TaxTMI 
TaxTMI 
2018 (8) TMI 267
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....e assessee having submitted complete details before Hon'ble CIT, he ought not to have set aside the assessment directing the A.O. to pass a fresh assessment order and verify the admissibility of claim of deduction u/s. 80IB(11C) of I.T. Income Tax Act, 1961, 1961. 3. The assessee company in this case is engaged in providing medical facilities to the patients. On examination of the records, the Commissioner of Income Tax noted that the assessee had shown income from interest, rent and referral of Rs. 5,99,000/-, Rs. 2,04,000/- and Rs. 1,00,58,000/- respectively. It had also received income of Rs. 2,78,000/- from running of Nursing College. The assessee had claimed these incomes as exempt u/s. 80IB(11C) of the Act. 4. The Commissioner of Income Tax was of the opinion that no verification was carried out by the Assessing Officer regarding the huge amount of referral income. he observed that it was not on record from whome and for what purpose referral income was received. He opined that in absence of basic details, the Assessing Officer could not have ascertained whether the referral income has been derived from business of operating and maintaining hospital so as to qualify for....
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....ying the admissibility of the claim of deduction u/s. 80IB(11C) of the Act. 5. Against the above order, the assessee is in appeal before us. 6. We have heard both the counsel and perused the records. The ld. Counsel of the assessee of the assessee has summarized his submissions as under: A) Assessee company has set up 100 bedded hospital at Yavatmal and complied with requisite conditions for grant of deduction u/s 80IB(11C). A.O. after examining the relevant record in detail and after inspection of business premises has allowed the deduction u/s 80IB(11C). B) Assessee has paid tax u/s 115JB @ 20% on book profit. C) Assessee has started its operation in the month of May 2008. Assessee is thus eligible for deduction u/s 80IB(11C) from Asstt. Year 2009-10 onwards. In Asstt. Year 2009-10 and 2010-11 assessee had no gross income as a result of which no deduction was claimed u/s 80IB(11C). D) Assessee has claimed deduction u/s 80IB(11C) for the first time in Asstt.Year 2011-12. Requisite conditions for grant of deduction u/s 80IB(11C) were examined and on being satisfied. A.O. had allowed deduction u/s 80IB(11C) in assessment framed u/s 143(3). A....
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....;ble Bombay High Court order in ITA No. 59/2004 in the case of M/s. Dinshaw Frozen Foods vide order dated 21/11/2007. iv) Hon'ble Bombay High Court order in ITA No. 39/2004 in the case of M/s. Dinshaw Dairy Foods Ltd. vide order dated 21/11/2007. Ratio laid down by aforesaid decisions squarely applies to the facts in the case of assessee. Deduction u/s 80IB(11C) having been accepted in Asstt. Year 2011-12 in respect to referral income, interest, rent and nursing receipts same cannot be withheld in the year under consideration. In view of above, assumption of jurisdiction u/s 263 by CIT is bad in law. Thus liable to be cancelled. I) In Asstt. Year 2012-13 A.O. has examined the details as well as eligibility of claim of deduction u/s 80IB(11C). A.O. in fact had issued summon u/s 131 for examining the eligibility condition for grant of deduction u/s 80IB(11C) on 18/12/2014 during the course of assessment proceedings. A.O. has carried out inspection of business premises in order to examine and verify the claim of assessee and allowed the deduction u/s 80IB(11C). J) A.O. in the present assessment year after due verification of evidence on record a....
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....the interest received would be eligible for deduction u/s 80IA/80IB. Deduction granted by A.O. in respect to interest is in accordance with the decision of Hon'ble Bombay High Court and cannot be termed as erroneous. O) Assessee hospital requires supply of medicine, pharmaceutical and surgical consumables for treatment of patients admitted in the hospital. As per Clinical Establishment Act 2010, 100 bedded hospital falls under Level-2 Hospital. As per Clinical Establishment Act Level-2 Hospital is mandatorily required to have pharmacy. As statutorily required assessee hospital has pharmacy division which caters to supply of medical and surgical consumables required by patients in the hospital. Hospital is not defined under the provisions of Income Tax Act 1961. The meaning provided under Clinical Establishment Act would be relevant for giving meaning for the purpose of sec. 80IB(11C)ofl.T.Act1961. P) Assesses considering the administrative convenience has engaged the service of Shri Rajkumar Agrawal to operate and maintain Medical and Pharmaceutical Stores at the premises of assessee. Assessee is receiving revenue in the shape of referral charges in r....
