MUKESH V. UDANI (HUF), MUMBAI v. ITO WD 20(2)(2), MUMBAI

ITA 5816/MUM/2008 | 2004-2005
Pronouncement Date: 12-03-2010 | Result: Allowed

Appeal Details

RSA Number 581619914 RSA 2008
Assessee PAN MARCH2003T
Bench Mumbai
Appeal Number ITA 5816/MUM/2008
Duration Of Justice 1 year(s) 5 month(s) 24 day(s)
Appellant MUKESH V. UDANI (HUF), MUMBAI
Respondent ITO WD 20(2)(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 12-03-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 12-03-2010
Date Of Final Hearing 09-03-2010
Next Hearing Date 09-03-2010
Assessment Year 2004-2005
Appeal Filed On 18-09-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: MUMBAI BEFORE SHRI R S SYAL ACCOUNTANT MEMBER AND SHRI V D RAO JUDICIAL MEMBER ITA NO 5818/MUM/2008 (ASSESSMENT YEAR: 2003-04) DR C J THAKKAR LAKESIDE NURSING HOME MUKUT 1 ST FLOOR 20-BSV ROAD BANDRA (WEST) MUMBAI -400 050 PAN:AAPPT 1152 K VS. DCIT -RANGE 11(2) 4 TH FLOOR AAYKAR BHAVAN M K MARG MUMBAI -400 050 APPELLANT RESPONDENT APPELLANT BY: SHRI KISHOR B KARIA RESPONDENT BY: SHRI SANJEEV JAIN ORDER PER V D RAO JUDICIAL MEMBER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 14 TH MAY 2008 OF THE COMMISSIONER OF INCOME TAX (APPEALS) X I MUMBAI. 2. FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN ORTHO PAEDIC SURGEON AND PROPRIETOR OF LAKESIDE NURSING HOME AND FILED ITS RETURN OF IN COME FOR ASSESSMENT YEAR 2003-04 DECLARING THE TOTAL INCOME OF RS 21 28 700/- AND AL SO FILED THE AUDIT REPORT U/S 44AB OF THE INCOME-TAX ACT 1964 RESPECTIVELY FOR THE L AKESIDE NURSING HOME RUN BY HIM AS WELL AS IN HIS PERSONAL CAPACITY AS DR C J THAKK AR ALONG WITH SAID RETURN OF INCOME. THE ASSESSEE IS ALSO ATTACHED WITH LEELAWA TI HOSPITAL AND BREACH CANDY HOSPITAL AS AN ORTHOPAEDIC SURGEON. THE ASSESSEE I S MAINTAINING A SEPARATE CASH REGISTER AS PRESCRIBED UNDER RULE 6F CLAUSE (3) IN RESPECT OF PATIENTS ADMITTED / TREATED IN LAKESIDE NURSING HOME IN RESPECT OF PAT IENTS TREATED / ADVISED IN HIS CLINIC. HOWEVER THE DETAILS IN RESPECT OF OPERATI ONS TREATED / OPERATED AT THE HOSPITALS WHERE HE HAS AFFILIATED OR MAINTAINED BY RESPECTIVE HOSPITALS. THE ASSESSING OFFICER WHILE MAKING THE SCRUTINY ASSESSM ENT DISALLOWED CERTAIN CLAIMS OF THE ASSESSEE AND THEY ARE FINALLY TRAVELLED TO THE TRIBUNAL THOSE ARE (I) DISALLOWANCE ITA 5818/M/2008 DR C J THAKKAR 2 OF DEPRECIATION AMOUNTS TO RS 16 40 996/-; (II) DIS ALLOWANCE OF PROFESSIONAL FEES OF RS 89 750/-; AND (III) ADHOC DISALLOWANCE OF CERTAI N EXPENSES. 