TMI Blog2020 (9) TMI 914X X X X Extracts X X X X X X X X Extracts X X X X ..... copies of bills raised and some page of patient register evidencing that complete details of patients were available with the company were filed - it is general practice in any profession to allow discounts to the relative and known, which cannot be denied and can t be termed as perquisites in the hands of doctors. No merit in the observation of the A.O. to the effect that when Company was in losses it was not justifiable for the Company to allow discount to patients. The AO has transgressed into the arena of businessman. How business is to be conducted is the sole prerogative of the assessee. The AO cannot sit in the arm chair of the businessman and dictate the terms at which business is to be conducted. Even the past history of the assessee, where the assessments were framed U/s 143(3) of the Act and no disallowance was made in the A.Y. 2004-05 and 2005-06. Thus discount claimed by the assessee Company is justified which deserves to be allowed. Disallowance of orthopedic consumption expenses - HELD THAT:-Since the complete expense is fully verifiable as evident from above table, AO as well as CIT(A) has wrongly observed that consumption declared in the month of June h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid to Shri Ravindera Tongia, we observe that the premise is situated at 8/A, Yudhister Marg, C-scheme, Jaipur which is near to hospital of the assessee Company Looking to the area occupied by the assessee Company. The proximity to the Hospital and posh locality of the premises, the rent paid is reasonable. The services of Dr. R.K. Tongia are required by the assessee Company on 24 hours basis. The area occupied for Dr. R.K. Tongia s residence is approximately 4000 sq. ft. And area occupied for record keeping is approximately 188 sq. ft. Assessee Company has also paid the same rent in AY 2005-06 which was allowed by in the assessment made u/s 143(3) of the Act. In view of the above, there is no justification for the disallowance made by the A.O. amounting to ₹ 2,76,000/-. Disallowance of Job paid Charges - HELD THAT:- After going through the details of job charges paid and reasoning given by the A.O., we restrict the disallowance on account of job paid charges to ₹ 25,000/-. - ITA No. 247/JP/2019 - - - Dated:- 11-9-2020 - Shri Ramesh C Sharma, AM And Shri Sandeep Gosain, JM For the Assessee : Shri Binod Kr. Gupta And Shri Deepak Sharma (CA) For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rent paid to director 36000/- 36000/- 3. Rent paid to director 2,40,000/- 2,40,000/- Total 3,85,300/- 3,85,300/- 5. Consequent to rejection of books of accounts u/s 145(3), the trading results of the assessee were disbelieved and GP was estimated at the rate of 32.74% as against GP Rate of 27.15% shown by the assessee which resulted into differential GP estimation of ₹ 47,08,357/-. As the addition on account of disallowance of expenses of trading account was already made, therefore the amount of estimated GP was not added separately. 6. By the impugned order, the ld. CIT(A) has confirmed all the additions/disallowances, against which the assessee is in further appeal before the ITAT by taking following grounds of appeal: 1. Ground of Appeal-1: Impugned order passed u/s 143(3) is bad in law and on the facts being against the principal of natural justice, perverse and for many more statutory reasons. 2. Under the facts and circumstances, Ld.AO has erred by rejecting the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities in their respective orders as well as cited by the ld. AR and ld. DR during the course of hearing before us in the context of factual matrix of the case. Since the A.O. has not made any trading addition but had made specific additions with respect to expenditure claimed, we are dealing with the precise addition made by the A.O. Firstly, the A.O. had disallowed discount given to the patient amounting to ₹ 42,06,781/-. The A.O. disallowed 50% of such expenses which was confirmed by the ld. CIT(A). 8. From the record, we found that during the year assesseee allowed discount and amount written off during the year totaling to ₹ 42,06,781/-. During the course of assessment, 50% of amount so incurred was disallowed by the AO. During the course of first appeal, the disallowance so made was sustained by the ld. CIT(A) 9. Complete details amounting to ₹ 42,06,781/- were made available during the course of assessment proceedings. The summary of total discount expense is as under: Particulars Amount Amount PBP Discount to patient by separate vouchers* ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount/w/off amount Reason of concession From the above details it can be clearly understood that all the details were available but since the details were bulky (109 pages/more than 4000 entries) and further furnishing addresses would have made the details further bulkier which results into wastage of stationery and manpower unnecessary. 12. We further observe that the assessee is running Heart General Hospital and due to medico legal reason assessee Company is expected to have address of each patient. 13. From the record, we also found that during the course of assessment proceedings complete books of accounts along with supporting vouchers, bills containing addresses of the patients and other evidences were produced on 6th, 14th 21st October, 4th, 12th November, 2008. The AO could have very well cross verified the details and found out the addresses from the bills produced has he so desired. However, no proper verification was made with respect to books produced before him and arbitrarily disallowed 50% of such discount. 14. From the record, we found that even before the ld. CIT(A), copies of bills raised and some page of patient register evidencing that co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal, assessee company incurred ₹ 4,81,000/- towards orthopedic expense details of which are as under: Month Amount incurred Orthopedic Income April 1,25,500/- - May 1,500/- 4,95,000/- June 2,91,000/- - March - 10,000/- Total 4,18,000/- 5,05,000/- The AO disallowed the expenses amounting to ₹ 2,91,000/- incurred in June for the reason that the consumption declared in the month of June have not been used for the business purposes. 20. From the record, we found that the above expenditure was incurred for the treatment of following three patients: 1. Nirmala Bhargav 2. Usha Bhargav 3. Radha Devi Sharda The above treatment was done in the month of April for which only professional fees of ₹ 1,25,500/- was paid in the same month. The material for consumption in treatment amounting to ₹ 2,91,000 was purchased in the month ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso follow an accounting procedure, wherein, expense incurred on purchase of consumables like stents, balloons, special dies, injections etc. are recoverable from the patients. These expenses are debited to the account of patient as soon as the invoice of supplier is received. But Journal Vouchers for these expenses are passed after being approved. The AO has estimated the Gross Cath Lab Income on the basis of ratio of Cath Lab expense and Cath Lab income for the month of May. He has failed to co-relate the expense incurred with the income recorded in the month of May. Most of the expenses which have actually been incurred in May month were booked in the month of June. It is clear that expenditure in relation to any particular income was not necessarily booked in the same month. Therefore, month wise correlation done by the AO between Cath Lab incomes and expenditures is baseless. The AO ignoring the above facts applied the ratio of 175% Although applied by AO 150%), to the Cath Lab expense for determining Cath Lab receipts which is not justified. 23. From the record, we also found that during the month of May some specific procedures were also carried out, for which doctors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. M/s Heart Hospital Research Centre 2,40,000/- Total 2,76,000/- Rent to Shri Guman Mal ji Tongia was paid for house situated at 2ka 23, Jawahar Nagar, Jaipur. The house was provided to Shri Kamal Kumar Tongia, director of the Company. Said amount of rent was offered for tax in the Return of Income of Shri Kamal Kumar Ji Tongia as perquisite. Rent to M/s Heart hospital research Centre was paid for accommodation for keeping records and for providing residence to Dr. Ravindra Tongia, Director of the Company. 28. With regard to above, the salary paid to Shri Ravindera Tongia, we observe that the premise is situated at 8/A, Yudhister Marg, C-scheme, Jaipur which is near to hospital of the assessee Company. Looking to the area occupied by the assessee Company. The proximity to the Hospital and posh locality of the premises, the rent paid is reasonable. The services of Dr. R.K. Tongia are required by the assessee Company on 24 hours basis. The area occupied for Dr. R.K. Tongia s residence is approximately 4000 sq. ft. And area occupied for record keeping is approximately 188 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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