M/s. Genins India TPA Ltd., Noida V. ACIT (TDS), New Delhi

ITA 2014/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86654 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 21-01-2015
• Assessment Year: misc
• Appeal Filed On: 01-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R S GILL
• Assessee Lawyers: AMIT GOEL
• Keywords: Principle of natural justice; Additional evidence
• Section: 273B; 201(1); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C NEW DELHI BEFORE SHRI H.S.SIDHU, JM AND SHRI J.SUDHAKAR REDDY, AM ITA NO S . 2014 2015 2016 AND 2017 /DEL/2012 AY : - 2006 - 07 , 2007 - 08, 2008 - 09 AND 2009 - 10 M/S GENINS INDIA TPA LTD. VS. ACIT (TDS) (NOW KNOWN AS GENINS INDIA LTD.) CIRCLE 50(1), 5 TH FLOOR D 34, SECTOR 2 AAYAKAR BHAWAN, DIST.CENTRE NOIDA 201 301 LAXMI NAGAR, NEW DELHI PAN: AAACE 4057 C A N D ITA NO S . 2507 2508 2509 AND 2510 /DEL/2012 AY : - 2006 - 07, 2007 - 08, 2008 - 09 AND 2009 - 10 ACIT, CIRCLE 50(1) VS. M/S GENIN INDIA TPA LTD. NEW DELHI NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMIT GOEL, ADV. RESPONDENT BY : SH. R. S . GILL, CIT, DR O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER THESE ARE CROSS APPEALS AND ARE DIRECTED AGAINST THE ORDER OF THE LD.CIT(A) - XXX , NEW DELHI DT. 7.3.2012 , WHEREIN HE HAS PASSED A COMMON ORDER FOR THE ASSESSMENT YEARS (HEREINAFTER REFERRED TO AS THE A.Y. ) 2005 - 06, 2006 - 07, 2007 - 08 AND 2008 - 09. 1.1. AS THE ISSUES ARISING IN ALL THESE APPEALS ARE COMMON, FOR THE SAKE OF CONVENIENCE THEY ARE HEARD TOGETHER AND ARE DISPOSED OF BY WAY OF THIS COMMON ORDER. ITA NOS. 2014 - 2015 - 2016 & 2017/DEL/2012 & ITA NOS. 2507 - 2508 - 2509 & 2510/DEL/2012 AYS: 2006 - 07, 2007 - 08, 2008 - 09 & 2009 - 10 GENIN INDIA TPA P.LTD. 2 2. FACTS IN BRIEF : - THE ASSESSEE IS A COMPANY AND IS A THIRD PARTY ADMINISTRAT OR (TPAS) TO HOSPITALS ON BEHALF OF INSURANCE COMPANIES. A SURVEY WAS CONDUCTED IN THE CASE OF THE ASSESSEE COMPANY. CONSEQUENTLY AN ORDER U/S 201(1)/201(1A) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) PASSED ON 30 TH MARCH, 2011 HOL DING THAT THE ASSESSE IS AN ASSESSEE IN DEFAULT, FOR THE REASON THAT TAX WAS NOT DEDUCTED AT SOURCE FROM PAYMENTS MADE TO VARIOUS POLICY HOLDERS , AS WELL AS TO VARIOUS HOSPITALS ON BEHALF OF THE INSURANCE COMPANIES. 2.1 . THE ASSESSING OFFICER (HEREINAFT ER REFERRED TO AS THE AO ) HELD THAT THESE PAYMENTS TO HOSPITALS FOR PROFESSIONAL AND TECHNICAL SERVICES AND HENCE THE PROVISIONS IN S. 194J OF THE ACT ARE ATTRACTED AND THE ASSESSEE HAS TO DEDUCT TAX AT SOURCE . HENCE HE HELD THAT THE ASSESSEE IS LIABLE TO PAY THE DEFAULT AMOUNT U/S 201(1) AS WELL AS INTEREST U/S 201(1A) OF THE ACT FOR THE AY 2005 - 06 TO 2008 - 09. THE CONTENTIONS OF THE ASSESSEE WERE REJECTED BY THE A.O. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL. 2.2. AFTER CONSIDERING VARIOUS ARGUMENTS OF THE ASSESSEE, THE FIRST APPELLATE AUTHORITY HELD AS FOLLOWS: ( A ) THE AO HAS NOT FOLLOWED THE PRINCIPLES OF NATURAL JUSTICE, AS NO PROPER AND ADEQUATE OPPORTUNITY WAS ALLOWED TO THE ASSESSEE . H ENCE THE APPLICATION FOR ADMISSION OF ADDITIONAL EVIDE NCE UNDER RULE 46A OF THE ACT WAS ACCEPTED AND THE ADDITIONAL EVIDENCE IS SENT TO THE A.O. FOR VERIFICATION. ( B ) THE AO AT PAGE 2 PARA 4 OF HIS ORDER, HELD THAT PAYMENTS TO HOSPITALS ARE FOR PROFESSIONAL AND TECHNICAL SERVICES, WHICH ATTRACT DEDUCTION OF TAX AT SOURCE U/S 194J OF THE ACT. THE LD.CIT(A) POINTED OUT THAT NO OBJECTION IS RAISED BY THE AO WITH REGARD TO NON DEDUCTION OF TAX AT SOURCE, IN RESPECT OF THE PAYMENTS MADE TO INDIVIDUAL INSURANCE POLICY HOLDERS . ITA NOS. 2014 - 2015 - 2016 & 2017/DEL/2012 & ITA NOS. 2507 - 2508 - 2509 & 2510/DEL/2012 AYS: 2006 - 07, 2007 - 08, 2008 - 09 & 2009 - 10 GENIN INDIA TPA P.LTD. 3 H ENCE THE CONCLUSIONS DRAWN BY THE AO THAT THE ASSESSEE COMMITTED DEF AULT U/S 201(1) AND 201(1A) ON THESE PAYMENTS MADE TO INDIVIDUAL POLICY HOLDERS IS NOT JUSTIFIED. ( C ) S.194J IS NOT APPLICABLE TO INDIVIDUAL POLICY HOLDERS, AS THEY GET PAYMENTS FROM ASSESSEE IN THE FORM OF REIMBURSEMENT OF THEIR MEDICAL EXPENSES . ( D ) S.194J IS APPLICABLE WHERE A PROFESSIONAL ORGANIZATION SUCH AS A HOSPITAL IS GIVING PROFESSIONAL SERVICE THROUGH TPA. ( E ) THE ASSESSEE IS MERELY A CONDUIT PIPE FOR MAKING PAYMENTS TO HOSPITALS ON BEHALF OF THE INSURANCE COMPANIES. T HE PAYMENTS ARE NOT DEBITED TO ASSESSEE S PROFIT AND LOSS ACCOUNT. HENCE THE INSURANCE COMPANIES ARE LIABLE TO DEDUCT TDS U/S 194J OF THE ACT AND NOT THE ASSESSEE COMPANY. ( F ) ANYHOW IN VIEW OF THE JURISDICTIONAL DELHI HIGH COURT JUDGEMENT IN THE CASE OF M/S VIPUL MED CORP TPA PVT. LTD. & OTHERS VS. CBDT DT. 30 TH SEPTEMBER,2011, THE ASSESSEE COMPANY IS LIABLE TO DEDUCT TDS U/S 194J OF THE ACT. ( G ) THE DEMAND RAISED U/S 201(1) OF THE ACT, IS TO BE REDUCED TO THE EXTENT THE ASSESSEE HAS FURNISHED CA CERTIFICATES IN PROOF OF THE PAYEE HOSPITALS AND NURSING HOMES HAVING ACCOUNTED FOR IN THEIR BOOKS OF ACCOUNTS OF THIS INCOME AND THAT THEY HAVE FILED THE RETURN OF INCOME. T HE DEMAND RAISED BY THE AO U/S 201(1) OF THE ACT IS DELETED BY FOLLOWING THE JUDGEMENT OF HON BLE DELHI HIGH COURT IN THE CASE OF VIPUL MEDCORP TPA P.LTD. (SUPRA) AND CBDT CIRCU LAR NO. 8/2009 DATED 24.11.2009, TO THE EXTENT THE ASSESSEE PRODUCED THESE CA CERTIFICATES FOR VERIFICATION. ( H ) THE ASSESSEE IS DIRECTED TO SUBMIT THE COMPUTATION OF TDS, IN TEREST U/S 201(1A) , FOR NON DEDUCTION OF TAX ON PAYMENTS MADE TO HOSPITALS FROM THE DATE OF DEFAULT, TILL THE DATE OF FILING OF THE RETURNS BY THE HOSPITALS FOR EACH F.Y TO THE SATISFACTION OF THE AO. ( I ) THE HOSPITALS ARE REGULAR TAX PAYERS AND FILED RETUR NS AS CERTIFIED BY THE CA S. THE ASSESSEE HAS GIVEN A LIST OF 767 HOSPITALS WITH THEIR PAN ITA NOS. 2014 - 2015 - 2016 & 2017/DEL/2012 & ITA NOS. 2507 - 2508 - 2509 & 2510/DEL/2012 AYS: 2006 - 07, 2007 - 08, 2008 - 09 & 2009 - 10 GENIN INDIA TPA P.LTD. 4 NUMBERS, ADDRESS ES AND C.A. CERTIFICATES. THE ASSESSEE SHALL FILE A CALCULATION SHEET BEFORE THE AO. ( J ) THE ASSESSEEE IS DIRECTED TO FILE CALCULATION SHEET U/S 201(1 ) AND 201(1A) FOR EACH F.Y. SEPARATELY TO THE AO AND TO THIS OFFICE WITHIN ONE MONTH OF RECEIPT OF THIS ORDER. 2.3. AGGRIEVED BOTH THE ASSESSEE AND THE REVENUE HAVE FILED THESE CROSS APPEALS. 3. THE GROUNDS FILED BY THE ASSESSEE ARE AS UNDER. 1. THAT AFTER HAVING HELD THAT INSURANCE COMPANIES WERE LIABLE TO DEDUCTION OF TDS U/S 194 - J OF THE INCOME TAX ACT, 1961 AND NOT THE APPELLANT COMPANY, THE LD.CIT(A) OUGHT NOT TO HAVE SUSTAINED THE ADDITION U/S 201(1) OF THE ACT. 2. THAT THE APPELLANT WAS ALSO N OT LIABLE TO PAY ANY INTEREST U/S 201(1A) OF THE ACT. 3. THAT THE LD.CIT(A) OUGHT TO HAVE DELETED THE ADDITION AS SUSTAINED U/S 201(1) AND ALSO THE INTEREST U/S 201(1A) OF THE ACT. AT ANY RATE, WITHOUT PREJUDICE, THE ADDITION AND THE INTEREST AS MAINTAINED ARE VERY EXCESSIVE. 4. THAT THE APPELLANT RESERVES ITS RIGHT TO ADD, AMEND/MODIFY THE GROUNDS OF APPEAL. 3.1. THE GROUNDS FILED BY THE REVENUE ARE AS UNDER. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD.CIT(A) HAS ERRED IN : 1 . DELETING THE DEMAND RAISED BY THE AO U/S 201(1)/201(1A) R.W.S.194 HOLDING THAT APPELLANT HAD FURNISHED THE CA CERTIFICATES IN COMPLIANCE TO THE JUDGEMENT OF DELHI HIGH COURT IN THE CASE OF M/S VIPUL MEDCORP TPA P.LTD. FOLLOWING THE BOARD S CIRCULAR NO.8/2009 DATED 24.11.2009 AND HE ERRED IN HOLDING THAT THE PAYMENT MADE TO INDIVIDUAL POLICY HOLDER ARE NOT COVERED U/S 194 - J OF THE ACT AS THE POLICY HOLDERS GET PAYMENT FROM APPELLANT IN THE FORM OF REIMBURSEMENT OF THEIR MEDICAL EXPENSES. 2 . IN I NTERPRETING THE CBDT S CIRCULAR NO.8 OF 2009 DT. 24.11.2009 HOLDING THAT THE CERTIFICATE ISSUED BY THE CAS WOULD BE SUFFICIENT COMPLIANCE FOR THE PURPOSE OF TAXES PAID BY THE DEDUCTEES. ON THE CONTRARY THE CIRCULAR SPECIFICALLY SPEAKS OF THE COMPANY S AUD ITORS AS THE CORRECT AUTHORITY WHO CAN GIVE THIS CERTIFICATE. ITA NOS. 2014 - 2015 - 2016 & 2017/DEL/2012 & ITA NOS. 2507 - 2508 - 2509 & 2510/DEL/2012 AYS: 2006 - 07, 2007 - 08, 2008 - 09 & 2009 - 10 GENIN INDIA TPA P.LTD. 5 3 . IN ADMITTING THE ADDITIONAL EVIDENCE CAN ONLY BE ACCEPTED IF THE AO REFUSED TO ADMIT THE EVIDENCE. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND ANY OF THE GROUNDS OF APPEAL AT THE TIME O F HEARING. 4. THE LD. CIT, D.R. MR.R.S.GILL SUBMITTED THAT THE ASSESSEE FILED APPLICATION UNDER RULE - 46A(1) BEFORE THE LD.CIT(A) AND THE LD.CIT(A) ADMITTED THE SAME BY HOLDING THAT THE AO HAS NOT PROVIDED REASONABLE OPPORTUNITY TO THE ASSESSEE DURING T HE COURSE OF ASSESSMENT PROCEEDINGS TO PRODUCE THE EVIDENCE IN SUPPORT OF ITS CLAIM. HE SUBMITTED THAT THE ASSESSEE FAILED TO FILE THE RELEVANT DETAILS AND COMPLETE EVIDENCE BEFORE THE AO AND HENCE THE AO PASSED THE ORDER ON THE LAST DA Y OF THE F.Y. A S IT WAS TIME BARRING. HE FURTHER ARGUED THAT THE ISSUE AS TO WHETHER TAX HAS TO BE DEDUCTED AT SOURCE U/S 194J OF THE ACT BY TPAS, IS NO MORE RES INTEGRA IN VIEW OF THE DECISION OF HON BLE BOMBAY HIGH COURT IN THE CASE OF DEDICATED HEALTH CARE SERVICES TPA (INDIA) PRIVATE LTD. VS. ACIT REPORTED IN 324 ITR 345 (BOM) AND THE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S VIPUL MEDICORP TPA PVT. LTD. AND OTHERS VS. CBDT. HE SUBMITTED THAT THE JURISDICTIONAL H IGH COURT, IN ITS JUDGEMENT STATES THAT IT IS NOT RELEVANT AS TO WHETHER THE PAYER OR A THIRD PERSON HAS AVAILED PROFESSIONAL SERVICES AND THE NATURE OF PAYMENT IN THE HANDS OF THE PAYEE/RECIPIENT IS RELEVANT AND IF PAYMENT IS MADE TO A RESIDENT PERSON TO WARDS PROFESSIONAL SERVICES FEE, S.194J OF THE ACT IS ATTRACTED. HE VEHEMENTLY CONTENDED THAT IT IS IMMATERIAL WHETHER THE RECIPIENT IS A FIRM, AN INDIVIDUAL OR AN ARTIFICIAL PERSON. HE ARGUED THAT THE WORD S IN THE COURSE OF CARRYING ON AS APPEARIN G IN EXPLANATION (A) TO SECTION 194J OF THE ACT DO NOT MEAN THAT THE PERSON WHO RENDERS SERVICE , MUST BE A PROFESSIONAL BUT THESE WORDS