· The assessee, a medicare company claimed deduction of payments said to have been made to doctors towards MRI commission, CT scan and USG commission, Pathology collection commission and CT commission.
· The AO disallowed the claim on the ground that the assessee did not produce vouchers or any other supporting documents to substantiate the claim. Also, the assessee did not disclose the names of the recipients.
· On appeal before the CIT (Appeals), the assessee contended that in the previous year similar claims were allowed by the AO. The CIT (Appeals), therefore, allowed the said expenditure.
· The Revenue further appealed before the Tribunal, which dismissed Revenue’s appeal stating that payments made were not opposed to public policy and it was the practice followed in business.
· The Hon’ble Court observed that though the assessee had claimed deduction of amounts allegedly paid to doctors towards commissions, the assessee did not produce the vouchers or any other supporting documents to substantiate the claim. Also, the assessee did not even disclose the names of the recipients. It was further found that these were cases where the assessee had miserably failed to substantiate the claim of having made the payments.
· The Hon’ble High Court held that in such circumstances, even if it was true that in the previous years similar claims were allowed by the AO, insofar as the assessment year in question was concerned, since the assessee had miserably failed to substantiate the claim, the first appellate authority should not have interfered with the assessment order. For the same reasons, the Tribunal should not have upheld the order of the first appellate authority holding that it was the practice followed in business. Therefore, the Court concluded by setting aside the orders passed by the first appellate authority and the Tribunal.
For further reading, refer the attachment.
Further Reading