ACIT, Gurgaon V. M/s. Apollo DKV Insurance Co. Ltd., Gurgaon

ITA 2816/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86488 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-11-2014
• Assessment Year: misc
• Appeal Filed On: 07-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS Y KAKKAR
• Assessee Lawyers: RUPESH J AIN
• Keywords: Salary income; Additional evidence; Non-deduction of tax; Reasonable cause
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI A.T. VARKEY : JUDICIAL MEMBER ITA NO. 2816/DEL/2012 A.Y. 2009-10 ACIT TDS CIRCLE, VS. M/S APOLLO DKV INSURANCE CO. LTD., NEW DELHI. APOLLO MUNICH HEALTH INSURANCE CO. LT D., 10 TH FLOOR, TOWER-B, BUILDING NO. 10, DLF CYBER CITY, DLF CITY, PHASE-II, GURGAON. PAN: AAGCA 1654 H AND C.O. NO. 291/DEL/12 ( IN ITA NO. 2816/DEL/2012) A.Y. 2009-10 M/S APOLLO DKV INSURANCE CO. LTD., VS. ACIT TDS CIR CLE, GURGAON. NEW DELHI. ( APPELLANT ) ( RESPONDENT ) DEPARTMENT BY : MRS. Y. KAKKAR DR ASSESSEE BY : SHRI RUPESH JAIN ADV. & SHRI UPVAN GUPTA CA DATE OF HEARING : 05-11-2014 DATE OF ORDER : 12-01-2015. O R D E R PER S.V. MEHROTRA, A.M:- THE DEPARTMENT HAS PREFERRED APPEAL AND THE ASSESS EE HAS FILED CROSS OBJECTION AGAINST THE ORDER DATED 21-03-2012, PASSE D BY THE CIT(APPEALS), FARIDABAD IN APPEAL NO. 145/GGN/2009-10 FOR A.Y. 2 009-10. 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INSURANCE COMPANY AND HAD ENTERED INTO CONTRACTS WITH VARIOUS HOSPITA LS FOR TREATMENT OF ITS POLICY HOLDERS. SURVEY/ TDS INSPECTION U/S 133A(1) OF THE I.T. ACT, 1961 WAS CARRIED OUT ON 12-12-2008 IN THE CASE OF THE AS SESSEE. IN THE COURSE OF INSPECTION, IT WAS NOTICED THAT THE ASSESSEE HAD MA DE THE FOLLOWING PAYMENTS TO VARIOUS HOSPITALS FOR THE PROFESSIONAL SERVICES RENDERED BY THE HOSPITALS TO THE POLICY HOLDERS OF THE ASSESSEE: F.Y. MONTH AMOUNT 2007-08 JAN 2008 RS. 7065 FEB 2008 RS. 47200 MAR 2008 RS. 282368 TOTAL RS. 336633 2008-09 APR 2008 RS. 671176 MAY 2008 RS. 2040292 JUN 2008 RS. 6771674 JUL 2008 RS. 4755838 AUG 2008 RS. 6057944 SEP 2008 RS. 6041210 OCT 2008 RS. 7888425 NOV 2008 RS. 8924253 DEC 2008 RS. 9686827 JAN 2009 RS. 22480349 FEB 2009 RS. 20861900 MAR 2009 RS. 22097739 2.1. THE AO WAS OF THE OPINION THAT SINCE THE PAYME NTS WERE MADE FOR PROFESSIONAL SERVICES, THE ASSESSEE WAS OBLIGED TO DEDUCT TAX U/S 194J OF THE I.T. ACT. THE AO REFERRED TO THE DECISION OF HONBL E KARNATAKA HIGH COURT IN THE CASE OF MEDI ASSISH INDIA TPA VS. DCIT, HOLD ING THAT THE PAYMENTS 3 MADE TO HOSPITALS WERE SUBJECT TO THE PROVISION OF SEC. 194J. HE ALSO REFERRED TO THE CBDT CIRCULAR NO. 8/2009 DATED 24-1 1-2009 ON THIS ISSUE. AO FURTHER OBSERVED THAT ASSESSEE HAD FAILED TO SUB MIT ANY SUSTAINABLE DOCUMENTARY EVIDENCE IN SUPPORT OF ITS CONTENTION T HAT RESPECTIVE HOSPITALS HAD ALREADY PAID TAX TO GOVT. A/C AND THERE WAS NO REVENUE LOSS TO THE DEPARTMENT. THE AO, THEREFORE, COMPUTED THE DEFAULT FOR NON-DEDUCTION OF TAX U/S 201(1), AS UNDER: AMOUNT OF TDS RS. 13400855 INTEREST RS. 1765387 2.2. FURTHER, FOR DELAY IN DEPOSITING THE TDS, THE INTEREST CHARGEABLE U/S 201(1A) WAS COMPUTED AT RS. 17042/- AS UNDER: AMOUNT OF TAX DEDUCTED DUE DATE OF PAYMENT ACTUAL DATE OF PAYMENT INTEREST U/S 201(1A) TO BE CHARGED RS. 1112819/- 07-07-2008 09-07-2008 RS. 11128/- RS. 127768/- 07-05-2008 16-05-2008 RS. 1277/- RS. 463729/- 07-07-2008 09-07-2008 RS. 4637/- TOTAL RS. 17042/ - 2.3. BEFORE LD. CIT(A), THE ASSESSEE HAD FILED DETA ILED SUBMISSIONS, WHICH WERE FORWARDED BY LD. CIT(A) TO AO FOR HIS COMMENTS , BUT SINCE NO REPORT WAS RECEIVED, THEREFORE, LD. CIT(A) DECIDED THE APP EAL ON THE BASIS OF WRITTEN SUBMISSIONS MADE BY ASSESSEE. 4 2.4. LD. CIT(A) UPHELD THE AOS ACTION IN TREATING THE PAYMENTS BEING AMENABLE TO DEDUCTION UNDER THE PROVISIONS OF SECTI ON 194J, INTER ALIA, OBSERVING THAT HOSPITALS HAD RENDERED PROFESSIONAL SERVICES TO THE ASSESSEE, THOUGH POLICY HOLDERS WERE TREATED UNDER THE CASH-L ESS INSURANCE SCHEME. HE POINTED OUT THAT THERE WAS NO CONTRACT FOR THE AVAI LING OF MEDICAL SERVICES BETWEEN THE POLICY HOLDER AND THE HOSPITAL, BUT A C ONTRACT BETWEEN ASSESSEE AND THE HOSPITALS BY VIRTUE OF WHICH THE INSURED AV AILED MEDICAL FACILITIES FROM THE HOSPITALS. HE OBSERVED THAT THOUGH THE PAY MENTS WERE MADE ON THEIR BEHALF, BUT THE SAME CONSTITUTED PAYMENT TO H OSPITALS UNDER THE EXPRESSION ARRANGEMENT/ AGREEMENT. 2.5. AS REGARDS THE ASSESSEES RELIANCE ON THE DECI SION OF HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES LTD. V. CIT 293 ITR 226 AND CBDT CIRCULAR NO. 275/201/95-IT(B) DATED 29 -01-1997, LD. CIT(A) OBSERVED THAT AS PER CIRCULAR THOUGH NO DEMAND VISU ALIZED U/S 201(1), SHOULD BE ENFORCED AFTER THE TAX DEDUCTOR HAS SATISFIED TH E OFFICER-IN-CHARGE OF TDS, THAT TAXES DUE HAD BEEN PAID BY THE DEDUCTEE-ASSESS EE. HOWEVER, THAT WOULD NOT ALTER THE LIABILITY TO CHARGE INTEREST U/S 201( 1A) OF THE ACT TILL THE DATE OF PAYMENT OF TAXES BY THE DEDUCTEE- ASSESSEE, OR THE LIABILITY FOR PENALTY U/S 271C. HE ALSO REFERRED TO THE DECISION OF HONBLE S UPREME COURT IN THE CASE OF CIT VS. ELI LILLY & CO. INDIA PVT. LTD. 312 ITR 225, WHEREIN IT HAD BEEN 5 HELD THAT ONCE THE DEDUCTEES HAD PAID TAXES ON THEI R SALARY INCOME BY WAY OF SELF ASSESSMENT TAX, TAX COULD NOT BE RECOVERED FROM THE EMPLOYERS U/S 201(1) OF THE ACT. IN VIEW OF THIS POSITION OF LAW, LD. CIT(A) REQUIRED THE ASSESSEE TO FILE THE DETAILS REGARDING TAXES PAID B Y VARIOUS HOSPITALS BY WAY OF TDS, ADVANCE TAX AND SELF ASSESSMENT TAX, SO AS TO DETERMINE THE CORRECT LIABILITY TOWARDS NON/SHORT DEDUCTION OF TAX AND IN TEREST CHARGEABLE U/S 201(1A) OF THE ACT. 2.6. IN RESPONSE TO LD. CIT(A)S DIRECTION, THE ASS ESSEE FILED NECESSARY DETAILS, ENCLOSING THEREWITH, THE PB, CONTAINING 4 25 PAGES AND CERTIFICATE ISSUED BY THE HOSPITALS. LD. CIT(A) HAS OBSERVED TH AT THESE EVIDENCES COULD NOT BE FILED BEFORE THE AO DUE TO TIME CONSTRAINTS AND VOLUMINOUS EXERCISE, BUT THE SAME WERE CALLED FOR AND ADMITTED BY EXERCI SING POWER UNDER RULE 46A(4) OF THE I.T. RULES IN ORDER TO DECIDE VARIOUS GROUNDS OF APPEAL JUDICIOUSLY. 2.7. LD. CIT(A), AFTER EXAMINING THE CERTIFICATES F ILED BY THE ASSESSEE, POINTED OUT THAT HOSPITALS OBTAINED A GENERAL CERTI FICATE FROM THEIR AUDITORS TO THE EFFECT THAT THEY HAD PAID TAXES ON INCOME. AFTE R CONSIDERING THE DETAILS, LD. CIT(A), INTER ALIA, OBSERVED AS UNDER: 6 DURING THE FY 2008-09, THE APPELLANT HAS MADE PAY MENTS OF RS. 20,000/- OR LESS TO 243 HOSPITALS ON WHICH TDS OF RS. 2,88,465/- AND INTEREST OF RS. 37,072/- HAS BEEN WO RKED OUT. AS REGARDS TOTAL PAYMENTS OF RS. 112,039,526/- HAVING TDS IMPLICATION OF RS. 1,26,94,078/- THE APPELLANT HAS FIELD CERTIFICATES REGARDING TAXES PAID BY THE HOSPITALS AS PAGE 1 TO 425 OF THE PAPER BOOK. SOME OF THE HOSPITALS HAVE A LSO ENJOYED EXEMPTION FROM DEDUCTION OF TAX BY VIRTUE OF CERTI FICATES OBTAINED U/S 197(1) OF THE ACT. THE APPELLANT HAS N OT BEEN ABLE TO FILE CERTIFICATES IN RESPECT OF REMAINING TDS AM OUNT OF RS. 4,18,312/-. IN THE LIGHT OF DECISION OF HONBLE SU PREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES LTD. V. C IT (293 ITR 226) AND CBDTS CIRCULAR NO. 275/201/95-IT(B) D ATED 2901-1997, NO DEMAND OF TDS CAN BE RECOVERED EXCEPT THE AMOUNT OF RS. 4,18,312/- FOR WHICH THE APPELLANT HA S NOT BEEN ABLE TO SATISFY THAT THE AMOUNT OF TAX TO THAT EXTE NT HAS BEEN PAID BY CONCERNED HOSPITALS. HENCE, IN ABSENCE OF A NY EVIDENCE, THE DEMAND RAISED TO THE EXTENT OF RS. 4, 18,312/- U/S 201(1) ON ACCOUNT OF NON DEDUCTION OF TAX IS CONFIR MED AND BALANCE DEMAND OF RS. 1,29,82,543/- IS DELETED. GRO UND NO. 4 OF APPEAL IS PARTLY ALLOWED. 2.8. AS REGARDS THE DEMAND U/S 201(1A), LD. CIT(A), INTER ALIA, OBSERVED THAT IN VIEW OF THE DECISION OF HONBLE SUPREME COU RT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES LTD. (SUPRA), THERE R EMAINED NO DISPUTE THAT THE INTEREST IS REQUIRED TO BE CHARGED UP TO THE DA TE OF PAYMENT MADE BY THE DEDUCTEES. 2.9. AFTER EXAMINING THE CERTIFICATES, ISSUED BY TH E HOSPITALS, LD. CIT(A) OBSERVED THAT NO SPECIFIC INFORMATION AS TO THE PAY MENT BY WAY OF TDS, ADVANCE TAX OR SELF ASSESSMENT TAX WAS GIVEN BY THE HOSPITALS AND GENERAL CERTIFICATE HAD BEEN ISSUED STATING THE TOTAL TAXES PAID BY THEM ON THEIR 7 RETURNED INCOME. HE POINTED OUT THAT TO COLLECT HOS PITAL-WISE INFORMATION SEPARATELY FOR TDS, ADVANCE TAX OR SELF ASSESSMENT TAX WAS NOT FEASIBLE ON ACCOUNT OF THE SAME BEING TIME CONSUMING AND VOLUMI NOUS EXERCISE. HE FURTHER POINTED OUT THAT EVEN IF SUCH EXERCISE WAS DONE, THE RESULT COULD NOT MAKE MUCH DIFFERENCE IF THE INTEREST WAS CHARGED CO NSIDERING THE PROVISIONS RELATING TO PAYMENT OF ADVANCE TAX. HE POINTED OUT THAT UNDER THE EXISTING PROVISIONS, THE ASSESSEES WERE REQUIRED TO PAY ADVA NCE TAX EITHER IN THREE OR FOUR QUARTERLY INSTALLMENTS WHEREAS THE ASSESSEE HA D MADE PAYMENTS REGULARLY TO THE HOSPITALS. IN THE BACKDROP OF THIS POSITION, LD. CIT(A) COMPUTED THE INTEREST PAYABLE U/S 201(1A), OBSERVIN G AS UNDER: THUS, PAYMENTS MADE WITHOUT DEDUCTION OF TAX PRIOR TO DUE DATES OF ADVANCE TAX PAYMENTS BY THE DEDUCTEES WOUL D DEPRIVE THE REVENUE OF LEGITIMATE TAXES. THE APPELLANT HAS WORKED OUT INTEREST ON MONTHLY BASIS UP TO 31-03-2009. IN RESP ECT OF TDS AMOUNT OF RS. 4,18,312/- FOR WHICH NO CERTIFICATES HAVE BEEN FILED, THE INTEREST HAS BEEN WORKED OUT AT RS. 1,11 ,276/-. HOWEVER, THE SAME IS REQUIRED TO BE CHARGED UP TO T HE DUE DATE OF FILING OF RETURNS IN THE CASE OF DEDUCTEES