Shruti Medical Institute, Pune v. ITO, Ward 5(1), Pune, Pune

ITA 607/PUN/2009 | 2005-2006
Pronouncement Date: 23-12-2010 | Result: Allowed

Appeal Details

RSA Number 60724514 RSA 2009
Assessee PAN AASFS8247H
Bench Pune
Appeal Number ITA 607/PUN/2009
Duration Of Justice 1 year(s) 7 month(s) 5 day(s)
Appellant Shruti Medical Institute, Pune
Respondent ITO, Ward 5(1), Pune, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 23-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 23-12-2010
Assessment Year 2005-2006
Appeal Filed On 18-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER ITA NO. 607/PN/2009 (ASSTT YEAR: 2005-06) SHRUTI MEDICAL INSTITUTE PUNE .. APPELLANT PAN AASFS8247H VS. INCOME-TAX OFFICER WARD 5(1) PUNE .. RESPONDENT APPELLANT BY : SHRI SUNIL GANOO RESPONDENT BY : MRS MITHALI MADUSMITA ORDER PER G.S. PANNU A.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX-III PUNE (IN SHORT COMMISSIONER) DATED 30.3.20009 PASSED UNDER SECTION 263 OF THE IN COME-TAX ACT 1961 (IN SHORT THE ACT) WHEREBY THE ASSESSMENT OR DER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE A CT DATED 20.2.2007 HAS BEEN HELD TO BE ERRONEOUS IN SO FAR A S IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE ON THRE E ASPECTS WITHIN THE MEANING OF SECTION 263 OF THE ACT. 2. BRIEFLY PUT THE FACTS ARE THAT THE APPELLANT IS A FIRM DERIVING INCOME FROM RUNNING OF CT AND MRI SCAN CENTRE. FOR THE ASSESSMENT YEAR 2005-06 IT FILED A RETURN OF INCOM E DECLARING NIL INCOME WHICH WAS SUBJECT TO A SCRUTINY ASSESSMENT. IN THE ITA NO 607/PN/09 SHRUTI MEDICAL INSTITUTE PUNE 2 ASSESSMENT FINALIZED UNDER SECTION 143(3) OF THE AC T DATED 28.2.2007 ASSESSING OFFICER DETERMINED THE INCOME BEFORE SETTING OFF OF BUSINESS LOSSES AND DEPRECIATION AT RS 34 17 848/- AND AFTER SETTING OFF BROUGHT FORWARD LOSS FINAL INCOME WAS DETERMINED AT NIL. SUBSEQUENTLY THE COMMISSIONER EXAMINED THE RE CORD OF ASSESSMENT PROCEEDING AND SHOW CAUSED THE ASSESSEE VIDE HIS NOTICE DATED 6.3.2009 AS TO WHY THE ASSESSMENT ORDE R DATED 28.2.2007 BE NOT CONSIDERED AS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT. THE THREE ASPECTS CONSIDERE D BY THE COMMISSIONER IN THE SHOW CAUSE NOTICE WERE AS FOLLO WS. FIRSTLY AS PER THE COMMISSIONER ASSESSEE HAD MADE PAYMENT OF RS 3 12 720/- TO M/S KODAK INDIA LTD. TOWARDS EQUIPMEN T USER CHARGES AND SECONDLY THE ASSESSEE HAD PAID/CREDITED SERVIC E CHARGES OF RS 19 10 708/- TO THE KEM HOSPITAL TRUST. AS PER TH E COMMISSIONER NO TAX WAS DEDUCTED AT SOURCE FROM TH E AFORESAID PAYMENTS EVEN THOUGH THE SAME WAS PRIMA FACIE DEDU CTIBLE. ACCORDING TO THE COMMISSIONER DURING THE COURSE OF ASSESSMENT PROCEEDINGS DEDUCTIBILITY OR OTHERWISE OF TAX FROM THE PAYMENTS IN QUESTION AND THEIR CONSEQUENTIAL ADMISSIBILITY/OTHE RWISE FOR DEDUCTION OF EXPENSES IN TERMS OF SECTION 40(A)(IA) WAS NOT EXAMINED BY THE ASSESSING OFFICER AT ALL. THIRDLY THE COMMISSIONER NOTICED THAT IN THE STATEMENT OF INCOME ENCLOSED AL ONGWITH THE RETURN ASSESSEE HAD DISALLOWED REFERRAL FEES OF RS 3 25 448/- UNDER SECTION 40(A)(IA) OF THE ACT WHEREAS THE REF ERRAL FEE IS NOT ADMISSIBLE AS A DEDUCTION AT ALL IN VIEW OF THE EXP LANATION 2 TO SECTION 37(1) OF THE ACT AND THE SAID MATTER HAS NO T BEEN ITA NO 607/PN/09 SHRUTI MEDICAL INSTITUTE PUNE 3 CONSIDERED BY THE ASSESSING OFFICER DURING ASSESSME NT PROCEEDINGS. 3. IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED BY T HE COMMISSIONER ASSESSEE MADE WRITTEN SUBMISSIONS VI DE LETTERS DATED 14.3.2009 AND 24.3.2009 COPIES OF WHICH HAVE BEEN PLACED ON RECORD. THE STAND OF THE ASSESSEE WAS THAT ON FA CTS AND IN LAW THE ASSESSMENT ORDER DATED 28.2.2007 WAS NEITHER ER RONEOUS NOR PREJUDICIAL TO THE INTERESTS OF THE REVENUE ON ANY OF THE THREE ASPECTS CONSIDERED BY THE COMMISSIONER AND THEREFO RE IT REQUESTED THE COMMISSIONER TO DROP THE PROCEEDINGS INITIATED UNDER SECTION 263 OF THE ACT. THE COMMISSIONER HAS CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND HAS THEREAFTER SET ASIDE THE ASSESSMENT ORDER DATED 28.2.2007 FOR BEING MADE AFR ESH IN ACCORDANCE WITH LAW. 4. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE IMPUGNED ORDER PASSED BY THE COMMIS SIONER WAS BAD IN LAW AND WITHOUT JURISDICTION INASMUCH AS TH E CONDITIONS PRECEDENT FOR ASSUMPTION OF JURISDICTION UNDER SECT ION 263 OF THE ACT WERE ABSENT IN THE PRESENT CASE. ON THE ASPECT OF EXERCISING OF REVISIONAL JURISDICTION BY THE COMMISSIONER IT IS POINTED OUT THAT THE COMMISSIONER HAS SET ASIDE ASSESSMENT ORDER FOR REFRAMING THE SAME IN ACCORDANCE WITH LAW AND HAS ALSO SIMULTANEO USLY ISSUED DIRECTIONS FOR MODIFICATION/ENHANCEMENT OF THE ASSE SSMENT WHICH HAS MADE THE ORDER OF THE COMMISSIONER AS UNWORKABL E. THE PLEA SET UP BY THE LEARNED COUNSEL IS THAT UNDER SECTION 263 OF THE ACT THE COMMISSIONER CAN EITHER SET ASIDE ASSESSMENT WI TH DIRECTION TO REFRAME THE SAME IN ACCORDANCE WITH LAW OR HE CAN H IMSELF MODIFY ITA NO 607/PN/09 SHRUTI MEDICAL INSTITUTE PUNE 4 THE ASSESSMENT ORDER SUITABLY BUT BOTH THE TWO THI NGS CANNOT BE DONE SIMULTANEOUSLY BY THE COMMISSIONER WHILE EXERC ISING THE REVISIONAL JURISDICTION UNDER SECTION 263 OF THE AC T. EVEN ON FACTS IT HAS BEEN SUBMITTED THAT THE COMMISSIONER HAS ERRED IN CONCLUDING THAT PROVISIONS OF SECTION 194J OF THE ACT WERE ATT RACTED ON PAYMENTS MADE TO M/S KEM HOSPITAL TRUST AND M/S KOD AK INDIA LTD. ON BOTH THESE ASPECTS IT HAS BEEN POINTED OUT THAT AGREEMENTS WITH THE TWO CONCERNS CLEARLY SHOWED THA T THEY FALL WITHIN THE PURVIEW OF THE PROVISIONS OF SECTION 194 I OF THE ACT WHICH DEALS WITH RENT PAYMENTS AND IN THIS VIEW OF THE MATTER THE QUESTION OF DISALLOWANCE UNDER SECTION 40(A)(IA) ON ACCOUNT OF NON DEDUCTION OF TAX DOES NOT ARISE SINCE SECTION 40(A) (IA) HAS BEEN MADE APPLICABLE TO RENTAL EXPENDITURE ONLY WITH EFF ECT FROM 1.4.2006 BY THE TAXATION LAWS (AMENDMENT ACT) 2006 AND THEREFORE THE SAME IS INAPPLICABLE FOR THE ASSESSM ENT YEAR UNDER CONSIDERATION. WITH REGARD TO THE OBSERVATION OF TH E COMMISSIONER THAT THE TWO PAYMENTS FALL WITHIN THE PURVIEW OF SE CTION 194J OF THE ACT BECAUSE THE SAME ARE PROFESSIONAL CHARGES THE LEARNED COUNSEL VEHEMENTLY ARGUED THAT NO PROFESSIONAL SERV ICES OF THE NATURE REFERRED TO IN SECTION 194J HAS BEEN RENDERE D TO THE ASSESSEE BY THE TWO RECIPIENTS AND THEREFORE THE INFERENCE OF THE COMMISSIONER IS UNTENABLE IN LAW AS ALSO ON FACTS ON THIS ASPECT. ON THE THIRD ASPECT OF THE REFERRAL FEE THE LEARNE D COUNSEL POINTED OUT THAT THE AMOUNT OF RS 3 25 448/- WAS ALREADY DI SALLOWED IN THE ASSESSMENT ORDER DATED 28.2.2007 AND NO CAUSE OF AC TION LIES WITH THE COMMISSIONER UNDER SECTION 263 OF THE ACT. IN A NY CASE IT IS POINTED OUT THAT DURING THE ASSESSMENT PROCEEDINGS A ITA NO 607/PN/09 SHRUTI MEDICAL INSTITUTE PUNE 5 QUESTIONNAIRE DATED 2.2.2007 WAS ISSUED BY THE ASSE SSING OFFICER WHEREIN AS SPECIFIC QUERY WITH REGARD TO THE EXPEN DITURE ON REFERRAL FEE WAS MADE CALLING FOR RELEVANT DETAILS INCLUDI NG NAMES AND ADDRESSES QUALIFICATIONS AND NATURE OF SERVICES RENDERED BY THE RECIPIENTS TO EARN SUCH INCOME. THE ASSESSING OFFIC ER HAD ALSO REQUIRED THE ASSESSEE TO STATE WHETHER ANY TDS HAS BEEN DEDUCTED FROM SUCH PAYMENTS BESIDES CALLING FOR THE INCOME- TAX PARTICULARS OF THE RECIPIENTS. IT IS POINTED OUT THAT THE RELEV ANT DETAILS WERE FURNISHED BY THE ASSESSEE VIDE COMMUNICATION DATED 20.2.2007 AND THE ASSESSING OFFICER WAS SATISFIED THUS NOT R ESULTING IN ANY ADDITION OTHER THAN THE ADDITION MADE BY THE ASSESS EE IN THE RETURN OF INCOME OF A SUM OF RS 3 25 448/- UNDER SEC. 40(A )(IA) OF THE ACT FOR DELAY IN PAYMENT OF TDS. IT WAS THEREFORE CON TENDED THAT THE ASSESSING OFFICER HAD EXAMINED THE CLAIM OF THE ASS ESSEE AND AFTER DUE APPLICATION OF MIND ACCEPTED THE DISALLOW ANCE AS MADE BY THE ASSESSEE AND THEREFORE UNDER THESE CIRCUMSTAN CES INVOKING OF SECTION 263 OF THE ACT BY THE COMMISSIONER IS DE VOID OF JURISDICTION. MOREOVER IT IS CONTENDED THAT THE RE FERENCE MADE BY THE COMMISSIONER TO EXPLANATION 2 TO SECTION 37(1) OF THE ACT WITH REGARD TO THE PAYMENT OF REFERRAL FEE IS NOT JUSTIF IED INASMUCH AS THE ASSESSEE HAD CLEARLY BROUGHT OUT BEFORE THE COM MISSIONER THAT THE FEES WERE PAID TO DOCTORS ACCOMPANYING THE PATI ENTS OR ASSISTING THE SURGEON IN PERFORMING THE PROCEDURE A ND WAS NOT IN VIOLATION OF ANY LAW. THE NATURE OF THE SERVICES SO RENDERED DOES NOT INVITE THE PROVISIONS OF EXPLANATION 2 TO SECTI ON 37(1) OF THE ACT AND TO THIS SUBMISSION THERE IS NO CONTROVERSION B Y THE COMMISSIONER AND THUS THE ASSESSMENT ORDER COULD NOT HAVE ITA NO 607/PN/09 SHRUTI MEDICAL INSTITUTE PUNE 6 BEEN SAID TO BE ERRONEOUS ON THIS COUNT ALSO. IN NU TSHELL ON ALL THE POINTS THE LEARNED COUNSEL VEHEMENTLY ARGUED THAT T HE COMMISSIONER HAS NOT EXERCISED HIS JURISDICTION UND ER SECTION 263 PROPERLY EITHER IN LAW OR ON FACTS AND THEREFORE THE IMPUGNED ORDER BE SET AIDE. 5. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPR ESENTATIVE APPEARING FOR THE REVENUE HAS DEFENDED THE ORDER O F THE COMMISSIONER IN HOLDING THE ASSESSMENT ORDER DATED 28.2.2007 AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE IN TERMS OF SECTION 263 OF THE ACT. OUR ATTENTION HAS BEEN INVI TED TO PARAGRAPHS 5.1 AND 5.1.1 OF THE IMPUGNED ORDER TO C ONTEND THAT THE COMMISSIONER HAS EXAMINED THE AGREEMENTS WITH M/S K EM HOSPITAL TRUST AND M/S KODAK INDIA LTD. AND HAS RIG HTLY CONCLUDED THAT THE SAME INVOLVED PAYMENTS BY THE ASSESSEE FOR PROFESSIONAL SERVICES RENDERED TO IT AND THEREFORE SUCH PAYMEN TS WOULD COME WITHIN THE AMBIT OF SECTION 194J OF THE ACT. IN THE SE CIRCUMSTANCES THE ASSESSEE HAD ERRED IN NOT DEDUCTING TAX AT SOUR CE FROM SUCH PAYMENTS AND THEREFORE THE AMOUNTS WERE DISALLOWA BLE IN TERMS OF SECTION 40(A)(IA) OF THE ACT. THE ASSESSING OFFICER HAVING NOT DONE SO IT HAS RENDERED THE ASSESSMENT ORDER DATED 28.2 .2007 AS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE UNDER SECTION 263 OF THE ACT. EVEN WITH REG ARD TO THE PAYMENT OF REFERRAL FEES TO THE DOCTORS THE LEARN ED DEPARTMENTAL REPRESENTATIVE HAS REFERRED TO THE OBSERVATIONS OF THE COMMISSIONER IN PARA 5.4 OF THE IMPUGNED ORDER WHE REIN IT IS NOTED THAT THE ASSESSEE HAS NOT FURNISHED ANY DETAI LS WHATSOEVER AND THEREFORE THE MATTER WAS SET ASIDE TO THE FIL E OF THE ASSESSING ITA NO 607/PN/09 SHRUTI MEDICAL INSTITUTE PUNE 7 OFFICER FOR EXAMINATION. IN THIS MANNER THE LEARNE D DEPARTMENTAL REPRESENTATIVE HAS DEFENDED THE ORDER OF THE COMMIS SIONER IN EXERCISING JURISDICTION UNDER SECTION 263 OF THE AC T. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. SECTION 263 OF THE ACT EMPOWERS THE COMMISSIONER TO EXAMINE RECORD OF ANY PROCEEDINGS UNDER THIS ACT AND IF HE CONSIDER THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEOU S IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE HE MAY AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTE R MAKING OR CAUSING SUCH ENQUIRIES AS HE MAY DEEM NECESSARY PA SS AN ORDER AS THE CIRCUMSTANCES OF THE CASE JUSTIFY INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. IT IS CLEAR FROM THE PROVISIONS OF SECTION 263 THAT A PRE-REQUISITE FOR EXERCISING JURISDICTION BY THE COMMISSIONER IS THAT THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS IN SO FA R AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. AS PER THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO .LTD. V. CIT 243 ITR 83 (SC) THE COMMISSIONER HAS TO BE SATISFIED O F THE TWO CONDITIONS NAMELY THAT THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS AND THAT IT IS PREJUDICI AL TO THE INTERESTS OF THE REVENUE. IT IS ALSO WELL SETTLED AND AS HAS BEEN APPROVED BY THE HONBLE SUPREME COURT IN THE CASE OF MALABA R INDUSTRIAL CO. LTD. V. CIT (SUPRA) THAT SUCH TWIN CONDITIONS H AVE TO BE CUMULATIVELY SATISFIED. IF ONE OF THE TWO CONDITION S IS ABSENT RECOURSE CANNOT BE HAD TO SECTION 263 OF THE ACT. I T HAS BEEN EXPLAINED BY THE HONBLE SUPREME COURT THAT THE PHR ASE PREJUDICIAL ITA NO 607/PN/09 SHRUTI MEDICAL INSTITUTE PUNE 8 TO THE INTERESTS OF THE REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. IT HAS BEEN FURTHER EXPLAINED BY THE HONBLE SUPREME COURT THAT WHERE AN ASSESSING OFFICER HAS ADOPTED ONE OF THE COURSES PE RMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE OR WHER E TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VI EW WITH WHICH THE COMMISSIONER DOES NOT AGREE IT CANNOT BE TREAT ED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF THE REVENUE UNLESS AND UNTIL THE VIEW TAKEN BY THE ASSESSING OFFICER I S HELD TO BE UNSUSTAINABLE IN LAW. IN OTHER WORDS EACH AND EVER Y ORDER OF THE ASSESSING OFFICER CANNOT BE MADE A SUBJECT MATTER O F REVISION UNDER SECTION 263 MERELY BECAUSE THE COMMISSIONER D IS-AGREES WITH THE CONCLUSION ARRIVED AT BY THE ASSESSING OFF ICER UNLESS IT IS DEMONSTRATED THAT THE ORDER OF THE ASSESSING OFFICE R IS UNSUSTAINABLE IN LAW. 7. NOW COMING BACK TO THE FACTS OF THE PRESENT CASE . THE FIRST ASPECT ON THE BASIS OF WHICH ASSESSMENT ORDER IS CO NSIDERED ERRONEOUS IS WITH REGARD TO A PAYMENT OF RS 3 12 72 0/- MADE TO M/S KODAK INDIA LTD. AS PER THE AGREEMENT WITH M/S KODA K INDIA LTD. DATED 30.6.2001 THE ASSESSEE HAS TAKEN FOR USE CER TAIN EQUIPMENT/ MACHINERY AND THE SAID PAYMENTS HAVE BEE N MADE IN TERMS OF THE SAID AGREEMENT. AS PER THE COMMISSIONE R THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE ON SU CH PAYMENT IN TERMS OF SECTION 194J OF THE ACT WHICH HAS NOT BEE N MADE. AS PER THE COMMISSIONER THE ASPECT OF NON-DEDUCTION OF TA X WAS NOT NOTED BY THE ASSESSING OFFICER AND THEREFORE HE DI D NOT CONSIDER THE DISALLOWANCE OF THE IMPUGNED PAYMENT UNDER SECT ION 40(A)(IA) ITA NO 607/PN/09 SHRUTI MEDICAL INSTITUTE PUNE 9 OF THE ACT AND HENCE THE ORDER IS STATED TO BE ERR ONEOUS. THE ULTIMATE CONCLUSION OF THE COMMISSIONER IS THAT ASS ESSING OFFICER SHALL EXAMINE ALL THE FACTS AND THE DETAILS RELATIN G TO THE AGREEMENT WHICH HAS FORMED THE BASIS FOR MAKING TH E PAYMENT OF RS 3 12 720/- TO M/S KODAK INDIA LTD. AND WITH THI S DIRECTION ASSESSMENT HAS BEEN SET ASIDE TO BE DONE AFRESH IN ACCORDANCE WITH LAW. QUITE CLEARLY ON ONE HAND IN PARAGRAPH 5 .1.1 OF THE IMPUGNED ORDER THE COMMISSIONER COMES TO A PRIMA-FA CIE CONCLUSION THAT THE IMPUGNED PAYMENT FALLS WITHIN T HE AMBIT OF SECTION 194J OF THE ACT AND THEREAFTER IN PARAGRA PH 5.3 HE HAS DIRECTED THE ASSESSING OFFICER TO EXAMINE THE FACTS AND DETAILS AND DECIDE AFRESH IN ACCORDANCE WITH LAW. IN THE FACE O F A CLEAR CONCLUSION MADE IN PARA 5.1.1 OF THE IMPUGNED ORDER BY THE COMMISSIONER THE PREDICAMENT OF THE ASSESSING OFFI CER WHILE CARRYING OUT THE DIRECTIONS OF THE COMMISSIONER GIV EN IN PARA 5.3 BECOMES QUITE EVIDENT. NEVERTHELESS IN OUR CONSIDE RED OPINION AT THE STAGE OF EXAMINING INVOKING OF SECTION 263 WHA T IS PARAMOUNT TO EXAMINE IS WHETHER THE ASSESSMENT IS BASED ON A VIEW WHICH IS A POSSIBLE VIEW OR IS A VIEW WHICH IS UNSUSTAINABLE IN LAW. IN THIS CASE THE CLAIM OF THE ASSESSEE IS THAT NO PROFESSI ONAL SERVICES ARE RENDERED BY M/S KODAK INDIA LTD. TO THE ASSESSEE OF THE NATURE SPECIFIED IN SECTION 194J AND THEREFORE NON-CONSI DERATION OF THE SAME BY THE ASSESSING OFFICER HAS NOT RENDERED THE ASSESSMENT AS UNSUSTAINABLE IN LAW FOR THE PURPOSES OF SECTION 26 3 OF THE ACT. IN OUR CONSIDERED OPINION THERE IS AMPLE FORCE IN THE AFORESAID PROPOSITION HAVING REGARD TO THE FACTS OF THE PRESE NT CASE. THE AGREEMENT DOES NOT ENVISAGE PROVISION OF PROFESSION AL SERVICES OF ITA NO 607/PN/09 SHRUTI MEDICAL INSTITUTE PUNE 10 THE NATURE REFERRED TO SECTION 194J OF THE ACT. WE THEREFORE DO NOT FIND THAT THE ASSE;SSMENT ORDER CAN BE CONSTRUED AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT WITH RESPECT TO THE ASPECT O F PAYMENT MADE TO M/S KODAK INDIA LTD. OF RS 3 12 720/- TOWARDS EQ UIPMENT USER CHARGES. 8. WITH RESPECT TO THE PAYMENTS MADE TO M/S KEM HOSPITAL TRUST ON THIS ASPECT THE STAND OF THE COMMISSIONE R IS THAT SUCH PAYMENTS ARE ALSO COVERED UNDER SECTION 194J OF THE ACT REQUIRING DEDUCTION OF TAX AT SOURCE AND HAVING NOT DEDUCTED THE SAME IS DISALLOWABLE UNDER SECTION 40(A)(IA) OF THE ACT WH ICH THE ASSESSING OFFICER HAS FAILED TO DO IN THE ASSESSMENT ORDER DA TED 28.2.2007. ON THIS ASPECT ALSO CONTRADICTION IN ORDER OF THE COMMISSIONER AS NOTICED FOR THE PAYMENTS TO M/S KODAK INDIA LTD. I S CLEARLY EMERGING. WHETHER THE AGREEMENT IN TERM OF WHICH S AID PAYMENTS HAVE BEEN MADE COPY OF WHICH HAS BEEN PLACED IN TH E PAPER BOOK AT PAGES 47 TO 56 FALLS WITHIN THE SCOPE OF SECTIO N 194J OR SECTION 194I IS REQUIRED TO BE EXAMINED WITH REFERENCE TO THE RELEVANT FACTS. SECTION 194I OF THE ACT ENVISAGES DEDUCTION OF TAX AT SOURCE ON PAYMENT BY WAY OF RENT WHEREAS SECTION 194J OF THE ACT ENVISAGES DEDUCTION OF TAX AT SOURCE BY WAY OF PROF ESSIONAL OR TECHNICAL SERVICES. THE CLAIM OF THE ASSESSEE IS TH AT HAVING REGARD TO THE AGREEMENT THE PAYMENT FALLS WITHIN THE PURV IEW OF EXPRESSION RENT AS UNDERSTOOD UNDER SECTION 194I AND SINCE THE DISALLOWANCE ENVISAGED UNDER SECTION 40(A)(IA) ON R ENT PAYMENT CAME INTO EFFECT FROM 1.4.2006 THE ALLOWANCE OF SU CH EXPENDITURE BY THE ASSESSING OFFICER DOES NOT RENDER THE ASSESS MENT ITA NO 607/PN/09 SHRUTI MEDICAL INSTITUTE PUNE 11 ERRONEOUS. ON THE OTHER HAND AS PER THE COMMISSION ER VARIOUS CLAUSES OF THE AGREEMENT SHOW SOME INCLUDED SERVICE S AVAILED BY THE ASSESSEE FROM M/S KEM HOSPITAL TRUST AND THERE FORE IT CANNOT BE ROUTINELY SAID THAT SERVICE CHARGES PAID BY THE ASSESSEE TO M/S KEM HOSPITAL TRUST WERE IN THE NATURE OF RENT SO AS TO ATTRACT SECTION 194I OF THE ACT. ON THE OTHER HAND AS PER THE COMMISSIONER PROVISIONS OF SECTION 194J OF THE ACT ARE ATTRACTED. IN OUR CONSIDERED OPINION SECTION 194J ENVISAGES P AYMENTS FOR SPECIFIED PROFESSIONAL OR TECHNICAL SERVICES. THE S COPE OF THE EXPRESSIONS PROFESSIONAL SERVICES AND FEE FOR TE CHNICAL SERVICES AS USED IN SECTION 194J HAS BEEN PLACED IN THE EXPL ANATION BELOW SECTION 194J OF THE ACT. THE COMMISSIONER HAS NOT B ROUGHT OUT AS TO HOW THE SERVICES IN QUESTION FALL WITHIN THE DEF INITION OF PROFESSIONAL SERVICES OR FEE OR TECHNICAL SERVIC ES OR THE OTHER EXPRESSIONS FALLING IN THE PURVIEW OF SECTION 194J1 OF THE ACT. CLAUSES OF THE AGREEMENT REFERRED TO BY THE COMMISS IONER IN PARAGRAPH 5.1 OF THE IMPUGNED ORDER CANNOT BE CONST RUED AS ANY ARRANGEMENT SO AS TO FALL WITHIN THE PURVIEW OF SER VICES OUTLINED IN SECTION 194J1 OF THE ACT READ WITH EXPLANATION THER EOF. AT THIS POINT WE MAY HASTEN TO ADD THAT WE ARE NOT ON THE MERITS OF THE DISPUTE AS TO WHETHER THE PAYMENTS FALL WITHIN SECT ION 194I OR UNDER SECTION 194J OF THE ACT. WE ARE ONLY EXAMINING WHET HER THE VIEW CANVASSED BY THE ASSESSEE IS A POSSIBLE VIEW OR NOT ? THE CONSTRUING OF THE AGREEMENT AS FALLING FOR CONSIDER ATION UNDER SECTION 194I OF THE ACT IS A POSSIBLE VIEW THEREBY ELIMINATING THE DISALLOWANCE UNDER SECTION 40(A)(IA) FOR THE YEAR U NDER CONSIDERATION. THUS IN THIS VIEW OF THE MATTER WE DO NOT FIND THAT ITA NO 607/PN/09 SHRUTI MEDICAL INSTITUTE PUNE 12 THE ASSESSMENT ORDER COULD BE CONSTRUED AS ERRONEOU S BECAUSE THE SAID PAYMENT WOULD NOT FALL WITHIN THE DISALLOWABLE PROVISIONS OF SECTION 40A(IA) OF THE ACT. THEREFORE ON BOTH THES E COUNTS THE ORDER OF THE COMMISSIONER IS UNSUSTAINABLE. 9. EVEN WITH REGARD TO THE EXPENDITURE ON ACCOUNT OF REFERRAL FEES CLAIM OF THE ASSESSEE BEFORE THE COMMISSIONER WAS THAT THE PAYMENTS HAVE BEEN MADE TO THE DOCTORS WHO HAVE ACC OMPANIED PATIENTS OR TO THE DOCTORS WHO ASSISTED THE SURGEON S IN PERFORMING PROCEDURES. THE COMMISSIONER HAS DISREGARDED THE AF ORESAID PLEA ON THE GROUND THAT THE DETAILS HAVE NOT BEEN FURNIS HED. IF THAT BE SO THEN THERE IS NO MATERIAL ON RECORD WITH THE CO MMISSIONER TO HOLD THAT THE PAYMENTS HAVE BEEN IN INFRACTION OF A NY LAW SO AS TO INVITE DISALLOWANCE IN TERMS OF EXPLANATION TO SECT ION 37(1) OF THE ACT ON MERE APPREHENSION BASED ON THE NOMENCLATURE OF THE EXPENDITURE DEBITED. IN ANY CASE AS CORRECTLY POIN TED OUT BY THE COUNSEL FOR THE APPELLANT DETAILS REGARDING THIS E XPENDITURE WERE EXAMINED BY THE ASSESSING OFFICER BY WAY OF A SPECI FIC QUERY RAISED IN THE QUESTIONNAIRE COPY OF WHICH IS PLACE D AT PAGES 43 TO 45 OF THE PAPER BOOK. THE ASSESSEE HAD ALSO EXPLAIN ED IN THE REPLY TO THE ASSESSING OFFICER PLACED AT PAGES 45-46 T HAT OUT OF THE TOTAL EXPENDITURE OF RS 8 53 420/- ON THIS COUNT DISALLOWANCE OF RS 3 25 448/- WAS MADE IN THE COMPUTATION OF INCOME UNDER SECTION 40(A)(IA) OF THE ACT FOR DELAY IN PAYMENT O F TDS. IN FACT DETAILS CALLED FOR BY THE ASSESSING OFFICER ALSO RE LATED TO EXAMINING THE NATURE OF SERVICES INCOME-TAX PARTICULARS OF T HE RECIPIENTS AND ALSO PART DISALLOWANCE UNDER SECTION 40(A)(IA) MADE BY THE ASSESSEE IN THE COMPUTATION OF INCOME. THOUGH THE A SSESSING ITA NO 607/PN/09 SHRUTI MEDICAL INSTITUTE PUNE 13 OFFICER HAS NOT DISCUSSED THE ISSUE IN DETAIL SO H OWEVER NO DISALLOWANCE HAS BEEN MADE IN THE ASSESSMENT ORDER OTHER THAN THE AMOUNT OF RS 3 25 448/- SUO-MOTTO DISALLOWED B Y THE ASSESSEE ITSELF. THUS THE ASSESSING OFFICER IN OUR VIEW H AD APPLIED HIS MIND TO THE CLAIM MADE BY THE ASSESSEE AND HAS ACCE PTED THE CLAIM WHICH CANNOT BE CONSTRUED AS UNREASONABLE OR UNSUSTAINABLE IN LAW. THERE IS NO MATERIAL ON RECORD TO HOLD THAT THE NATURE OF THE EXPENDITURE IS DIFFERENT FROM THAT ACCEPTED IN THE ASSESSMENT PROCEEDINGS AND THEREFORE WE FIND NO REASON FOR THE COMMISSIONER TO INVOKE HIS REVISIONAL POWERS CONTAI NED IN SECTION 263 OF THE ACT. THUS ON THE THIRD ASPECT ALSO WE F IND NO JUSTIFICATION IN THE IMPUGNED ORDER. 10 HAVING REGARD TO THE MATERIAL AND FACTS ON REC ORD IN CONCLUSION WE HOLD THAT THE COMMISSIONER ERRED IN CONSTRUING THE ASSESSMENT ORDER DATED 28.2.2007 AS ERRONEOUS IN S O FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF REVENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT ON THE ABOVE DISCUSSED THREE ASPECTS. IN THE RESULT IMPUGNED ORDER OF THE COMMISSIONER IS SET A SIDE AND THE ASSESSMENT ORDER DATED 28.2.2007 IS RESTORED. 11. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWE D AS ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS 23RD DAY OF D ECEMBER 2010. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G.S. PA NNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 23RD DECEMBER 2010 COPY TO:- ITA NO 607/PN/09 SHRUTI MEDICAL INSTITUTE PUNE 14 1) THE APPELLANT. 2) THE ITO WD 5(1) PUNE 3) THE CIT III PUNE 4) THE DEPARTMENTAL REPRESENTATIVE A BENCH I.T.A.T. PUNE. BY ORDER TRUE COPY ASST. REGISTRAR I.T.A.T. PUNE B