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TMI Blog2016 (4) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. CIT(A) has appreciated the explanations furnished by the assessee. Since the assessee was simply a facilitator for the purchase of medicines from M/s Agrima Medicos for the patients and the payments were made by the patients, the disallowance, if any, can only be made in the hands of the patients, if the payments exceed the limit, but not in the hands of the assessee. Since the ld. CIT(A) has properly examined the issue in the light of the detailed submissions of the assessee, we find no infirmity in his order on this issue and we accordingly confirm the same. Disallowance of 1/5th of salary and wages debited the profit and loss account - Held that:- Assessing Officer has made ad hoc disallowance of 1/5th of total claim without pointing out any specific defect in a particular payment or in the cash book. The ld. CIT(A) has re-examined the details furnished by the assessee and he deleted the addition. He, however, has confirmed the addition of ₹ 2 lakhs on account of certain expenditures, which were not proved to have been incurred for business purposes. Since no specific infirmity has been pointed out in the order of the ld. CIT(A), we confirm his order. - ITA No.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e payment made in cash for repair and maintenance is duly reflected in the cash book and ledger. It was also contended before the ld. CIT(A) that the return of income filed by the assessee for assessment year 2010-11 has been scrutinized by the Assessing Officer and expenditure debited under the head repair and maintenance building has not been disallowed. Therefore, redemption of such liability made during the year in cash cannot attract the provisions of section 40A(3) of the Act. Being not convinced with the explanations of the assessee, the ld. CIT(A) deleted the addition. 3. Now the Revenue is in appeal before the Tribunal with the submission that when payment of earlier debts are made in cash, the same can be disallowed under section 40A(3) of the Act, but this aspect was not examined by the ld. CIT(A) and he has deleted the addition having observed that for the old liabilities, the provisions of section 40A(3) of the Act cannot be invoked. 4. The ld. counsel for the assessee, on the other hand, has placed reliance upon the order of the ld. CIT(A). 5. Having carefully examined the orders of the lower authorities in the light of the rival submissions, we find that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of such liability made during the year in cash cannot attract the provisions of section 40A(3). This disallowance is beyond the stretch of imagination of provisions of section 40A(3). Accordingly, the addition needs to be deleted. 6. Since the ld. CIT(A) has not applied his mind to these provisions and has not examined the nature of payment whether it was made on account of business exigencies or under any exceptional clause, we are of the view that let the matter should go back to the ld. CIT(A) for adjudication of the issue in the light of the provisions of section 40A(3A) of the Act. Accordingly, the order of the ld. CIT(A) is set aside and the matter is restored to his file for re-adjudication of the issue. 7. Apropos ground No.2, the Assessing Officer has disallowed ₹ 1.79 lakhs under section 43B of the Act as unpaid bonus liability, as it is noted that the liability of bonus of ₹ 2.90 lakhs and ₹ 6 lakhs whereas the payment is made only for ₹ 7.16 lakhs, thereby the disallowance was of ₹ 1.79 lakhs, against which an appeal was preferred before the ld. CIT(A) with the submission that he has debited ex-gratia and bonus to other of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of section 40A(3) of the Act. 11. An appeal was preferred before the ld. CIT(A) with the submission that M/s Agrima Medicos is a proprietary concern of Mrs. Dipti Mishra, who is running a medical shop in the hospital premises. The assessee-company as such has not business dealing with M/s Agrima Medicos except providing medicines to the concerned patients of the hospital. The assessee-hospital is entertaining the patients of Government employee and their relatives, thereby their payments are reimbursed by the respective employer. The medicines required immediately and administered to the patients are supplied by M/s Agrima Medicos, whose payments are received directly from the concerned employer/insurance company. M/s Agrima Medicos raises the bills in the name of concerned patients only whose payments are made by the respective employer. Therefore, the assessee-hospital has nothing to do with the medicines supplied by M/s Agrima Medicos and their payments. In any case, the assessee-company is not responsible for any payment to M/s Agrima Medicos except facilitating the payments made from concerned employer/insurance organization. It was further contended that the assessee-co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the ld. CIT(A) with the submission that since the assessee has not purchased any medicine for which payment was made in violation of the provisions of section 40A(3) of the Act, no disallowance can be made in the hands of the assessee. 13. Having carefully examined the orders of the lower authorities in the light of the rival submissions, we find that the Assessing Officer has not examined the complete facts of the case whereas the ld. CIT(A) has appreciated the explanations furnished by the assessee. Since the assessee was simply a facilitator for the purchase of medicines from M/s Agrima Medicos for the patients and the payments were made by the patients, the disallowance, if any, can only be made in the hands of the patients, if the payments exceed the limit, but not in the hands of the assessee. Since the ld. CIT(A) has properly examined the issue in the light of the detailed submissions of the assessee, we find no infirmity in his order on this issue and we accordingly confirm the same. 14. Apropos ground No.4, it is noticed that the Assessing Officer has made disallowance of ₹ 12,91,901/- out of salary and wages debited to the profit and loss account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l consideration of facts and circumstances of the case along with the business need and compulsion, the addition made by the Assessing Officer is hereby deleted. However, their services wholly and exclusively for the purpose of business has not been proved, thereby, ₹ 2 lakhs is being treated non-business expenditure. 16. Aggrieved, the Revenue is in appeal before the Tribunal and the ld. D.R. has placed reliance upon the order of the Assessing Officer; whereas the ld. counsel for the assessee has contended that the Assessing Officer has made ad hoc addition without pointing out any specific defect in the maintenance of the books of account. Whatever amount was paid in cash, proper receipts were obtained and complete details were produced before the lower authorities. Therefore, no disallowance is called for. 17. Having carefully examined the orders of the lower authorities in the light of the rival submissions, we find that the Assessing Officer has made ad hoc disallowance of 1/5th of total claim without pointing out any specific defect in a particular payment or in the cash book. The ld. CIT(A) has re-examined the details furnished by the assessee and he deleted t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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