TaxTMI 
TaxTMI 
2016 (6) TMI 640
X X X X Extracts X X X X
X X X X Extracts X X X X
....we heard them together and disposing of the same by this common order. 2. Shri S. Sridhar, ld. Counsel for the assessee submitted that the assessee-company is engaged in the business of providing management and other hospital services to the general hospital run by Rajah Muthiah Chettiar Charitable and Educational Trust. According to the ld. Counsel, there was an agreement between the assessee and Chettinad Academy of Research and Education for providing various services. The consideration for the services provided by the assessee was Rs. 12 lakhs per annum excluding taxes for the assessment year 2008-9 and Rs. 24 lakhs per annum each for assessment years 2009-10 and 2010-11. Referring to the agreement dated 30.7.2008, the copy of wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... per the agreement, the assessee has to compensate the Trust by providing compensation in not carrying out the obligations under the agreement. Therefore, it is not a colourable device as claimed by the Assessing Officer for any tax evasion. It is a loss suffered by the assessee in the course of its business activity, therefore, according to the ld. Counsel, the CIT(A) is not justified in confirming the disallowance made by the Assessing Officer. 3. On the contrary, Dr. B Nischal, ld. Departmental Representative submitted that the assessee, in fact, entered into an agreement with Chettinad Academy of Research and Education for providing services to the general hospital maintained by the Trust. According to the ld. DR, Rajah Muthiah Chettia....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ore, the Assessing Officer ignored the agreement entered into by the assessee for maintaining the managerial services and disallowed the loss claimed by the assessee over and above the consideration received by the assessee. 4. We have considered the rival submissions on either side and also perused the material available on record. Admittedly, the assessee entered into an agreement for providing managerial and other services to general hospital run by Rajah Muthiah Chettiar Charitable and Educational Trust. It is also an admitted fact that Rajah Muthiah Chettiar Charitable and Educational Trust is running a medical college and general hospital. For the purpose of providing various services in the general hospital, Chettinad Academy of Res....
X X X X Extracts X X X X
X X X X Extracts X X X X
....any intentionally shifted the profit to the charitable institution for the purpose of reducing the tax liability or not. This Tribunal is of the considered opinion that it is the initial year of providing services, therefore, as observed earlier, the assessee could not have anticipated the expenditure in providing the services. When the assessee entered into the agreement for providing services at Rs. 1 lakhs/Rs. 2 lakhs per month for these assessment years, it is expected that the assessee has to discharge its obligation as per the agreed terms. If there was any breach of agreement, the assessee has to compensate for the breach of the conditions as agreed between the parties. When the agreement entered into between the parties ....