Case Law Details
S. Gurushankar Vs CIT (Madras High Court)
The issue under consideration is whether the AO is correct in disallowing deduction u/s 80-IB i.e tax holiday for 5 years in case of assessee?
In the present case, the petitioner, is the Chairman of the Meenakshi Mission Hospital and Research Centre, Madurai. He had set up a hospital in Nilgiri Therku Thottam Village, Thanjavur Taluk, and District, to help the rural people. As per secttion 80-IB(11C), grant of five years’ tax holiday allowed to encourage hospitals to be set up anywhere in India, except certain specified urban areas and to be particularly set up in Tier-2 and Tier-3 towns to serve the rural people. The Assessing Officer had examined the returns of the petitioner wherein it was found that the tax holiday was claimed by the petitioner on the grounds that he purchased medical equipment in the guise of treating poor persons. It is subsequently found that the entire transaction is bogus. Consequently, the AO disallowed the tax holiday and invoked Section 115JC of the Income Tax Act.
ITAT states that, it has to be pointed out that any tax holiday can be granted to a person who declares a truthful return. It cannot and should not be granted to the person who claims that he purchased medical equipments in the guise of treating poor persons and it is subsequently found that the entire transaction is bogus. Further, it also reveals that during the demonetization period, the petitioner had deposited a total sum of Rs.7,54,77,619/- in cash, and when the assessee was asked to explain the source, he stated that he was running Meenakshi Mission Hospital at Thanjavur, for which, the tax holiday is now being sought. The hospital has been the source for a huge cash holding of Rs. 7,54,77,619/-. It is a wonder that the petitioner actually seeks tax holiday.
Accordingly, writ petition is dismissed.
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