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TMI Blog2021 (8) TMI 1147X X X X Extracts X X X X X X X X Extracts X X X X ..... explained expenditure U/s. 69C 1.2. The appellant submits that the assessing officer is incorrect in restricting the expenditure to 8% of the gross profit U/s. 40A(2)(b). 1.3. The appellant submits that Dr. S. Ganesan is the Medical Director and Chief Executive since inception of the business. Growth of business is not just a function of the patients brought it. In the case of pathological services, it is function of deciding on the type and nature of tests required and ensuring that the same is communicated with the medical fraternity and healthcare delivery establishments. The strategic intent of the business is more critical for the business rather than bringing the customers into the business. 1.4. The appellant submits that it is worth to note that the appellant had paid commission to Dr. Ganesan every year. Further, it is the regular practice followed by the appellant consistently every year to make payments to Dr. Ganesan based on the Turnover of the respective year, details of which were submitted during the course of assessment and appellate proceedings. 1.5. The appellant submits that Dr. S.P. Ganesan had sufficient income to set off against the loss of derivative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to obsolescence in technology and the assessing officer is incorrect in allowing the same. The appellant submits that the assessing officer has failed to allow depreciation on the same. The appellant prays that the Honorable Income Tax Appellant Tribunal may delete the above additions and render justice. 2. Besides the above common grounds, for the assessment year 2009-10, the assessee has also raised following grounds for adjudication: "3. Ground 2 - Addition on account of capital gains: The appellant submits that the property is jointly owned by her along with her spouse. The assessing officer is incorrect in making the entire addition in the appellant's hand. The appellant further submits that the possession of the property is not complete to recognize the capital gains. The appellant submits that merely entering into agreement and receipt of advance does not amount to transfer as stipulated u/s. 58A of transfer of property Act. The appellant therefore prays that the addition of Rs. 5,11,00,000/- under the head capital gains be deleted. 2.1. The first common ground raised in all these appeals is general in nature, requires no adjudication and accordingly, dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d has disclosed professional receipts of Rs. 1,6299,951/- from M/s. Hitech Diagnostic Centre for the FY 2007-08 relevant to AY 2008-09 which is the proprietary concern of the assessee. Whereas, the assessee's financials show that the professional charges of Rs. 23,25,955/- only and moreover in the list of persons to whom professional charges paid the name of Dr. S.P. Ganesan is not included. When this was put to assessee to explain vide show cause notice, the assessee has merely produced revised financials which were unaudited u/s. 44AB of the Act, wherein to match the extra expenditure, an equivalent amount was added to income as professional receipt and no further explanation was offered. Moreover, the assessee has not deducted TDS on such payment u/s. 194J of the Act. The Assessing Officer further noted that the assessee's husband is having only M.B.B.S. with DCP qualification, whereas, other Doctors, who are consultants with the assessee are having more qualification and the assessee has made permissible avoidance arrangement through MOU to shift her income to her husband so as to enable him to offset the losses incurred by him in share trading business. Accordingly, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's spouse, payment was made as per MOU entered into between the assessee and her husband and submitted that the same cannot be disallowed. He further submitted that the Assessing Officer has simply invoked the provisions of section 40A(2) without examining the special qualification and responsibilities discharged by the assessee's spouse. Further, the ld. Counsel for the assessee has submitted without examining or without applying any comparable case, the Assessing Officer has simply disallowed the payments to the assessee's spouse under section 40A(2) of the Act, which is not permissible. He further submitted that the Assessing Officer has erroneously invoked section 69C of the Act and made addition as unexplained expenditure, which is not correct. 5.1. On the other hand, the ld. DR strongly supported the orders of authorities below. 6. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below including case law cited and paper book filed by the assessee. The case of the Assessing Officer is that the assessee has paid unreasonable professional fees to her spouse and therefore, he has invoked section 40A(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and by giving reasons, the disallowance ought to have been made. The Assessing Officer has not examined any details and has not given any valid reason and no comparable was brought on record and simply rejected the submissions made by the assessee. Therefore, we are of the opinion that the disallowance made by the Assessing Officer under section 40A(2) of the Act is not correct. 7. So far as invoking section 69C of the Act is concerned, the ld. CIT(A) has given a categorical finding that the assessee has paid professional fees to her husband. However, the ld. CIT(A) has not discussed anything about the 69C addition. Once the assessee has shown payment made to her spouse as professional fees and the same was offered by the assessee's spouse for taxation by filing the return of income, the provisions of section 69C of the Act has no application. 8. So far as invoking section 40a(ia) of the Act is concerned, the ld. CIT(A) has held that the applicability of second proviso introduced through Finance Act, 2012 is only prospective in nature and has no retrospective effect by following the judgment of Hon'ble Kerala High Court in the case of Thomas George Muthoot v. CIT 287 CT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision applies only prospective. However, the Hon'ble Delhi High Court in the case of CIT v. Ansal Land Mark Township (P.) Ltd. (supra) has held that the second proviso to section 40(a)(ia) of the Act is declaratory and curative and it has retrospective effect from 01.04.2005 [para 14 of the judgement of Delhi High Court]. The Hon'ble Delhi High Court has held that the second proviso to section 40(a)(ia) was inserted by the Finance Act, 2012 with effect from 01.04.2013. The effect of the said proviso is to introduce a legal fiction where an assessee fails to deduct tax in accordance with the provisions of Chapter XVII B. Where such assessee is deemed not to be an assessee in default in terms of the first proviso to sub-section (1) of section 201 of the Act, then, in such event, it shall be deemed that the assessee has deducted and paid the tax on such sum on the same of furnishing of return of income by the resident payee referred to in the said proviso. In the present case, the assessee's spouse filed return of income offering the professional fee receipt for taxation. Thus, the assessee cannot be considered as an assessee in default under section 201 of the Act. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see and her spouse Dr. S.P. Ganesan and it cannot be taxed in the hands of the assessee alone. After considering the explanation of the assessee, the ld. CIT(A) has confirmed the order of the Assessing Officer observing that the acquisition of the land and sale are entered into the books of the assessee and therefore, the capital gains liability is considered in the hands of the assessee. 9.2. On being aggrieved, the assessee carried the matter in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that the assessee and her spouse entered into an agreement for the sale dated 22.04.2008 for the sale of the scheduled property and the sale consideration is Rs. 5,11,00,000/- and received only Rs. 5,00,00,000/-. No possession has been handed over and therefore, capital gains cannot be taxed in the assessment year 2009-10. It is further submitted that the assessee along with her spouse offered the capital gain tax on account of sale of the scheduled property in the assessment year 2013-14 and the Assessing Officer has taxed the same and submitted that the same amount of capital gain cannot be taxed twice. Thus, the ld. Counsel for the assessee prayed that the addi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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