TaxTMI 
TaxTMI 
2020 (1) TMI 604
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.... M/s Cuttack Hospital Pvt. Ltd. 2010-2011 14.07.2017 153A 11.03.2019 2. 37/CTK/19 M/s Cuttack Hospital Pvt. Ltd. 2011-2012 14.07.2017 153A 11.03.2019 3. 38/CTK/19 M/s Cuttack Hospital Pvt. Ltd. 2012-2013 14.07.2017 153A 11.03.2019 4. 39/CTK/19 M/s Cuttack Hospital Pvt. Ltd. 2013-2014 14.07.2017 153A 11.03.2019 5. 40/CTK/19 M/s Cuttack Hospital Pvt. Ltd. 2014-2015 14.07.2017 153A 11.03.2019 6. 41/CTK/19 M/s Cuttack Hospital Pvt. Ltd. 2015-2016 14.07.2017 153A 11.03.2019 7. 42/CTK/19 M/s Cuttack Hospital Pvt. Ltd. 2016-2017 14.07.2017 143(3) 11.03.2019 3. Since the issues involved in all the appeals are identical to each other, except different in figure, therefore, with the consent of both the parties, all the appeals are heard analogously and disposed off by this consolidated order. For the sake of convenience, we shall take into consideration the facts and grounds mentioned in IT(SS)A No.36/CTK/2019 for the assessment year 2010-2011 for deciding all the appeals. Grounds taken by the assessee in the said appeal for assessment year 2010-2011 ar....
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.... investment and framed the assessment accordingly. 5. Aggrieved from the order of AO, the assessee preferred appeal before the CIT(A), however, the CIT(A) after considering the submissions of the assessee and findings of AO, the CIT(A) observed that it cannot be denied that the assessee has established information centres at seventeen places in rented premises and has appointed staff members to facilitate treatment of patients from these places at its hospital in Cuttack. Accordingly, the CIT(A) restricted the disallowance to 30% of the total expenditure claimed by the assessee in the following manner for the respective assessment years under consideration :- A.Y. Total expenditure claimed Addition Made by the AO Addition confirmed Addition ordered to be deleted 2010-11 7,80,000 5,46,000 2,34,000 3,12,000 2011-12 21,90,000 15,33,000 6,57,000 8,76,000 2012-13 3,06,000 2,14,200 91,800 1,22,400 2013-14 4,27,500 2,99,250 1,28,250 1,71,000 2015-16 30,54,000 21,37,800 9,16,200 12,21,600 2016-17 32,43,600 22,70,600 9,73,080 12,97,5201 Total 1,00,01,100 70,00,850 30,00,33....
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....sallowance/addition regarding expenses incurred by the assessee and rent paid by the assessee for operating information centers at various locations in the state of Odisha to facilitate its prospective patients and to create awareness of the health among the people of weaker society of the state of Odisha, therefore, the expenditure has been incurred for the business purpose of the assessee which cannot be disallowed. Ld. counsel strenuously contended that merely because the assessee could not produce some bills and vouchers which were prepared at the information centers and could not reach and collect at central account office of the assessee, the adhoc addition of 30% cannot be held as justified and reasonable. Alternatively, the assessee concluded his argument with a prayer that if it is found necessary then the percentage of adhoc disallowance and addition may kindly be reduced in the interest of justice to 5 to 10%. 11. Replying to the above, ld. Departmental Representative (DR) took us through the relevant part of the assessment and first appellate order and submitted that the ld. CIT(A) has already granted relief to the assessee by reducing to the addition from 100% to 30....
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.... should be granted. It was also added by him that if it is found just and proper then the addition may be reduced to a reasonable percentage of 25%. 13. Considering the totality of facts and circumstances of the case and the rival submission of both the parties, we are of the considered view that the authorities below have not disputed that the assessee has established information centres at 17 places in the rented premises and has appointed staff members to facilitate the treatment of patients of these places to Cuttack, meaning thereby the information centres were established for the purpose of business of the assessee to secure high number of patients from remote areas by way of guiding them and facilitating them to reach Cuttack for treatment and getting benefited from the information given by these centers to the patients located at remote, rural and semi-urban areas. The authorities below have not doubted this fact that the assessee established information centers in the rented premises and also deployed therein. Therefore, incurring of expenditure towards payment of rent and salary to the employees is obvious and this was for the purpose of business of the assessee. The m....
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....xplained investment. 15. Ld. Counsel of the assessee submitted that during the assessment proceedings the AO persuaded by the findings of his predecessor on the ground that the AR of the assessee company failed to furnish information from Institute of Professional Studies & Research (IPSAR), which is not correct on the face of the audited balance sheet, cash flow statement and expenditure towards consideration of renovation of the building. Ld. Counsel of the assessee further submitted that the CIT(A) has not disputed the statement recorded on oath of Dr.J.K.Mishra owner/director of IPSAR wherein he denied having receipt of amount of Rs. 70 lakhs from the assessee towards sale of land and building from IPSAR. Ld. Counsel of the assessee strenuously contended that the first appellate authority has wrongly shifted the onus on the assessee company to disprove the negative that the assessee has not paid amount of Rs. 70 lakhs. The assessee cannot be compelled to prove the negative fact after the stand of the purchaser Shri J.K.Mishra, that if the onus was shifted to the AO to prove that the assessee has paid Rs. 70 lakhs over and above the amount stated in the registered sale deed. ....
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....aid by the assessee over and above the amount stated in the registered sale deed and rather it was spent on renovation of building and thereafter added to the book value of the said land and building. Ld. counsel further submitted that the source of amount of Rs. 70 lakhs spent by the assessee on renovation was gross receipts disclosed by the assessee company in the I.T. return for A.Y.2014-2015 which comes to Rs. 30,52,23,808/-, therefore, the conclusion arrived at by the ld. CIT(A) based on the remand report without any interpretation of facts and circumstances and without expressing his independent view point is not sustainable in the eyes of law. 18. It was also vehemently contended by the ld. Counsel that the fact of incurring expenditure on renovation cannot be disputed by the authorities below on the basis of sham and meaningless documents. Ld. counsel further submitted that in paragraph 4.3 of the first appellate order, the CIT(A) has mis-directed himself while sustaining the addition as in the seized material AH-55 as reflected, in the order of the assessment nowhere the facts and figures have been mentioned which have been brought in para 4.3 by the CIT(A) to tilt the ....
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....s nothing to do with the transaction of purchase of the property. Therefore, mentioning of Rs. 70 lakhs in the mail communication and noting in the diary clearly indicates that it was unexplained investment of the assessee towards purchase of land and building which was not mentioned in the sale deed and the amount was paid over and above of the amount which was written in the sale deed. 21. It was also the contention of ld. DR that if it is assumed that Rs. 70 lakhs is the part of Rs. 4.95 crore which was withheld by the assessee and the same was spent in cash, then also the total amount should have been paid by the cheque/DD to the vendor should have been Rs. 4.25 crore(4.95 crore - 0.70 crore). The fact that the payment to the vendor is Rs. 4.95 crore by cheque/DD clearly proves beyond doubt that the total transaction on record was Rs. 4.95 crore and Rs. 70 lakhs was additionally paid in cash over and above the consideration mentioned in the registered sale deed, which is evident from the incriminating material found during the course of search. Ld. DR further submitted that the mail sent by the CFO of the assessee Shri R.K.Sahoo confirmed the total payment of 5.65 crores whi....
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....otiations of purchase of building, cost of renovation has to be kept in mind by both the parties to determine and to arrive to the reasonable consideration to be paid by the purchaser to the seller, therefore, facts and figures pertaining to renovation finds place in the communication. He further pointed out that in absence of any specific date and mode of payment of Rs. 70 lakhs, the addition on allegation of unexplained investment cannot be sustained against the assessee. Ld. Counsel also submitted that the AO has allowed depreciation on the total cost of renovated building which includes amount of Rs. 70 lakhs. Therefore, if any further addition is made on the allegation of unexplained expenditure that would amount to double taxation, hence, in the interest of justice, the addition made by the AO and confirmed by the CIT(A) may kindly be deleted. 24. On careful consideration of the above rival submissions, first of all, we observe that the main basis for making and confirming the addition is two documents viz. (i) AH-55, which is an email from CFO Shri R.K.Sahoo of assessee to Dr. J.K.Mishra of IPSAR, ,the seller, which was extracted from the computer of CFO of the assessee; ....
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....vestment. 28. Further from para 4.3 of the first appellate order, we observe that ld. CIT(A) writes that, "the appellant has not furnished any mutual agreement to support its statement that Rs. 70,00,000/- was withheld by the appellant company". It is not the case of the assessee that there was any mutual agreement between the assessee and the seller regarding withholding of Rs. 70,00,000/-. Obviously, if the amount of sale consideration would have been determined including Rs. 70 lakhs then such kind of expectation of the first appellate authority could have been satisfied by way of MOU or any other written agreement but when at the time of making agreement to sale the amount of sale consideration was determined between the parties at Rs. 4.95 crores, there was no need of any other agreement or MOU that the purchaser has withheld amount of Rs. 70 lakhs out of the sale consideration. The AO has not taken any action against the seller by way of any mode or procedure provided in the Act and show-causing him as to why the amount of Rs. 70 lakhs should not be treated as unexplained income while determining the capital gain accrued to him on sale of land and building to the assessee ....