Medical Centre Trichur Ltd, Trichur v. ITO, Trichur

ITA 380/COCH/2010 | 2006-2007
Pronouncement Date: 25-05-2010 | Result: Dismissed

Appeal Details

RSA Number 38021914 RSA 2010
Assessee PAN AABCM6594P
Bench Cochin
Appeal Number ITA 380/COCH/2010
Appellant Medical Centre Trichur Ltd, Trichur
Respondent ITO, Trichur
Appeal Type Income Tax Appeal
Pronouncement Date 25-05-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 25-05-2010
Date Of Final Hearing 25-04-2012
Next Hearing Date 25-04-2012
Assessment Year 2006-2007
Appeal Filed On 08-06-2010
Judgment Text
1 ITA NO.380/COCH/2010 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKARA N(AM) I.T.A NO. 380/COCH/2010 (ASSESSMENT YEAR 2006-07) MEDICAL CENTRE TRICHUR LTD VS THE ITO WD.2(1) NEAR VIYYUR BRIDGE RANGE-2 TRISSUR TRICHUR 680 022 PAN : AABCM6594P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V VENUGOPAL RESPONDENT BY : SHRI ABHIMANYU SINGH YADAV DATE OF HEARING : 25-04-2012 DATE OF PRONOUNCEMENT : 25-05-2012 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER (APPEALS)-V KOCHI DATED 17-03-2010 AND IT PERTAINS FOR THE ASSESSMENT YEAR 2006-07. 2. THE FIRST GROUND OF APPEAL IS WITH REGARD TO DIS ALLOWANCE OF RS.6 10 043 BEING THE EXPENDITURE CLAIMED TO BE INCURRED FOR BU SINESS DEVELOPMENT AND PROMOTION. 2 ITA NO.380/COCH/2010 3. SHRI V VENUGOPAL THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS RUNNING A HOSPITAL BY NAME DAYA HO SPITAL AT TRICHUR. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE INCURRED AN EXPENDITURE OF RS. 6 34 043 TOWARDS BUSINESS PROMOTION. ACCORDING TO THE LD.RE PRESENTATIVE OUT OF RS.6 34 043 A SUM OF RS.6 10 043 WAS INCURRED FOR DISTRIBUTION OF COMPLIMENTS TO WELL WISHERS DOCTORS AND SHAREHOLDERS. THE LIST O F PERSONS TO WHOM THE COMPLIMENTS WERE DISTRIBUTED WAS ALSO FURNISHED TO THE ASSESSING OFFICER. HOWEVER THE ASSESSEE COULD NOT OBTAIN ANY RECEIPT FROM THE RESPECTIVE PERSON FOR DISTRIBUTING THE COMPLIMENTS. THEREFORE ACCOR DING TO THE LD.REPRESENTATIVE THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE A SSESSEE. THE LD.REPRESENTATIVE FOR THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSE E HAS PURCHASED 128 GOLD COINS WEIGHING ABOUT 8 GMS PER COIN FOR DISTRIBUTIO N AMONGST THE SHAREHOLDERS WELL WISHERS AND DOCTORS. ACCORDING TO THE LD.REPR ESENTATIVE ALL THESE RECIPIENTS OF THE GOLD COINS ARE HIGHLY RESPECTED PERSONS THE REFORE ASKING FOR RECEIPTS ACKNOWLEDGING THE RECEIPT OF THE COMPLIMENT MAY BE D IFFICULT FOR THE ASSESSEE. THE FACT REMAINS IS THAT THE GOLD COINS WERE PURCHA SED AND WERE DISTRIBUTED. THEREFORE IT HAS TO BE ALLOWED AS BUSINESS EXPENDI TURE COMPUTING THE TAXABLE INCOME. 4. ON THE CONTRARY SHRI ABHIMANYU SINGH YADAV THE LD.DR SUBMITTED THAT THE ASSESSEE HAS PURCHASED 128 GOLD COINS FOR RS.6 10 043 AND CLAIMED TO HAVE DISTRIBUTED THE SAME TO THE SHAREHOLDERS DOCTORS A ND WELL WISHERS. HOWEVER THERE IS NO MATERIAL PRODUCED BEFORE THE ASSESSING OFFICER TO SHOW THAT THE GOLD COINS WERE IN FACT DISTRIBUTED TO THE SHAREHOLDERS DOCTORS AND WELL WISHERS AS CLAIMED. ACCORDING TO THE LD.DR IF THE GOLD COINS WERE DISTRIBUTED TO THE SHAREHOLDERS IT IS ONLY DISTRIBUTION OF THE PROFIT AND IT WILL NOT PROMOTE THE 3 ITA NO.380/COCH/2010 BUSINESS OF THE ASSESSEE IN ANY WAY. THEREFORE TH E ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE CLAIM OF THE ASSESSEE. 5. WE HAVE CONSIDERED SUBMISSIONS ON EITHER SIDE AN D ALSO PERUSED THE MATERIAL ON RECORD. FROM THE ORDER OF THE COMMISSI ONER OF INCOME-TAX(A) MORE PARTICULARLY AT PARAGRAPH 4.3 IT APPEARS THAT THE ASSESSEE EXPLAINED THAT 128 GOLD COINS WERE PURCHASED ON 17-08-2005 AND THE SAME WERE DISTRIBUTED TO THE SHAREHOLDERS ON 21-08-2005 ON THE EVE OF ANNUAL GENE RAL BODY MEETING ON 22- 08-2005 SAID TO BE CONDUCTED AT HOTEL MERLYN INTERNA TIONAL. SUBSEQUENTLY THE ASSESSEE APPEARS TO HAVE CHANGED ITS STAND AND EXPL AINED THAT THE GOLD COINS WERE DISTRIBUTED TO THE WELL WISHERS AND DOCTORS. THE CLAIM OF THE ASSESSEE IS THAT IT PURCHASED GOLD COINS VALUING RS.6 10 043 AN D DISTRIBUTION OF THE SAME IS FOR BUSINESS PROMOTION. ADMITTEDLY THE ASSESSEE IS IN THE BUSINESS OF RUNNING HOSPITAL. IF THE ASSESSEE PURCHASED SOME MEDICAL E QUIPMENTS LIKE STETHOSCOPE BLOOD PRESSURE MONITOR ETC. AND GIVEN TO THE DOCTO RS OR SOME OTHER MATERIAL WHICH WOULD HAVE PROVOKED THE WELL WISHERS TO TAKE TH E TREATMENT IN THE HOSPITAL OF THE ASSESSEE THEN WE MAY SAY THAT THE EXPENDITURE INCURRED BY THE ASSESSEE IS FOR PROMOTING THE BUSINESS OF THE ASSES SEE. IN THIS CASE WHAT WAS PURCHASED IS A GOLD COIN. GIFTING OF GOLD COIN HAS NOTHING TO DO WITH RUNNING OF A HOSPITAL. IF THE ASSESSEE INTENDED TO GIVE GOLD CO INS TO THE SHARESHOLDERS AND DOCTORS OR ANYBODYELSE CLAIMING TO BE THEIR WELL WI SHERS IN OUR OPINION THIS CANNOT BE CONSIDERED TO BE A BUSINESS PROMOTION EXP ENSE. FOR THE PURPOSE OF PROMOTING THE BUSINESS THE EXPENDITURE INCURRED BY THE ASSESSEE SHOULD HAVE NEXUS WITH THAT OF THE BUSINESS. DISTRIBUTING GOLD COIN HAS NO NEXUS WITH RUNNING OF A HOSPITAL. MOREOVER THE GOLD COIN WAS DISTRIB UTED ON THE EVE OF ANNUAL GENERAL BODY MEETING. THEREFORE AS RIGHTLY FOUND BY THE ASSESSING OFFICER IT WAS ONLY DISTRIBUTION OF PROFIT TO THE SHAREHOLDERS. APART FROM THIS THERE IS NO 4 ITA NO.380/COCH/2010 MATERIAL AVAILABLE ON RECORD TO SUGGEST THAT THESE GOLD COINS WERE IN FACT DISTRIBUTED TO THE DOCTORS WELL WISHERS ETC. THE CLAIM OF THE ASSESSEE IS THAT THE RECIPIENTS OF THE GOLD COINS WERE RESPECTED PERSONS THEREFORE THEY COULD NOT GET THE ACKNOWLEDGEMENT APPEARS TO BE CONVINCING. BUT T HE FACT REMAINS IS THAT DISTRIBUTION OF GOLD COIN HAS NOTHING TO DO WITH TH E BUSINESS OF THE ASSESSEE VIZ. RUNNING OF A HOSPITAL. THEREFORE THIS TRIBUNAL IS OF THE OPINION THAT PURCHASE OF GOLD COINS TO THE EXTENT OF RS.6 10 043 IS NOT FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE. THEREFORE THE LOWER AUTHORITIES HAV E RIGHTLY DISALLOWED THE CLAIM OF THE ASSESSEE. THIS TRIBUNAL DO NOT HAVE ANY HES ITATION TO CONFIRM THE SAME. 6. THE ASSESEE HAS TAKEN ONE MORE GROUND WITH REGARD TO THE DISALLOWANCE OF RS.50 000. DURING THE COURSE OF HEARING THE LD .REPRESENTATIVE FOR THE ASSESSEE VERY FAIRLY SUBMITTED THAT HE DID NOT WANT TO PRESS THE GROUND RELATING TO DISALLOWANCE OF RS.50 000. THE LD.COUNSEL HAS ALSO MADE AN ENDORSEMENT TO THAT EFFECT. IN VIEW OF THE ABOVE THE ISSUE RELATING T O DISALLOWANCE OF RS.50 000 U/S 40(A)(IA) OF THE ACT IS DISMISSED AS NOT PRESSED. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF MAY 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN DT : 25 TH MAY 2012 PK/- 5 ITA NO.380/COCH/2010 COPY TO: 1. MEDICAL CENTRE TRICHUR LTD NEAR VIYYUR BRIDBGE TR ICHUR 680 022 2. THE ITO WD.2(1) RANGE-2 THRISSUR 3. THE COMMISSIONER OF INCOME-TAX(A)-V KOCHI 4. THE COMMISSIONER OF INCOME-TAX TRICHUR 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR INCOME-TAX APPELLATE TRIBUNAL COCHIN BENCH