Param Nicu & Children Hospital, Surat vs Department Of Income Tax

IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ITA No. 149/Ahd/2012 िनधा रण वष /Assessment Year: 2008-09 Income-tax Officer, Vs. Param NICU & Children Hospital Ward-7(3), 801/802, Param Doctor House, Surat Opp. Ayurvedic College, Lal Darwaja, Surat PAN : AAJFP 7569 G

अपीलाथ / अपीलाथ / (Appellant) ू यथ यथ / थ / (Respondent)

Revenue by : Shri Roopchand, Sr. DR Assessee(s) by : None सु नवाई क! तार#ख / Date of Hearing : 22/04/2015 घोषणा क! तार#ख / Date of Pronouncement: 24/04/2015

आदे श/O R D E R

PER G.D. AGRAWAL, VICE PRESIDENT:

This is an appeal filed by the Revenue and is directed against the order of the Commissioner of Income-tax(Appeals)-V, Surat dated 12.09.2011 pertaining to the Assessment Year 2008-09.

2. Notice of hearing was sent to the assessee by Registered Post with Acknowledgement Due on 31.03.2015 fixing the date of hearing on 22.04.2015. The said notice has not been returned back by the postal authorities unserved. When the case was called for hearing, none was present on behalf of the assessee and neither any adjournment application was filed. Therefore, we proceeded to hear the appeal ex-parte qua the respondent-assessee and to decide the appeal after taking into consideration ITA No.149/Ahd/2012 ITO vs. Param NICU & Children Hospital AY: 2008-09 2

the submissions of the Departmental Representative and the material available on record.

3. The Ground No.1 of the Revenue's appeal reads as under:-

1. On the facts and circumstances of the case and in Law, the Ld. CIT(A) has erred in deleting the addition of Rs.9,75,926/- made by the A.O. in respect of difference occurred due to purchase consideration by the assessee and valuation made by Sub Registrar as per Jantri rate and treating the same as Undisclosed investment made by the assessee from Unaccounted Income.

4. At the time of hearing before us, the ld. Departmental Representative submitted that during the accounting year relevant to assessment year under consideration, the assessee had purchased property at 801-802, 8th Floor, Param Doctor House, Surat - admeasuring 324.72 sq. mtrs. at the cost of Rs.22,75,000/- and paid Rs.2,00,000/- as Stamp Duty (Total cost Rs.24,75,000/). However, the Assessing Officer, while verifying the same from Sub-Registrar, Surat, it was found that the valuation of the property for Stamp Duty (Jantri Value) was at Rs.32,89,725/- and the assessee, as a buyer of the property, has paid the stamp duty on the above value. He, therefore, submitted that the actual purchase price can never be less than the stamp duty valuation and therefore, the Assessing Officer rightly treated the difference between the stamp duty valuation and sale price shown by the assessee as unexplained investment u/s 69B of the Act. The CIT(A) deleted the addition without properly considering the facts of the case. He, therefore, submitted that the order of the CIT(A) should be reversed and that of the Assessing Officer should be sustained.

5. We have carefully considered the arguments of ld. Departmental Representative and perused the material placed before us. The Assessing ITA No.149/Ahd/2012 ITO vs. Param NICU & Children Hospital AY: 2008-09 3

Officer made the addition for the difference between the stamp duty valuation and actual price consideration as unexplained investment u/s 69B. However, the actual sale price and the stamp duty valuation can be different for variety of reasons. That if the purchase price paid by the assessee is less than the stamp duty valuation, it may be good and sufficient cause for making necessary inquiry by the Assessing Officer so as to find out whether the assessee made any payment over and above the disclosed sale consideration; but, it by itself is not sufficient to presume that the assessee made the investment which was not disclosed by the assessee so as to invoke the provisions of Section 69B. Admittedly, the Assessing Officer has not brought on record any evidence that the actual purchase consideration paid by the assessee was over and above the sum of Rs.24,75,000/- recorded in the sale deed. The deeming provision of Section 50C wherein the stamp duty valuation is considered actual sale consideration for the purpose of capital gain is applicable only in the case of seller and not in the case of buyer for the relevant assessment year. While taking this view, we derive support from the decision of Hon'ble Jurisdictional High Court in the case of CIT vs. Meghjibhai Popatbhai Virani vide Tax Appeal No.46 of 2013. In view of above factual and legal position, we do not find any justification to interfere with the order of the CIT(A) and the same is sustained. Thus, the Ground No.1 of the Revenue's appeal is rejected.

6. Ground No.2 of the Revenue's appeal reads as under:-

2. On the facts and in the circumstances of the case and in Law, the CIT(A) has erred in deleting the addition of Rs.18,96,903/- made by the AO by attracting the section 40(a)(ia) of the IT Act, in respect of payment made by the assessee to the contractors and on which, no TDS has been made.

ITA No.149/Ahd/2012 ITO vs. Param NICU & Children Hospital AY: 2008-09 4

7. We have heard ld. Departmental Representative and perused the material placed before us. The CIT(A) has recorded the finding that the assessee has not claimed the expenditure in respect of payment of labour charges to contractors because the same has been capitalized. The relevant finding of the ld. CIT(A) reads as under:-

5.3 I have carefully gone through the reasons mentioned by the A.O. in the assessment order as well as the elaborate arguments made on behalf of the appellant. Admittedly, the payments of labour charges to these contractors were neither debited in P&L A/c nor any claim for deduction of the same was made. These payments were capitalized under the heads "furniture & fixture A/c" and "interior work A/c". The provisions of S. 40 are the disallowance provisions. The initial wordings of S. 40 are reproduced below:-

"40. Notwithstanding anything to the contrary in section 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession, (ia).............,........"

From the above wordings, it is amply clear that the provisions of section 40 are applicable only when a deduction is claimed while computing income - chargeable under the head "profits and gains of business or professions". If a payment is neither debited to P & L A/C not any claim for deduction of the same has been made, then the provisions of S. 40 are not applicable. This section shall be triggered only when a claim of deduction is made by the assessee. I, therefore, agree with the argument of learned counsel of the appellant the provisions of S. 40(a) (ia) are attracted only if the expenditure is either debited to the P & L A/C or the amount is otherwise claimed for deduction. When neither the payments were debited to P & L A/C nor any claim of deduction in respect of the same was made, there was no question of disallowing the same u/s. 40(a) (ia) of the Act. It is true that the appellant firm failed to deduct TDS on these payments. But the remedy for this failure lies somewhere else in other provisions of the Act and not u/s. 40(a) (ia) of the Act when no claim of deduction of the same was made. The case law relied upon by the AO is also distinguished as in that case the deduction u/s. 35AB was claimed and it was with reference to this claim of deduction that the disallowance u/s. 40(a) (ia) was upheld. In the case on hand, there was no claim of deduction at all. In view of above, I am of the considered view that the addition made by the AO of Rs.8,96,903/- by way of disallowance u/s.

ITA No.149/Ahd/2012 ITO vs. Param NICU & Children Hospital AY: 2008-09 5

40(a) (ia) of the Act is wrong in law and is without any lawful basis and the same is hereby deleted. Consequently, this ground of appeal is also allowed.

8. After considering the arguments of ld. Departmental Representative and facts of the case, we do not find any infirmity in the above findings of the ld. CIT(A). When the assessee has not claimed the expenditure, the question of disallowing the same does not arise. The labour charges paid has been capitalized by the assessee; therefore, the same has not been claimed as expenditure. Once expenditure is not claimed, the same cannot be disallowed. We, therefore, do not find any justification to interfere with the order of the CIT(A) in this regard. Accordingly, Ground No.2 of the appeal is rejected.

9. In the result, the appeal filed by the Revenue is dismissed.

Order pronounced in the Court on 24th April, 2015 at Ahmedabad.

Sd/- Sd/-

(RAJPAL YADAV) (G.D. AGRAWAL) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 24/04/2015 Biju T., PS

षत Copy आदे श क! ूितिल)प अमे)षत/ of the Order forwarded to : 1. अपीलाथ / The Appellant 2. ू यथ / The Respondent. 3. संबंिधत आयकर आयु, / Concerned CIT 4. आयकर आयु,(अपील) / The CIT(A)

5. )वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड फाईल / Guard file.

/ BY ORDER, आदे शानु सार

TRUE COPY Dy./Asstt.Registrar) उप/सहायक पंजीकार ( उप/ अिधकरण, अहमदाबाद / आयकर अपीलीय अिधकरण, ITAT, Ahmedabad