I.E. UP TO SEPTEMBER 2009. THUS, THE INTEREST FOR FURTHER PERIOD OF 6 MO NTHS WORKS OUT TO RS. 25,098/-. IN RESPECT OF NO CERTIFICATE C ASES OF DEDUCTEES, THE TOTAL INTEREST WORKS OUT TO RS. 1,36 ,374/-. IN RESPECT OF HOSPITALS FROM WHICH THE CERTIFICATES HA VE BEEN FILED, THE AMOUNT OF INTEREST HAS BEEN WORKED OUT BY THE A PPELLANT ON MONTHLY BASIS UP TO 31-03-2009 AT RS. 4,23,084/-(I. E. RS. 5,34,360/- MINUS RS. 1,11,276/-). HOWEVER, THE INTE REST IN THESE CASES IS ALSO REQUIRED TO BE CHARGED UP TO THE DUE DATE OF FILING OF RETURNS BY THE DEDUCTEES. BY ESTIMATING THAT THE DEDUCTEES MUST HAVE PAID AT LEAST 90% OF THEIR TAXES BY WAY O F ADVANCE TAX, THE INTEREST ON SHORT FALL OF 10% OF TDS AMOUN T I.E. S. 8 12,98,254/- FOR 6 MONTHS WORKS OUT TO RS. 77,895/-. CONSEQUENTLY, THE TOTAL INTEREST CHARGEABLE IN THES E CASES OF DEDUCTEES WORKS OUT TO RS. 5,00,979/-. CONSIDERING THE ABOVE FACTS, CHARGING OF INTEREST OF RS. 6,37,353/- (I.E. RS. 1,36,374/- PLUS RS. 5,00,979/-) U/S 201(1A) IS CONFIRMED AND B ALANCE INTEREST OF RS. 11,28,034/- IS DELETED. GROUND NO. 5 OF APPEAL IS PARTLY ALLOWED. 2.10. BEING AGGRIEVED, WITH THE ORDER OF LD. CIT(A) , THE DEPARTMENT IS IN APPEAL BEFORE US AND ASSESSEE HAS FILED CROSS OBJEC TIONS. 3. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES. FIRST WE TAKE UP THE CROSS OBJECTIONS, TAKEN BY THE ASSESSEE, WHE REIN THE ASSESSEE HAS PRIMARILY ASSAILED THE FINDINGS OF LOWER REVENUE AU THORITIES IN INVOKING THE PROVISIONS OF SECTION 194J TO THE PRESENT SET OF FA CTS. THE FACTS ARE NOT DISPUTED. THE ASSESSEE HAD MADE PAYMENTS TO VARIOUS HOSPITALS FOR THE ALLEGED PROFESSIONAL SERVICES RENDERED BY THE HOSPI TALS TO ITS POLICY HOLDERS. THE ASSESSEE COMPANY IS ENGAGED IN HEALTH INSURANCE BUSINESS AND OFFERED HEALTH INSURANCE, PERSONAL ACCIDENT AND TRAVEL INSU RANCE PRODUCTS TO BOTH RETAIL AND CORPORATE CUSTOMERS. THE ASSESSEE, IN TH E COURSE OF ITS BUSINESS, RECEIVED CLAIMS FROM POLICY HOLDERS AND MADE PAYME NTS ON BEHALF OF POLICY HOLDERS TO HOSPITALS. THE ASSESSEES CONTENTION WAS THAT IT WAS NOT REQUIRED TO DEDUCT TAX U/S 194J OF THE ACT, SINCE IT WAS NOT THE RECIPIENT OF SERVICES PROVIDED BY THE HOSPITALS. THE SUBMISSION WAS THAT THE PAYMENT TO HOSPITAL 9 WAS MADE BY THE ASSESSEE NOT ON ITS OWN ACCOUNT BUT ON BEHALF OF POLICY HOLDERS. 3.1. LD. COUNSEL FOR THE ASSESSEE FAIRLY CONCEDED T HAT THE ISSUE REGARDING APPLICABILITY OF THE PROVISIONS OF SECTION 194J TO THE PRESENT SET OF FACTS HAS BEEN DECIDED BY DELHI HIGH COURT AGAINST THE ASSESS EE IN THE CASE OF VIPUL MEDICORP TPA (P) LTD. & OTHERS VS. CBDT 245 CTR 125 , WHEREIN IT HAS BEEN HELD AS UNDER: 19. THE QUESTION, THEREFORE, IS WHAT IS COVERED BY THE EXPRESSION PROFESSIONAL SERVICES UNDER EXPLANATION (A) AND R EQUIRES DEDUCTION OF TDS UNDER SECTION 194J. WHAT IS THE LE GISLATIVE INTENT BEHIND THE DEFINITION IN EXPLANATION (A) TO SECTION 194J OF THE ACT? AS NOTICED ABOVE, SECTION 2(36) DEFINES THE TERM PROFESSION AND SECTION 14 ALSO REFERS TO PROFITS AND GAINS OF BUSINESS OR PROFESSION. THE TERM USED IN SECTION 19 4J, HOWEVER, IS PROFESSIONAL SERVICES AND EXPLANATION (A) DEFI NES THE SAID TERM FOR THE SAID SECTION EXCLUSIVELY. THE WORD SE RVICES IN THE EXPRESSION PROFESSIONAL SERVICES IS SIGNIFICA NT AND HAS TO BE GIVEN DUE WEIGHTAGE. THE PRIMARY PURPOSE AND OBJ ECTIVE OF THE DEFINITION CLAUSE IS TO DEFINE THE SERVICES INC LUDED AND REGARDED AS PROFESSIONAL SERVICES AND NOT THE PERSO N WHO RENDERS THE SAID SERVICES. SECTION 194J UNDER SUB-S ECTION 1 APPLIES WHEN PAYMENT IS MADE TO A RESIDENT TOWARDS ANY SUM BY WAY OF FEE FOR PROFESSIONAL SERVICES. THE OBJECT OF THE DEFINITION CLAUSE EXPLANATION (A) IS NOT TO IDENTIFY THE RESI DENT, OR THE RECIPIENT, WHO RECEIVES OR IS PAID FEE FOR PROFESSI ONAL SERVICES BUT TO DEFINE THE SERVICES. 3.2. HONBLE DELHI HIGH COURT AGREEING WITH THE VIE W TAKEN BY HONBLE BOMBAY HIGH COURT IN THE CASE OF DEDICATED HEALTH CARE SERVICES TPA (INDIA)(P) LTD. 232 CTR 41, HELD AS UNDER: 10 24. IN DEDICATED HEALTH CARE SERVICES CASE (SUPRA), AFTER REFERRING TO SECTION 119 OF THE ACT, FOLLOWING OBSE RVATIONS HAVE BEEN MADE:- 14. SECTION 119 OF THE ACT PROVIDES THAT THE BOARD MAY, FROM TIME TO TIME ISSUE SUCH ORDERS, INSTRUCTIONS A ND DIRECTIONS TO OTHER INCOME-TAX AUTHORITIES AS IT MA Y DEEM FIT FOR THE PROPER ADMINISTRATION OF THE ACT AND TH AT SUCH AUTHORITIES AND ALL OTHER PERSONS EMPLOYED IN THE EXECUTION OF THE ACT SHALL OBSERVE AND FOLLOW SUCH ORDERS, INSTRUCTIONS AND DIRECTIONS OF THE BOARD. T HE PROVISO TO SUB-SECTION (1) HOWEVER STIPULATES THAT NO SUCH ORDERS, INSTRUCTIONS OR DIRECTIONS SHALL BE ISSUED (A) SO AS TO REQUIRE ANY INCOME-TAX AUTHORITY TO MAKE A PARTI CULAR ASSESSMENT OR TO DISPOSE OF A PARTICULAR CASE IN A PARTICULAR MANNER; OR (B) SO AS TO INTERFERE WITH T HE DISCRETION OF THE COMMISSIONER (APPEALS) IN THE EXE RCISE OF HIS APPELLATE FUNCTIONS. THE BOARD HAS BY THE CI RCULAR TAKEN THE VIEW THAT PAYMENTS WHICH ARE MADE BY TPAS TO HOSPITALS FALL WITHIN THE PURVIEW OF SECTION 194J. NO EXCEPTION CAN BE TAKEN TO THE CIRCULAR TO THAT EXTE NT, CONSISTENT WITH THE INTERPRETATION PLACED ON THE PROVISIONS OF SECTION 194J IN THE COURSE OF THIS JU DGMENT. HOWEVER, THE GRIEVANCE OF THE PETITIONERS IS THAT T HE CIRCULAR PROCEEDS TO POSTULATE THAT A LIABILITY TO PAY A PENALTY UNDER SECTION 271C WILL BE ATTRACTED FOR A FAILURE TO MAKE A DEDUCTION UNDER SECTION 194J. SECTION 273 B OF THE ACT PROVIDES THAT NOTWITHSTANDING ANYTHING CONT AINED IN THE PROVISIONS INTER ALIA OF SECTION 271C NO PEN ALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE, A S THE CASE MAY BE, FOR ANY FAILURE REFERRED TO IN THE PRO VISION IF HE PROVES THAT THERE WAS A REASONABLE CAUSE FOR THE FAILURE. THE VICE IN THE CIRCULAR THAT HAS BEEN ISS UED BY THE CENTRAL BOARD OF DIRECT TAXES LIES IN THE DETERMINATION WHICH HAS BEEN MADE BY THE BOARD THAT A FAILURE TO DEDUCT TAX ON PAYMENTS MADE BY TPAS TO HOSPITALS UNDER SECTION 194J WILL NECESSARILY ATTRA CT A PENALTY UNDER SECTION 271C. BESIDES INTERFERING WIT H THE QUASI-JUDICIAL DISCRETION OF THE ASSESSING OFFICER OR, AS THE CASE MAY BE, THE APPELLATE AUTHORITY THE DIRECT ION 11 WHICH HAS BEEN ISSUED BY THE BOARD WOULD FORECLOSE THE DEFENCE WHICH IS OPEN TO THE ASSESSEE UNDER SECTION 273B. BY FORECLOSING A RECOURSE TO THE DEFENCE STAT UTORILY AVAILABLE TO THE ASSESSEE UNDER SECTION 273B, THE B OARD HAS BY ISSUING SUCH A DIRECTION ACTED IN VIOLATION OF THE RESTRAINTS IMPOSED UPON IT BY THE PROVISIONS OF SUB - SECTION (1) OF SECTION 119. TO THAT EXTENT, THEREFO RE THE CIRCULAR THAT WAS ISSUED BY THE BOARD WOULD HAVE TO BE SET ASIDE AND IS ACCORDINGLY SET ASIDE. WE ALSO CLA RIFY THAT IN MAKING ASSESSMENTS OR, AS THE CASE MAY BE, IN PASSING ORDERS ON APPEALS FILED UNDER THE ACT, THE ASSESSING OFFICERS AND THE COMMISSIONER (APPEALS) S HALL DO SO INDEPENDENTLY AND SHALL NOT REGARD THE EXERCI SE OF THEIR QUASI-JUDICIAL POWERS AS BEING FORECLOSED BY THE ISSUANCE OF THE CIRCULAR. 4. THEREFORE, GROUND NOS. 2 AND 3 OF THE CROSS OBJE CTION FILED BY THE ASSESSEE ARE DISMISSED. AS FAR AS GROUND NOS. 1 & 4 ARE CONCERNED, THEY WILL BE CONSIDERED WHILE DECIDING THE APPEAL FILED BY DE PARTMENT BECAUSE LD. CIT(A) HAS PARTLY ALLOWED THE ASSESSEES GROUND OF APPEAL. 5. NOW COMING TO THE DEPARTMENTS APPEAL AND GROUND NOS. 1 & 4 OF CROSS-OBJECTION, THE MAIN CONTENTION OF LD. DR IS T HAT LD. CIT(A) WRONGLY OBSERVED THAT ASSESSEE WAS NOT GIVEN SUFFICIENT OPP ORTUNITY FOR FILING THE NECESSARY DETAILS. HE REFERRED TO PAGE 1 OF THE ASS ESSMENT ORDER AND POINTED OUT THAT SURVEY TOOK PLACE ON 12-12-2008 AND THE OR DER U/S 201(1) AND 201(1A) WAS PASSED ON 5-10-2010. LD. DR POINTED OUT THAT AT PAGE 21, THE LD. CIT(A) HAS OBSERVED THAT VIDE LETTER DATED 7-3- 2011 THE PAPER BOOK AND WRITTEN SUBMISSIONS FILED BY THE ASSESSEE WERE FORW ARDED TO THE AO, BUT NO REPORT WAS RECEIVED FROM ASSESSEE. HE REFERRED TO P AGE 70 TO 101 OF THE PB AND POINTED OUT THAT BEFORE LD. CIT(A) THE ASSESSEE HAD FILED VARIOUS EVIDENCE ON 5-3-2012 AND LD. CIT(A) PASSED THE ORDE R ON 21-3-2012. THEREFORE, AO HAD NO SUFFICIENT TIME TO EXAMINE THE DETAILS. LD. DR 12 SUBMITTED THAT THE DETAILS WERE TO BE CONSIDERED UN DER RULE 46A(3) AND NOT UNDER RULE 46A(4). ON MERITS LD. DR REFERRED TO PRO VISIONS OF SECTIONS 201(1A) TO SUBMIT THAT THE INTEREST IS TO BE PAID FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DATE OF FURNISHING OF RET URN OF INCOME BY THE RECIPIENT. 6. AS FAR AS THE LD. DRS SUBMISSIONS WITH REFERENC E TO THE PROVISO TO SECTION 201(1A) ARE CONCERNED, THE SAID PROVISO HAS BEEN INSERTED BY THE FINANCE ACT 2012 W.E.F. 1-7-2012 AND, THEREFORE, T HE SAID PROVISO IS NOT APPLICABLE FOR AY 2009-10. 7. THE ASSESSEES SUBMISSION BEFORE LD. CIT(A) WAS THAT EVEN IF INTEREST WAS TO BE LEVIED, IT COULD NOT BE LEVIED BEYOND THE CLOSING OF THE FINANCIAL YEAR. HOWEVER, LD. CIT(A) DID NOT ACCEPT THIS CONT ENTION OF THE ASSESSEE AND COMPUTED THE INTEREST UP TO THE DATE OF PAYMENT BY DEDUCTEE. 8. AS FAR AS LD. DRS SUBMISSION WITH REGARD TO THE EVIDENCE FILED BEFORE LD. CIT(A) UNDER RULE 46A(3) AND NOT UNDER RULE 46A (4) IS CONCERNED, WE FIND THAT DURING THE HEARING ON 6-2-2012, AS MENTIO NED IN PARA 6.1, LD. CIT(A) HAD REQUIRED THE ASSESSEE TO FILE THE DETAI LS IN THE LIGHT OF JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN C OCA COLA BEVERGES LTD. 293 ITR 226 AND CBDT CIRCULAR NO. 275/201/95-I T(B) DATED 29-1- 1997,. THESE DETAILS WERE FILED BY ASSESSEE ON 5-3- 2012 AND FURTHER SUBMISSIONS WERE MADE ON 13-3-2012. HOWEVER, IN PAR A 6.2 OF HIS ORDER WE FIND THAT BEFORE LD. CIT(A), THE ASSESSEE HAD MADE SUBMISSIONS ON 25-2- 2011 AND HAD ALSO FILED A PAPER BOOK, CONTAINING 11 7 PAGES. THESE SUBMISSIONS DATED 21-2-2011 ARE CONTAINED AT PAGE 6 6 OF THE PB, IN WHICH ASSESSEE HAD MADE APPLICATION FOR ADMISSION OF ADDI TIONAL EVIDENCE UNDER RULE 46A. IN THESE SUBMISSIONS ITSELF THE ASSESSEE HAD, INTER ALIA, SUBMITTED AS UNDER:- 13 IT IS MOST RESPECTFULLY PRAYED THAT THE APPELLANT BE ALLOWED TO LEAD EVIDENCE IN THE MATTER IN SUPPORT OF ITS CONTE NTIONS. THE APPELLANT HAS MOVED A SEPARATE APPLICATION BEFORE Y OUR HONOUR SEEKING PERMISSION TO ADDUCE ADDITIONAL EVIDENCE IN THE MATTER, WHICH OPPORTUNITY WAS DENIED TO THE APPELLANT BY TH E ASSESSING OFFICER. IT WOULD BE SEEN FROM THE APPLICATION THAT OUT OF TOTAL PAYMENT OF RS. 3,36,633 MADE FOR ASSESSMENT YEAR 20 08-09 AND RS. 11,82,77,627/- MADE FOR ASSESSMENT YEAR 2009-10 , THE APPELLANT HAS BEEN ABLE TO FURNISH EVIDENCE IN SUPP ORT OF ITS CONTENTION TO THE EXTENT OF RS. 1,66,428/- FOR ASSE SSMENT YEAR 2008-09 AND RS. 5,88,17,651 FOR ASSESSMENT YEAR 200 9-2010. ACCORDINGLY, IT IS PRAYED THAT TAX DEMAND OF RS. 18 ,856 FOR AY 2008-09 AND RS. 66,70,647 FOR ASSESSMENT YEAR 2009- 2010 MAY KINDLY BE QUASHED. THE CONSEQUENTIAL INTEREST LEVIE D ON THE AFORESAID AMOUNTS MAY ALSO BE DELETED. 9. THESE SUBMISSIONS WERE DULY SENT TO AO FOR HIS C OMMENTS ON 7-3- 2011 BUT AS OBSERVED BY LD. CIT(A), EVEN AFTER A GA P OF ONE YEAR, AO DID NOT FILE ANY REPLY. SOME MORE DETAILS ALONG WITH THE DE TAILS FILED ON 25-2-2011 WERE FILED BY ASSESSEE ON 5-3-2012 IN RESPONSE TO L D. CIT(A)S DIRECTIONS. THEREFORE, KEEPING IN VIEW THE ENTIRETY OF FACTS, I T WOULD BE PROPER TO CONCLUDE THE AO HAD BEEN PROVIDED DUE OPPORTUNITY I N TERMS OF THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. MANISH BUILDWELL (P) LTD. (2012) 204 TAXMAN 106, HOLDING AS UNDER: 24. IN THE PRESENT CASE, THE CIT (A) HAS OBSERVED THAT THE ADDITIONAL EVIDENCE SHOULD BE ADMITTED BECAUSE THE ASSESSEE WAS PREVENTED BY ADDUCING THEM BEFORE THE ASSESSING OFFICER. THIS OBSERVATION TAKES CARE OF CLAUSE (C) OF SUB-RU LE (1) OF RULE 46A. THE OBSERVATION OF THE CIT (A) ALSO TAKES CARE OF SUB-RULE (2) UNDER WHICH HE IS REQUIRED TO RECORD HIS REASON S FOR ADMITTING THE ADDITIONAL EVIDENCE. THUS, THE REQUIR EMENT OF SUB-RULES (1) AND (2) OF RULE 46A HAVE BEEN COMPLIE D WITH. HOWEVER, SUB-RULE (3) WHICH INTERDICTS THE CIT (A) FROM TAKING INTO ACCOUNT ANY EVIDENCE PRODUCED FOR THE FIRST TI ME BEFORE HIM UNLESS THE ASSESSING OFFICER HAS HAD A REASONAB LE 14 OPPORTUNITY OF EXAMINING THE EVIDENCE AND REBUT THE SAME, HAS NOT BEEN COMPLIED WITH. THERE IS NOTHING IN THE ORD ER OF THE CIT (A) TO SHOW THAT THE ASSESSING OFFICER WAS CONFRONT ED WITH THE CONFIRMATION LETTERS RECEIVED BY THE ASSESSEE FROM THE CUSTOMERS WHO PAID THE AMOUNTS BY CHEQUES AND ASKED FOR COMMENTS. THUS, THE END RESULT HAS BEEN THAT ADDITI ONAL EVIDENCE WAS ADMITTED AND ACCEPTED AS GENUINE WITHO UT THE ASSESSING OFFICER FURNISHING HIS COMMENTS AND WITHO UT VERIFICATION. SINCE THIS IS AN INDISPENSABLE REQUIR EMENT, WE ARE OF THE VIEW THAT THE TRIBUNAL OUGHT TO HAVE RESTORE D THE MATTER TO THE CIT (A) WITH THE DIRECTION TO HIM TO COMPLY WITH SUB-RULE (3) OF RULE 46A. IN OUR OPINION AND WITH RESPECT, T HE ERROR COMMITTED BY THE TRIBUNAL IS THAT IT PROCEEDED TO M IX UP THE POWERS OF THE CIT (A) UNDER SUB- SECTION (4) OF SEC TION 250 WITH THE POWERS VESTED IN HIM UNDER RULE 46A. THE T RIBUNAL SEEMS TO HAVE OVERLOOKED SUB-RULE(4) OF RULE 46A WH ICH ITSELF TAKES NOTE OF THE DISTINCTION BETWEEN THE POWERS CO NFERRED BY THE CIT (A) UNDER THE STATUTE WHILE DISPOSING OF TH E ASSESSEES APPEAL AND THE POWERS CONFERRED UPON HIM UNDER RULE 46A. THE TRIBUNAL ERRED IN ITS INTERPRETATION OF THE PRO VISIONS OF RULE 46A VIS--VIS SECTION 250(4). ITS VIEW THAT SI NCE IN ANY CASE THE CIT (A), BY VIRTUE OF HIS CONTERMINOUS POW ERS OVER THE ASSESSMENT ORDER, WAS EMPOWERED TO CALL FOR ANY DOC UMENT OR MAKE ANY FURTHER ENQUIRY AS HE THINKS FIT, THERE WA S NO VIOLATION OF RULE 46A IS ERRONEOUS. THE TRIBUNAL APPEARS TO H AVE NOT APPRECIATED THE DISTINCTION BETWEEN THE TWO PROVISI ONS. IF THE VIEW OF THE TRIBUNAL IS ACCEPTED, IT WOULD MAKE RUL E 46A OTIOSE AND IT WOULD OPEN UP THE POSSIBILITY OF THE ASSESSE ES CONTENDING THAT ANY ADDITIONAL EVIDENCE SOUGHT TO B E INTRODUCED BY THEM BEFORE THE CIT (A) CANNOT BE SUB JECTED TO THE CONDITIONS PRESCRIBED IN RULE 46A BECAUSE IN AN Y CASE THE CIT (A) IS VESTED WITH CONTERMINOUS POWERS OVER THE ASSESSMENT ORDERS OR POWERS OF INDEPENDENT ENQUIRY UNDER SUB- SECTION (4) OF SECTION 250. THAT IS A CONSEQUENCE W HICH CANNOT AT ALL BE COUNTENANCED. 