TaxTMI 
TaxTMI 
2022 (6) TMI 739
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....fession, capital gain and other sources. The assessee filed his return of income on 29.09.2013 declaring total income of Rs. 62,25,700/-. The case was selected for scrutiny under CASS and notice u/s 143(2) was issued on 04.09.2014, which was served upon the assessee. 4. The AO arrived the findings that the assessed u/s 143(3) at total income of Rs. 79,96,390/-. Issue demand notice and challan. Give the credit of prepaid taxes after verification. Income Tax and interest under different sections, has been calculated/charged as per ITNS-150 appended to his order, which is a part of this order. Issue penalty notice u/s 271(1)(c) r.w.s. 274 of the Income Tax Act, 1961 for the concealing particulars and furnishing of in accurate particulars of income. 5. Being aggrieved the assessee carried the matter in appeal before the ld. CIT(A) who allowed the relief to the assessee. The relevant findings of the ld. CIT(A) are contained at para 5 which is reproduced as under:- "5. Appellate findings: 5.1 Ground No. 1:- vide this ground of appeal the appellant has challenged the order u/s 154 dated 18.12.2017 passed by the DCIT, Circle-7, Jaipur for the A.Y. 2013-14 vide which....
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....essee vide letter dated 05.12.2015 filed the details of professional promotion charges along with ledger account(PB 4-13).The AO after considering the same passed the order u/s 143(3) accepting the expenses claimed. 3. After assessment, the office of the Principal Director of Audit (Central) raised an audit objection on 27.01.2016 (PB 14)that professional promotion expenses is not allowable in view of the CBDT Circular No.05/2012 dt. 01.08.2012. 4. In the meanwhile the matter for AY 2001-02 wherein similar disallowance of professional development expenses was made by AO, deleted by the CIT(A) but restored by ITAT came up for consideration before the Hon'ble Rajasthan High court who vide order dated 18.07.2017 (PB 15-22)set aside the issue to ITAT by holding as under:- "11.Counsel for the respondent has strongly relied upon explanation but in view of the observations made by the AO where he has allowed the part expenses of the hospital, in that view of the matter, we are of the opinion that the CIT(A) observations which are made by the CIT are required to be accepted. The explanation cannot come into play on appeal which was filed at this stage. Even other....
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.... also not valid in law. Section 154 of the Act reads as under:- "154. (1) With a view to rectifying any mistake apparent from the record an income-tax authority referred to in section 116 may,- (a) amend any order passed by it under the provisions of this Act ; (b) amend any intimation or deemed intimation under sub-section (1) of section 143; (c) amend any intimation under sub-section (1) of section 200A; (d) amend any intimation under sub-section (1) of section 206CB. From the above provisions it can be noted that only the mistake apparent from record can be rectified u/s 154. Hon'ble Supreme Courtin case of ITOVs. Volkart Bros. [1971] 82 ITR 50 has held that a mistake apparent from record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may conceivably be two options. A decision on a debatable point of law is not a mistake apparent from the record. In the present case, whether the professional development expenses is hit by the provisions of section 37 read with Circular No.05/2012 dt. 01.08.2012 or not is highly debatable issue as e....
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....ng, business and miscellaneous expenses on doctors and business guests total amount to Rs. 71,97,585/-. The AO noted that the expenditure incurred by the assessee is hit by explanation to Section 37(1) of the Act in view of the MCI Regulations, 2002 which were issued on 10.12.2009 w.e.f. 14.12.2009 prohibiting the doctors and medical practitioners from receiving gifts, freebies from the pharmaceutical companies/ individuals. Accordingly, the AO disallowed 60% of the said expenditure amounting to Rs. 45,75 552/-.The details of the expenditure and disallowance made by the AO are as under:- GOA Head of disallowance Disallowance made by the AO Expenses claimed % disallowed Amount of disallowance 3.1 Advertisement & Sales promotion expenses (as gift to doctors) Rs. 40,87,254/ 60% Rs. 24,52,352/- 3.2 Advertisement & Sales promotion expenses Rs. 7,77,292/- Rs. 7,23,377/- 3.3 Entertainment expenses for business agent Rs. 79,410/- (Rs. 44,276/-+Rs. 35,134/-) 60% Rs. 47,646/- 3.4 Travelling & conveyance for business guests Rs. 22,47,930/- 60% Rs. 13,48,758/- 3.5 Miscellaneous expenses on doctor Rs. ....
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....ct. Accordingly prima facie there is no merit in the contention of the appellant. As regards the case laws relied upon by the appellant, it may be stated that as the Circular issue by the CBDT is of clarificatory nature therefore the case laws relied upon by the appellant will not have any applicability in this case. Accordingly the ground of appeal is dismissed." Before us, the assessee as well as Department has placed reliance on series of decisions wherein two divergent views were taken by this Tribunal. However, the Hon'ble jurisdiction High Court in case of Dr. Anil Gupta Vs. ACIT (supra) while dealing with an identical issue has held in para 5 to 11 are as under:- "5. The Tribunal while considering the case of the appellant has observed as under:- "8. We may submit that expenses are vouched, comparable from earlier year, incurred wholly and exclusively for the purpose of business. On test chech basis few person were produced and examined by AO. Section 37(1) provides that:- (i) any expenditure, (ii) not being in the nature of capital expenditure or (iii) personal expenses of the assessee (iv) expended wholly and e....
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....state of affairs in the petitioner Hospital has harmed no legal right/interest of the petitioner for which a writ can be issued by this Hon'ble Court against the answering respondent. (v) That the petitioner contends that an adverse order has been passed by the MCI and that too without hearing the petitioner. Both these contentions of the petitioner are incorrect and by the MCI against the petitioner as MCI does not have any such jurisdiction; secondly, the petitioner was throughout represented before the Ethics Committee of MCI during the proceedings initiated on complaint of one Mr. Sunil Manchanda against some of the doctors working in the petitioner hospital. The petitioner was heard through is advocates on several occasions and had submitted several documents also in support of their stand. 7. It is clearly admitted by the respondent that it has no jurisdiction to pass any order against the petitioner hospital under the 2002 Regulations. In fact, it is stated that it has not passed any order against the petitioner hospital. Thus, I need not go into the question whether the adequate infrastructure facilities for appropriate post-operative care were in fact in ....
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....e, of any expenditure incurred in violation of the provisions of another statute or any penalty imposed under another statute. In the instant case, if the deductions claimed are allowed the penal provisions of FERA will become meaningless. It has also to be borne in mind that evasion of law cannot be a trade pursuit. The expenditure in this case cannot, in any way, be allowed as wholly and exclusively laid out for the purpose of assessee's business." 9. We have heard counsel for both the sides. 10. Section 37 of the Income Act reads as under:- "37(1) Any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head, "Profits and Gains of Business or Profession". [Explanation.- For the removal of doubts, it is hereby declared that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the pu....