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TMI Blog2022 (5) TMI 1174X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the Assessing Officer to delete the disallowance of deduction u/s 80IB of Rs.3,34,51,938/- 2.1 The learned CIT(A) ought to have appreciated the fact that the AO has rightly compared the two concerns as all the conditions for comparison are satisfied i.e., both MMHRC & MH are in the same field of providing medical services, they are both in the same state and in adjacent cities, there are no time differences and both are being managed by the assessee, Dr. Gurushankar, as Vice-Chairman of M/s Meenakshi Mission Hospital and Research Centre, Madurai and as also the head of M/s Meenakshi Hospital, Tanjore. 2.2 The learned CIT(A) ought to have appreciated the fact that the AO has compared the Turnover in the two cases with respect to the investment in medical equipment only to bring out the fact that the proprietary/ corporate hospital has tried to show more profit margin as it will be enjoying deduction u/s. 80IB(11C) for a restricted period of 5 years, whereas the charitable organization is eligible to claim exemption of its entire income u/s. 11 if it is able to show application of 85% of its income towards charitable activities only. 2.3 The learned CIT(A) ought to have appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . AR, on the other hand, controverted the stand of Ld. CIT-DR and drew attention to the findings given by Income Tax Settlement Commission (ITSC) in the case of Shri T. John Rajasekhar. The Ld. AR also assailed the confirmation of additions as sustained by Ld. CIT(A) in the impugned order. Having heard rival submissions and upon perusal of relevant material on records, our adjudication would be as given in succeeding paragraphs. Assessment Proceedings 4.1 The assessment for AY 2014-15 was framed u/s 143(3) r.w.s. 153A on 31.12.2016. The assessee is a Doctor by profession. The assessee is Vice-Chairman of a trust namely S.R. Trust which runs M/s Meenakshi Mission Hospital and Research Centre, Madurai (MMHRC). During October, 2009, the assessee acquired certain land in Tanjavur and constructed a super specialty hospital by the name Meenakshi Hospital (MH) which started functioning during January, 2013. From AY 2013-14, MH was eligible for deduction of 100% of its profits u/s 80-IB(11C) of the Act. Accordingly, for AY 2014-15, the assessee filed return of income at Rs.130.98 Lacs on 30.09.2014 after claiming deduction u/s80IB for Rs.1323.09 Lacs. 4.2 The assessee was subjected to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Ld. AO that the assessee was in the habit of introducing unaccounted income in the guise of 'IP collection advances' in the account of MH. 4.5 Based on these facts, Ld. AO alleged that the profit of Rs.1323.09 Lacs as earned by MH was not acceptable, this being only the second year of start of hospital. In comparison, MMHRC had medical equipment of more than 181 Crores whereas MH had only 3.97 Crores worth of medical equipment. The comparative analysis between MMHRC and MH was tabulated as under: - S.No. Financial Parameters for FY 2013-14 MMHRC, Madurai (in Rs.) As % of turnover Meenakshi Hospital, Thanjavur (in Rs.) As % of turnover 1 Turn Over 229,22,70,873 63,11,37,009 2 Cash at locker 255,69,11,919 111.54 59,24,16,363 93.86 3 IP collection 85,10,26,583 37.13 18,64,94153 29.55 4 IP Collection 140,75,62,997 61.40 25,61,81,454 40.59 5 OP Collection 31,92,18,205 13.93 7,19,88,742 11.41 6 Pharmacy sales 55,98,06,651 24.42 9,26,83,624 14.69 7 Purchase of materials 58,29,51,503 25.43 111,937,975 17.74 8 Purchase of 40,50,14,324 17.67 7,43,48,961 11.78 9 Consultation fees 26,37,87,099 11.51 4,13,48,428 6.55 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng as for AY 2014-15, Ld. AO restricted the deduction u/s 80IB to the extent of 75% and denied deduction of remaining 25% of the profits earned by MH. 4.7 The Ld. AO made another addition of Rs.26.52 Lacs in AY 201516. The same was on account of the fact that actual IP collections on 20.08.2014 were Rs.10.26 Lacs only as against Rs.56.95 Lacs as shown and therefore, the balance amount of Rs.46.68 Lacs was introduced by the assessee which was liable to be taxed as unaccounted cash introduced by the assessee. Since, the assessee admitted income of Rs.1262.28 Lacsinstead of Rs.1242.12 Lacs as offered during the course of search, the telescoping difference of Rs.20.16 Lacs was granted to the assessee and differential amount of Rs.26.52 Lacs was added to the income of the assessee. 