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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 ..... accepted by Ld. AO as well. To support his case, Ld. AO has drawn comparison between the two entities. However, as rightly noted by Ld. CIT(A), the profitability of the two entities could not be compared since MMHRC was a charitable entity having objects of Charity whereas MH was run on commercial basis. Pertinently, MH was a super specialty hospital having no competition. Therefore, to say that both the entities should have same profitability would not be a correct proposition - Thus 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. Addition based on 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 impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciated the fact that the AO has rightly disallowed the deduction as the hospital has tried to show more profit while it is claiming tax deduction u/s. 80IB(11C), which will in turn be enjoyed by the management of the Hospital, whereas the charitable organization has to apply its income towards the objects of the trust and cannot be shared by the trustees. 2.4 The learned CIT(A) erred in not appreciating the larger picture, though AO has rightly made the disallowance, as Monica Group was the only major supplier of medicines to MMHRC, the charitable insttn, and the payments made were withdrawn from bank accounts of Monica group by way of cash. 2.5 The Id CIT(A) failed to appreciate that the assessee had deposited Rs12.42 crores between 8.6.14 16.11.14, i.e, a span of just five and half months into the HDFC current a/c no. 24500. 2.6 The learned CIT(A) erred in not considering that the assessee had transferred the funds amounting to Rs.5.8 crores on 30.08.2014 from MMHRC, Madurai, HDFC. A/c no. 04416 to MH, Tanjore, A/c no. 24499. 2.7 The learned CIT(A) erred in not considering that the. assessee had transferred the funds amounting to Rs 6.0 crores on 15.09.2014 from SBI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see was subjected to search action u/s 132 on 26.11.2014 and notices were issued u/s 153A. The assessee offered the original return of income whereas Ld. AO assessed income at Rs.794.04 Lacs. The increase in income primarily stem from the fact that Ld. AO had restricted the deduction u/s80IB to the extent of 50% and added the balance profits as unaccounted income under the head income from other sources . 4.3 The deduction was so restricted by Ld. AO on the allegation that assessee suppressed turnover and inflated expenses of MMHRC by siphoning-off the trust funds for personal investments in various properties including construction of new hospital building at Tanjavur for MH. Simultaneous searches were also conducted in the case of trust, trustees and also in the case of one Shri T. John Rajasekhar of Monica Group of concerns. Shri T. John Rajasekhar was stated to be an exclusive supplier of drugs and surgical material to the MMHRC trust at Madurai. On the basis of search findings, it was concluded that funds were siphoned-off from MMHRC by the assessee through some of the suppliers especially through Monica Group which was evident from the fact that unaccounted income was det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 10 EB Charges 4,69,74,972 2.05 1,46,34,048 2.32 11 Visiting fees 2,08,18,201 0.91 22, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and additional income of Rs.1242.12 Lacs was admitted as well as offered in the return of income. The said amount was stated to be gifts / donations received from friends, patients etc. who visited the hospital and consultation charges received by the assessee from third parties. These receipts were stated to be obtained purely in personal individual capacity and not related to receipts of MH. The Ld. AO has also accepted the same. However, adopting the same reasoning 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 diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A), inter-alia, on the ground that the time limit to issue notices u/s 143(2) had not expired. 5.5 The Ld. CIT(A), after considering assessee s submissions, noted that there were two types of software installed by the assessee i.e., one for the hospital receipts and control which was called as Backbone software and other for accounting purposes which was called the Tally software . The difference in total receipts in the two accounting software was Rs.1242.12 Lacs. This difference was already 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 revolv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Date Cash collection as per back bone software Cash collection as per Tally software Difference (3-2) Amount deposited in the HDFC current no. 50200000524500 1 2 3 4 5 08.06.2014 4,72,304 1,09,93,182 1,05,20,878 1,03,00,000 11.06.2014 12,74,103 84,99,973 72,25,770 1,02,00,000 12.06.2014 9,9,4,009 88,28,276 78,34,267 65,66,500 13.06.2017 12,17,385 71,13,383 58,95,998 55,00,000 02.07.2014 12,21,430 66,77,017 54,55,587 50,00,000 04.07.2014 7,89,652 40,56,254 32,66,602 29,52,000 22.07.2014 9,08,724 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uise of purchases which was withdrawn and paid back to the assessee. The said cash, in turn, is alleged to have been introduced in MH to inflate hospital receipts with a view to claim higher deduction u/s 80IB(11C). However, the said allegation would have no legs to stand in the light of the fact that Shri T.John Rajasekhar admitted additional income of over Rs.12.35 Crores before Hon ble Income Tax Settlement Commission (ITSC) to account for various discrepancies found in the books and bank accounts. The Hon ble ITSC determined the additional income at Rs.22.35 Crores and in its order observed as under: .......................................... However, the 245D(3) report has not made out any case with supporting evidence for returning the cash withdrawals by the Applicant to Meenakshi Mission Hospital, Madurai, even though both the cases were searched simultaneously............... Therefore, the conclusion that the cash was returned back to the assessee could not be upheld. As rightly noted by Ld. CIT(A), except for difference in receipts in two accounting software, there was no other evidence / information to show that the assessee had been receiving income from other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee trust. The Hon'ble Gujarat High Court in the case of PCIT vs. Tejua Rohit kumar Kapadia, (2018) 94 taxmann.com 324 held that when the purchases made by the assessee were duly supported by bills and payments were made by account payee cheque and there was no evidence to show that amount was recycled back to the assessee moreover when the sales out of the purchases was accepted by the Revenue, the purchases cannot be treated as bogus. This decision of the Hon'ble Gujarat High Court was affirmed by Hon'ble Supreme Court by dismissal of SLP in PCIT vs. Tejua Rohit kumar Kapadia, (2018) 94 taxmann.com 325. There is long line of authorities following the similar ratio, The facts of the present case are identical to the case of Tejua Rohit kumar Kapadia (supra). In the light of the settled position of law, it cannot be concluded that assessee trust had indulged in the act of inflation of the cost of purchase of pharmacy and surgical items, Thus, the allegations of the Assessing Officer that the funds of the assessee trust have been diverted for the benefit of specified person of the assessee trust remains unsubstantiated. Therefore, it cannot be said that the benefit ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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