Nahas Hospital, Parappanangadi V. The ACIT TDS, Kozhikkode

ITA 117/COCH/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 1390 (ITAT-COCHIN)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 13-09-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 133A; 194C; 201(1); 201; 194J

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before ShriGeorge George K., Judicial Memberand ShriLaxmi Prasad Sahu, Accountant Member ITA No.117/Coch/2021 (Assessment Year:2013-14) M/s. Nahas Hospital PP/XVLL/191 Parappanagadi Malappuram 676303 Vs. ACIT (TDS) (OSD) Kozhiikode PAN –AADFN5549C Appellant Respondent Appellant by: None Respondent by: Smt. J.M. Jamuna Devi, Sr. D.R. Date of Hearing: 27.06.2022 Date of Pronouncement: 30.06.2022 O R D E R Per: L.P. Sahu, A.M. This is an appeal filed by the assessee against the order of the learned CIT(A), NFAC, Delhi dated 02.09.2021 for AY 2013-14 on the following grounds: - “1. The order of the Commissioner of Income Tax (Appeals), Kozhikode confirming the order of the Assistant Commissioner of Income Tax (TDS) treating the appellant as an assessee in default is arbitrary and unjust. 2. The Commissioner of Income Tax (Appeals) erred in treating the advertisement charges paid to media directly without considering the documents submitted before him along with arguments notes and grounds of appeals. 3. Treating the payment made to the advertising media like Mathrubhumi, The Madhyamam directly as a payment to contractors and treating the payment made to contractors and treating the appellant as an assessee in default and demanding tax and interest in respect of such payment under section 201 is arbitrary and unjust. ITA No. 117/Coch/2021 M/s. Nahas Hospital 2 3. Considering the fact that the payments made are within the permissible limits as provided under section 194C of the Income Tax Act 1961 the Assistant Commissioner of Income tax erred in holding that tax is to be deducted at source in respect of such payments. 4. Commissioner of Income Tax (Appeals) erred in not considering the facts and the question of law advanced in the notes of arguments submitted. (A copy of which is enclosed herewith) proving that the appellant is not liable to Deduct Tax at Source in respect of the payment of advertisement charges paid to the media directly and not through contractors. 5. On the above facts and grounds and such other grounds to be urged at the time of hearing the appellant prays that the Hon'ble Income Tax Appellate Tribunal may be pleased to set aside the assessment order as arbitrary and the appeal allowed.” 2. None appeared on behalf of the assessee. Therefore, we proceeded to dispose of the appeal ex-parte qua the assessee. 3. The brief facts of the case are that a survey under Section 133A of the Income Tax Act, 1961 (hereinafter "the Act") was conducted by the Income Tax officers (TDS) in the premises of M/s. Nahas Hospital on 20.08.2013. During the course of survey various details were collected. It was observed that out of the total professional fee collected 80% was paid to Dr.Sankaranarayanan and Dr.Raveendran. It was also observed that no TDS has been deducted under Section 194J of the Act. On perusal of the Profit and Loss Account the Income Tax Officer (TDS) observed that the assessee has incurred an amount of Rs.16,94,137/- towards advertisement charges and no TDS has been deducted as per 194C of the Act in the cases wherein single payment of more than Rs.30,000/- and the cumulative payment above Rs.1,00,000/- were paid. Relying on the Circular No. 5 of 2002 dated 30.07.2002 the AO held that the assessee was bound to deduct the required taxes but the assessee failed to do so. Therefore the assessee was held as an assessee in default. Aggrieved by the order of the AO the assessee filed appeal before the CIT(A). The CIT(A) deleted the addition made towards non-deduction of TDS under the head Professional Charges under Section 194J of the Act but he uphold for the non-deduction of tax at source for payment of advertisement charges ITA No. 117/Coch/2021 M/s. Nahas Hospital 3 under Section 194C of the Act,accordingly partly allowed the appeal of the assessee. Aggrieved, assessee filed appeal before the Tribunal. 4. The learned D.R. strongly relied on the orders of the lower authorities. 5. From a perusal of the material available before us we observe that the assessee has paid advertisement charges to the 15 parties as per para 3 of the assessment order. On perusal of the record we find that the assessee has submitted details of the payments made for the whole year on different dates to the tune of. Rs.16,94,137/- out of which Rs.14,18,581/- has been disputed by the AO. On perusal of the details of all 15 parties it has been observed that in some cases the payment is below Rs.1,00,000/- to a single recipient during the year. As per Section 194C(5) of the Act the twin conditions must be satisfied, i.e. the payment should exceed Rs.30,000/- and the aggregate payment should be more than Rs1,00,000/- in a year to one recipient. But in the case before us there are some payments made to the parties which are less than Rs.1,00,000/-. Therefore in this case TDS provision will not be applied as the total payment is below Rs.1,00,000/- during the year to a single party. However, as per proviso of Section 201(1) of the Act if the recipient pays the tax on the amount received from the assessee the assessee will not be treated as an assessee in default,if the recipients have complied as per the proviso of Section 201(1) of the Act then the assessee shall not be treated as an assessee in default. As per the documents available before us, there no any such proof submitted by the assessee for complying the proviso of Section 201(1) of the Act. Therefore, considering the totality of the facts and circumstances of the case we consider it fit to send back the matter to the file of the AO for verification if the recipients have fulfilled the conditions of the proviso ofSection 201(1) of the Act and if the AO finds as per the proviso of Section 201(1) of the Act then the assessee shall not be treated as assessee in default. We make it further clear that interest shall be charged as per Section 201A(1) of the Act. Needless to say the assessee should be provided reasonable opportunity of hearing and the assessee is directed to file the necessary documents for ITA No. 117/Coch/2021 M/s. Nahas Hospital 4 substantiating his case. The assessee is also directed not to take unnecessary adjournments for the speedy disposal of the appeal. 6. In the result, the appeal filed by the assessee is allowed for statistical purposes. Dictated and pronounced in the open Court on 30 th June, 2022. Sd/- Sd/- (George George K.) (Laxmi Prasad Sahu) Judicial Member Accountant Member Cochin, Dated: 30 th June, 2022 Copy to: 1. The Appellant 2. The Respondent 3. The CIT(A) -NFAC, Delhi 4. The CIT- 5. The DR, ITAT, Cochin 6. Guard File By Order //True Copy// Assistant Registrar ITAT, Cochin n.p.