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....aintenance of hospital eligible for deduction u/s 80IB(11C). Reliance on: i) ITAT, Pune Bench 'A', Pune in the case of Sameer Rajendra Shah vs. JCIT in ITA N0.1061/PN/2013 order dated 29/04/2016. ii) ITAT order in I.T.(T.P.)A. No.799/Bang/2015 in the case of M/s. Infosys Limited vide order dated 10/11/2017. T) Assessee is operating and maintaining hospital in rural area. Hospital being of 100 bedded rendering 24/7 facilities requires lot of human resources for nursing patients treated in the hospital. Trained nurses are not readily available and therefore inhouse training of nurses is undertaken in the hospital itself which has been observed by A.O. to be Nursing College. In this process assessee company has received Rs. 11.46 lacs for training provided to nursing staff. Assessee Company has incurred direct expenses for training nurses at Rs. 8.68 lacs. Assessee company has also incurred indirect expenses for providing training to nurses which are part of administrative and other expenses. There is no positive income which can be excluded for the purpose of deduction u/s 80IB(11C) after considering the share of indirect expenses. U) Activ....
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.... dated 12/07/2017. ii) (1995) 216 ITR 0548 (Bom.) CIT vs. Paul Brothers iii) Hon'ble Bombay High Court order in ITA No. 59/2004 in the case of M/s. Dinshaw Frozen Foods vide order dated 21/11/2007. iv) Hon'ble Bombay High Court order in ITA No. 39/2004 in the case of M/s. Dinshaw Dairy Foods Ltd. vide order dated 21/11/2007. 9. In this view of the matter, in our considered opinion, the Commissioner of Income Tax assumes jurisdiction u/s. 263, is not at all sustainable in law. 10. We further note that in forming his opinion that the assessee's claim for deduction needs further enquiry by the Assessing Officer, the Commissioner of Income Tax has given a reasoning that the Assessing Officer has not made necessary enquiry. In this regard, we note that it is the claim of the assessee that due scrutiny was done by the Assessing Officer. The Assessing Officer had issued necessary questionnaires. He also issued summons u/s. 131 of the Act. All these requirements by the Assessing Officer were duly complied with. In this regard, the Commissioner of Income Tax has given a very strange reasoning that accepting the statement filed by the assessee in the ....
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....ion u/ss. 80IA and 80IB. As regards the rental income from medical store, it has been submitted that the hospital requires supply of medicine, pharmaceutical and surgical consumables for treatment of patients. As per Clinical Establishment Act 2010, under Level-2 Hospital is mandatorily required to have pharmacy. It has further been submitted that the assessee considering the administrative convenience has engaged the service of Shri Rajkumar Agrawal to operate and maintain Medical and Pharmaceutical Stores at the premises of assessee. the assessee is receiving revenue in the shape of referral charges in respect to various supplies made by him to the patients administering treatment at hospital premises. Price at which medicines and consumables are to be sold in hospital is as per directives of assessee company. It has been submitted that activities of Shri Rajkumar Agrawal are restricted to make supplies of Medical, Pharmaceutical and Surgical Consumables within the hospital itself. It has further been submitted that in the project report submitted by the hospital to bank for obtaining term loan income from pharmacy was considered an integral part. Hence, it has been claimed that ....
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....d (ii) by virtue of the order being erroneous prejudice has been caused to the interests of the revenue. It has, therefore, to be considered firstly as to when an order can be said to be erroneous. One finds that the expressions 'erroneous', 'erroneous assessment' and 'erroneous judgment' have been defined in Black's Law Dictionary. According to the definition, 'erroneous' means 'involving error; deviating from the law'. 'Erroneous assessment' refers to an assessment that deviates from the law and is, therefore, invalid, and is a defect that is jurisdictional in its nature, and does not refer to the judgment of the Assessing Officer in fixing the amount of valuation of the property. Similarly, 'erroneous judgment' means 'one rendered according to course and practice of Court, but contrary to law, upon mistaken view of law, or upon erroneous application of legal principles'. From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an ITO acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Co....
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....aste. An order can be said to be prejudicial to the interests of the revenue if it is not in accordance with the law in consequence whereof the lawful revenue due to the State has not been realised or cannot be realised. There must be material available on the record called for by the Commissioner to satisfy him prima facie that the aforesaid two requisites are present. If not, he has no authority to initiate proceedings for revision. Exercise of power of su motu revision under such circumstances will amount to arbitrary exercise of power. It is well-settled that when exercise of statutory power is dependent upon the existence of certain objective facts, the authority before exercising such power must have materials on record to satisfy it in that regard. If the action of the authority is challenged before the Court, it would be open to the Courts to examine whether the relevant objectives were available from the records called for and examined by such authority.The ITO in this case had made enquiries in regard to the nature of the expenditure incurred by the assssee. The assessee had given a detailed explanation in that regard by a letter in writing. All these were part of the rec....