10. NOW, COMING TO THE MERITS OF THE CASE, WE FIND THAT BEFORE LD. CIT(A) IT WAS SUBMITTED THAT OUT OF TOTAL PAYMENT OF RS. 3 ,36,633/- MADE OR AY 2008-09 AND RS. 11,82,77,627/- MADE FOR AY 2009-10, THE ASSESSEE HAD 15 BEEN ABLE TO FURNISH EVIDENCE IN SUPPORT OF ITS CON TENTION TO THE EXTENT OF RS. 1,66,428/- FOR AY 2008-09 AND RS. 5,88,17,651/- FOR AY 2009-10. ACCORDINGLY, IT WAS SUBMITTED THAT TAX DEMAND OF RS . 18,856/- FOR AY 2008- 09 AND RS. 66,70,647/- FOR AY 2009-10 COULD NOT BE RECOVERED FROM THE ASSESSEE. IT WAS FURTHER POINTED OUT THAT INTEREST U/S 201(1A) WAS ALSO NOT LEVIABLE AS THERE WAS NO LOSS OF REVENUE IN VIEW OF THE FACT THAT HOSPITAL HAD PAID TAX DURING THE RELEVANT YEAR IN RELATION TO TH E INCOME RECEIVED (INCLUDING THE PAYMENT MADE BY THE ASSESSEE). IN TH IS REGARD, THE ASSESSEE RELIED ON THE DECISION OF HONBLE GUJARAT HIGH COUR T IN THE CASE OF CIT VS. RISHIKESH APARTMENTS CO-OPERATIVE HOUSING SOCIETY LTD. 253 ITR 310, WHEREIN IT HAS BEEN HELD THAT WHERE THE ASSESSEE FA ILS TO DEDUCT THE AMOUNT OF TAX, WHICH WAS REQUIRED TO BE DEDUCTED UNDER THE PROVISIONS OF THE ACT AND THE PAYEE HAS PAID SUFFICIENT ADVANCE TAX AND T AX ON SELF-ASSESSMENT, ON DUE DATE, NO INTEREST COULD BE LEVIED U/S 201(1A) OF THE ACT ON THE ASSESSEE, OUT OF WHICH TAX WAS REQUIRED TO BE DEDUCTED AT SOU RCE BY THE ASSESSEE, FOR THE REASON THAT NO LOSS WAS CAUSED TO REVENUE ON AC COUNT OF NON-DEDUCTION OF SUCH TAX. 11. THE ASSESSEE ALSO REFERRED TO THE DECISION OF D ELHI BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. SOOD ENTERPRISES 4 1 ITD 234, WHEREIN ALSO SIMILAR VIEW WAS TAKEN. 12. THE ASSESSEE ALSO REFERRED TO THE DECISION OF D ELHI BENCH OF THE TRIBUNAL IN THE CASE OF SALWAN CONSTRUCTION CO. VS. ACIT 53 TTJ 39; AND DECISION OF BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF WIPRO FINANCE LTD. VS. ITO 81 TTJ 887. 16 13. THE ASSESSEE VIDE SUBMISSIONS DATED 5-3-2012 F URNISHED BEFORE LD. CIT(A) FOLLOWING EVIDENCES IN RESPONSE TO THE EVIDE NCE REQUISITIONS BY LD. CIT(A) ON 6-2-2012: FINANCIAL YEAR CATEGORY TOTAL PAYMENT AMOUNT TOTAL TAX AMOUNT TOTAL INTEREST AMOUNT EVIDENCE AVAILABILITY ANNEXURE NUMBER 2007-08 A.CLAIM PAYMENT OF RS. 20,000 OR LESS 12,414 1,407 327 ANNEX -I 2007-08 B.CLAIM PAYMENT OF RS. 20,000 OR MORE EVIDENCE COLLECTED. 324,219 36,734 8,184 ENCLOSED ANNEX. -I TOTAL FOR FY 2007-08 336,633 38,141 8,511 2008 -09 A.CLAIM PAYMENT OF RS. 20,000 OR LESS 2,546,025 288,465 37,072 ANNEX -II 2008 -09 B.CLAIM PAYMENT OF RS. 20,000 OR MORE EVIDENCE COLLECTED . 112,039,52 6 12,694,07 8 1,689,84 1 ENCLOSED ANNEX. -II 2008 -09 C.CLAIM PAYMENT OF RS. 20,000 OR MORE EVIDENCE PENDING. 3,692,076 418,312 56,983 COLLECTIO N IN PROGRESS ANNEX -II TOTAL FOR FY 2008-09 118,277,627 13,400,855 1,783 ,896 118,614,260 13,438,996 1,792,407 WE REQUEST RELIEF FROM THE PAYMENT OF TAX OF RS. 13 ,020,684 AND INTEREST OF RS. 1,735,424 IN RESPECT OF THE PAYMENTS OF RS. 20,000 OR LESS AND THE PAYMENTS FOR WHICH EVIDENCE FOR PAYMENT OF TAX HAD BEEN COLLECTED AS PER FOLLOWING DETAILS:- 17 CATEGORY TOTAL PAYMENT AMOUNT TOTAL TAX AMOUNT TOTAL INTEREST AMOUNT A.CLAIM PAYMENT OF RS. 20,000 OR LESS IN FY 2007-08 12,414 1,407 327 A.CLAIM PAYMENT OF RS. 20,000 OR LESS IN FY 2008-09 2,546,025 288,465 37,072 B. CLAIM PAYMENT OF RS. 20,000 OR MORE EVIDENCE COLLECTED IN FY 2007-08 324,219 36,734 8,184 B. CLAIM PAYMENT OF RS. 20,000 OR MORE EVIDENCE COLLECTED IN FY 2008-09 112,039,526 12,694,078 1,689,841 TOTAL AMOUNT FOR WHICH RELIEF IS REQUESTED FOR FY 2007-08 & 2008-09 (A+B) 114,922,184 13,020,684 1,735,424 14. THE MAIN CONTENTION OF ASSESSEE WAS THAT AT BES T INTEREST COULD BE CHARGED FOR THE PERIOD DURING WHICH REVENUE SUSTAIN ED LOSS AND IN CASE WHERE SUCH TAX HAD BEEN DEPOSITED BY THE RECIPIENT THEN DEFAULT IN DEDUCTING TAX AT SOURCE WERE CEASED AND, THEREFORE, NO INTERE ST COULD BE CHARGED BEYOND THE PERIOD OF WHICH RECIPIENT HAD DEPOSITED THE TAX. THE ASSESSEE RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGE P. LTD. V. CIT 293 ITR 226, WHER EIN IT HAS BEEN HELD THAT DEDUCTION OF TAX AT SOURCE BY A PAYER AND DIR ECT PAYMENT OF TAX BY THE PAYEE WERE ALTERNATIVE AND NOT CUMULATIVE METHODS O F TAX RECOVERY, SO THAT ONCE THERE IS DIRECT PAYMENT OF TAX BY THE PAYEE, T HE LIABILITY OF THE PAYER FOR INTEREST UNDER SECTION 201(1A) OF THE ACT FOR DEFAU LT IN DEDUCTING TAX AT SOURCE WOULD CEASE. 