ACIT TDS 1(1), MUMBAI V. DDRC SLR DIAGNOSTICS P.LTD, MUMBAI

ITA 6558/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2126 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 30-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH , MUMBAI BEFORE SRI MAHAVIR SINGH, J M AND SRI RAJESH KUMAR, AM ITA NO. 6558 /MUM/201 4 (A.Y: 20 11 - 12 ) ACIT (OSD) (TDS) RANGE - 1, ROOM NO. 803, K.G.MITTAL HOSPITAL BLDG., CHARNI ROAD (W), MUMBAI - 400002. VS. M/S D DRC SLR DIAGNOSTICS P . LTD. 4 TH FLOOR, PRIME SQUARE, PLT NO.1, GALWADI INDUSTRIAL ES TATE (W), MUMBAI - 400062 PAN NO.AACCD4433H APPELLANT .. RESPONDENT REVENUE BY .. B.S. BIST, SR DR ASSESSEE BY .. YOGESH THAR, AR DATE OF HEARING .. 09 - 11 - 2016 DATE OF PRONOUNCEMENT .. 09 - 11 - 2016 O R D E R PER MAHAVIR SINGH , JM : THIS APPEAL BY THE ASSESSEE IS ARISING OU T OF THE ORDER OF CIT (A) - 14 , MUMBAI IN APPEAL NO . CIT(A ) - 14 /IT - 246 / DCIT (TDS) - 1(1) /2013 - 14 , MUMBAI DATED 1 1 - 08 - 1 4 . THE ASSESSMENT WAS FRAMED BY DCIT (TDS) - 1(1), MUMBAI FOR THE A . Y . 20 1 1 - 1 2 VIDE ORDER DATED 30 - 03 - 2013 UNDER SECTION 201(1) & 201 (1A) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) . 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT ( A) DELEING THE CHARGING OF TDS U /S 201 (1) AND CONSEQUENTIAL INTEREST U/S 201( 1A ) OF THE ACT. FOR THIS REVENUE HAS RAISED FOLLOWING TWO GROUNDS: - I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT ( A) HAD ERRED IN DELETING THE ADDITION MADE BY T HE ASSESSING OFFICER U /S 201(1) AND INTEREST U /S 201(1A) ON ACCOUNT OF NON - DEDUCTION/SHORT DEDUCTION OF TAX U/S 194H OF THE I.T. ACT IN RESPECT OF DISCOUNT OFFERED TO HOSPITALS, LABORATORIES, ETC. II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT ( A ) ERRED IN RELYING ON THE DECISION OF HER PREDECESSOR ON THE ISSUE OF AMC CONTRACT WHEREAS THE ISSUE HERE IS NON - DEDUCTION OF TAX U/S 194H ON DISCOUNT ALLOWED AND NOT TDS U/S 194H OR 194J ON AMC CONTRACT IN RESPECT OF MEDICAL EQUIPMENTS. ITA NO. 6558 / MUM/201 4 2 3. AT THE OUTSET LEA RNED COUNSEL FOR THE ASSESSEE FIRST OF ALL ARGUED THAT SIMILAR ISSUE WAS RAISED BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE F OR THE AY 2010 - 11 IN ITA NO. 3872 &5044/M/13. 4. THE L EARNED COUNSEL FOR THE ASSESSEE STATED THAT THERE IS A MISTAKE IN THE ORDER OF CI T ( A), WHEREIN VIDE PARA 4.2, CIT ( A) HAS REPRODUCED A WRONG PARA OF THE ORDER WHILE COMING TO THE FINDING IN RESPECT TO DISCOUNT ALLOWED BY ASSESSEE TO ITS CUSTOMERS VIZ . HOSPITAL / LABORATORIES AND CHARITABLE ORGANIZATIONS ETC., WHETHER THE NATURE OF PAYME NT OF COMMISSION FALLS U/S 194H OF THE ACT OR NOT. THE L EARNED COUNSEL FOR THE ASSESSEE STATED THAT THE TRIBUNAL HAS ALREADY SET ASIDE THIS ISSUE IN RESPECT TO CLAUSE C OF GROUND NO.5 RAISED BEFORE THE CIT(A) I.E. HOSPITALS/LABORATORIES AND CHARITABLE ORGA NIZATION ETC. BY TRIBUNAL VIDE PARA 18 & 19 OF TRIBUNALS ORDER WHICH READ AS UNDER: - 18. BEFORE US, THE LD A.R PLACED HEAVY RELIANCE ON THE AGREEMENT ENTERED BETWEEN THE ASSESSEE AND HOSPITALS TO CONTEND THAT THE SAID AGREEMENT CLEARLY PROVIDES THAT TH E RELATIONSHIP IS ON PRINCIPAL TO PRINCIPAL' BASIS. IN OUR VIEW, THE AGREEMENT ENTERED BETWEEN THE PARTIES ALONE CANNOT BE CONSIDERED TO BE THE DETERMINATIVE FACTOR. IT IS WELL SETTLED PROPOSITION OF LAW THAT THE SUBSTANCE WILL PREVAIL OVER THE FORM. HENC E, IN OUR VIEW, WHAT IS REQUIRED TO BE SEEN TO RESOLVE THIS ISSUE IS - WHETHER THE HOSPITALS/LABORATORIES HAVE AVAILED THE SERVICES OF THE ASSESSEE ON THEIR OWN