SIGNIFY THAT SERVICES RENDERED IN THE COURSE OF CARRYING ON MEDICAL PROFESSION WERE COVERED U/S 194J OF THE ACT. HE R ELIED ON CBDT CIRCULAR NO.8/2009 AND SUBMITTED THAT NON DEDUCTION OF TAX U/S 194J OF THE ACT NECESSARILY ATTRACTS PENALTY U/S 271(1)(C ) OF THE ACT AND THAT THE DEFENSE AVAILABLE TO THE ASSESSEE U/S 273B IS FORECLOSED. HE ITA NOS. 2014 - 2015 - 2016 & 2017/DEL/2012 & ITA NOS. 2507 - 2508 - 2509 & 2510/DEL/2012 AYS: 2006 - 07, 2007 - 08, 2008 - 09 & 2009 - 10 GENIN INDIA TPA P.LTD. 6 ARGUED THAT THE HIGH COURT DECISI ON DOES NOT DIFFERENTIATE BETWEEN PAYMENT BY WAY OF REIMBURSEMENT TO INDIVIDUAL POLICY HOLDER OR THE CASHLESS PAYMENT. HE PRAYED THAT THE ORDER OF AO BE RESTORED. 4.1. THE LD.COUNSEL FOR THE ASSESSEE MR.AMIT GOEL ON THE OTHER HAND OPPOSED THE CONTENTION S AND SUBMITTED THAT THE FIRST APPELLATE AUTHORITY HAS FOLLOWED VARIOUS JUDGMENTS OF HIGH COURTS AND TRIBUNALS , AS WELL AS CBDT CIRCULARS , WHILE COMING TO A CONCLUSION THAT , TDS LIABILITY DOES NOT ARISE WHEN THE ASSESSEE FURNISHES CA CERTIFICATES FROM T HE PAYEE HOSPITALS/NURSING HOMES SPECIFYING THAT THE AMOUNT PAID TO THEM BY THE ASSESSEE COMPANY HAS BEEN INCLUDED AND CONSIDERED BY THEM IN THE IR INCOME TAX RETURNS. HE FURTHER SUBMITTED THAT ALL SUCH CERTIFICATES ISSUED BY THE C.A. WERE VERIFIED BY THE AO, SUBSEQUENT TO THE ORDER OF THE FIRST APPELLATE AUTHORITY , AND AFTER VERIFICATION THE AO PASSED CONSEQUENTLY ORDERS. H E CONTENDED THAT THE GROUND S RAISED BY THE REVENUE THAT THE CERTIFICATE SHOULD BE OF THE AUDITOR AND NOT OF A CA, IS ILLOGICAL AND MISCONCEIVED AS THE TERM AUDITOR AND CA ARE SYNON YMOUS . HE POINTED OUT THAT FORM NO.26A OF THE IT RULES SPECIFY THAT THE CERTIFICATE SHOULD BE GIVEN BY A CA. HE SUBMITTED THAT THIS ASPECT OF THE AUDITOR CERTIFYING IS BEYOND THE CONTROL OF THE ASSESSEE , AS IT IS THE PAYEE HOSPITALS WHICH ARE PROVIDING CERTIFICATE OF THE CA. HE ARGUED THAT THERE IS NO VIOLATION OF RULE 46A AND SUBMITTED THAT THE LD.CIT (A) HAS GIVEN ELABORATE REASON FOR ADMITTING ADDITIONAL EVIDENCE AND HAS ALS O DIRECTED THE AO TO VERIFY THESE CERTIFICATES BEFORE PASSING ORDERS. HE RELIED ON A NUMBER OF CASE LAWS. 5 . RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, ORDERS OF LOWER AUTHORITIES AND CASE LAWS CITED , WE HOLD AS FOLLOWS. ITA NOS. 2014 - 2015 - 2016 & 2017/DEL/2012 & ITA NOS. 2507 - 2508 - 2509 & 2510/DEL/2012 AYS: 2006 - 07, 2007 - 08, 2008 - 09 & 2009 - 10 GENIN INDIA TPA P.LTD. 7 6. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF PROVIDING THIRD PARTY ADMINISTRAT OR SERVICES (TPAS) FOR POLICIES ISSUED BY THE INSURANCE COMPANIES. THE ISSUE WHETHER THE ASSESSEE IS LIABLE TO DEDUCT TAX AT SOURCE U/S 194J OF THE ACT, FOR VARIOUS PAYMENTS MADE TO HOSPITALS IS NO MORE RES INTEGRA. THE HON BLE BOMBAY HIGH COURT IN THE CASE OF M/S DEDICATED HEALTH CARE SERVICES VS. ACIT REPO RTED IN 324 ITR 345 (BOMBAY) HELD AS FOLLOWS. WHETHER THE PROVISION OF MEDICAL SERVICES TAKES PLACE WITHIN THE INSTITUTIONAL FRAMEWORK OF A HOSPITAL, SERVICES ARE RENDERED AS PART OF AN UMBRELLA OF SERVICES PROVIDED BY THE HOSPITAL WHICH ENGAGES QUALIFIED MEDICAL PROFESSIONALS WHO PRACTICE THE MEDICAL PROFESSION. THESE ARE SERVICES RENDERED IN THE COURSE OF CARRYING ON OF THE MEDICAL PROFESSION. HENCE, IT IS NOT POSSIBLE TO ACCEPT THE SUBMISSION THAT TPAS, WHEN THEY MAKE PAYMENTS TO HOSPITALS ARE NOT LIA BLE TO DEDUCT TAX AT SOURCE UNDER THE PROVISIONS OF S.194J OF THE ACT. 6.1. THE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S VIPUL MEDICORP TPA P.LTD. & OTHERS VS. CBDT HAS TAKEN A SIMILAR VIEW. WITH TH ESE BINDING PRECEDENTS, WE NOW CONSIDER THE GRO UNDS OF THE REVENUE WHICH ARE COMMON FOR ALL THE A SSESSMENT YEARS. 6.2. THE REVENUE IN ITS FIRST GROUND CHALLENGED THE ORDER OF THE LD.CIT(A) D ELETING THE DEMAND RAISED BY THE AO U/S 201(1)/201(1A) OF THE ACT R.W.S. 194J OF THE ACT, TO THE EXTENT THE ASSESSEE HAS FURNISHED CERTIFICATE ISSUED BY THE CAS OF THE PAYEE HOSPITALS/NURSING HOMES, AS PROOF OF THE FACT THAT THE AMOUNT PAID TO THEM BY THE ASSESSEE COMPANY, HAS BEEN INCLUDED/CONSIDERED BY THEM IN THEIR INCOME TAX RETURNS . 6.3. T HE CBDT IN CIRCULAR NO.8/2009 DT. 24 TH NOVEMBER,2009 AT PARA 4 IT IS STATED AS FOLLOWS. ITA NOS. 2014 - 2015 - 2016 & 2017/DEL/2012 & ITA NOS. 2507 - 2508 - 2509 & 2510/DEL/2012 AYS: 2006 - 07, 2007 - 08, 2008 - 09 & 2009 - 10 GENIN INDIA TPA P.LTD. 8 4. THE BOARD IS ALSO OF THE VIEW THAT TAX DEMAND ARISING OUT OF S.201(1) IN SITUATIONS ARISING ABOVE, MAY NOT BE ENFORCED IF THE DEDUCTOR (TPA) SATISFIES THE OFFICER IN CHARGE OF TDS THAT THE RELEVANT TAXES HAVE BEEN PAID BY THE DEDUCTEE ASSESSEE (HOSPITALS ETC.). A CERTIFICATE FROM THE AUDITOR OF THE DEDUCTEE ASSESSEE STATIN G THAT THE TAX AND INTEREST DUE FROM DEDUCTEE ASSESSEE HAS BEEN PAID FOR THE AY CONCERNED WOULD BE SUFFICIENT COMPLIANCE FOR THE ABOVE PURPOSE. WE FIND NO INFIRMITY IN THE ORDER OF THE LD.CIT(A) AS THE SAME IS IN LINE WITH THIS CIRCULAR OF THE CBDT, WHICH IS BINDING ON ALL REVENUE AUTHORITIES. 6. 4 . THE ITAT H BENCH OF THE MUMBAI IN THE CASE OF HEALTH INDIA TPA SERVICES/ITO(OSD) 1(1) PVT.LTD. VIDE ORDER DT. 17.4.2013 AT PARA 11 HELD AS FOLLOWS. 11. WE OBSERVE THAT LD.CIT(A) IN PARA 8 AFTER CONS IDERING THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF HINDUSTAN COCO COLA BEVERAGES P.LTD. VS. CIT, 293 ITR 226 (SC) R.W. CBDT CIRCULAR NO.8 OF 2009 HAS STATED THAT IT IS AN ADMITTED POSITION OF LAW THAT WHEREVER ASSESSEE COMPANY PROVES THAT TAX H AS BEEN PAID BY THE DEDUCTEE, RECOVERY OF DEMAND CANNOT BE ENFORCED. LD.CIT(A) HAS STATED THAT IN ORDER TO DETERMINE WHETHER THE DEDUCTEE HAS PAID THE TAX OR NOT, A CERTIFICATE FROM THE AUDITOR OF THE DEDUCTEE COMPANY STATING THAT TAX AND INTEREST DUE FR OM THE DEDUCTEE ASSESSEE HAS BEEN PAID FOR THE CONCERNED AY WOULD BE PRODUCED BY THE ASSESSEE COMPANY AND SHALL BE VERIFIED BY THE AO. WE OBSERVE THAT LD.CIT(A) HAD DIRECTED THE AO TO GIVE DUE CREDIT TO THE ASSESSEE IF THE ASSESSEE COMPANY PRODUCED SUCH C ERTIFICATE AND RECOVERY OF TDS AMOUNT U/S 194J SHOULD NOT BE ENFORCED TO THAT EXTENT. WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO INFIRMITY IN THE SAID ORDER OF LD.CIT(A) AS HE HAS GIVEN DIRECTION TO THE AO THAT IF THE ASSESSEE COMPANY PRODUCES SUCH CE RTIFICATE OF THE AUDITORS OF THE DEDUCTEE COMPANY STATING THAT THE TAX AND INTEREST DUE FROM THE DEDUCTEE HAS BEEN PAID BY THEM FOR THE CONCERNED AY, RECOVERY OF TDS AMOUNT U/S 194J SHOULD NOT BE ENFORCED. 6. 5 . SIMILARLY THE HON BLE MADRAS HIGH COURT IN THE CASE OF SAA ISPAHANI TRUST VS. ITO(TDS), WARD 11(2) (2013) 34 TAXMANN.COM 29 (MADRAS) HELD AS FOLLOWS: S.201 OF THE INCOME TAX ACT, 1961 DEDUCTION OF TAX AT SOURCE CONSEQUENCE OF FAILURE TO DEDUCT O R PAY (INTEREST) - AY 2003 - 04 WHETHER WHERE RECIPIENT DEDUCTEE ITA NOS. 2014 - 2015 - 2016 & 2017/DEL/2012 & ITA NOS. 2507 - 2508 - 2509 & 2510/DEL/2012 AYS: 2006 - 07, 2007 - 08, 2008 - 09 & 2009 - 10 GENIN INDIA TPA P.LTD. 9 HAD BEEN ASSESSED ON ITS INCOME AND TAX DUE ON SAME HAD BEEN PAID, NO FURTHER TAX COULD BE COLLECTED BY AO FROM ASSESSEE PAYER DEDUCTOR BY RAISING DEMAND U/S 201(1) HELD YES, - WHETHER, HOWEV ER, INTEREST COULD BE CHARGED ON ASSESSEE DEDUCTOR FROM DATE OF ITS LIABILITY TILL DATE OF ACTUAL TAX PAYMENT BY RECIPIENT DEDUCTEE HELD, YES (PARA 12) (PARTLY IN FAVOUR OF ASSESSEE). 6. 6 . THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT - XVII VS. D EWAN CHAND REPORTED IN 178 TAXMAN 173 (DEL) (2009) HELD AS FOLLOWS: S.201 OF THE I.T.ACT, 1961 DEDUCTION OF TAX AT SOURCE CONSEQUENCES OF FAILURE TO DEDUCT OR PAY AYS 2002 - 03 TO 2005 - 06 WHETHER WHERE ASSESSEE HAD FURNISHED CONFIRMATIONS FROM PAYEE S, WHEREIN THEY HAD GIVEN THEIR PANS/ACKNOWLEDGEMENT OF THEIR RETURNS AND HAD CONFIRMED THAT THEY HAD INCLUDED AMOUNT RECEIVED FROM ASSESSEE AS THEIR INCOME AND HAD ALSO PAID TAXES DUE ON SUCH INCOME, ASSESSEE COULD BE TREATED AS ASSESSEE IN DEFAULT IN TE RMS OF S.201(1) HELD, NO. 6. 7 . I N THE CASE OF CIT, DELHI VS. ADIDAS INDIA MARKETING P.LTD. THE HON BLE DELHI HIGH COURT HAS HELD AS FOLLOWS: S.201 OF THE ACT DEDUCTION OF TAX AT SOURCE CONSEQUENCES OF FAILURE TO DEDUCT OR PAY AYS 2000 - 2001 AND 2001 - 02 WHETHER PERIOD FOR WHICH INTEREST CAN BE CLAIMED U/S 201(1A) IS FROM DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO DATE ON WHICH SUCH TAX IS ACTUALLY PAID AND, CONSEQUENTLY, NO INTEREST BEYOND DATE OF ACTUAL PAYMENT OF TAX CAN BE CLAIMED BY DEPARTMEN T HELD, YES WHETHER S.201 DOES NOT STATE THAT TAX SHOULD HAVE BEEN PAID BY ASSESSEE (DEDUCTOR) ALONE, AND TAX MAY ACTUALLY BE PAID BY ASSESSEE OR DEDUCTEE HELD, YES. 6. 8 . THE LD.CIT(A) HAS FOLLOWED THE RATIO OF THE ABOVE REFERRED JUDGEMENTS. HENCE IN VIEW OF THESE BINDING PRECEDENTS, WE FIND NO INFIRMITY IN THE ORDER OF THE FIRST APPELLATE AUTHORITY ON THIS ASPECT. WE UPHOLD THE SAME. 7. THE SECOND ISSUE RAISED IN GROUND NO.1, IS WHETHER PAYMENTS MADE TO INDIVIDUAL POLICY HOLDERS ARE COVER ED U/S 194J OF THE ACT. WE ARE OF THE CONSIDERED OPINION THAT THE VIEW OF THE FIRST APPELLATE AUTHORITY ON THIS ISSUE HAS TO BE UPHELD FOR THE FOLLOWING REASONS. 7.1. THE HON BLE DELHI HIGH COURT IN THE CASE OF M/S VIPUL MEDICORP TPA P.LTD. (SUPRA) HAS HELD AS UNDER. THE HIGH COURT OBSERVED THAT THE WORD 'BUSINESS' IS OF A WIDER IMPORT THAN THE WORD 'PROFESSION'. ALL PROFESSIONS CAN BE CLASSIFIED AS BUSINESS IF REQUIRED HOWEVER, ALL ITA NOS. 2014 - 2015 - 2016 & 2017/DEL/2012 & ITA NOS. 2507 - 2508 - 2509 & 2510/DEL/2012 AYS: 2006 - 07, 2007 - 08, 2008 - 09 & 2009 - 10 GENIN INDIA TPA P.LTD. 10 BUSINESSES ARE NOT PROFESSIONS. FURTHER, SECTION 2(B) OF THE INDIAN PAR TNERSHIP ACT, 1932 DEFINES BUSINESS AS INCLUDING EVERY TRADE, OCCUPATION AND PROFESSION. THE HIGH COURT RELYING ON THE DECISION OF DEDICATED HEALTH CARE SERVICES TPA (INDIA) PRIVATE LIMITED' HELD THAT TAX NEEDS TO BE DEDUCTED ON PAYMENTS MADE TO THE RE CIPIENT FOR RENDERING SERVICES