DCIT 8(3), MUMBAI V. PAREKH HEALTH MANAGEMENT P. LTD, MUMBAI

ITA 3038/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2802 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 03-11-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 19-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMAR SINGH
• Assessee Lawyers: RAJESH SIMHAN; ASHISH SODHARI
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 143(3)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.3038/MUM/2013 ASSESSMENT YEAR- 2007-08 DCIT-8(3), ROOM NO.217, AAYAKAR BHAWAN, M.K.ROAD, MUMBAI-400020 / VS. M/S PAREKH HEALTH MANAGEMENT P. LTD., 3-B, GUNDECHA ENCLAVE, KHERANI ROAD, SAKINAKA, ANDHERI(W), MUMBAI-400072 ( / REVENUE) ( ! /ASSESSEE) PAN. NO. AACCP3776F / REVENUE BY SHRI PRADEEP KUMAR SINGH- DR ! / ASSESSEE BY SHRI RAJESH SIMHAN AND SHRI ASHISH SODHARI ' # $ ! % / DATE OF HEARING : 03/11/2015 $ ! % / DATE OF ORDER: 09/11/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 31.01.2013 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE ONLY GROUND RAISED IN THIS APPEAL PERTAINS TO DELE TING THE DISALLOWANCE OF RS. 7,49,7,6,558/- MADE U/S 40(A)(I A) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). M/S PAREKH HEALTH MANAGEMENT PVT. LTD. ITA NO.3038/MUM/2013 2 2. DURING HEARING, THE CRUX OF ARGUMENTS ADVANCED B Y SHRI PRADEEP KUMAR SINGH, LD. DR IS IDENTICAL TO THE GRO UND RAISED BY SUBMITTING THAT WHILE GRANTING RELIEF TO THE ASSESSEE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DID NO T APPRECIATE THE FACT THAT THE ASSESSEE MADE THE PAYM ENTS TO THE HOSPITALS WITHOUT TDS U/S 194J, THUS THE DISAL LOWANCE U/S 40(A)(IA) WAS RIGHTLY MADE BY THE ASSESSING OFF ICER. RELIANCE WAS PLACED UPON CBDT CIRCULAR NO. 8/2009 D ATED 24.11.2009 AND THE RATIO LAID DOWN IN THE CASE OF D EDICATED HEALTHCARE SERVICES TPA (INDIA) LTD. (324 ITR 345) (BOM.). 3. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSE SSEE, SHRI RAJESH SHIMHAN ALONG WITH SHRI ASHISH SODHANI, LD. COUNSEL FOR THE ASSESSEE DEFENDED THE CONCLUSION AR RIVED AT IN THE IMPUGNED ORDER BY PLACING RELIANCE UPON THE DECISION IN THE CASE OF ACIT VS. HEALTH INDIA TPA SERVICES ( P) LTD. (2014) 49 TAXMANN. COM 541 (MUMBAI. TRIB.) AND ALSO ITA NO. 6856/MUM/2011 (2008-09) BY FURTHER CLAIMING THA T THE IMPUGNED AMOUNTS WERE NOT DEBITED FROM THE ACCOUNT WHICH HAS NOT BEEN DISPUTED BY THE ASSESSING OFFICER THAT THE IMPUGNED AMOUNTS WERE NOT PASSED THROUGH THE ACCOUN TS OF THE ASSESSEE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. FACTS IN BRIEF AR E THAT THE ASSESSEE DECLARED NIL INCOME AFTER CLAIMING SET OFF OF CARRIED FORWARD UNABSORBED DEPRECIATION ALLOWANCE, IN ITS R ETURN M/S PAREKH HEALTH MANAGEMENT PVT. LTD. ITA NO.3038/MUM/2013 3 FILED ON 13.10.2007, WHICH WAS ASSESSED U/S 143(3) OF THE ACT ON 29.12.2009 ON A TAXABLE INCOME OF RS. 7,41,8 7,640/- .IT IS NOTED THAT THE LD. ASSESSING OFFICER ADDED T HE INCOME ON THE BASIS OF THE DECISION FROM HONBLE KARNATAKA HIGH COURT IN THE CASE OF MEDI ASSIST TPA VS. DCIT AND A LSO CBDT CIRCULAR NO. 8/2009 DATED 24.11.2009 HOLDING THAT T PAS ARE LIABLE TO DEDUCT TAX AT SOURCE U/S 194J OF THE ACT IN RESPECT OF PAYMENT MADE TO HOSPITALS. IN THE PRESENT APPEAL , THE ASSESSEE IS ENGAGED IN THE BUSINESS OF FACILITATING HEALTH INSURANCE CLAIM SETTLEMENT AND THE ASSESSEE ACTS ON BEHALF OF INSURANCE COMPANIES AND MAKES PAYMENTS TO HOSPITALS IN RESPECT OF SERVICES AVAILED BY INDIVIDUAL, HOLDING INSURANCE POLICIES. BEFORE DOING SO, THE ASSESSEE ENTERED INT O AGREEMENTS WITH INSURANCE COMPANIES AND THE AGREEME NTS RELATE TO ADMINISTRATION OF GROUP HEALTH INSURANCE POLICIES PROVIDED BY THE INSURANCE COMPANIES