WITHOUT THE INSTRUCTIONS FROM THE CONCERNED PATIENTS OR NOT. ACCORDINGLY, (A) IF THE HOSPITALS /LABORATORIES HAVE AVAILED THE SERVICES OF THE ASSESSEE ON THE SPECIFIC INSTRUCTIONS OF THE PATIENTS, THEN THEY SHOULD BE CONSIDERED AS MERE AGENTS, IN WHICH CASE THE DISCOUNT PAID TO THEM SHOULD BE CONSIDERED AS COMMISSION LIABLE FOR DEDUCTION U/S 194H OF THE ACT . (B) IF THE HOSPITALS/LABORATORIES HAVE AVAILED THE SERVICES OF THE ASSESSEE ON THEIR OWN, WITHOUT ANY INSTRUCTIONS FROM THE PATIENTS, THEN IT SHOULD BE CONSIDERED THAT THE TRANSACTIONS HAVE BEEN CARRIED ON PRINCIPAL TO PRINCIPAL BASIS, IN W HICH CASE THE DISCOUNT GIVEN BY THE ASSESSEE CANNOT BE CONSIDERED TO BE COMMISSION PAYMENTS. THUS, IN OUR VIEW, THE HOSPITALS/LABORATORIES ARE DOING DUAL ROLES. THIS IS PARTICULARLY IN VIEW OF THE FACT THAT THE ASSESSEE IS ALSO WIDELY ADVERTISING ITS SERV ICES THROUGH THE MEDIA AND ALSO THROUGH DISPLAY OF THEIR NAME BEFORE THE LABORATORIES/HOSPITALS. FURTHER, IF ANY OF THE LABORATORIES IS DEDICATED ONLY FOR THE ASSESSEE, THEN THE DISCOUNT PAID TO SUCH KIND OF LABORATORIES WOULD FALL IN THE CATEGORY OF COMM ISSION ONLY, SINCE THE PATIENTS SHOULD BE APPROACHING THEM TO GET THEIR TESTS CONDUCTED THROUGH THE ASSESSEE. ITA NO. 6558 / MUM/201 4 3 19. WE NOTICE THAT THE NEITHER THE ASSESSEE NOR THE TAX AUTHORITIES HAVE BROUGHT ON RECORD . (A) AS TO HOW THE HOSPITALS/LABORATORIES HAVE APPROA CHED THE ASSESSEE, I.E. WHETHER ON THE SPECIFIC INSTRUCTION OF THE PATIENT OR ON ITS OWN. (B) WHETHER THE LABORATORIES/HOSPITALS ARE DEDICATED TO THE ASSESSEE ONLY OR NOT, I.E., WHETHER THEY HAVE SUCH KIND OF BUSINESS LINK WITH THE COMPETITORS OF THE ASSES SEE OR NOT. IT IS ALSO REQUIRED TO BE SEEN AS TO WHETHER THE TEST REPORTS ARE GIVEN BY THE ASSESSEE DIRECTLY TO THE PATIENTS REFERRED TO BY THE HOSPITALS/LABORATORIES OR THEY ARE ISSUED TO THE HOSPITALS/LABORATORIES, WHO IN TURN ISSUE THE TEST RESULTS IN T HEIR OWN LETTER HEADS. THIS FACTOR WILL ALSO HELP TO DECIDE ABOUT THE NATURE OF RELATIONS HIP. IN OUR VIEW, ALL THE ABOVE FACTS NEED TO BE EXAMINED BEFORE ANSWERING THE QUESTION ABOUT THE NATURE OF RELATIONSHIP BETWEEN THE ASSESSEE AND HOSPITALS/LABORATORIE S. SINCE THE ISSUE HAS NOT BEEN EXAMINED BY THE TAX AUTHORITIES BY CONSIDERING THE BASIS FACTS DISCUSSED ABOVE, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT (A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE THE SAME IN THE LIGHT OF DISCUSSIONS MADE SUPRA. THE ASSESSEE IS ALSO DIRECTED TO FURNISH ALL THE RELEVANT FACTS AND EXPLANATIONS RELEVANT TO THIS ISS UE AND ALSO THAT MAY BE CALLED FOR BY THE AO. IN VIEW OF THIS FACTS AND CIRCUMSTANCES THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT THESE ISSUES WILL GO BACK TO THE FILE OF THE CIT(A) FOR CORRECT APPRECIATION OF FACTS AND DECISIONS IN THIS CASE. ON QU ERY FROM THE BENCH THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE HAS NOT OBJECTED TO THE SAME . A CCORDINGLY, WE DIRECT THE CIT ( A) TO DECIDE THESE ISSUES IN TERMS OF DIRECTION GIVEN BY THE TRIBUNAL IN AY 2010 - 11 AND DECIDE THE CLAIM OF THE ASSESSEE. THE AP PEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 5. IN THE RESULT, THE APPEAL OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 09 - 1 1 - 2016 . SD/ - SD/ (RAJESH KUMAR) (MAHAVIR SINGH) ACCO U NTANT MEMBER JUD ICIAL MEMBER MUMBAI, DATED 09 - 11 - 2016 SUDIP SARKAR/SR.PS ITA NO. 6558 / MUM/201 4 4 COPY OF THE ORDER FORWARDED TO : BY ORDER, ASSISTA NT REGISTRAR ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//