IN COURSE OF CARRYING ON MEDICAL PROFESSION OR OTHER PROFESSIONS. IT IS IMMATERIAL WHETHER THE RECIPIENT IS AN INDIVIDUAL, FIRM OR AN ARTIFICIAL PERSON. I THE WORDS 'IN THE COURSE OF CARRYING ON' AS APPEARING IN EXPLANATI ON (A) TO SECTION 194J OF THE ACT DO NOT MEAN THAT THE PERSON WHO RENDERS SERVICE MUST BE A PROFESSIONAL. THESE WORDS SIGNIFY THAT SERVICES RENDERED IN THE COURSE OF CARRYING ON MEDICAL PROFESSION WERE COVERED UNDER SECTION 194J OF THE ACT. THE HIGH COU RT OBSERVED THAT A CORPORATE HOSPITAL IS NOT A PROFESSIONAL AND DOES NOT EARN PROFESSIONAL INCOME BUT IT CAN BE PAID FEES FOR SERVICES IN THE COURSE OF CARRYING ON PROFESSIONAL SERVICES. IT IS NOT NECESSARY THAT THE PERSON WHO RENDERS SERVICE SHOULD HIMSEL F CARRY ON THE MEDICAL PROFESSION. THEREFORE, CORPORATE HOSPITAL WOULD BE COVERED WITHIN THE DEFINITION OF 194J OF THE ACT. THE HIGH COURT RELYING ON THE DECISIONS OF DEDICATED HEALTH CARE SERVICES TPA INDIA) PVT LTD AND MEDI ASSIST INDIA TPA P. LTD HELD THAT PROVISIONS OF SECTION 194J OF THE ACT APPLIES ON PAYMENT MADE BY THE TPA'S TO HOSPITALS. 7.2 . IT IS NOBODY S CASE THAT A PATIENT OR A POLICY HOLDER WOULD BE COVERED WITHIN THE TERM BUSINESS OR PROFESSION . A POLICY HOLDER HAS NOT RECEIVED THE PAYMENT FOR RENDERING SERVICES IN THE COURSE OF CARRYING ON MEDICAL PROFESSION OR OTHER PROFESSIONS. THE PATIENT IS THE RECEIVER OF THE SERVICE BUT NOT A PROFESSIONAL SERVICE PROVIDER. BE IT AS IT MAY, WHAT IS PAID TO THE PATIENT OR A POLICY HOLDE R IS REIMBURSEMENT OF THE COST INCURRED. HENCE THERE IS NO ELEMENT OF PROFIT EMBEDDED IN THE AMOUNT IN QUESTION . UNDER THOSE CIRCUMSTANCES, WHEN THERE IS NO INCOME ELEMENT IN THE SUM OF PAYMENT THE QUESTION OF TAX BEING DEDUCTED AT SOURCE DOES NOT ARIS E. THUS THIS GROUND OF REVENUE ALSO IS DISMISSED. 7.3. GROUND NO.2 IN OUR VIEW IS, TOTALLY MISCONCEIVED. THE REVENUE TRIES TO MAKE A DISTINCTION BETWEEN AN AUDITOR AND A C.A. FORM NO.26A, WHICH IS A FORM FOR FURNISHING ACCOUNTANTS CERTIFICATE UNDER THE FIRST PROVISO TO SUB SECTION OF S.201 OF THE ACT REFERS TO A C.A. WITHIN THE MEANING OF THE CHARTERED ACCOUNTANTS ACT, 1949. THE CIRCULAR NOWHERE SPECIFY THAT THE CERTIFICATE SHOULD BE GIVEN BY THE STATUTORY AUDITOR OF THE PAYEE HOSPITALS. THE PURPOSE IS TO VERIFY WHETHER THE PAYEE HAS PAID THE TAX OR NOT. IN OUR VIEW SUCH ITA NOS. 2014 - 2015 - 2016 & 2017/DEL/2012 & ITA NOS. 2507 - 2508 - 2509 & 2510/DEL/2012 AYS: 2006 - 07, 2007 - 08, 2008 - 09 & 2009 - 10 GENIN INDIA TPA P.LTD. 11 INTERPRETATION SOUGHT TO BE PLACED BY THE REVENUE IS UNWARRANTED. ON FACTS , THE AO HAS NOT FOUND ANY DEFECT DURING THE VERIFICATIONS OF THESE CERTIFICATES GIVEN BY THE C.A. OF THE PAYEE HOSPITALS/NURSING HOMES . THERE IS NO FINDING GIVEN BY THE AO THAT THESE CAS ARE NOT THE AUDITORS OF THE PAYEES OR NURSING HOMES, NOR THAT THIS IS NOT SUFFICIENT EVIDENCE FOR THE PURPOSE OF REDUCING THE DEMAND. IN FACT HE REDUCED THE DEMAND AFTER VERIFICATION. IN OUR VIEW SUCH GROUND I S UNNECESSARY AND HENCE WE DISMISS THE SAME. 7.4. THE LAST GROUND IS ON THE ADMISSION OF ADDITIONAL EVIDENCE. THE GROUND IS NOT PROPERLY WORDED. THE LD.CIT(A) IN OUR VIEW HAS RIGHTLY COME TO A CONCLUSION THAT THE AO HAS VIOLATED THE PRINCIPLE OF NATURAL JUSTICE. IT WAS ONLY VIDE ORDER SHEET ENTRY DT. 28.2.2011 THAT THE