DCIT,Cir.-5,, Pune v. Dr. Ranjit R. Jagtap, Pune

ITA 719/PUN/2008 | 2004-2005
Pronouncement Date: 28-02-2011 | Result: Partly Allowed

Appeal Details

RSA Number 71924514 RSA 2008
Bench Pune
Appeal Number ITA 719/PUN/2008
Duration Of Justice 2 year(s) 9 month(s) 5 day(s)
Appellant DCIT,Cir.-5,, Pune
Respondent Dr. Ranjit R. Jagtap, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 28-02-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 28-02-2011
Assessment Year 2004-2005
Appeal Filed On 23-05-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI I.C. SUDHIR J UDICIAL MEMBER AND SHRI D. KARUNAKARA RAO A CCOUNTANT M EMBER ITA NO. 719 /PN/ 20 0 8 ( ASSTT. YEAR : 2004 - 05 ) DY. COMMISSIONER OF INCOME TAX APPELLANT CIR CLE 5 PUNE VS. DR.SHRI RANJIT R. JAGTAP RESPONDENT 24 PADMA VILAS ENCLAVE BLDG. NO. A PRINCE OF WALES DRIVE WANOWRIE PUNE - 411040 PAN : NOT AVAILABLE APP ELLANT BY : SHRI HEMANT C. LEUAVE RESPONDENT BY : SHRI KISHORE PHADKE ORDER PER D KARUNAKARA RAO AM THIS APPEAL FILED BY THE REVENUS IS DIRECTED AGAINST THE ORDER OF CIT(A) - I I PUNE DATED 1 4.02.2008 . 2. AT THE OUTSET THE LD COUNSEL FOR THE ASSESSEE TOOK US THROUGH THE GROUNDS OF APPEAL AND MENTIONE D THAT GROUNDS 1 TO 3 AND 5 HAVE TO BE RESTORED TO THE FILES OF A.O. IN THIS REGARD REFERRING TO GROUND NO. 1 TO 3 THE COUNSEL MENTIONED THAT THE ASSESSEE OFFERED THE TDS DEDUCTED BY THE BANK TO THE TAX IN THE RETURN INSTEAD OF INTEREST INCOME ACTUALLY PAID BY THE BANK TO THE ASSESSEE. IN THIS REGARD HE MENTIONED THAT TOTAL INTEREST AS PER THE TDS CIRTIFICTE IS RS. 6 22 587/ - OF WHICH ONLY THE SUM OF RS.1.53 LAKHS IS TAXABLE SUM FOR THE YEAR UNDER CONSIDERATION CONSIDERING METHOD OF ACCOUNTING FOLLO WED BY THE ASSESSEE I.E. CASH SYSTEM OF ACCOUNTING. IN THIS REGARD THE COUNSEL FURT HER MENTIONED THAT THE BALANCE OF THE INTEREST REMAINS TAXABLE IN THE SUBSEQUENT ASSESSMENT YEAR AS THE SAID AMOUNT CONSTITUTES ONLY A PROVISION CREATED BY THE BANK AS PER THEIR SYSTEM OF ACCOUNTING. IN ANY CASE INTEREST AMOUNTS BECOME TAXABLE IN THE SUBSEQUENT YEARS DEPENDING UPON THE DATE OF PAYMENT OF SAID INTEREST TO THE A SSESSEE. SINCE THESE ISSUES HAVE TO BE EXAMINED BY THE A.O IT IS APPROPRIATE THAT THE MATTER SHO ULD BE SET ASIDE. ITA 719 /PN/ 08 DR.SHRI RANJIT R. JAGTAP ( A.Y. 2004 - 05 ) . 