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Dr. Jayeshbhai M. Patel, Prop. of Reejay Children Hospital Versus ACIT, Kheda Circle, Nadiad

2015 (6) TMI 758 - ITAT AHMEDABAD

Unexplained cash credit addition u/s.68 - Held that:- The assessee nowhere disputes contents of the survey statement. He seeks to justify his credits in question by claiming impugned payments of ₹ 3 lac to have been made while acquiring the rented hospital building in the year 1993. However, there is no evidence forthcoming from the case file whatsoever in support thereof. It is made clear that once the assessee has raised this plea of very old payment, it was incumbent for him to place on .....

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hat the assessee has merely failed in proving the factum of having paid impugned sum of ₹ 3 lac at the time of tenancy rights way back in the year 1993.Therefore, the same cannot be treated to be an instance of concealment and inaccurate particulars of income u/s.271(1)(c) of the Act. The impugned penalty is deleted accordingly. - Decided against revenue

Claim of expenditure incurred on hospital building repairs - revenue v/s capital - Held that:- Quantum and extent of repair in .....

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reads “where the assessee incurs any expenditure in respect of which payment is made in a sum exceeding twenty thousand rupees”. This is not the Revenue’s case that the impugned payments have been made “in a sum”. It is not clear as to whether these payments are made on separate occasions or in a single instance. The Assessing Officer simply observes that these payments exceeds ₹ 20,000/-. We reiterate that the present is a disallowance provision in a fiscal statute to be literally interp .....

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e no. CAB/IV-N-337/05-06 and 55/09-10 upholding unexplained cash credit addition of ₹ 3 lac u/s.68 and disallowance of ₹ 5,76,737/- in former quantum appeal and also affirming penalty arising out of the aforesaid unexplained cash credits, in proceedings u/s.143(3) and section 271(1)(c) of the Income Tax Act in short the Act respectively. We proceed to deal with assessee s quantum appeal ITA 980/Ahd/2009 first. 2. The assessee is a pediatrician. He runs a hospital by the name of Reeja .....

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1993. The assessee would treat the said amount as goodwill in the balance sheet. The Assessing Officer refers to his statement stating these payments to have been made out of understatement of professional and other income and sought to invoke section 68 of the Act. 3. The assessee inter alia pleaded his statement to have been made for buying peace, lack of any incriminating evidence found in the course of survey, sought to justify his aforesaid credits by stating that at the time of finalizing .....

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ainly relied on survey statement and added this amount as unexplained credits u/s.68 of the Act. 4. The CIT(A) has upheld the Assessing Officer s findings as under: 2. I have carefully considered the submissions. Appellant's contention that the Assessing Officer did not have any evidence regarding payment of ₹ 3,00,000/- towards tenancy rights to Ranchhodrai Education Trust in the current year, other than statement U/S.133A dated 27.02.2003 is correct. However, it is equally correct th .....

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first admission that the same was made out of current year's income has to be taken as correct. Regarding appellant's reliance on the decision in the case of Paul Mathew 263 ITR 101, in this decision, the Hon'ble court has held that statement u/s.133A being not on oath does not have evidentiary value. Similar decision is of ITAT Ahmedabad in case of Abhi Builders. In appellant's case, there is no dispute that the payment of ₹ 3,00,000/- was made out of unaccounted sources .....

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ected. Similar principle governs section 68, 69, 69A, 69B and 69C. Thus, regardless of the statement recorded at the time of survey and its evidentiary value, in the absence of proof regarding exact date of unaccounted payment of ₹ 3 lakh by the appellant to Ranchhodrai Education Trust towards tenancy rights of the hospital building, the same has to be assessed as income of the year during which the fact of incurring unaccounted expense was detected. Addition of ₹ 3,00,000/- in A.Y.2 .....

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s raised this plea of very old payment, it was incumbent for him to place on record sufficient material. His claim does not inspire confidence in these circumstances. We uphold the action of the lower authorities accordingly and reject the first substantive ground raised in this appeal. 6. The assessee s second ground challenges lower authorities action in treating his claim of expenditure incurred on hospital building repairs of ₹ 5,76,737/- as capital in nature. The assessee has taken hi .....

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/- The Assessing Officer observed that the quantum and extent of the expenditure proved the repair work s nature as an enduring and extensive work. He further stated that the same was overdue and accumulating one not in the nature of current repair within the purview of section 30 of the Act. He also took notice of the fact that the assessee had himself capitalized similar expenses in preceding assessment years. He treated the assessee s claim as capital expenditure accordingly not coming u/s.30 .....

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very clear that expenditure is for substantially renovating the hospital and is clearly of capital nature. Claim of such an expenditure would not be admissible u/s.30, since the expenditure cannot be said to be towards current repairs. The Explanation inserted by Finance-Act, 2003 w.e.f. 1.4.2004 is only, clarificatory, as clear from use of phrase "For removal of doubts....." in the same. Appellant has submitted that since the landlord was not in a. position to carry out the renovation .....

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diture on renovation of leased premises. This explanation is on statute book since 1.4.1988. It is therefore, held that the expenditure of ₹ 5,76,737/-, by its nature was not on current repairs but was of capital nature, being renovation and could therefore not be claimed u/s.30. Section 37 also does not allow capital expenditure and hence this expenditure is not admissible u/s.37 as well. In the earlier years, appellant himself categorized similar expenditure, though of much lesser quantu .....

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ilding work undertaken has not created any increase in the already existing capacity or a new capital asset giving enduring advantage. The findings under challenge nowhere hold so. That being the case, it is evident that the assessee/lessee has undertaken the building repair relating to functioning of hospital business without any addition or expansion of the profit making apparatus. In these circumstances, we draw support from the hon ble jurisdictional high court in Indian Ginning and Pressing .....

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inciple of estoppel (supra) in capitalizing an identical expenditure in previous assessment years is concerned, we hold that the same does not apply against the law. If the very expenditure is revenue in nature and capitalizes the same, the same cannot bar the higher authorities in taking an independent view as per law in succeeding assessment years. This leaves us with the Assessing Officer s hypothetical assumption that section 40A(3) disallowance of ₹ 58,003/- would apply in this case i .....

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