3. THE FIRST GROUND RAISED BY THE ASSESSEE RELATING TO DISALLOWANCE OF DEPRECIATION OF RS 16 40 996/- . DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS OBSERVED WIT H REGARD TO THE CLAIM OF THE ASSESSEE IS THAT HE HAS CLAIMED DEPRECIATION OF RS 16 40 996/- IN RESPECT OF IMAGE GUIDING MACHINE AND THE IMAGE GUIDED SURGERY SYSTEM VICTOR VISION COMPACT FOR JOINT REPLACEMENT WAS INSTALLED AT THE PREMISES OF BREACH CANDY HOSPITAL MUMBAI. DURING THE FINANCIAL YEAR 2002-03 IN THE AUDIT REP ORT THE DATE OF ACQUISITION / PUT TO USE WAS MENTIONED AS 8TH FEBRUARY 2003. THE ASSESS ING OFFICER ON EXAMINATION OF THE REGISTER MAINTAINED BY THE ASSESSEE UNDER RULE 6F SUB-CLAUSE (3) IT IS SEEN THAT NO RECEIPT FROM PATIENTS OR ACCOUNT OF ANY OPERATIO N DONE ON THE ABOVE MENTIONED MACHINE HAS BEEN RECORDED. WHEN THE ASSESSING OFFI CER HAS SHOW CAUSED THE ASSESSEE THE ASSESSEE HAS SUBMITTED A PRINT-OUT CO PY FROM BREACH CANDY HOSPITAL WHICH SHOWS AN AMOUNT RECEIVABLE OF RS 30 000/- FRO M ONE PATIENT WITH RESPECT OF OPERATION DONE DURING THE FINANCIAL YEAR 2002-03. 4. THE ASSESSING OFFICER ISSUED A NOTICE U/S 133(3) SUB-CLAUSE (6) TO THE BREACH CANDY HOSPITAL THE BREACH CANDY HOSPITAL HAS CONFI RMED THAT THE SAID AMOUNT OF RS 30 000/- WAS RECEIVED FROM THE PATIENTS AFTER THE E ND OF THE FINANCIAL YEAR. HOWEVER THE ASSESSING OFFICER DISBELIEVED THE EXPL ANATION OF THE ASSESSEE ON THE GROUND THAT THE AMOUNT RECEIVED BY THE ASSESSEE DIR ECTLY FROM THE PATIENTS FOR THE FINANCIAL YEAR 2002-03 WITH RESPECT OF OPERATION DO NE IN THE IMAGE GUIDING MACHINE THESE RECEIPTS ARE NOT RECORDED IN THE REGISTER MAI NTAINED UNDER RULE 6F SUB-CLAUSE (3). THE ASSESSEES EXPLANATION IS ONLY AFTER THOU GHT AND THE MACHINE IS READY TO USE BUT NOT ACTUALLY USED TO GENERATE ANY BUSINESS/ PROFESSIONAL INCOME FOR THE ASSESSEE. NO INCOME WAS EARNED BY THE ASSESSEE DUR ING THE ASSESSMENT YEAR 2003- 04 BY USING THIS MACHINE. 5. ON BEING AGGRIEVED THE ASSESSEE CARRIED THE MAT TER IN APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT BOTH THE PARTIES ITA 5818/M/2008 DR C J THAKKAR 3 BELOW WRONGLY CONSTRUED THE FACTS AND DISALLOWED TH E CLAIM OF DEPRECIATION ON THE GROUND THAT THE BREACH CANDY HOSPITAL IN ITS CONFIR MATION LETTER STATED THAT AMOUNT OF RS 30 000/- WAS NOT RECEIVED DURING THE YEAR 200 2-03. THE LEARNED COUNSEL HAS POINTED OUT FROM THE PAPER BOOK PAGE 9 ANNEXURE A THAT THE ASSESSEE HAS PERFORMED THE OPERATION ON 11.3.2003 TO KAPOOR NEET A AND RECEIVED RS 20 000/- ON 24.3.2003 AND THE AMOUNT WAS ALSO RECEIVED IN THE Y EAR 2002-03. THE AUTHORITIES BELOW WRONGLY DENIED THE CLAIM OF THE ASSESSEE. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS PA SSED BY THE AUTHORITIES BELOW. 6. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE REC ORDS GONE THROUGH THE ORDERS PASSED BY THE AUTHORITIES BELOW. THE POINT FOR CONSIDERATION BEFORE THE TRIBUNAL IS WHETHER IMAGE GUIDING MACHINE WAS PUT TO USE DURING THE FINANCIAL YEAR 2002-03 OR NOT? THERE IS NO DISPUTE THAT THE ABOVE MACHINE WAS ACQUIRED BY THE ASSESSEE ON 8TH FEBRUARY 2003 AND THERE IS ALSO NO DISPUTE THAT THE SAME WAS INSTALLED AT BREACH CANDY HOSPITAL. THE ASSESSEE A LSO SUBMITTED A CONFIRMATION FROM BREACH CANDY HOSPITAL FOR AN AMOUNT RECEIVABLE OF R S 30 000/- FROM ONE OF THE PATIENTS IN RESPECT OF OPERATION DONE DURING THE FI NANCIAL YEAR 2002-03. THE ASSESSING OFFICER HAS ISSUED A NOTICE U/S 133(6) TO BREACH CANDY HOSPITAL AND IT WAS CONFIRMED THAT THE SAID AMOUNT OF RS 30 000/- WAS R ECEIVED FROM THE PATIENT AFTER THE END OF THE FINANCIAL YEAR. FROM THE ABOVE IT IS CLEAR THAT BREACH CANDY HOSPITAL HAS RECEIVED AN AMOUNT OF RS 30 000/- FORM THE PATI ENT. THEY DO NOT DISPUTE THAT THE ASSESSEE HAS NOT PERFORMED THE OPERATION. THE ASSESSING OFFICER HAS TO COME TO A CONCLUSION THAT THE IMAGE GUIDED SURGERY SYSTEM VECTOR VISION COMPACT FOR JOINT REPLACEMENT WAS READY TO USE BUT NOT ACTUALLY USED TO GENERATE ANY BUSINESS OR PROFESSIONAL INCOME FOR THE ASSESSEE. NO INCOME WA S EARNED BY THE ASSESSEE DURING THE FINANCIAL RELEVANT TO ASSESSMENT YEAR 2003-04 B Y USE OF THIS MACHINE. THE SAME VIEW WAS CONFIRMED BY THE CIT (A). HOWEVER THE FA CTUAL POSITION IS VERY CLEAR FROM PAGE NO.3 AS WELL AS PAGE 9 OF THE PAPER BOOK THE A SSESSEE THAT SHOWS HE HAS PERFORMED OPERATION ON 11TH MARCH 2003 TO ONE KAPOO R NEETA AND RECEIVED AN AMOUNT OF RS 20 000/- ON 24TH MARCH 2003. THEREFOR E WE ARE NOT AGREE WITH THE REVENUE AUTHORITIES THAT THE MACHINE WAS NOT PUT TO USE DURING THE YEAR 2002-03. ITA 5818/M/2008 DR C J THAKKAR 4 7. AS PER SECTION 32 OF THE INCOME-TAX ACT 1961 T HE ASSESSEE SHALL BE AN OWNER AND HE MUST BE USED AND ASSESSED DURING THE RELEVAN T PREVIOUS YEAR. IN THE PRESENT CASE ASSESSEE HAS FULFILLED ALL THE CONDITIONS WH ICH ARE REQUIRED FOR ELIGIBILITY FOR DEPRECIATION U/S 32 OF THE INCOME-TAX ACT 1961. T HEREFORE WE SET ASIDE THE ORDER PASSED BY THE CIT (A) AND ACCORDINGLY THIS GROUND R AISED BY THE ASSESSEE IS ALLOWED. 8. THE SECOND GROUND OF APPEAL RAISED BY THE ASSESSEE R ELATING TO DISALLOWANCE OF PROFESSIONAL FEES OF RS 89 750/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS O BSERVED THAT THE ASSESSEE HAS DEBITED RS 89 750/- AS A PROFESSIONAL FEE FOR ADVOCATE / LE GAL CONSULTANT REPRESENTING A COMPLAINT MADE BY ONE OF THE PATIENTS. NO DETAIL S OF THE CASE INCLUDING NAME ADDRESS OF THE COMPLAINT WAS FURNISHED DURING THE C OURSE OF THE ASSESSMENT PROCEEDINGS. THE ABSENCE OF DETAILS THE AMOUNT PA ID TO LAWYERS CANNOT BE ALLOWED THE SAME WAS DISALLOWED. ON APPEAL THE CIT (A) CO NFIRMED THE ORDER OF THE ASSESSING OFFICER. BEFORE THE TRIBUNAL THE AUTHOR ISED REPRESENTATIVE OF THE ASSESSEE HAS POINTED OUT FROM THE PAPER BOOK PAGE N OS 28 29 30 & 31. IT SHOWS THAT THERE IS A COMPLAINT AGAINST THE ASSESSEE BY O NE MR JAGDISH G SHIRDHANKAR AND THE PAYMENTS MADE TO ADVOCATE/LEGAL CONSULTANTS ALL THE DETAILS ARE FILED AT PAGE NOS 28 TO 31. AFTER PERUSAL OF THE BILLS FILED BY THE ASSESSEE WE CONVINCED THAT THE ASSESSEE HAS INCURRED THE ABOVE AMOUNT IN RESPECT O F COMPLAINT FILED AGAINST HIM AND THEREFORE IT IS GENUINE EXPENSES INCURRED BY THE A SSESSEE THEREFORE ALLOWABLE UNDER THE ACT. WE THEREFORE SET ASIDE THE ORDER PASSED BY THE CIT (A) AND ACCORDINGLY THE SECOND GROUND RAISED BY THE ASSESSEE IS ALLOWED . 