15. IN THE ALTERNATIVE, THE ASSESSEE SUBMITTED THAT EVEN IF INTEREST WAS TO BE LEVIED, IT COULD NOT BE LEVIED BEYOND THE CLOSE OF THE FINANCIAL YEAR. IN THIS REGARD THE ASSESSEE REFERRED TO THE DECISION OF JOD HPUR BENCH OF THE TRIBUNAL IN THE CASE OF EMRALD CONSTRUCTION CO. (P) LTD. 304 ITR 338 (AT), WHEREIN 18 THE TRIBUNAL, RELYING ON THE DECISION OF HONBLE GU JARAT HIGH COURT IN THE CASE OF RISHIKESH APARTMENTS CO-OPERATIVE HOUSING S OCIETY LTD. (SUPRA) HELD THAT WHERE THE ENTIRE TAX HAD BEEN PAID BY THE PAYEE AS ADVANCE TAX AND TAX ON SELF-ASSESSMENT, INTEREST U/S 201(1A) COULD NOT BE LEVIED. 16. THE ASSESSEE ALSO REFERRED TO THE DECISION OF H ONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RAJASTHAN RAJYA V IDYUT PRASARAN NIGAM LTD. 161 TAXMAN 133 (RAJ.), WHEREIN THE RECIPIENT W AS AWARDED REFUND AND, THEREFORE, IT WAS HELD THAT NO INTEREST U/S 201(1A) WAS LEVIABLE. THE ASSESSEE ALSO RELIED ON FOLLOWING DECISIONS: - CIT V. MANAGER M.P. STATE COOPERATIVE DEVELOPMENT B ANK LTD. 137 ITR 230; - CIT VS. DIVISIONAL MANAGER, NEW INDIA ASSURANCE CO. LTD. 140 ITR 818 - CIT V. LIFE INSURANCE CORPORATION 166 ITR 191 (MP. 17. LD. CIT(A), AFTER CONSIDERING THE EVIDENCES FI LED BY ASSESSEE, IN THE LIGHT OF DECISION OF HONBLE SUPREME COURT IN THE C ASE OF HINDUSTAN COCA COLA BEVERAGE P. LTD. (SUPRA), AND CBDT CIRCULAR N O. 275/201/95-IT(B) DATED 29-1-1997, CONSIDERED THE DETAILS FILED IN PA PER BOOK, CONTAINING 425 PAGES AND CERTIFICATE ISSUED BY THE HOSPITALS. LD. CIT(A) OBSERVED IN PARA 6.2 & 6.3 AS UNDER: 6.2. THE LEARNED COUNSEL HAS FILED NECESSARY DETAIL S ENCLOSING THEREWITH THE PAPER BOOK CONTAINING 425 PAGES AND C ERTIFICATES ISSUED BY THE HOSPITALS. THESE EVIDENCES COULD NOT BE FILED BEFORE THE AO EARLIER DUE TO TIME CONSTRAINTS AND VOLUMINO US EXERCISE BUT THE SAME ARE CALLED FOR AND ADMITTED BY EXERCISING POWER UNDER U/E 46A(4) .OF THE INCOME TAX RULES, 1962 IN ORDER TO DECIDE VARIOUS GROUNDS OF APPEAL JUDICIOUSLY. A PERUSAL OF CERTIFICATES REVEALS THAT SOME OF THEM ARE ISSUED IN THE NAME OF APPELLANT AND OTHERS IN THE NAME OF VARIOUS TPAS. THE APPELLANT H AS CONTENDED 19 THAT THE TPAS WERE EARLIER ISSUED NOTICES BY THE DE PARTMENT FOR NOT DEDUCTING TAX ON PAYMENTS TO HOSPITALS. AS PER CBDT 'S CIRCULAR, THE TPAS REQUESTED THE HOSPITALS TO FURNISH CERTIFI CATES FROM THEIR AUDITORS REGARDING TAXES PAID. A HOSPITAL WORKS WIT H SEVERAL TPAS AND INSURANCE COMPANIES AND IT WAS NOT PRACTICALLY POSSIBLE FOR THE HOSPITALS TO PROVIDE CERTIFICATE FROM THEIR AUD ITORS TO EACH OF THE TPAS AND INSURANCE COMPANIES SEPARATELY. THE HO SPITALS OBTAINED A GENERAL CERTIFICATE FROM THEIR AUDITORS TO THE EFFECT THAT THEY HAVE PAID TAXES ON INCOME. INCIDENTALLY, SOME OF THE CERTIFICATES WERE ADDRESSED TO THE INSURANCE COMPAN IES, SOME TO TPAS AND SOME WERE ADDRESSED TO PUBLIC IN GENERAL. IN CASE OF THE APPELLANT, SOME OF THE CERTIFICATES, THOUGH CO NTAINING THE INFORMATION AS MANDATED IN THE AFORESAID CBDT CIRC ULAR, HAVE BEEN ADDRESSED TO THE TPAS. THE PRACTICAL DIFFICULT Y IN OBTAINING MULTIPLE CERTIFICATES BY EACH HOSPITAL WOULD NOT AF FECT THE CLAIM OF THE APPELLANT SINCE THE CERTIFICATES FULLY COMPLY W ITH THE CONDITIONS LAID DOWN IN THE SAID CBDT CIRCULAR. DURING THE F.Y .2008-09, THE APPELLANT HAS MADE PAYMENTS OF RS.20,000/- OR LESS TO 243 HOSPITALS ON WHICH TDS OF RS.2,88,465/- AND INTERES T OF RS.37,0721 - HAS BEEN WORKED OUT. AS REGARDS TOTAL PAYMENTS OF RS.112,039,526/- HAVING TDS IMPLICATION OF RS.1,26, 94,078/- THE APPELLANT HAS FILED CERTIFICATES REGARDING TAXES PA ID BY THE HOSPITALS AS PER PAGE 1 TO 425 OF THE PAPER BOOK. S OME OF THE HOSPITALS HAVE ALSO ENJOYED EXEMPTION FROM DEDUCTIO N OF TAX BY VIRTUE OF CERTIFICATES OBTAINED U/S 197(1) OF THE A CT. THE APPELLANT HAS NOT BEEN ABLE TO FILE CERTIFICATES IN RESPECT O F REMAINING TDS AMOUNT OF RS. 18,312/ -. IN THE LIGHT OF DECISION O F HON'BLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BE VERAGES LTD. V. CIT (293 ITR 226) AND CBDT'S CIRCULAR NO. 275/20 1/95 - IT' (B) DATED 29.01.1997, NO DEMAND OF TDS CAN BE RECOV ERED EXCEPT THE AMOUNT OF RS 4,18,312/- FOR WHICH THE APPELLANT HAS NOT BEEN ABLE TO SATISFY THAT THE AMOUNT OF TAX TO THAT EXTE NT HAS BEEN PAID BY CONCERNED HOSPITALS. HENCE, IN ABSENCE OF ANY EV IDENCE, THE DEMAND RAISED TO THE EXTENT OF RS. 4,18,312/- U/S 2 01(1) ON ACCOUNT OF NON DEDUCTION OF TAX IS CONFIRMED AND BA LANCE DEMAND 20 OF RS.1,29,82,543/ - IS DELETED. GROUND NO. 4 OF AP PEAL IS PARTLY ALLOWED. 6.3. AS REGARDS CHARGING OF INTEREST U/S 201(1A), I T IS SEEN THAT THE AO HAS CHARGED INTEREST UPTO THE DATE OF ORDER WHIC H IS IN CONTRADICTION TO THE CBDT'S CIRCULAR AND THE DECISI ON OF HON'BLE APEX COURT. THE INTEREST IS REQUIRED TO BE CHARGED UPTO THE DATE OF PAYMENTS MADE BY THE DEDUCTEES ON THEIR INCOME. THE APPELLANT HAS RELIED UPON LARGE NUMBER OF DECISIONS ON THIS I SSUE. THE HON'BLE GUJARAT HIGH COURT IN RISHIKESH . APARTMENT CO- OPERATIVE HOUSING SOCIETY LTD. (SUPRA) HAS HELD THA T NO INTEREST CAN BE CHARGED BEYOND THE F.Y. IN WHICH TAX WAS DED UCTIBLE. HOWEVER, THIS WAS A CASE WHERE ASSESSEE CLAIMED REF UND ON ACCOUNT OF EXCESS TAXES PAID WITHIN THE FINANCIAL Y EAR. AFTER THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF HI NDUSTAN COCA COLA BEVERAGES LTD. (SUPRA), THERE REMAINS NO DISPU TE THAT THE INTEREST IS REQUIRED TO BE CHARGED UPTO THE DATE OF PAYMENTS MADE BY THE DEDUCTEES. THEREFORE, THE CASE LAWS RELIED U PON BY THE LEARNED COUNSEL ARE EITHER DISTINGUISHABLE OR NOT A PPLICABLE IN THE FACTS OF APPELLANT'S CASE. A PERUSAL OF CERTIFICATE S ISSUED B THE HAS ITAL REVEALS THAT THERE IS NO SPECIFIC INFORMATION AS TO THE PAYMENTS BY WAY OF TDS, ADVANCE TAX OR SELF ASSESSMENT TAX B UT GENERAL CERTIFICATES HAVE BEEN ISSUED STATING THE TOTAL TAX ES PAID 'BY THEM ON THEIR RETURNED INCOME. CONSEQUENTLY TO COLLECT H OSPITAL WISE INFORMATION SEPARATELY FOR TDS ADVANCE TAX OR SELF ASSESSMENT TAX IS NOT FEASIBLE, IN ADDITION TO BEING VERY-TIME CON SUMING AND VOLUMINOUS EXERCISE. EVEN IF SUCH EXERCISE IS DONE, THE RESULT WOULD NOT MAKE MUCH DIFFERENCE IF THE INTEREST IS C HARGED CONSIDERING THE PROVISIONS RELATING TO PAYMENT OF A DVANCE TAX . UNDER THE EXISTING PROVISIONS, THE ASSESSEES ARE RE QUIRED TO PAY ADVANCE TAX EITHER IN THREE OR FOUR QUARTERLY INSTA LLMENTS WHEREAS THE APPELLANT HAS MADE PAYMENTS REGULARLY TO THE HO SPITALS. THUS, PAYMENTS MADE WITHOUT DEDUCTION OF TAX PRIOR TO DUE DATES OF ADVANCE TAX PAYMENTS BY THE DEDUCTEES WOULD DEPRIVE THE REVENUE OF LEGITIMATE TAXES. THE APPELLANT HAS WORKED OUT I NTEREST ON 21 MONTHLY BASIS UPTO 31.03.2009. IN RESPECT OF TDS AM OUNT OF RSA,LB,312/- FOR WHICH NO CERTIFICATES HAVE BEEN FI LED, THE INTEREST HAS BEEN WORKED OUT AT RS.1,11,276/-. HOWEVER, THE SAME IS REQUIRED TO BE CHARGED UPTO THE DUE DATE OF FILING OF RETURNS IN THE CASE OF DEDUCTEES I.E. UPTO SEPTEMBER 2009. THUS, T HE INTEREST FOR FURTHER PERIOD OF 6 MONTHS WORKS OUT TO RS.25,098/- . IN RESPECT OF NO CERTIFICATE CASES OF DEDUCTEES, THE TOTAL INTERE ST WORKS OUT TO RS.1,36,374/-. IN RESPECT OF HOSPITALS FROM WHICH T HE CERTIFICATES HAVE BEEN FILED, THE AMOUNT OF INTEREST HAS BEEN WO RKED OUT BY THE APPELLANT ON MONTHLY BASIS UPTO 31.03.2009 AT RS.4, 23,084/- (I.E. RS.5,34,360/- MINUS RS.L,11,276/-). HOWEVER, THE IN TEREST IN THESE CASES IS ALSO REQUIRED TO BE CHARGED UPTO THE DUE D ATE OF FILING OF RETURNS BY THE DEDUCTEES. BY ESTIMATING THAT THE DE DUCTEES MUST HAVE PAID AT LEAST 90% OF THEIR TAXES BY WAY OF ADV ANCE TAX, THE INTEREST ON SHORT FALL OF 10% OF TDS AMOUNT I.E. RS .12,98,254/- FOR 6 MONTHS WORKS OUT TO RS.77,895/-. CONSEQUENTLY, TH E TOTAL INTEREST CHARGEABLE IN THESE CASES OF DEDUCTEES WORKS OUT TO RS.5,00,979/-. CONSIDERING THE ABOVE FACTS, CHARGING OF INTEREST O F RS.6,37,353/- (I.E. RS.L,36,374/- PLUS RS.5,00,979/- U/S 201(1A) IS CONFIRMED AND BALANCE INTEREST OF RS. 11,28,034/ - IS DELETED. GR OUND NO. 5 OF APPEAL IS PARTLY ALLOWED. (EMPHASIS SUPPLIED BY US). 19. WE FIND THAT LD. CIT(A) KEEPING IN VIEW THE COM PLEXITY OF THE ISSUE INVOLVED AND THE FEASIBILITY OF EVIDENCE TO BE AVAI LABLE IN THE GIVEN FACTS CONSIDERED THE ENTIRE ISSUE ON THE BASIS THAT 90% O F THE ADVANCE TAX MUST HAVE BEEN PAID BY THE HOSPITAL AND, THEREFORE, HE H AS COMPUTED THE INTEREST ON SHORT FALL OF 10% OF TDS AMOUNT. CONSIDERING THE ENTIRE CONSPECTUS OF THE CASE AND THE VOLUMINOUS EXERCISE REQUIRED IN OB TAINING THE DETAILS, WE DO NOT FIND ANY INFIRMITY IN THESE FINDINGS OF LD. CIT (A) AS THE FINAL CONCLUSION, IN ANY CASE, WILL NOT BE MATERIALLY DIFFERENT FROM THAT ARRIVED AT BY LD. CIT(A) AND, ACCORDINGLY, CONFIRM THE SAME, AS THE INTEREST HAS BEEN CHARGED 22 UP TO THE DUE DATE OF FILING OF RETURN BY THE DEDUC TEES. WE ARE NOT IN AGREEMENT WITH THE SUBMISSIONS OF LD. COUNSEL FOR T HE ASSESSEE THAT THE INTEREST SHOULD HAVE BEEN CHARGED ONLY UP TO THE 31 ST MARCH OF FINANCIAL YEAR BECAUSE AS HELD BY HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. CHENNAI METROPOLITAN WATER SUPPLY AND SEWERAGE BOAR D 348 ITR 530, INTEREST IS REQUIRED TO BE PAID UP TO THE DATE ON W HICH THE RETURN HAD BEEN FILED BY THE PAYEE. 20. IN ANY VIEW OF THE MATER, WE DO NOT FIND ANY FL AW OR INFIRMITY IN THE ORDER OF LD. CIT(A) SO TO TAKE A DIFFERENT VIEW IN THE MATTER. ORDER OF CIT(A) IS, ACCORDINGLY, UPHELD. 21. IN THE RESULT, REVENUES APPEAL AS WELL AS ASSE SSEES CROSS OBJECTIONS ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 12-01-2015. SD/- SD/- ( A.T. VARKEY ) ( S.V. MEHROTRA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12-01-2015. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. 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