Case Law Details
RELEVANT PARAGRAPH
3. The first question pertains to disallowance of assessee’s claim of deduction on salary paid to doctors, staff and depreciation for car, furniture, etc. in the determination of professional income of the assessee. The assessee’s grievance is that the Tribunal rejected the claim for the reason that the claim was made for the first time before the Tribunal and the assessee never raised the issue in assessment before the officer or in first appeal before the first appellate authority.
Admittedly, the assessee did not make such a claim in the assessment or in first appeal. Accordingly to the assessee the claim pertains to salary paid to two doctors and staff members and the depreciation allowable. On furniture, fixtures. car, etc. However, the assessee’s claim before the Tribunal was only on estimation basis and not on actuals. The Tribunal rejected the claim on the ground that the claim made for the first time before it cannot be entertained. The assessee has relied on the decision in PP. VARKEY & COMPANY V. DY. CST (LAW), BOARD OF REVENUE (TAXES), 84 STC 383 and that of the Supreme Court in CIT V. STEPWELL INDUSTRIES LTD., 228ITR 171. However, we notice that the Tribunal has relied on the Larger Bench decision of the Supreme Court in NATIONAL THERMAL POWER CO. LTD. V. CIT5 2291.T.R. 383 and Held that Tribunal can allow a new legal issue to be raised before it for the first time, if the facts are already available on record. Since facts pertaining to remuneration paid to doctors, staff and claim of depreciation were not available on record, the Tribunal declined to entertain the claim made before it for the first time. The Tribunal in their order noted that assessee has not produced any proof of payment to doctors and staff. We do not think the assessee is entitled to succeed on this issue not only for the reason stated by the Tribunal, but also for the reason that professional income of the assessee is refixed by the Tribunal on estimation basis thereunder over and above the relief granted in first appeal, the Tribunal has granted deduction towards overhead expenditure. Admittedly assessee did not maintain any books of accounts and assessee himself returned professional income on estimation basis from total receipts. If assessee has regular employees we see no reason why die assessee could not maintain proper accounts showing the payments made to them and to claim eligible deductions, such as remuneration paid to staff depreciation earned, etc and return the actual income for assessment. On the other hand, assessee himself returned only estimation of income from gross receipts and therefore he cannot at the second stage of appeal before the Tribunal come forward with claims of deductions towards remuneration paid to employees, including doctors, depreciation or furniture, fixtures, etc. In fact, the officer himself allowed 20% of earnings towards expenditure without any evidence at all and over and above this, tire first appellate authority estimated additional expenditure of Rs. 60.000/- per year, which was increased by the Tribunal on a percentage basis of the turnover, thereby granting substantial deduction. Therefore this is not a question of law as projected by the assesses, but only a question of tact, that is, whether this Court will be justified in interfering with the order of the Tribunal refixing the income of the assessee on estimation basis after granting further deductions, that too in a case where return of income itself is filed by the assessee on estimation basis. We are of the view that no substantial question of law arises in the claim of deduction made by the assessee towards salary paid to doctors, and staff and depreciation in a case where the assessee has not maintained books of accounts and has returned his professional income on estimation basis, hi our view when assessee returns net income from gross receipts on estimation basis, and the same is substituted by granting deductions on percentage basis in assessment and further deductions of estimated expenditure as granted by first appellate authority and the Tribunal, all such educations granted cover eligible deductions, allowances, and rebates admissible under the Act in fall. In other words, assessees maintaining books of accounts only can claim deductions, allowances and rebates provided in-the Statute. In any case in view of the larger Bench decision of the Supreme Court in NTPC’s case, relied on by the Tribunal, the Tribunal is perfectly justified in rejecting the claim as die claim was raised for the first time before it. We therefore decide this issue against the assessee.
Hi there!
I have a query. How is the income of professionals taxed (consultants, designers, painters etc).
Could somebody enlighten on this?
Thanks