9. THE NEXT GROUND OF APPEAL RELATING TO DISALLOWANCE O F CERTAIN EXPENSES . DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAD DEBITED RS 1 55 776/ - AS SUNDRY EXPENSES RS 32 821/- AS MISCELLANEOUS EXPENSES RS 6 900/- AS U NIFORM EXPENSES RS 23 522/- AS CLOTHES WASHING EXPENSES RS 1 48 975/- AS REPAI RS & MAINTENANCE RS 31 921/- AS HOSPITAL LINEN RS 8 099/- AS CONVEYANCE EXPENSE S ETC. IN THE ACCOUNT OF LAKESIDE NURSING HOME (NET TURNOVER RS 32 LAKHS). DETAILS O F THESE EXPENSES ARE ONLY IN THE ITA 5818/M/2008 DR C J THAKKAR 5 FORM OF SELF-MADE VOUCHERS. SOME PART OF THESE EXP ENSES NOT BEING WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS CANNOT BE RULED OUT AND ACCORDINGLY ONE FIFTH OF SUCH EXPENSES I.E. RS 82 003/- IS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. SIMILARLY IN THE PROFESSIONAL PROFIT & LOSS ACCOUNT OF THE ASSESSEE RS 29 034/- IS DEBITED AS PROFESSION DEVELOPMENT EXPEN SES RS 55 646/- AS SUNDRY EXPENSES RS 2 956/- AS STAFF WELFARE RS 20 478/- AS REPAIRS & MAINTENANCE AND ONE FIFTH OF SUCH EXPENSES I.E. RS 21 623/- IS DISALLO WED UNDER SECTION 37(1) OF THE ACT. 10. ON APPEAL THE LEARNED CIT (A) HAS OBSERVED THA T THE NATURE OF THE EXPENSES UNDER THESE HEADS IS SUCH THAT IT CANNOT BE SAID TH AT THE WHOLE OF WHICH WOULD BE VERIFIABLE. UNDER SUCH FACTS AND CIRCUMSTANCES SO ME ADDITION DESERVED TO BE MADE. DISALLOWANCE AT 20% UNDER THE BOTH THE HEADS I.E. U NDER LAKESIDE NURSING HOME AND UNDER THE PERSONAL ACCOUNT IS ON A HIGHER SIDE. TH EREFORE THE CIT (A) HAS SUSTAINED ONLY 10% OF DISALLOWANCE AND DIRECTED THE ASSESSING OFFICER TO RE-CALCULATE THE DISALLOWANCE. WE FIND NO INFIRMITY IN THE ORDER PA SSED BY THE CIT (A). ACCORDINGLY THIS GROUND RAISED BY THE ASSESSEE IS DISMISSED. 11. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 4TH DAY OF DECEMBER 2009. SD/- (R S SYAL) ACCOUNTANT MEMBER SD/- (V D RAO) JUDICIAL MEMBER MUMBAI DATE: 4 TH DECEMBER 2009 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) -XI MUMBAI. 4) THE CIT- XI MUMBAI. 5) THE D.R. C BENCH MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T. MUMBAI CHAVAN* ITA 5818/M/2008 DR C J THAKKAR 6 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 03.12.09 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 04.12.09 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS 7 FILE SENT TO THE BENCH CLERK SR.PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER