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Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH
Before: Shri Mahavir Prasad & Shri Amarjit Singh
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH Before: Shri Mahavir Prasad, Judicial Member And Shri Amarjit Singh, Accountant Member ITA No. 2417/Ahd/2016 Assessment Year 2012-13
M/s. GI Healthcare Pvt. The DCIT, Ltd. (Kazen Hospital), Circle-2(1)(1), 132 Ft. Ring Road, Vs Ahmedabad-380022 Nr. Helmet Circle, (Respondent) Memnagar, Ahmedabad-380052 PAN: AADCG4824E (Appellant)
Revenue by: Shri Lalit P. Jain, Sr. D.R. Assessee by: Ms. Urvashi Shodhan, A.R. Date of hearing : 15-01-2019 Date of pronouncement : 31-01-2019 आदेश/ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-
This assessee’s appeal for A.Y. 2012-13, arises from order of the CIT(A)-2, Ahmedabad dated 16-08-2016, in proceedings under section 271(1)(c) of the Income Tax Act, 1961; in short “the Act”.
The solitary ground of appeal of the assessee is against the levy of penalty of Rs. 3,27,468/- u/s. 271(c) of the act.
I.T.A No. 2417/Ahd/2016 A.Y. 2012-13 Page No 2 M/s. G I Healthcare Pvt. Ltd. vs. DCIT
The fact in brief is that during the assessment made u/s. 143(3) of the act the assessing officer has made disallowance of following amounts:- (i) capitalization of interest u/s. 36(1)(iii) Rs. 9,22,418 (ii) Addition on account of income Rs. 1,07,359 Regarding capitalization of interest u/s. 36(1)(iii), the assessee was asked to furnish the detail of loan amount, purchase of assets and working of interest till the date of putting of use of assets. In response the assessee has explained that no portion of interest was capitalized in respect of machineries as there was no time difference requiring the same as to acquisition and put to use. In this connection, the assessee has explained that it has inaugurated Kaizen Hospital on 27h Nov, 2011 and furnished the detail of interest in the period 01-04-2011 as under:- Total For I- or For Particulars Building Furniture Equipments 1,49,175 22,449 1,26,726 Interest on Loan from State Bank of India Interest on Loan from 8,21,791 3,48,459 80,347 3,92,985 Nutan Nagrik Sahakari Bank Ltd. 9,70,966 3,70,908 2,07,073 3,92,985
After verification of the detail submitted by the assessee the assessing officer has capitalized the interest of Rs. 9,70,966/- and allowed deprecation to the amount of Rs. 48,548 and added the remaining amount of Rs. 9,22,418 to the total income of the assessee by treating the same as capital expenditure.
I.T.A No. 2417/Ahd/2016 A.Y. 2012-13 Page No 3 M/s. G I Healthcare Pvt. Ltd. vs. DCIT
Regarding second addition on account of interest income during the assessment, the assessing officer noticed that assessee has received the following amounts from the three parties which were not credited in the P & L a/c (i) Torrent Power Limited Rs. 12359 (ii) Ranbaxy Laboratory Ltd. Rs. 50000 (iii) Cipla Ltd. Rs. 45000 ------------- Rs.107359 The assessee could not explain the same therefore the assessing officer has added the same to the total income of the assessee. The assessing officer has also initiated penalty proceedings u/s. 271(1)(c) of the act for furnishing inaccurate particulars of income. The assessing officer has show caused the assessee to explain why the penalty on the aforesaid addition should not be levied u/s. 271(1)(c) of the act. The assessee has explained that there was only disallowance/addition but noting has been proved to show concealment of income which was envisaged u/s. 271(1)(c) of the act. The assessee has also placed reliance on the decision of Hon’ble Supreme Court in the case of Reliance Petro Products 322 ITR 158 (2010). The assessing officer was not satisfied with the explanation furnished by the assessee and held that assessee had furnished inaccurate particulars of income and also failed to substantiate reasonable and satisfactory explanation therefore the assessing officer had levied penalty of Rs. 527468/- u/s. 271(1)(c) of the act.
Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has confirmed the penalty levied by the assessing officer.
I.T.A No. 2417/Ahd/2016 A.Y. 2012-13 Page No 4 M/s. G I Healthcare Pvt. Ltd. vs. DCIT
We have heard the rival contentions and perused the material on record carefully. The assessing officer has levied penalty under section 271(1)(c) of the act to the amount of Rs. 3,27,468/- on the ground of furnishing inaccurate particulars of income in respect of the following additions made in the assessment order u/s. 143(3) finalized on 30-07-2015:-
(i) capitalization of interest u/s. 36(1)(iii) Rs. 9,22,418 (ii) Addition on account of income Rs. 1,07,359
In respect of capitalization of interest of Rs. 9,22,418/, we observe that assessee has obtained loan from the State Bank of India and Nutan Nagrik Sahakari Bank Ltd. which has been utilized for the purpose of building furniture and equipment of Kaizen Hospital inaugurated on 27-11-2011. The assessee explained during the course of assessment proceedings that portion of interest paid was capitalized as there was no time difference requiring the same as to acquisition and put to use. In this regard, it is observed that the small amount of bank loan of Rs. 9,70,966/- has been used for three components i.e. building furniture and equipment at different stages therefore, the assesssee has claimed such part of expenses as revenue expenditure instead of claiming depreciation on capitalization of such expenses. In the light of the above facts, we do not find it appropriate to consider that there is a case of furnishing inaccurate particular of income. Therefore, we are of the view it is not justified to levy penalty on the impugned amount of Rs. 9,70,966/-. However in respect of revenue receipt of Rs. 1,07,359 received as per TDS certificate which was not credited in the P & L a/c, we observe that the assessee has failed to substantiate with any
I.T.A No. 2417/Ahd/2016 A.Y. 2012-13 Page No 5 M/s. G I Healthcare Pvt. Ltd. vs. DCIT
material that why the impugned receipt was not disclosed in its income. Therefore, we consider that the assessee has furnished inaccurate particulars of income to the extent of Rs. 1,07,359 and we justify the action of the assessing officer of levying the penalty u/s. 271(1)(c) of the act. Accordingly, we direct the assessing officer to restrict the penalty as supra, therefore, the appeal of the assessee is partly allowed.
In the result, the appeal of the assesse is partly allowed.
Order pronounced in the open court on 31-01-2019
Sd/- Sd/- (MAHAVIR PRASAD) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 31/01/2019 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद