Income Tax Appellate Tribunal - Jaipur
Asstt. Cit vs Smt. Rekha Bhandari on 23 March, 2004
Equivalent citations: [2004]1SOT98(JP)
ORDER
By the Court This is an appeal filed by the department against the order of the learned Dy. CIT (A) dated 16-12-1997 for the assessment year 1992-93.
2. The assessee is a medical practitioner and running Nursing Home in the name and style as Bhandari Nursing Home, which is a proprietary concern. During scrutiny, the AO found that assessee was not maintaining Indoor Patient Register as prescribed in rule 6F. So by applying section 145, he made the addition of Rs. 40,000 under the head of Trading Account. But the same was deleted by the first appellate authority.
3. After hearing both the parties and on perusal of record, we agree with the order of the AO who has applied section 145. Its application is hereby upheld for the reasons mentioned in the order of the AO. When section 145 is applied, then the only recourse left is to make the addition on estimate basis. But the addition made by the AO in the instant case is looking on higher side due to peculiar facts as mentioned by the Dy. CIT (A) in his order. Therefore, by modifying both the orders of the lower authorities, we restrict the addition to Rs. 20,000. Thus, the assessee will get the relief of Rs. 20,000 from the order of the AO.
4. The second disallowance is of Rs. 3,611. The assessee has purchased an idol of Lord Shiva which was installed in the hospital for a sum of Rs. 3,111. In addition to that, the assessee has given donation of Rs. 500 for the election campaign of the students. The AO has disallowed both the expenditures under the head Miscellaneous Expenses. But the first appellate authority has deleted the said additions.
5. After hearing both the parties and considering the circumstances of the case, we are of the view that the idol of Lord Shiva was installed in the hospital for the purpose of business as it inspires the patients and doctors as well. Needless to mention that doctor is next to God for the patient. Therefore, we agree with the order of the first appellate authority who has rightly deleted the addition of Rs. 3,111. The same is hereby upheld.
6. However, we do not agree with the order of the first appellate authority pertaining to donation of Rs. 500 for the students election campaign as it has no link with the business. Therefore, the addition of Rs. 500 made by the AO is hereby sustained by setting aside the order of the first appellate authority.
7. The next grievance of the department is pertaining to disallowance of Rs. 8,038 under the head of Advertisement expenses.
8. The assessee has organized a function on the inauguration of the hospital and the expenses were incurred for the cold drinks, sweets, etc. The AO found these expenses as not related to the business. So he has disallowed a sum of Rs. 8,038 but the said addition was deleted by the first appellate authority.
9. After hearing both the parties on perusal of record, it appears that the new building in the hospital was inaugurated on 3-6-1991 and the said expenses were incurred for arranging the function which appears a part of the publicity. Therefore, we are of the view that the said expenses were for business purposes. But the same is looking on higher side in the peculiar facts and as mentioned by the AO in his order, Therefore, by modifying both the orders of the lower authorities, we restrict the addition to Rs. 3,000 only. Thus, the assessee will get the relief of Rs. 5,038 from the order of the AO. This ground is partly allowed.
10. The last grievance of the department is pertaining to depreciation on building of Rs. 85,772.
11. The AO has not allowed depreciation on the hospital building but the first appellate authority considering the hospital as plant as per ratio laid down by the Karnataka High Court in the case of CIT v. Dr. B. Venkata Rao (1993) 202 ITR 303 (Karn) deleted the said addition. It may be mentioned that the ratio laid down by Karnataka High Court in the abovementioned case was upheld by Honble Supreme Court in the case of CIT v. Dr. B. Venkata Rao (2000) 243 ITR 81 (SC). In the said case Honble Supreme Court has allowed depreciation @ 10% by considering the Nursing Home Building as Plant. By keeping in mind the ratio laid down by Supreme Court, we find no reason to interfere with the order of the Dy. CIT (A) who has rightly deleted the addition of Rs. 85,772. The same is hereby upheld alongwith the reasons mentioned therein.
12. In the result, appeal filed by the department is partly allowed as stated above and announced in the open court.