TO THE EMPLOYIN G ENTITY (EMPLOYER), WHICH IN-TURN PROVIDES THE POLICY TO TH E INSURED PERSONS. WHEN AN INSURED PERSON APPROACHES THE HOSP ITAL, THE BILLS ARE FORWARDED BY THE HOSPITALS TO THE ASS ESSEE UNDER THE CASHLESS HOSPITALIZATION SCHEME. THE ASSESSEE I N-TURN FORWARDS THE BILLS TO THE INSURANCE COMPANY. INSURA NCE COMPANIES PAYS THE BILLS TO THE HOSPITALS DIRECTLY THROUGH A CHECK OF REMITS MONEY TO A FLOAT ACCOUNT THROUGH WH ICH PAYMENTS ARE MADE BY THE ASSESSEE. IN NO SITUATION, THE ASSESSEE MAKES PAYMENTS OUT OF ITS OWN ACCOUNTS. TH E SERVICES PROVIDED BY THE ASSESSEE INCLUDE FACILITAT ION OF CASHLESS HOSPITALIZATION OF INSURED PERSONS, CALL C ENTRE SERVICES, CLAIM PROCESSING AND PAYMENT SERVICES, CU STOMER M/S PAREKH HEALTH MANAGEMENT PVT. LTD. ITA NO.3038/MUM/2013 4 RELATIONS AND CONTRACT MANAGEMENT SERVICES. NOW UNDISPUTED FACTS EMERGES FROM THE RECORD IS THAT TH E ASSESSEE DISCHARGES THE LIABILITY OF THE INSURANCE COMPANY OUT OF THE FLOAT MONEY PLACED BY THE INSURANCE COMP ANY WITH THE ASSESSEE AND FURTHER THE ASSESSEE IS PROHIBITED TO USE THE FLOAT MONEY FOR ANY PURPOSES OTHER THAN MAKING PAYM ENTS IN DISCHARGING THE LIABILITY OF INSURANCE COMPANY TOWA RDS THE INSURED PERSONS. WE NOTE THAT THE CASE RELIED UPON BY THE LD. DR FROM HONBLE KARNATAKA HIGH COURT, IN THAT C ASE NO DISCUSSION HAS BEEN MADE WITH RESPECT TO APPLICABIL ITY OF SECTION 40(A)(IA) IN A CASE WHEREIN SUCH AMOUNT AR E NOT ROUTED THROUGH PROFIT & LOSS ACCOUNT OF THE ASSESSE E AND MERELY TALKS ABOUT APPLICABILITY OF SECTION 194J ON TPA. THERE IS NO DISCUSSION WITH RESPECT TO ACCOUNTING M ETHOD ADOPTED BY THE TPAS WHEREIN THE AMOUNT HAS NOT BEEN ROUTED THROUGH PROFIT & LOSS ACCOUNT. SECTION 40(A) (IA) CAN BE INVOKED IF THERE IS A DEBIT OF SAID PAYMENT AS EXPE NDITURE IN PROFIT & LOSS ACCOUNT, THUS IN OUR VIEW NON DEDUCTI ON OF TDS ON PAYMENTS MADE FROM PROFESSIONAL SERVICES EVEN IF NOT DEBITED IN THE PROFIT & LOSS ACCOUNT WOULD MAKE ASS ESSEE LIABLE FOR LEVY OF INTEREST U/S 201 (1) AND 201(1A) OF THE ACT, HOWEVER NO ACTION U/S 40(A)(IA) CAN BE TAKEN. OUR V IEW FINDS SUPPORTS FROM THE DECISION OF THE MUMBAI BENCH OF T HE TRIBUNAL IN THE CASE OF ACIT VS. HEALTH INDIA TPA S ERVICES PVT. LTD. ( 2014) 49 TAXMANN.COM 541 (MUMBAI.) ORDE R DATED 21-02-2014, WHEREIN, IDENTICALLY, THE ISSUE WAS DE CIDED IN FAVOUR OF THE ASSESSEE. THE ASSESSEE HAS NOT RENDER ED ANY PROFESSIONAL SERVICE TO THE INSURER OR INSURED AND ONLY M/S PAREKH HEALTH MANAGEMENT PVT. LTD. ITA NO.3038/MUM/2013 5 COLLECTING THE AMOUNT FROM THE INSURER AND PASSING IT ON TO VARIOUS HOSPITALS WHO PROVIDES MEDICAL SERVICES TO THE INSURED. SINCE THERE IS NO CLAIM OF EXPENDITURE BY THE ASSESSES, DISALLOWANCE U/S 40(A)(IA), AS WAS DONE B Y THE ASSESSING OFFICER DOES NOT ARISE. OUR VIEW FURTHER FIND SUPPORT FROM THE DECISION OF THE TRIBUNAL IN THE CA SE OF PARAMOUNT HEALTH SERVICES (TPA) PVT. LTD. VS. ITO ( ITA NO. 2188/MUM/2013) ORDER DATED 25.07.2014. IN VIEW OF T HE FACTUAL MATRIX AND THE CASES CITED, HEREINABOVE WE FIND NO INFIRMITY IN THE ORDER OF THE LD. FIRST APPELLATE A UTHORITY, THEREFORE, APPEAL OF THE REVENUE IS DISMISSED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 03/11/2015. SD/- SD/- ( ASHWANI TANEJA ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER ' # MUMBAI; ' DATED : 09/11/2015 F| P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. )*+, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. / / ' 0! ( )* ) / THE CIT, MUMBAI. 4. / / ' 0! / CIT(A)- , MUMBAI 5. 23 -! , / )*% ) 4 , ' # / DR, ITAT, MUMBAI 6. 5 6# / GUARD FILE. / BY ORDER, .2*! -! //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ' # / ITAT, MUMBAI.