SANDOR MEDICAIDS PRIVATE LIMITED,HYDERABAD vs. DCIT., CIRCLE-3(1), HYDERABAD

आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ DB-B‘ Bench, Hyderabad �ी रिवश सूद,�ाियक सद� एवं �ी मधुसूदन साविड़या लेखा सद� सम� | Before Shri Ravish Sood, Judicial Member A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No. 713/Hyd/2025 (िनधा�रण वष�/Assessment Year: 2022-23) M/s. Sandor Medicaids Vs. Deputy Commissioner Private Limited, of Income Tax HYDERABAD Circle 3(1) PAN: AADCS4168H Hyderabad (Appellant) (Respondent) िनधा�रती �ारा/Assessee by: Advocate Narhari Biswal राज� व �ारा/Revenue by: Shri Waseem UR Rehman, CIT (DR) सुनवाई की तारीख/Date of hearing: 23/07/2026 घोषणा की तारीख/Pronouncement: 05/08/2026 आदेश/ORDER Per Madhusudan Sawdia, A.M.:

This appeal is filed by M/s. Sandor Medicaids Private Limited (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) (“Ld. CIT(A)”) dated 13.02.2025 for the A.Y. 2022-23. 2. The assessee has raised the following grounds of appeal: “1. The Ld. CIT(A) erred in confirming the business promotion and selling & distribution expenses of Rs. 5,32,83,308/- without giving any reason and without

2 considering the explanations filed and without proper appreciation of facts. 2. The Ld. CIT(A) erred in not allowing set off of income with brought forward loss pertaining to AY 2020-21 of Rs. 11,44,10,943/- without considering the submissions made by the appellant company. 3. The appellant craves leave to add, alter or amend the above grounds of appeal before or in course of hearing.” 3. The brief facts of the case are that the assessee is a company engaged in the business of distribution of medical drugs, devices and equipment across India. The assessee filed its return of income for the assessment year 2022-23 on 01.11.2022, declaring a total income of ₹11,02,37,300 after claiming set-off of brought forward losses of ₹11,44,10,943 pertaining to the assessment year 2020-21. The case of the assessee was selected for complete scrutiny under CASS and, accordingly, notice under section 143(2) of the Income-tax Act, 1961 (“the Act”) dated 02.06.2023 was issued by the Learned Assessing Officer (“Ld. AO”). After considering the submissions of the assessee, the Ld. AO made various additions/disallowances and completed the assessment under section 143(3) read with section 144B of the Act vide order dated 27.03.2024, determining the total income of the assessee at ₹27,94,45,330. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT (A), who partly allowed the appeal of the assessee. 5. Aggrieved by the order of the Ld. CIT (A), the assessee is in appeal before this Tribunal. At the outset, the Learned Authorized Representative (“Ld. AR”) submitted that out of the various grounds raised in the appeal, only two issues survive for adjudication. The first issue relates to the

3 disallowance of ₹5,32,83,308 on account of business promotion and selling & distribution expenses, and the second issue relates to the non-grant of set-off of brought forward losses of ₹11,44,10,943. 6. With regard to the first issue i.e. disallowance of ₹5,32,83,308 on account of business promotion and selling & distribution expenses, the Ld. AR submitted that during the relevant previous year, the assessee was engaged in providing RT-PCR testing services during the COVID-19 pandemic pursuant to contracts entered into with the Government of Kerala. For execution of the said contracts, the assessee entered into agreements with six different service providers for carrying out the required services. It was submitted that copies of the agreements entered into with the said service providers are placed at page nos. 51 to 77 of the paper book. The Ld. AR further submitted that the expenditure of ₹5,32,83,308 claimed under the head “Business Promotion and Selling & Distribution Expenses” represents payments made to the said service providers for rendering RT-PCR testing services. However, the Ld. AO disallowed the expenditure without appreciating the fact that the services had actually been rendered through the said service providers. It was further submitted that the Ld. AO rejected the claim mainly on the ground that the assessee failed to furnish details of the persons on whom RT-PCR tests were conducted. According to the Ld. AR, such information could not be disclosed in view of the guidelines and directions issued by the Government regarding confidentiality of beneficiaries. He, therefore, prayed that the disallowance made by the Ld. AO be deleted.

4 7. Per contra, the Learned Departmental Representative (“Ld. DR”) relied upon the orders of the lower authorities. He submitted that even though assuming that the names and particulars of the beneficiaries could not be disclosed owing to Government guidelines, the assessee was still under an obligation to establish that the services had in fact been rendered through the six service providers. According to the Ld. DR, except producing copies of the agreements, the assessee has not furnished any documentary evidence to establish the actual rendering of services. The Ld. DR further pointed out that one of the alleged service providers was APR Jewellers Private Limited, which itself creates a serious doubt as to how a company engaged in the jewellery business could render specialized RT-PCR testing or other technical medical services. Accordingly, it was submitted that the assessee has failed to discharge the burden cast upon it to establish the genuineness of the expenditure claimed. 8. We have heard the rival submissions and perused the material available on record. There is no dispute regarding the fact that the assessee had undertaken RT-PCR testing activities during the COVID-19 pandemic pursuant to contracts awarded by the Government of Kerala during the relevant previous year. The only dispute relates to whether the assessee has adequately established that the services, for which the expenditure of ₹5,32,83,308 has been claimed, were actually rendered through the six service providers to whom the payments were made. On perusal of the material available on record, we find that except placing on record copies of the agreements entered into with the six service providers, the assessee has not produced any documentary evidence to establish that the services were in fact rendered through the

5 said entities. In our considered opinion, mere execution of an agreement by itself does not establish that the contracted services were actually performed. The assessee is required to substantiate the actual execution of the work by producing appropriate documentary evidence such as invoices, work orders, completion reports, deployment records, supporting correspondence, payment records linked with execution of work, confirmations from the service providers, or any other contemporaneous evidence demonstrating actual rendering of services. We also find force in the contention of the Ld. DR that the nature of one of the service providers, namely APR Jewellers Private Limited, raises a legitimate issue requiring further verification as to the exact nature of services rendered by such entity and the manner in which it was capable of providing RT-PCR testing-related services. This aspect also requires proper examination by the Ld. AO. At the same time, we find merit in the contention of the assessee that the details of the individual beneficiaries who underwent RT-PCR testing may not have been capable of being disclosed in view of the applicable Government guidelines relating to confidentiality during the COVID-19 pandemic. Therefore, the absence of such particulars alone cannot be made the sole basis for rejecting the entire claim. Considering the totality of the facts and circumstances of the case, and in the interest of substantial justice, we are of the considered opinion that one more opportunity deserves to be granted to the assessee to substantiate its claim by producing adequate documentary evidence demonstrating that the services were actually rendered through the six service providers and that the expenditure claimed was incurred wholly and exclusively for the purposes of its business. Accordingly, we set aside the

6 orders of the lower authorities on this issue and restore the matter to the file of the Ld. AO for de novo examination. The assessee shall be at liberty to produce all supporting documentary evidence in support of its claim. The Ld. AO shall examine the same in accordance with law, after providing adequate opportunity of being heard to the assessee and thereafter pass a speaking order in accordance with law. 9. With regard to the second issue, the Ld. AR submitted that the assessee had claimed set-off of brought forward business losses pertaining to the assessment year 2020-21 amounting to ₹11,44,10,943. However, the Ld. AO denied the claim without properly verifying the relevant records and documentary evidence available in support of the brought forward losses. The Ld. AR, therefore, prayed that the issue may be restored to the file of the Ld. AO for fresh verification and adjudication in accordance with law. 10. Per contra, the Ld. DR relied upon the orders of the lower authorities. 11. We have heard the rival submissions and perused the material available on record. We find that the claim of the assessee regarding the set-off of brought forward business losses amounting to ₹11,44,10,943 has not been examined by the Ld. AO with reference to the relevant records and supporting documentary evidence. Since the allowability of such set-off depends upon verification of the records relating to the earlier assessment year and other statutory requirements under the Act, the issue requires proper factual verification. Considering the totality of the facts and circumstances of the case, and in the interest of substantial justice, we deem it appropriate to set aside the orders of the

7 lower authorities on this issue and restore the matter to the file of the Ld. AO for de novo adjudication. The assessee shall be at liberty to place on record all relevant documentary evidence in support of its claim for set-off of the brought forward business losses. The Ld. AO shall verify the claim in accordance with the provisions of the Act and decide the issue afresh by passing a speaking order, after affording adequate opportunity of being heard to the assessee.

Order pronounced in the Open Court on 5th August, 2026. Sd/- Sd/- (RAVISH SOOD) (MADHUSUDAN SAWDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, dated 5th August, 2026. Vinodan/sps Copy to: S.No Addresses 1 M/s. SANDOR MEDICAIDS PRIVATE LIMITED 8-2-326/5, 4TH FLOOR PLOT NO 1 ,ROAD NO 3 BANJARA HILLS HYDERABAD 500034 ,Telangana 2 Dy. CIT Circle 3(1) Room No.714 7th Floor, Signature Towers, Opp: Botanical Gardens, Kondapur Hyderabad 500081 3 Pr. CIT , Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File

By Order TUMMALACHARLA Digitally signed by TUMMALACHARLA LAKSHMI NARAYANA DN: cn=TUMMALACHARLA LAKSHMI LAKSHMI NARAYANA, c=IN, o=INCOME TAX APPELLATE TRIBUNAL, ou=INCOME TAX NARAYANA APPELLATE TRIBUNAL, CHENNAI BENCH Date: 2026.08.05 14:30:19 +05'30'