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Income Tax Appellate Tribunal, Circuit Bench, Varanasi
Before: Shri B.R. Baskaran (AM) & Shri Amit Shukla (JM)
The assessee has filed this appeal challenging the order dated 13.3.2019 passed by the learned CIT(A), Varanasi and it relates to A.Y. 2013- 14. The assessee is aggrieved by the decision of the learned CIT(A) in confirming the disallowance of discount expenses and also disallowance of ROC fees.
The assessee is running a hospital. The return of income filed by the assessee for A.Y. 2013-14 was taken up for scrutiny. The Assessing Officer noticed that the assessee has claimed a sum of Rs. 17,32,944/- as deduction under the head “Discount given to the patients”. The Assessing Officer asked the assessee to furnish the evidences for the payment of discount. The assessee furnished sample copies of the vouchers and explained the methodology adopted for giving the discounts. Since the discount claim is supported by self made vouchers, the Assessing Officer took the view that the 2 Opal Hospital (P) Ltd.
assessee has not fully proved the genuineness claim of discount expenses and accordingly disallowed the same. The Assessing Officer also noticed that the assessee has claimed ROC expenses to the tune of Rs.31,561/-, which included Fees of Rs.3,900/- and late payment fee of Rs.600/- paid to Registrar of the companies for increase in the authorized capital. The Assessing Officer disallowed the above said expenses alsofor want of evidences.
Before Ld CIT(A), the assessee made detailed submissions on the discount claim. Hence the Ld CIT(A) called for a remand report from the AO. Though the assessee replied to various points raised by the assessing officer, yet the Ld CIT(A) concurred with the view of the AO and accordingly confirmed the disallowance of discount expenditure. With regard to the disallowance of ROC fees, the learned CIT(A) deleted the addition to the extent of Rs. 27,661/- as it consisted of professional fees payment and expenses incurred on obtaining digital signature. With regard to the balance amount of Rs. 3,900/- the learned CIT(A) took the view that the expenditure incurred for increasing authorised capital is capital in nature and accordingly confirmed the same. Aggrieved the assessee has filed this appeal before the Tribunal.
We heard the parties and perused the record. The first issue relates to the disallowance of discount expenses. We notice that the assessee has submitted before tax authorities that the patients usually ask for discount at the time of discharge and the entire amount of discount is given against the medicine bills. It was submitted that the discount given to each person can be linked with the patients register, i.e., the discount is given only to the patients. We notice that the tax authorities have taken the view that the discount is supported by self made vouchers. However, the moot point here is that it is the assessee which is giving discount to the patients, i.e., the 3 Opal Hospital (P) Ltd.
assessee is collecting lesser amount than what was billed to the patients. Hence the discount can only be supported by self made vouchers only.
We notice that the AO did not make any enquiry with any of the patients in order to prove that the discount claim is excessive or bogus in nature. It is in the common knowledge of everyone that the hospitals usually give discounts in case the billed amount is beyond the capacity of the patients. It is also not the case of the AO that the discount claim is excessive vis-à-vis market trend. The Ld A.R also pointed out that the aggregate amount of discount expenditure only works out 2% of the gross receipts and he also submitted that the claim is not abnormal in the year under consideration. We notice that the AO did not examine the patients register all. If he had examined the patient register, he could have verified as to whether the discount given to each of the patients is commensurate with the billing done. Without carrying out the required verification/examination, in our view, the AO has come to conclusion that the discount expenditure could not be verified. As noticed earlier, it is the assessee who has given discount to the patients and if at all, the AO is doubting the claim of discount expenditure, either he could have carried out necessary enquiries with the patients or he could have examined the quantum of expenditure vis-à-vis billing done. None of these has been done. Under these set of facts, we are of the view that the AO has disallowed the claim of discount expenditure only on surmises and conjectures. Accordingly, we are of the view that the Ld CIT(A) was not justified in disallowing the claim of discount expenditure. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the disallowance of discount expenditure.
The next disallowance made is related to disallowance of ROC fees amounting to Rs.3,900/-. We notice that the assessee has increased the authorized capital and hence it has paid fees to ROC. It is not the case of the 4 Opal Hospital (P) Ltd.
AO that the assessee has started any new project to which the above said fees could be linked. There is no finding that there is augmentation of the capital also in this year. Accordingly, we are of the view that the above said amount cannot be considered as capital in nature. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete this disallowance also.
In the result, the appeal filed by the assessee is allowed.
Order pronounced on 09.11.2023.