COUNSEL FOR THE ASSESSEE WAS ASKED TO FILE DETAILS AND ORDER WAS PASSED ON 30.3 .2011 AND THAT TOO WITHOUT SEEKING EXPLANATION FROM THE ASSESSEE IN THIS REGARD. IN ANY EVENT THE AO HAS VERIFIED ALL THESE ADDITIONAL EVIDENCES AND IN HIS CONSEQUENTIAL ORDER GRANTED RELIEF. THE AO SHOULD HAVE NOT RAISED THE DEMAND IN THE FIRST PLACE AN D SHOULD HAVE DIRECTED THE ASSESSEE TO PRODUCE THE EVIDENCE AS PER THE CBDT CIRCULAR. THIS WAS NOT DONE. IN ANY EVENT THESE EVIDENCES ARE NECESSARILY REQUIRED FOR PROPER DETERMINATION OF THE DEMAND TO BE RAISED ON THE ASSESSEE U/S 201 AND 201(1A) OF THE ACT. AS THE AO HAS ALREADY VERIFIED THESE EVIDENCES, THIS GROUND IS ACADEMIC IN NATURE. 7.5 . IN VIEW OF THE ABOVE DISCUSSION THIS GROUND OF REVENUE IS DISMISSED. 7.6. IN THE RESULT, THE REVENUE S APPEAL IS DISMISSED. 8. THIS BRINGS US TO THE ASSESSEE S APPEAL. 8.1 . GROUND NO.1 IS GENERAL IN NATURE. ITA NOS. 2014 - 2015 - 2016 & 2017/DEL/2012 & ITA NOS. 2507 - 2508 - 2509 & 2510/DEL/2012 AYS: 2006 - 07, 2007 - 08, 2008 - 09 & 2009 - 10 GENIN INDIA TPA P.LTD. 12 8.2 . ON GROUND NO.2 THE MUMBAI BENCH OF THE ITAT IN HEALTH INDIA TPA SERVICES (P) LTD. H AS HELD AS FOLLOWS. 12. DURING THE COURSE OF HEARING, LD.AR FROM THE SAID CHART SUBMITTED THAT THE ONLY BALANCE AMOUNT LEFT OUT OF RS.9,92,48,570 IS RS.7,34,60,140 ON WHICH ASSESSEE IS LIABLE TO PAY TDS. LD.AR ALSO CONCEDED THAT ASSESSEE IS ALSO LIABLE TO PAY INTEREST U/S 201(1A) FO THE ACT ON THE TDS PAYABLE ON RS.7,34,60,140 AND IS ALSO LIABLE TO PAY INTEREST ON THE TDS PAYABLE OF RS.89,61,485/ - TILL THE DATE OF PAYMENT OF TAX THEREON BY THE DEDUCTEE. LD.DR HAS NO OBJECTION TO THAT EXTENT SUBJECT TO THE CONDITION THAT ASSESSEE SHOULD FURNISH THE REQUISITE CERTIFICATES AS PER CBDT CIRCULAR NO.8/2009 DT. 24.11.2009 . 13. WE AGREE WITH ABOVE CONTENTION OF LD.AR AND, ACCORDINGLY, RESTORE THE ISSUE TO THE FILE OF AO WITH A DIRECTION TO CALCULATE THE TDS PAYABLE BY THE ASSESSEE AND THE LIABILITY OF INTEREST U/S 201(1A) OF THE ACT SUBJECT TO THE OBSERVATIONS MADE HEREIN ABOVE AFTER GIVING DUE OPPORTUNITY OF HEARING AND ALSO CONSIDERING SUCH EVIDENCES AS MAY BE PRODUCED BY THE ASSESSEE BEFORE HIM HENCE GROUND NOS. 3 AND 5 OF THE AP PEAL ARE ALLOWED. 8.3. CONSISTENT WITH THE VIEW TAKEN THEREIN, AND THE JUDGEMENT OF THE J URISDICTIONAL HIGH COURT IN THE CASE OF ADIDAS INDIA MARKETING P.LTD. (SUPRA), WE DIRECT THE AO TO CHARGE INTEREST ONLY FROM THE DATE OF DEFAULT TO THE DATE ON WHICH THE PAYEE HAS ACTUALLY PAID TAX. NO INTEREST BEYOND THE DATE OF ACTUAL PAYMENT OF TAX CAN BE CLAIMED BY THE DEPARTMENT. HENCE THIS GROUND IS ALLOWED IN PART. 8.4. GROUND NOS. 3 AND 4 ARE ALSO GENERAL IN NATURE. 8.5. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE ALLOWED IN PART. ITA NOS. 2014 - 2015 - 2016 & 2017/DEL/2012 & ITA NOS. 2507 - 2508 - 2509 & 2510/DEL/2012 AYS: 2006 - 07, 2007 - 08, 2008 - 09 & 2009 - 10 GENIN INDIA TPA P.LTD. 13 9. IN THE RESULT THE APPEALS BY THE REVENUE FOR ALL THE AYS ARE DISMISSED AND THE APPEALS BY THE ASSESSEE FOR ALL THE AYS ARE ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JANUARY, 2015 . SD/ - SD/ - (H.S. SIDHU) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUN TANT MEMBER DATED: THE 30 TH JANUARY, 2015 *MANGA COP Y OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR