ACIT, New Delhi V. M/s. Raksha TPA(P) Ltd., Faridabad

ITA 2801/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3660 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 05-04-2017
• Assessment Year: misc
• Appeal Filed On: 06-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Keywords: Non-deduction of tax

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 2801/DEL/2014 (ASSESSMENT YEAR: 2010 - 11 ) ACIT, CIRCLE 5(1), NEW DELHI VS. RAKSHAN TPA (P) LTD, ESCORTS CORPORATE CENTRE, 15/5, MATHURA ROAD, FARIDABAD PAN:AACCR3893H (APPELLANT) (RESPONDENT) CO. NO. 90/DEL/2015 (IN ITA NO.2801/DEL/2014 (ASSESSMENT YEAR: 2010 - 11) RAKSHA TPA (P) LTD, ESCORTS CORPORATE CENTRE, 15/5, MATHURA ROAD, FARIDABAD PAN:AACCR3893H VS. ACIT, CIRCLE 5(1), NEW DELHI (APPELLANT) (RESPONDENT) REVENUE BY : SH. FR MEENA, SR. DR ASSESSEE BY: SH. RAHUL KHARE, ADV DATE OF HEARING 05/04 / 2017 DATE OF PRONOUNCEMENT 10 / 04 / 2017 O R D E R PER PRASHANT MAHARISHI, A. M. 01. TH IS APPEAL IS FILED BY REVENUE AGAINST THE ORDER OF THE LD CIT(A) - XXX, NEW DELHI DATED 05.02.2014 FOR THE ASSESSMENT YEAR 2010 - 11 AND ASSESSEE HAS FILED CROSS OBJECTION . 02. THE REVENUE IN ITANO 2801 / DEL/214 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD C(T(A) HAS ERRED IN AGREEING TO THE CONTENTION OF THE ASSESSEE THAT THE INTEREST SHOULD HAVE BEEN CHARGED ONLY TILL THE DATE PG. 2 OF PAYMENT OF TAX AND NOT TILL THE DATE ON WHICH TH E DEDUCTEE(S) FILED THEIR RETURN OF INCOME. 03. THE ASSESSEE IN CO NO 90/ DEL/ 2015 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN CROSS OBJECT: - 1. THE LD CIT(A) ERRED IN FACT AND IN LAW IN CONFIRMING THE ADDITION THE ADDITION OF INTEREST CHARGED WHICH IS NOT ONLY BAD IN LAW BUT ALSO AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE BECAUSE DEDUCTEES HAD ALREADY FILED THEIR RETURNS AND PAID THEIR TAX LIABILITY WHERE EVEN APPLICABLE. 2. THAT INSPITE OF DIRECTION GIVEN BY CIT(A) TO ACCEPT THE CERTIFICATES P RODUCED BEFORE HIM, THE APPEAL EFFECT IS STILL PENDING. 3. THE LD CIT(A) ERRED IN FACT AND IN LAW IN NOT APPRECIATING THAT APPROX 95% CERTIFICATES WERE PRODUCED AND BALANCE CERTIFICATES WERE UNABLE TO OBTAIN DUE TO LOGISTIC ISSUES HENCE THE INTEREST CHARG ED BE DELETED. 04. THE APPELLANT IS A COMPANY ENGAGED IN THE BUSINESS OF PROVIDING THIRD - PARTY ADMINISTRATIVE SERVICES TO INSURANCE COMPANIES FOR THE PURPOSE OF SERVICING THEIR POLICYHOLDERS. ONE OF THE PRINCIPAL ACTIVITY IN RELATION TO SUCH SERVICES FACIL ITATION OF CASHLESS EXCESS, PROCESSING AND SETTLEMENT OF MEDICAID IS ON BEHALF OF INSURANCE COMPANY. IN THE COURSE OF PROVIDING THIS CASHLESS SERVICES. HE APPELLANT DISCHARGES OBLIGATION OF INSURED PERSONS TOWARDS THE HOSPITAL FOR GETTING TREATMENT UNDER T HE POLICY TERMS. THE ENTIRE ISSUE INVOLVED IN THIS ORDER RELATES TO NON - DEDUCTION OF TAX UNDER SECTION 194J ON THE PAYMENTS MADE BY THE APPELLANT AS THIRD - PARTY ADMINISTRATOR SERVICES PROVIDED TO THE HOSPITALS IN RESPECT OF TREATMENT OF MADE THE CLAIM POLI CYHOLDERS. THE APPELLANT ALONG WITH ALL OTHER THIRD - PARTY ADMINISTRATORS OPERATING IN THE COUNTRY HAD MOLLIFIED BELIEF THAT NO TAX AT SOURCE IS DEDUCTIBLE OF THE SAID PAYMENTS. THE CENTRAL BOARD OF DIRECT TAXES IN NOVEMBER 2009 ISSUED A CIRCULAR NO. 8/2009 CLARIFYING THAT EDS IS APPLICABLE ON SUCH PAYMENTS AND WITH REGARD TO THE DEFAULTS ALREADY MADE BY THE ASSESSEE CERTAIN GUIDELINES WERE ISSUED TO THE DEPARTMENT FOR THE PURPOSE TO ASSESS THE LIABILITIES OF THESE PARTIES FOR PAST DEFAULTS. ACCORDING TO THA T CIRCULAR IT WAS IMPERATIVE FOR THE ASSESSEE TO EXPLAIN AND SHOW THAT HOSPITAL SAVED DISCHARGED THE TAX OBLIGATION BEFORE FILING OF THE RETURNED AND HAVE INCLUDED RECEIPTS IN THERE ACCOUNTS. IN THE PRESENT CASE THE ASSESSEE WAS SOLVED WITH A DEMAND OF RS. 2 938 4955/ ON THE APPELLANT WIDE ORDER DATED 30 08/03/2012 UNDER SECTION 201 (1)/201 (1A) OF THE INCOME TAX ACT. PG. 3 THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT APPEAL WHO IN TURN DIRECTED THE ASSESSEE TO FILE ALL THE CERTIFICATES AVAILABLE WITH IT BEF ORE THE LD. ASSESSING OFFICER AND ON SUCH EXAMINATION THE AMOUNT OF TAX RAISED UNDER SECTION 201 (1) MAY BE MODIFIED ACCORDINGLY. WITH RESPECT TO THE CHARGEABILITY OF INTEREST UNDER SECTION 201 (1A) OF THE ACT. HE DIRECTED THE LD. ASSESSING OFFICER TO CALC ULATE THE INTEREST IS THE PAYMENT MADE BY THE DEDUCTEE IN THE CASE WHERE CA CERTIFICATES HAVE BEEN SUBMITTED BY THE APPELLANT FROM THE HOSPITALS. HE CONFIRMED A SUM OF RS. 2 49678 PERTAINING TO MISCELLANEOUS MATTERS RELATED TO TAX DEDUCTION AT SOURCE. BOTH THE PARTIES. AGGRIEVED BY THE ORDER OF THE LD. CIT A HAS PREFERRED AN APPEAL BEFORE US. 05. IN THE APPEAL OF THE REVENUE ONLY GROUND IS THAT THE LD. CIT (A) HAS ERRED IN AGREEING TO THE CONTENTION OF THE ASSESSEE THAT THE INTEREST SHOULD HAVE BEEN CHARGED ON LY TILL THE DATE OF PAYMENT OF TAX AND NOT TILL THE DATE ON WHICH THE DEDUCT IS FILED THE RETURN OF INCOME. 06. BOTH THE PARTIES AGREED BEFORE US THAT THE ISSUE IS NOW SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH IN CASE OF GENINS INDIA TPA LTD VER SUS ASSISTANT COMMISSIONER OF INCOME TAX OPEN BRACKET TDS), CIRCLE 50 (1) (2015) 54 TAXMANN.COM 85 (DELHI TRIB) WHICH IS DECIDED THE ISSUE AS UNDER: - I. TPAS ARE LIABLE TO DEDUCT TDS UNDER SECTION 194J FROM PAYMENTS MADE TO HOSPITAL II. PAYMENT MADE TO PATIENT AND POLICYHOLDERS IS ONLY REIMBURSEMENT OF COST, TPAS WOULD NOT BE LIABLE FOR DEDUCTION OF TDS UNDER SECTION 194J III. WHERE TAX HAS ALREADY BEEN PAID BY DEDUCTEE, NO FURTHER TAX CAN BE COLLECTED FROM DEDUCTOR; HOWEVER, INTEREST UNDER SE CTION 201(1A) CAN BE CHARGED FROM DEDUCTOR FOR FAILURE TO DEDUCT TAX FROM DATE OF DEFAULT TILL DATE OF ACTUAL TAX PAID BY DEDUCTEE 07. THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH IN THE APPEAL OF THE REVENUE, WE HOLD THAT INTEREST UN DER SECTION 201 (1A) CAN BE CHARGED FROM DEDUCTOR FOR FAILURE TO DEDUCT TAX FROM THE DATE OF DEFAULT TILL THE DATE OF ACTUAL TAX PAID BY THE DEDUCTEE ONLY. IN THE RESULT WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE AND THEREFORE SAME IS DISMISSED. PG. 4 08. NOW COMING TO THE APPEAL OF THE ASSESSEE IN CROSS OBJECTION WHEREIN GROUND NO. 1 AND GROUND NO. 2 OF THE APPEAL , THE ASSESSEE DID NOT RAISE ANY ARGUMENTS AND THEREFORE THEY ARE DISMISSED. 09. WITH RESPECT TO GROUND NO. 3. THE GROUND OF THE ASSESSEE IS THAT THE LD. CIT APPEAL HAS NOT APPRECIATED THAT APPROXIMATELY 95% CERTIFICATES WERE PRODUCED AND BALANCE CERTIFICATES WERE UNABLE TO BE OBTAINED DUE TO LOGISTIC ISSUE HAS THE INTEREST CHARGE MAY BE DELETED. 10. FOR THIS ASSESSEE SUBMITTED THE ORDER OF THE LD. ASSE SSING OFFICER DATED 24/01/2017 WHEREIN THE LD. ASSESSING OFFICER HAS UPHELD THE TAX LIABILITY AMOUNTING TO RS. 9 256817/ . THE ASSESSEE REITERATED THE SAME CONTENTIONS WHICH WERE RAISED BEFORE THE LD. ASSESSING OFFICERS STATING THAT CONSIDERING THE SUBSTAN TIAL VALUE 88% OF THE TOTAL VALUE WHICH IS BEING VERIFIED WITH THE COPY OF THE RETURN OF INCOME, NO INTEREST SHOULD BE AGREED ON THAT TOTAL VALUE. IN NUTSHELL, THE ARGUMENT OF THE ASSESSEE IS THAT WHEN 95% OF THE CERTIFICATES WERE PRODUCED AND BALANCE CERT IFICATES COULD NOT BE PRODUCED DUE TO LOGISTIC AND THE INTEREST CHARGE MAY BE DELETED. 11. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY OBJECTED TO THAT AND SUBMITTED THAT THE ORDER OF THE COORDINATE BENCH WAS THAT THAT INTEREST UNDER SECTION 201 (1A) BE CHARGED FROM THE DEDUCTOR FOR FAILURE TO DEDUCT TAX FROM THE DATE OF DEFAULT TILL THE DATE OF ACTUAL TAX PAID BY THE DEDUCTEE. THEREFORE, IF THE ASSESSEE IS NOT IN A POSITION TO SHOW THAT WHAT IS THE DATE OF ACTUAL TAX PAID BY THE HOSPITALS THE INTEREST IS REQUIR ED TO BE CHARGED ~DATE OF FILING OF THE RETURN OF INCOME. HE THEREFORE SUBMITTED THAT THERE IS NO ERROR IN THE ORDER OF THE LD. CIT APPEAL AS WELL AS THE ORDER GIVING EFFECT TO THE ORDER OF THE LD. CIT APPEAL OF THE LD. ASSESSING OFFICER. 12. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE ORDER OF THE LD. ASSESSING OFFICER DATED 24/01/2017 WHEREIN HE HAS WORKED OUT THE TAX PAYABLE BY THE ASSESSEE AMOUNTING TO RS. 9 256817/ . THE COORDINATE BENCH HAS HELD THAT THAT INTEREST IS REQUIRED T O CHARGE ONLY FROM THE DATE OF DEFAULT TO THE DATE ON WHICH THE PAYEE IS ACTUALLY PAID TAX. NO INTEREST BEYOND THAT DATE OF ACTUAL PAYMENT OF TAX CAN BE CLAIMED BY THE DEPARTMENT. THE ASSESSEE HAS SUBMITTED THAT A TOTAL PAYMENT OF RUPEES ON 167532578/ ARE COVERED BY THE CEA CERTIFICATES PROVIDED AT THE TIME OF ASSESSMENT AND WHEREIN THE RETURN ACKNOWLEDGEMENT ARE PROVIDED FOR PG. 5 87.5% OF THE AMOUNT AND THEREFORE THE INTEREST CHARGEABLE BY THE DEPARTMENT IS NIL. IT WAS THE CONTENTION OF THE ASSESSEE THAT THERE WILL BE NO INTEREST LIABILITY ON THE ASSESSEE COMPANY. IN THESE CASES WHERE CEA CERTIFICATES ALONGWITH ITR ACKNOWLEDGEMENT OF THE RECIPIENT OF THE INCOME HAVE BEEN PROVIDED TO ENSURE THAT FULL AMOUNT OF TAXES A BEEN PAID BY THE PAYS TO THE GOVERNMENT. AND SIMILARLY, THE ASSESSEE HAS ALSO NOT PROVIDED CA CERTIFICATES AT THE TIME OF ASSESSMENT, BUT NOW PROVIDED BEFORE THE LD. ASSESSING OFFICER FOR A SUM OF RS. 52467050/ AND THERE ALSO THE ASSESSEE HAS SUBMITTED THAT THERE WILL NOT BE ANY INTEREST LIABILITY IS THE RETURN OF THE PAYEE IS PROVIDED SHOWS THAT THE FULL AMOUNT OF TAXES HAVE BEEN PAID TO THE GOVERNMENT. ACCORDING TO THE DECISION OF THE COORDINATE BENCH INTEREST UNDER SECTION 201 (1A) CAN BE CHARGED FROM THE DEDUCTOR FOR FAILURE TO DEDUCT TAX FROM THE DATE OF DEFAULT TILL THE DATE OF ACTUAL TAX PAID BY THE HOSPITALS. WHEREAS, THE LD. ASSESSING OFFICER HAS CHARGED INTEREST UP TO 31 ST OF MARCH 2010 FOR THE REASON THAT FROM THE COPIES OF THE INCOME TAX ACKNOWLEDGEMENT FILED BY THE DEDUCTEE THE EXACT D ATE OF PAYMENT OF TAXES BY THE DEDUCTEE HOSPITALS CANNOT BE ASCERTAINED AND HAS MOST OF THE HOSPITALS OF CLAIM REFUND AND HAS DISCHARGED THEIR ENTIRE TAX LIABILITY. HE HAS COMPUTED THE INTEREST UP TO 31 ST OF MARCH 2010. WE DO NOT APPROVE THE ORDER OF THE L D. ASSESSING OFFICER OF CHARGING INTEREST UP TO 31 ST OF MARCH 2010, AS THE COORDINATE BENCH HAS HELD THAT INTEREST IS REQUIRED TO BE CHARGED FROM THE DATE OF DEFAULT TILL THE DATE OF ACTUAL TAX PAID BY THE HOSPITALS. EVEN THE CIRCULAR NO. 8 /2009 DATED 24/ 11/2009 ALSO SAID THAT THE LIABILITY TO CHARGE INTEREST UNDER SECTION 201 (1A) OF THE INCOME TAX ACT SHALL REST UP TO PAYMENT OF TAXES BY THE DEDUCTEE ON THE ASSESSEE. IN VIEW OF THIS WE RESTORE THE ISSUE OF CHARGING INTEREST UNDER SECTION 201 (1A) TO THE FILE OF THE LD. ASSESSING OFFICER TO WORK OUT THE INTEREST FROM THE DATE OF DEFAULT TILL THE DATE OF TAX PAID BY THE HOSPITALS IN EACH SUCH CASE OF DEFAULT. THE ASSESSEE IS ALSO DIRECTED TO COOPERATE BY FURNISHING THE REQUISITE DETAILS OF THE DATE OF DEFAULT AND THE DATE OF PAYMENT OF TAXES BY THE HOSPITALS FOR WORKING OUT THE INTEREST CHARGEABLE UNDER SECTION 201 (1A) OF THE ACT. IN THE RESULT GROUND NO. 3 OF THE APPEAL OF THE ASSESSEE IS ALLOWED WITH ABOVE DIRECTION. 13. IN THE RESULT APPEAL OF THE ASSES SEE IS PARTLY ALLOWED STATISTICAL PURPOSES. PG. 6 ORDER PRONOUNCED IN THE OPEN COURT ON 1 0 / 04 / 2017 . - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL ME M BER ACCOUNTANT MEMBER DATED: 1 0 / 04 / 2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI