NUECLEAR HEALTHCARE LTD.,MUMBAI vs. A.C.I.T. - 16(3), MUMBAI

We have carefully heard the arguments advanced by both the representatives. We have also perused relevant material on record including documents placed in the paper-book. Our adjudication to the subject matter of appeal would be as given in succeeding paragraphs.

The material on record would show that an assessment was framed against the assessee for the year under consideration u/s 143(3) on 29/03/2016 wherein the returned loss of Rs.23.32 Lacs was assessed M/s Nuclear Healthcare Limited Assessment Year: 2013-14 at income of Rs.13.88 Lacs under normal provisions. While framing the assessment, the assessee was, inter-alia, saddled with repairs & maintenance disallowance of Rs.12.73 Lacs and disallowance of deferred revenue expenditure of Rs.16.49 Lacs which form the subject matter of present appeal before us. The assessee being resident corporate assessee is stated to be engaged in the business of providing healthcare services. Disallowance of Repairs & Maintenance Expenditure 4.1 During assessment proceedings, it transpired that the assessee claimed deduction of Rs.20.38 Lacs under the head repairs & maintenance-buildings. Upon perusal of details filed by the assessee, it was observed by Ld.AO that an amount Rs.11.96 Lacs was paid to an entity namely M/s Proconvis Consultants Private Limited (Proconvis) for designing work of the premises. However, the invoices were issued in the name of M/s Thyrocare. Since the payment was stated to be not made by the assessee, the expenditure was disallowed and added to the income of the assessee. 4.2 Before Ld. CIT(A), the assessee pleaded that no new asset was created and the expenditure was in normal course of business to maintain the premises from where the business of the assessee was carried on and therefore, the same was an allowable deduction. The attention was drawn to the fact that the majority of expenditure include expenses incurred towards purchase of cables, copper strips, lights electrical fittings, painting material etc. which were towards general wear and tear of business assets. It was also submitted that the assessee and M/s Nuclear Healthcare Limited Assessment Year: 2013-14 M/s Thyrocare were group company and the vendor raised the invoices inadvertently in the name of M/s Thyrocare. However, the payments were made by the assessee after deduction of tax at source. The attention was also drawn to the fact that the actual payment paid to vendor after considering the discounts/credit notes issued by vendor was only Rs.3.58 Lacs as against Rs.11.96 Lacs wrongly noted by Ld. AO. However, the submissions were rejected since the assessee failed to adduce any proof to support the submissions and in view of the fact that the expenses were capital in nature. Aggrieved, the assessee is in further appeal before us. 4.3 Upon perusal of documents as placed in the paper-book, we find that M/s Proconvis has raised an invoice on 26/12/2012 for Rs.11.96 Lacs in the name of M/s Thyrocare. The invoice is stated to be for designing / execution work at certain premises. However, the ledger extract of the said vendor as appearing in assessee’s books would clearly show that the assessee, itself, has made payment of Rs.3,51,711/- only to the vendor on 30/03/2013 which has been cleared from assessee’s bank account on 10/04/2013. The amount of Rs.8.37 Lacs represent debit note issued by the vendor and the expenditure has been reversed to that extent. The assessee has deducted due tax at source from the aforesaid payment. These facts would rebut revenue’s allegations that the payments were not made by the assessee. The assessee’s explanation that the invoice was inadvertently issued by the vendor in the name of group concern was to be accepted. Regarding the nature of the expenditure, the complete details of the same was placed M/s Nuclear Healthcare Limited Assessment Year: 2013-14 before lower authorities and the expenditure was in the nature of designing work of certain premises from where the assessee’s buisness was being carried on. By expanding this amount, no new asset could be said to have come into existence and therefore, the expenditure was to be treated as revenue in nature. Finally, on the given facts and circumstances, the impugned disallowance of Rs.11.96 Lacs as made by Ld. AO could not be sustained in the eyes of law. By deleting the same, we allow grounds raised