TaxTMI 
TaxTMI 
2020 (9) TMI 914
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....e was selected for scrutiny and notice u/s 143(2) and 142(1) of the Act was issued on 11.07.2008 which were duly replied and details as required were submitted before the AO. 4. The Assessment u/s 143(3) was made after invoking section 145(3) of the Act, disallowing certain expenses amounting to Rs. 48,18,492/-in the following manner: Disallowances out of Expenses debited in Trading Account S.No. Expenses Amount Debited Amount Disallowed/Added 1. Discounts 42,06,761 21,03,380 (50% of total amount debited) 2. Orthopedic Consumption Expenses 2,91,000 2,91,000 3. Cath Lab Expenses - 19,36,062/- (estimation made) 4. Job Charges Paid 1,02,750/- 1,02,750/- u/s 40(a)(i) Total 44,33,192/- Estimated the total receipt @388% of expenses by drawing inference from expenses and receipts of month of May. Disallowances out of Expenses debited in P&L Account S.No. Expenses Amount Debited Amount Disallowed/Added 1. Salary to director 1,09,300/- 1,09,300/- u/s 40A(2)(b) 2. Rent paid to director 36000/- 36000/- 3. Rent paid to director 2,40,000/- 2,40,000/- ....
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..... The disallowance made and confirmed is unjustified, illegal or excessive. 8. Under the facts and circumstances, Ld. A.O. has erred by disallowing the Job paid Charges of Rs. 1,02,750/- and CIT(A) has erred by sustaining the same. The disallowance made and confirmed is unjustified, illegal or excessive. 9. Under the facts and circumstances, ld. AO has erred by making a trading addition of Rs. 47,08,357/- by applying GP rate of 32.74% and CIT(A) has erred by sustaining the same. The addition made and confirmed is unjustified, illegal and excessive. 10. That the appellant craves your indulgence to add, amend, modify or alter all or any grounds of appeal before or at the time of hearing." 7. We have considered the rival contentions and carefully gone through the orders of the authorities below. We have also considered entire material placed on record and the judicial pronouncements cited by the lower authorities 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 respec....
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....seessee submitted only the name of the patients to whom discount was allowed. In fact the details submitted before the AO contained the following particulars: * Patient Name * Reg No. * Period of treatment * Bill No. * Amount * Concession/Discount/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 bill....
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....owed the orthopedic consumption expenses of Rs. 2,91,000/- and the ld. CIT(A) has sustained the same. In this regard, we observe that during the year under appeal, assessee company incurred Rs. 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 Rs. 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 Rs. 1,25,500/- was paid in the same month. The material for consumption in treatment amounting to Rs. 2,91,000 was purchased in the month of April. Bills of which were accounted for in the month of June. Details are as under: S. No. Name of Patient....
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....-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 were called for from Mumbai. Professional Fees paid to these doctors were also recovered from the patients and credited to Cath Lab Income A/C. Since the amount paid to doctors was separately considered under the head Professional fees paid, it resulted into enhancement of ratio between Cath lab Income and Cath Lab Expense. 24. In view of the above, we do not find any merit in the disallowance so made by the A.O. amounting to Rs. 19,39,062/-. 25. The A.O. also disallowed salary of Rs. 1,09,300....