M/S. HOSPITAL MANAGEMENT GROUP ORTHONOVA,NEW DELHI vs. ITO, NEW DELHI

This appeal filed by the assessee is directed against the order of the CIT(A)-XXVIII, New Delhi, dated 01/10/2013 for A.Y 2010-11 passed in first appeal No. 143/2012-13.

The effective grounds raised by the assessee read as under:

Apropos these grounds, we have heard the rival submissions and have carefully perused the relevant material on record. The ld. AR submitted that the ld. CIT(A) has erred on facts and in law in holding the addition made by the A.O illegally violative of principles of natural justice, without far and objective application of mind to the facts of the issue and law applicable and without being guided by the binding decisions of courts and tribunal hence the same may be set aside and quashed in toto. The ld. AR vehemently contended that the impugned addition to the tune of Rs. 14.66.250/- out of rent paid/claimed by the assessee has been made without any basis, thus the same should have been set aside by the ld. CIT(A). The ld. AR pointed out that he ld. CIT(A) noted that the impugned amount of rent has increased retrospectively and paid during the year after deducting the TDS and the assessee is maintaining its accounts as per mercantile system of accounting. Therefore, the ld. AR contended that the rent paid in pursuance to the demand of additional rent was made by the owner of the property during the year with retrospective effect was paid during the year after TDS has to be allowed irrespective of the fact it was related to previous year. 3

Per contra, the ld. counsel of the Revenue supported the action of the A.O and contended that the rent expenses claimed by the assessee does not relate to the year under consideration, hence the claim was rightly rejected.

On careful consideration of the above, at the very outset, we note that the impugned rent amount was the amount of addition rent which was enhanced as per lease deed at the request of the owner of the property during the year with retrospective effect. The assessee had no occasion to make any provision for the same in the earlier A.Y as the enhanced provisions was invoked by the owner during the financial year under consideration with retrospective effect. The AO has not alleged that he claim is bogus or property was not used for the business of the assessee. It is also not a case of the AO that the assessee made payment out of ambit of the lease agreement.

The ld. AR apropos these grounds contended that the CIT(A) has erred in law and on the facts in upholding the baseless addition made by the AO out of vehicle running and maintenance expenses and telephone expenses claimed by the assessee on the presumption of personal use. The ld. AR pointed out that there is no allegation of bogus claim and the partners of the firm have separate cars and telephone for personal use. Thus no disallowance can be made. The ld. DR replied that the assessee did not produce log book and details of car and telephone use.

On careful consideration of the above, from the assessment order, we note that the AO asked the assessee to submit details of car use log book and details of telephone and telex expenses, but he assessee failed to submit the same and the ld. AR fairly accepted before the AO that no log book and details of use of car, telephone and telex have been maintained. This failure prompted the AO to make disallowance of 10% of the total claim

Before us, it was vehemently contended by the ld. AR that the partners have separate cars and telephone for personal use but this fact was not brought to the notice of the AO and the CIT(A) during the proceedings. No details of even car and telephones maintained by the partners for personal use have been submitted neither before the authorities below nor even before the Tribunal. Thus, we decline to accept the contention of the assessee being baseless and devoid of merits.

In the result, the appeal of the assessee stands partly allowed.