TaxTMI 
TaxTMI 
2022 (5) TMI 1174
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....in law. 2. The learned CIT(A.) erred in directing the Assessing Officer to delete the disallowance of deduction u/s 80IB of Rs.3,34,51,938/- 2.1 The learned CIT(A) ought to have appreciated the fact that the AO has rightly compared the two concerns as all the conditions for comparison are satisfied i.e., both MMHRC & MH are in the same field of providing medical services, they are both in the same state and in adjacent cities, there are no time differences and both are being managed by the assessee, Dr. Gurushankar, as Vice-Chairman of M/s Meenakshi Mission Hospital and Research Centre, Madurai and as also the head of M/s Meenakshi Hospital, Tanjore. 2.2 The learned CIT(A) ought to have appreciated the fact that the AO has compared the Turnover in the two cases with respect to the investment in medical equipment only to bring out the fact that the proprietary/ corporate hospital has tried to show more profit margin as it will be enjoying deduction u/s. 80IB(11C) for a restricted period of 5 years, whereas the charitable organization is eligible to claim exemption of its entire income u/s. 11 if it is able to show application of 85% of its income towards c....
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.... another to claim higher deduction u/s 80-IB which is evident from the profit-ratio of the two concerns. The Ld. AR, on the other hand, controverted the stand of Ld. CIT-DR and drew attention to the findings given by Income Tax Settlement Commission (ITSC) in the case of Shri T. John Rajasekhar. The Ld. AR also assailed the confirmation of additions as sustained by Ld. CIT(A) in the impugned order. Having heard rival submissions and upon perusal of relevant material on records, our adjudication would be as given in succeeding paragraphs. Assessment Proceedings 4.1 The assessment for AY 2014-15 was framed u/s 143(3) r.w.s. 153A on 31.12.2016. The assessee is a Doctor by profession. The assessee is Vice-Chairman of a trust namely S.R. Trust which runs M/s Meenakshi Mission Hospital and Research Centre, Madurai (MMHRC). During October, 2009, the assessee acquired certain land in Tanjavur and constructed a super specialty hospital by the name Meenakshi Hospital (MH) which started functioning during January, 2013. From AY 2013-14, MH was eligible for deduction of 100% of its profits u/s 80-IB(11C) of the Act. Accordingly, for AY 2014-15, the assessee filed return of income at R....
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....r sources' received in the form of gifts, donations, consultation charges etc. In the light of these facts, it was alleged by Ld. AO that the assessee was in the habit of introducing unaccounted income in the guise of 'IP collection advances' in the account of MH. 4.5 Based on these facts, Ld. AO alleged that the profit of Rs.1323.09 Lacs as earned by MH was not acceptable, this being only the second year of start of hospital. In comparison, MMHRC had medical equipment of more than 181 Crores whereas MH had only 3.97 Crores worth of medical equipment. The comparative analysis between MMHRC and MH was tabulated as under: - S.No. Financial Parameters for FY 2013-14 MMHRC, Madurai (in Rs.) As % of turnover Meenakshi Hospital, Thanjavur (in Rs.) As % of turnover 1 Turn Over 229,22,70,873 63,11,37,009 2 Cash at locker 255,69,11,919 111.54 59,24,16,363 93.86 3 IP collection 85,10,26,583 37.13 18,64,94153 29.55 4 IP Collection 140,75,62,997 61.40 25,61,81,454 40.59 5 OP Collection 31,92,18,205 13.93 7,19,88,742 11.41 6 Pharmacy sales 55,98,06,651 24.42 ....
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....to be gifts / donations received from friends, patients etc. who visited the hospital and consultation charges received by the assessee from third parties. These receipts were stated to be obtained purely in personal individual capacity and not related to receipts of MH. The Ld. AO has also accepted the same. However, adopting the same reasoning as for AY 2014-15, Ld. AO restricted the deduction u/s 80IB to the extent of 75% and denied deduction of remaining 25% of the profits earned by MH. 4.7 The Ld. AO made another addition of Rs.26.52 Lacs in AY 201516. The same was on account of the fact that actual IP collections on 20.08.2014 were Rs.10.26 Lacs only as against Rs.56.95 Lacs as shown and therefore, the balance amount of Rs.46.68 Lacs was introduced by the assessee which was liable to be taxed as unaccounted cash introduced by the assessee. Since, the assessee admitted income of Rs.1262.28 Lacsinstead of Rs.1242.12 Lacs as offered during the course of search, the telescoping difference of Rs.20.16 Lacs was granted to the assessee and differential amount of Rs.26.52 Lacs was added to the income of the assessee. 4.8 Aggrieved as aforesaid, the assessee contested the additi....
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....assessee's submissions, noted that there were two types of software installed by the assessee i.e., one for the hospital receipts and control which was called as 'Backbone software' and other for accounting purposes which was called the 'Tally software'. The difference in total receipts in the two accounting software was Rs.1242.12 Lacs. This difference was already admitted by the assessee and amount of Rs.1262.28 Lacs was offered in the return of income. Except for the said difference of Rs.1242.12 Lacs, there was no other evidence / information to show that the assessee had been receiving income from other sources or had been inflating hospital receipts in order to claim higher deduction u/s 80IB. The main reason for Ld. AO to disallow part of deduction was the mere suspicion that the amounts were siphoned-off from MMHRC in the form of purchase of medicines from Monica Group and the cash came back to the assessee which was introduced in MH as hospital receipts. However, the entire issue of disallowance of part of 80-IB(11C) deduction revolved around suspicion only without there being any concrete evidences. 5.6 The Ld. CIT(A) further noted that there was no evidence that the m....
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....ent no. 50200000524500 1 2 3 4 5 08.06.2014 4,72,304 1,09,93,182 1,05,20,878 1,03,00,000 11.06.2014 12,74,103 84,99,973 72,25,770 1,02,00,000 12.06.2014 9,9,4,009 88,28,276 78,34,267 65,66,500 13.06.2017 12,17,385 71,13,383 58,95,998 55,00,000 02.07.2014 12,21,430 66,77,017 54,55,587 50,00,000 04.07.2014 7,89,652 40,56,254 32,66,602 29,52,000 22.07.2014 9,08,724 62,19,779 53,11,055 50,00,000 23.07.2014 9,26,524 58,11,913 48,85,389 49,50,000 24.07.2014 9,54,105 72,31,302 62,77,197 60,00,000 25.07.2014 8,43,896 66,30,607 57,86,711 54,60,000 16.09.2014 10,85,796 84,48,466 73,62,670 70,00,000 17.09.2014 11,27,999 86,68,075 75,40,076 73,34,000 17.10.2014 16,89,418 1,32,77,266 1,15,87,848 1,17,50,000 09.11.2014 4,58,530 1,43,22,071 1,38,63,541 1,37,00,000 10.11.2014 11,82,719 1,15,35,181 1,03,52,462 1,00,00,000 11.11.2014 10,81,550 63,53,460 52,71,910 50,00,000 16.11.2014 5,97,532 83,88,151 77,90,619 75,00,000 Total ....
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....r, as rightly noted by Ld. CIT(A), the profitability of the two entities could not be compared since MMHRC was a charitable entity having objects of Charity whereas MH was run on commercial basis. Pertinently, MH was a super specialty hospital having no competition. Therefore, to say that both the entities should have same profitability would not be a correct proposition. 8. It could also be seen that revenue's appeals in case of M/s S.R. Trust (which is managing MMHRC) was subject matter of adjudication before this Tribunal vide ITA Nos. 2144/Chny.2018 &ors. order dated 27.06.2019 for AYs 2009-10 to 2015-16. The appeals were dismissed by the bench, inter-alia, with the following observations: - We find that findings of the Id. CIT(A) are based on the appreciation of material on record. We are unable to discern from the assessment order that the Assessing Officer had made available to the assessee-trust the information available with him alleged to be against the assesses trust for the purpose of rebuttal. There is no material brought on record proving the nexus between withdrawal of the from bank account of T, John Rajasekar and the deposits made in the bank accounts o....