2 3. FURTHER R EFERRING TO GROUND NO. 5 I.E. RELATING TO FURNISHING OF A CERTIFICATE ON A TTENDANCE EVIDENCING THE ATTENDANCE TO A SEMINAR IN THAILAND BY THE ASSESSEE WHO IS A DOCTOR THE COUNSEL FAIRLY ADMITTED THAT THE SAID CERTIFIC ATE WAS NOT FURNISHED BEFORE THE A.O AND IN ALTERNATIVE THE CIT(A) ALSO FAILED TO CALL FOR ANY REMAND REPORT. FURTHER IT IS ALSO AN ADMITTED F A CT THAT NOBODY HAS GONE INTO THE EXTENT OF BUSINESS EXPENDITURE INVOLVED OUT OF THE AMOUNTS DEBITED TO THE P & L ACCOUNT ON ACCOUNT OF FOREIGN TOUR EXPENSES. WE FIND NO REASON TO DENY THE REQUEST OF THE ASSESSEES COUNSEL. AFTER HEARING THE D.R. WE PROCEED TO SET ASIDE THESE TWO ISSUES TO THE FILES OF THE A.O FOR EXAMINING THE ISSUE AFRESH AFTER CONSIDERING T HE DOCUMENTS TO BE FILED BY THE ASSESSEE AND AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY GROUNDS 1 2 3 AND 5 ARE SET ASIDE . 4. REGARDING GROUND NO. 4 RELATING TO SALARY PAID TO THE ASSESSEES WIFE NAMELY SMT. MANI SHA JAGTAP LD COUNSEL MENTIONED THAT THE CLAIM OF THE ASSESSEE WAS ALLOWED IN FULL IN THE PRECEDING AY THOUGH AT THE FIRST APPELLATE S TAGE IN FAVOUR OF THE ASSESSEE. FURTHER THE COUNSEL MENTIONED THE SALARY PAID TO THE ASSESSEE TO HIS SPOUSE CANNOT BE DENIED IN THIS YEAR WHILE THE SAME IS ALLOWED IN FAVOUR OF THE ASSESSEE AS THE FACTUAL MATRIX OF THE PAYMENT IS IDENTICAL AND COMPARABLE . FURTHER HE ALSO MENTIONED THAT THE DEPARTMENT HAS CONDUCTED CERTAIN ENQUIRIES AT THE BA CK OF THE ASSESSEE WHIC H WERE NEVER PUT TO TH E ASSESSEE BEFORE THE DISALLOWANCE WAS MADE. THUS IT IS A CASE OF VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. ON FACT THE ASSESSEES COUNSEL MENTIONED THAT PRACTICALLY THE ADMINISTRATION OF HOSPITAL IS IN THE HANDS OF ASSESSEES S POUSE (SMT. MANISHA JAGTAP) AND THEREFORE CLAIM OF THE ASSESSEE HAS TO BE ALLOWED IN FULL. 5. ON THE OTHER HAND LD. D.R. FOR REVENUE RELIED ON THE ORDER OF THE AO . 6. WE HAVE HEARD THE PARTIES AND PERUSED THE DOCUMENTS AVAILABLE BEFORE US. THE FAC TS AND LOGIC FOR THE CIT(A) CONFIRMING THE ADDITION ARE GIVEN IN PARA 12 AND 12.1 OF THE IMPUGNED ORDER WHICH IS REPRODUCED AS UNDER : 12. REGARDING GROUND OF APPEAL NO.(III) WITH RESPECT TO SALARY PAID TO MRS.JAGTAP THE ASSESSING OFFICER DISALLOWED AN AMOUNT OF RS.80 000/ - ONLY ON THE PLEA THAT THE SALARY OF RS.16 666/ - PER MONTH I.E. RS.2 00 000/ - PER ANNUM PAID TO MRS. JAGTAP WAS EXCESSIVE SINCE OTHER STAFF WAS ALSO EMPLOYED BY THE ASSESSEE. THE PROVISIONS OF SECTION 40A(2)(A) OF THE ACT WERE INVOKE D. IN THE APPELLATE PROCEEDINGS IT WAS ITA 719 /PN/ 08 DR.SHRI RANJIT R. JAGTAP ( A.Y. 2004 - 05 ) . 3 STATED BY THE APPELLANT THAT MRS. JAGTAP LOOKED AFTER CLINIC ADMINISTRATION INCLUDING ATTENDANCE OF IMPORTANT CALLS FORMULATING THE DAILY SCHEDULE OF ASSESSEE ALONG WITH SCHEDULING OF THE APPOINTMENTS AND MAINLY OV ERALL SUPERVISION OF THE PROFESSION OF THE ASSESSEE WHICH INVOLVED MAINTENANCE OF RECORDS OPERATION OF BANK ACCOUNTS AND CORRESPONDENCE WITH HOSPITALS WHERE THE ASSESSEE WAS ATTACHED. 12.1 I HAVE GONE THROUGH THE FACTS. FOR INVOKING THE PROVISIONS OF SECTION 40A(2)(A) THE ASSESSING OFFICER HAS TO SHOW THAT THE EXPENDITURE INCURRED WAS EXCESSIVE OR UNREASONABLE HAVING REGARD TO THE FAIR MARKET VALUE OF THE SERVICES FOR WHICH THE PAYMENT WAS MADE. AS NO COMPARISON HAS BEEN MADE WITH RESPECT TO THE FAIR MARKET VALUE OF THE SERVICES RENDERED AND IT IS FOR THE APPELLANT TO SEE THAT THE PAYMENT WAS MADE FOR THE LEGITIMATE NEEDS OF THE BUSINESS OR PROFESSION AND THE BENEFIT DERIVED THEREFROM THE ADDITION MADE ON ADHOC BASIS WITHOUT REFERRING TO ANY COMPARISO NS IS DELETED. THE VERIFICATION MADE BY THE ASSESSING OFFICER ON A PARTICULAR DATE WHEN THE ASSESSEES WIFE WAS NOT PRESENT IN THE CLINIC WOULD NOT CHANGE THE FACTUAL METRIX AS ALSO THE FACT THAT NEITHER ANY STATEMENT BY SMT. MANISHA JAGTAP WAS RECORDED N OR ANY OPPORTUNITY WAS GIVEN TO THE APPELLANT TO REBUT THOSE VERIFICATIONS MADE. GROUND OF APPEAL NO.(III) IS ALLOWED. IT IS A FACT THAT IDENTICAL ISSUE CAME UP IN EARLIER YEARS BEFORE THE CIT(A) AND CLAIM WAS ALLOWED AND REVENUE IS NOT AGITATED ON THE SAME. AFTER CONSIDERING THE FACTS THAT THE ASSESSEE HAS BEEN REGULARLY PAYING SUM OF RS. 2 00 000/ - EVERY YEAR TO SMT.MANISHA JAGTAP (WIFE OF ASSESSEE) WE FIND NO REASON TO DENY THE CLAIM OF THE ASSESSEE FOR THIS YEAR ALSO. THEREFORE WE ARE OF THE OPIN ION THAT ORDER OF THE CIT(A) DOES NOT CALL FOR ANY INTERFERENCE ON THIS ISSUE. ACCORDINGLY GROUND NO. 4 IS ALLOWED . 7. IN THE RESULT APPEAL OF THE REVENUE IS PARTLY ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON 28 TH FEBRUARY 201 1 SD/ - SD/ - ( I.C. SUDHIR ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED THE 28TH FEBRUARY 201 1 US COPY OF THE ORDER IS FORWARDED TO : 1. THE A PP ELLANT 2. THE RESPONDENT 3. THE CIT(A) - I I PUNE 4. THE CIT - III PUNE ITA 719 /PN/ 08 DR.SHRI RANJIT R. JAGTAP ( A.Y. 2004 - 05 ) . 4 5. THE D.R. ITAT B BENCH 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APP ELLATE TRIBUNAL PUNE