2004 (3) TMI 350 - AT - Income Tax

Summary

Issues: Appeal against order of Dy. CIT(A) for the assessment year 1992-93 regarding maintenance of patient register, disallowance of expenses for idol installation and donation, disallowance of advertisement expenses, and depreciation on building.

Maintenance of Patient Register: The AO found the medical practitioner, running a nursing home, did not maintain the indoor patient register as required by r. 6F, resulting in an addition of Rs. 40,000 under trading account. The first appellate authority deleted this addition. The ITAT upheld the application of s. 145 by the AO, but restricted the addition to Rs. 20,000 due to peculiar facts, providing relief to the assessee.

Expenses for Idol Installation and Donation: The AO disallowed expenses of Rs. 3,111 for installing an idol of Lord Shiva and a donation of Rs. 500 for an election campaign. The first appellate authority deleted the disallowance of idol installation expenses, considering it beneficial for the business. However, the ITAT sustained the disallowance of the donation amount as it was unrelated to the business.

Disallowance of Advertisement Expenses: The AO disallowed Rs. 8,038 incurred for a hospital inauguration function, considering them unrelated to business. The first appellate authority deleted this disallowance. The ITAT observed that the expenses were for publicity purposes related to the hospital's new building inauguration, limiting the addition to Rs. 3,000, granting relief to the assessee.

Depreciation on Building: The AO denied depreciation on the hospital building, but the first appellate authority, following a Karnataka High Court ruling upheld by the Supreme Court, allowed depreciation at 10% by considering the building as a plant. The ITAT upheld the deletion of Rs. 85,772 addition for depreciation, in line with the judicial precedents cited.

In conclusion, the ITAT partly allowed the Department's appeal, making adjustments to the additions and deletions made by the lower authorities based on the specific circumstances and legal interpretations provided in the judgment.