4.8 Aggrieved as aforesaid, the assessee contested the additions before Ld. CIT(A) wherein the appeals were disposed-off vide common order dated 14.09.2018. Appellate proceedings 5.1 During appellate proceedings, the assessee pleaded that there was no inflation of hospital receipts in MH as alleged by Ld. AO. The difference found in two accounting software was already offered to tax and therefore, restric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lready admitted by the assessee and amount of Rs.1262.28 Lacs was offered in the return of income. Except for the said difference of Rs.1242.12 Lacs, there was no other evidence / information to show that the assessee had been receiving income from other sources or had been inflating hospital receipts in order to claim higher deduction u/s 80IB. The main reason for Ld. AO to disallow part of deduction was the mere suspicion that the amounts were siphoned-off from MMHRC in the form of purchase of medicines from Monica Group and the cash came back to the assessee which was introduced in MH as hospital receipts. However, the entire issue of disallowance of part of 80-IB(11C) deduction revolved around suspicion only without there being any concrete evidences. 5.6 The Ld. CIT(A) further noted that there was no evidence that the money paid by MMHRC was returned to the assessee. Apparently, there were no confessions/statements in this regard and therefore, it was not possible to hold that any part of the hospital receipts of MH represent the amounts siphoned-off from MMHRC, Madurai and routed through the Monica Group. This was further evidenced by the fact that Shri Rajasekhar filed an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 014 9,08,724 62,19,779 53,11,055 50,00,000 23.07.2014 9,26,524 58,11,913 48,85,389 49,50,000 24.07.2014 9,54,105 72,31,302 62,77,197 60,00,000 25.07.2014 8,43,896 66,30,607 57,86,711 54,60,000 16.09.2014 10,85,796 84,48,466 73,62,670 70,00,000 17.09.2014 11,27,999 86,68,075 75,40,076 73,34,000 17.10.2014 16,89,418 1,32,77,266 1,15,87,848 1,17,50,000 09.11.2014 4,58,530 1,43,22,071 1,38,63,541 1,37,00,000 10.11.2014 11,82,719 1,15,35,181 1,03,52,462 1,00,00,000 11.11.2014 10,81,550 63,53,460 52,71,910 50,00,000 16.11.2014 5,97,532 83,88,151 77,90,619 75,00,000 Total 1,68,25,676 14,30,54,256 12,62,28,580 12,42,12,500 Thus, the difference of Rs.46.68 Lacs as found on 20.08.2014 was not part of the difference of Rs.1242.12 Lacs. However, as against difference of Rs.1262.28 Lacs, the assessee already admitted professional receipts of Rs.1284.94 Lacs and thus, the assessee had admitted excess income of Rs.22.65 Lacs over and the above the actual difference of Rs.1262.28 Lacs which need to be tele scoped. In other words, the addition of differential of Rs.24.03 Lacs was to be confirmed as against Rs.26.52 Lacs considered by Ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ys 2009-10 to 2015-16. The appeals were dismissed by the bench, inter-alia, with the following observations: - We find that findings of the Id. CIT(A) are based on the appreciation of material on record. We are unable to discern from the assessment order that the Assessing Officer had made available to the assessee-trust the information available with him alleged to be against the assesses trust for the purpose of rebuttal. There is no material brought on record proving the nexus between withdrawal of the from bank account of T, John Rajasekar and the deposits made in the bank accounts of Dr. Gurusankar. Admittedly, even the said T, John Rajasekar had not admitted that money was paid back to managing trustee of the assessee trust. Even if we are to believe that said Shri. T. John Rajasekar was indulging in providing accommodation entries, it cannot be concluded that he had provided accommodation entries to trust, in the absence of any evidence to this effect. Even the materials seized does not indicate any inflation of purchase of assessee trust. The deposits in the bank account of Dr. Gurusankar stands explained, More importantly, in the proceedings before the Income Tax Settlem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the impugned order before us. 9. Therefore, on the given facts and circumstances of the case, the impugned order in granting full deduction u/s 80IB could not be faulted with. Concurring with the stand of Ld. CIT(A), we dismiss revenue's appeals for both the years. 10. Regarding addition of Rs.24.03 Lacs as sustained by Ld. CIT(A), it could be noted that there was difference of Rs.1242.12 Lacs during the entire period from 01.04.2014 to 26.11.2014 (i.e., date of search). The assessee reconciled whole of the receipts between two software and finally arrived at difference of Rs.1262.28 Lacs and offered the same to tax in the return of income. Therefore, the separate addition of difference of a particular day would not be justified since the same has to be considered to be part and parcel of total difference as offered by the assessee. Therefore, by deleting the impugned addition, we allow the cross-objection of the assessee. The separate addition, as sustained by Ld. CIT(A) in AY 2015-16 stand deleted. We order so. The assessee's cross-objection stand allowed. Conclusion 11. The revenue's appeals stand dismissed whereas the assessee's cross-objection stand allowed in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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