A.C.I.T.(O.S.D.)-2(1), MUMBAI V. HEALTH INDIATPA SERVICES PVT. LTD., MUMBAI

ITA 6475/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75636 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 23-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI . . , . . , BEFORE SHRI B R MITTAL, JM & SHRI B R BASKARAN , A M ./I.T.A. NO6475/MUM/2012 ( ' ' ' ' ' '' ' / ASSESSMENT YEAR : 2009-10) THE ASST COMMR OF INCOME TAX(OSD) 2(1) MUMBAI / VS. HEALTH INDIA TPA SERVICES P LTD 2 ND FLOOR COMMERCIAL UNION HOUSE 09 WALLACE STREET, FOR MUMBAI ./PAN : AABCB4953D ( % /APPELLANT ) ( &'% / RESPONDENT ) % ( / APPELLANT BY : SHRI K C P PATNIK &'% ( / RESPONDENT BY : SHRI D V LAKHANI ( + /DATE OF HEARING : 18.02.2014 ( + / DATE OF PRONOUNCEMENT : 21 FEB 2014 / O R D E R PER B R BASKARAN, AM : THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 23.8.2012 PASSED BY THE LD CIT(A) 4 MUMBAI AND I T RELATES TO THE AY 2008- 09. 2. THE SOLITARY ISSUE RAISED IN THIS APPEAL IS WHETHER THE LD CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE MADE U/S 40( A)(IA) OF HE ACT FOR NON DEDUCTION OF TAX AT SOURCE U/S 194J OF THE ACT ON T HE HOSPITAL CHARGES PAID BY IT, BY DISREGARDING THE CIRCULAR NO.8 OF 2009 DATE D 24.11.2009 ISSUED BY CBDT. HEALTH INDIA TPA SERVICES P LTD 2 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSEE IS A TPA I.E. THIRD PARTY ADMINISTRATOR. THE FUNCTION OF THE ASSESSEE IS THAT WHEN THE INSURED PERSONS DIRECTLY AVAIL SERVICES OF HOSP ITAL WHICH IS GENERALLY KNOWN AS CASHLESS SERVICES, THE TPA TAKES GUARANTEE OF MAKING PAYMENT TO SUCH HOSPITALS. THE ASSESSEE HEREIN COLLECTS THE AMOUNT OF MEDICAL EXPENSES BILLED BY THE HOSPITALS ON INSURED PERSONS, FROM THE INSUR ANCE COMPANIES AND REMIT THE SAME TO THE HOSPITALS. THUS, THE CASE OF THE AS SESSEE IS THAT IT ONLY PROVIDES SERVICES OF PAPER WORK AND GUARANTEE AND FINALLY MA KES PAYMENTS TO HOSPITALS IN WHICH THE INSURED PERSONS HAS AVAILED THE MEDICA L FACILITIES/SERVICES. THE ASSESSEE IS DOING ALL THESE WORKS ON BEHALF OF INSU RANCE COMPANIES. THE ASSESSEE NEITHER CREDITS THE RECEIPTS NOR DEBITS TH E PAYMENTS TO THE P&L ACCOUNT. THE AO HELD THAT PAYMENT MADE TO THE HOSP ITALS BY THE ASSESSEE IS COVERED U/S 194J AND ACCORDINGLY TOOK THE VIEW THAT THE ASSESSEE SHOULD HAVE TDS FROM THE PAYMENTS TO MADE TO THE HOSPITALS. SI NCE THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE, THE AO DISALLOWED SUCH PAYMEN TS BY INVOKING THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT. 4. IN THE APPELLATE PROCEEDINGS, THE LD CIT(A) DELE TED THE DISALLOWANCE BY FOLLOWING THE DECISION RENDERED BY HIS PREDECESSOR IN THE ASSESSEES OWN CASE FOR THE AY 2007-08. AGGRIEVED, THE REVENUE HAS FILE D THIS APPEAL BEFORE US. 5. AT THE TIME OF HEARING, BOTH THE PARTIES AGREED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER DATED 22-02- 2013 PASSED BY THE COORDINATE BENCH OF TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO.6856/MUM/2011 RELATING TO THE AY 2008-09. THE LD AR HAS ALSO FILED A COPY OF THE ORDER PASSED BY THE TRIBUNAL. HEALTH INDIA TPA SERVICES P LTD 3 6. WE HAVE GONE THROUGH THE ORDER PASSED BY THE COO RDINATE BENCH OF TRIBUNAL, REFERRED ABOVE. FOR THE SAKE OF CONV ENIENCE, WE EXTRACT BELOW THE OPERATIVE PORTION OF THE SAID ORDER: 5. WE HAVE CONSIDERED THE ISSUE. AS SEEN FROM THE FACTS PLACED ON RECORD, THE ASSESSEE IS ONLY FACILITATING THE PAYME NTS BY INSURER TO THE INSURED FOR AVAILING THE MEDICAL FACILITIES. ASSESS EE HAS NOT RENDERED ANY PROFESSIONAL SERVICES TO THE INSURER OR INSURED A ND ONLY COLLECTING THE AMOUNT FROM THE INSURER AND PASSING IT ON TO VARIOU S HOSPITALS WHO WERE PROVIDING MEDICAL SERVICES TO THE INSURED. SINCE, T HERE IS NO CLAIM OF EXPENDITURE BY THE ASSESSEE, DISALLOWANCE U/S 40A(A )(A) AS WAS DONE BY THE AO DOES NOT ARISE. IT MAY BE DIFFERENT ISSUE TH AT THE AMOUNTS PAID MAY BE COVERED BY PROVISIONS OF SEC. 194J AS WAS HE LD BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF THE MEDIASSES ST INDIA TPA P LTD VS DCIT-18(1), BANGALORE (WP NO.11376/2009 (T-IT) R ELIED UPON BY THE AO. IN THAT CASE, PROVISIONS OF SECTION 201 WAS APP LICABLE BUT CERTAINLY DISALLOWANCE U/S 40(A)(IA) DOES NOT ARISE AS ASSESS EE IS NOT CLAIMING ANY SUCH EXPENDITURE IN ITS P&L ACCOUNT. MOREOVER, REVE NUE ACCEPTED THE ORDER OF CIT(A) IN EARLIER YEAR. FOR THESE REASONS, WE UPHOLD THE ORDER OF THE CIT(A). 7. SINCE THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS TAKEN A PARTICULAR VIEW, WE ARE INCLINED TO FOLLOW THE SAME. SINCE THE VIEW TAKEN BY THE LD CIT(A) IS IN ACCORDANCE WITH THE VIEW EXPRESSED BY THE TRIBUNAL IN ASSESSEES OWN CASE; WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD CIT(A). 8 IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. / ( / ( ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST FEB 2014 . ( 5 21 FEB 2014 ( SD/- SD/- ( B R MITTAL ) ( B R BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 5 DATED 21 ST FEB 2014 .../ RAJ , SR. PS HEALTH INDIA TPA SERVICES P LTD 4 ( &; <; ( &; <; ( &; <; ( &; <;/ COPY OF THE ORDER FORWARDED TO : 1. % / THE APPELLANT 2. &'% / THE RESPONDENT. 3. =() / THE CIT(A)- 4. = / CIT 5. ; &, , / DR, ITAT, MUMBAI 6. ' / GUARD FILE. / BY ORDER, '; & //TRUE COPY// / // / ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI