Kiran Infertility Centre Pvt Ltd., Hyd, Hyderabad V. ITO, Ward-2(1),Hyd, Hyderabad

ITA 867/HYD/2016

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 7137 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 08-02-2021
• Assessment Year: 2011-2012
• Appeal Filed On: 07-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S RAMA RAO
• Keywords: Revised return; TDS
• Section: 133A; 40(a)(ia); 194C; 201; 194J; 13; 22; 147; 131; 6; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 866/HYD/16 2010-11 KIRAN INFERTILITY CENTRAL PRIVATE LIMITED, HYDERABAD [PAN: AABCK6053F] INCOME TAX OFFICER, WARD-2(1), HYDERABAD 867/HYD/16 2011-12 868/HYD/16 2012-13 1673/HYD/17 2013-14 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(1), HYDERABAD FOR ASSESSEE : SMT. S.SANDHYA AND SHRI S.RAMA RAO, AR FOR REVENUE : SHRI ROHIT MUJUMDAR, DR DATE OF HEARING : 18 & 19-02-2021 DATE OF PRONOUNCEMENT : 08-04-2021 O R D E R PER S.S.GODARA, J.M. : THESE FOUR ASSESSEES APPEALS FOR AYS.2010-11 TO 201 3- 14 ARISE AGAINST THE CIT(A)-KURNOOL & HYDERABADS SE PARATE ORDERS DATED 11-04-2016 IN FORMER THREE AND DT.30-06-2 017 IN LAST CASE PASSED IN CASE NOS.0153, 0152, 0150 / CIT( A),KNL / 2015-16 & 0085 / 2016-17 INVOLVING PROCEEDINGS U/S.148/147 R.W.S.143(3) [FOR AYS.2010-11 TO 2012-13 ] AND KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 2 -: U/S.143(3) IN AY.2013-14 OF THE INCOME TAX ACT, 1961 [IN SHORT, THE ACT]; RESPECTIVELY. HEARD BOTH THE PARTIES. CASE FILES PERUSED. 2. THE ASSESSEES FIRST AND FOREMOST SUBSTANTIVE GROUN D CHALLENGES VALIDITY OF RE-OPENING IN ITS FORMER THREE APPEALS ITA NO.866 TO 868/HYD/2016; HAS NOT BEEN PRESSED DURING TH E COURSE OF HEARING. THE SAME STANDS REJECTED AS NOT PR ESSED. 3. WE NEXT NOTICE THAT THE ASSESSEES IDENTICAL LATTER SUBSTANTIVE GRIEVANCE IN FORMER THREE AYS.2010-11 TO 2 012-13 AND SOLE SUBSTANTIVE ISSUE IN AY.2013-14 CHALLENGES CORRECTNESS OF BOTH THE LOWER AUTHORITIES ACTION INVOKIN G SECTION 194C R.W.S.40(A)(IA) DISALLOWANCE OF RS.71, 23,300/- PAID TO SHRI SESHA SAI (ACTING ON BEHALF OF M/S.AMMA WELFARE SOCIETY) IN THE NATURE OF SURROGACY IN AY.2010-11 & SIMILAR SURROGACY PAYMENTS TO THE VERY PARTY ALONG WITH ONE SHR I T.RAMANA RAO (LATTER PAYEE NEVER APPEARED) OF RS.3,35,52,500/- IN AY. 2011-12, RS.89,02,746/- IN AY.2012- 13 AND RS.70,50,000/- IN AY.2013-14; RESPECTIVELY AL ONG WITH SECTION 40(A)(I) R.W.S.195 DISALLOWANCE OF RS.1,10, 478/-, RS.43,61,158/- AND RS.83,16,089/- (IN LATTER THREE ASS ESSMENT YEARS) REPRESENTING PAYMENTS MADE TO FOREIGN EGG DONO RS; RESPECTIVELY. 4. WE FIRST OF ALL ADVERT TO THE IMPUGNED SECTION 40(A)( IA) R.W.S.194C AND 194J ISSUE OF SURROGACY PAYMENTS IN CASE OF SHRI S.SESHA SAI SINCE THE OTHER RECIPIENT HAS NEVER A PPEARED TO SUPPORT THE IMPUGNED CLAIMS TILL DATE. THE CIT(A)S I DENTICAL LOWER APPELLATE DISCUSSION AFFIRMING THE ASSESSING OF FICERS KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 3 -: ACTION DISALLOWING ASSESSEES SUMMARY OF PAYMENTS MAD E TO SURROGATE MOTHERS READS AS UNDER: 5.3 GROUND NO.3 TO 5: THESE GROUNDS RELATE TO THE ASSESSMENT MADE BY THE AO HOLDING THAT THE INCOME RETURNED ATTRACTS THE PROVISION OF SECTION 194 J AND AS NO TAX WAS DEDUCTED ON SUCH PA YMENTS, THE DISALLOWANCE WAS MADE U/S.40(A)(IA). THE AO HAS BRO UGHT OUT THE VARIOUS ISSUES INVOLVED IN A LUCID MANNER IN THE AS SESSMENT ORDER. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APP ELLANT FILED HIS WRITTEN SUBMISSIONS. AS PER PAGE 30 OF THE ANNEXURE FILED ALONG WITH THE WRITTEN SUBMISSIONS, THE APPELLANT ENCLOSED A P ROFORMA (SAMPLE) COPY OF THE SURROGACY AGREEMENT WHEREIN IT IS STATE D TO BE A BIPARTITE AGREEMENT CONSISTING OF : (I) GENETIC FATHER AND MOTHER - INTENDED PARENTS (W HO MAKE USE OF THE SURROGATE TECHNOLOGY). (II) TREATING PHYSICIAN OF THE KIRAN INFERTILITY CE NTRE (APPELLANT). IN THE DEFINITION SECTION 1.3 - PHYSICIAN SAMIT SEK HAR IVF AND SURROGACY PROGRAMME DIRECTOR, KIRAN INFERTILITY CEN TRE PVT. LTD., ARE STATED AS SOLE REPRESENTING KIRAN INFERTILITY CENTR E PVT. LTD. IN THE MISCELLANEOUS SECTION OF THE SAID AGREEMENT VIDE PA RA 18.2, IT IS STATED THAT THE TERMS AND CONDITIONS OF THIS AGREEM ENT SHALL EXTEND TO INCLUDE TO THE BENEFIT OF AND BE BINDING UPON THE P ARTIES HERETO AND THEIR RESPECTIVE PERMITTED SUCCESSORS AND ASSIGNEES . I HAVE ALSO PERUSED THE WRITTEN SUBMISSIONS CONTAIN ING THE DETAILED EXPLANATION MADE BY THE APPELLANT IN RESPONSE TO TH E SHOW CAUSE LETTER ISSUED BY THE AO. I AM UNABLE TO CONCUR WITH THE VIEW OF THE APPELLANT. ONCE THE PAYMENT TO THE SURROGATE MOTHER OR TO THE EGG DONOR IS THAT OF THE APPELLANT, THEN THE RESPONSIBI LITY OF DEDUCTING THE AMOUNT OF TDS REQUIRED TO BE DONE U/S.194J / 194C I N ACCORDANCE WITH THE AGREEMENT ALSO VESTS IN THE HANDS OF THE A PPELLANT. THE APPELLANT CANNOT TAKE A PLEA THAT IT IS ONLY A CONDUIT THROUGH WHICH THE GENETIC PARENT MAKES THE PAYMENT EITHER T O THE SURROGATE MOTHER OF THE EGG DONOR. I ALSO DO NOT AGREE WITH T HE PROPOSITION BY THE APPELLANT THAT THE SURROGATE MOTHER IS NOT REND ERING ANY SERVICES TO THE APPELLANT HOSPITAL. THE AO HAS ELABORATELY B ROUGHT OUT THE FACTS IN THE ASSESSMENT ORDER VIDE PARA 7 OF THE OR DER WHICH NEEDS TO BE REPRODUCED: '7. THE ISSUE INVOLVED IN THE ASSESSMENT IS WHETHER THE PAYMENTS MADE TOWARDS SURROGACY SERVICES ATTRACT TAX DEDUCTI ON PROVISIONS U/S.194J /194C OF THE ACT. KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 4 -: FROM THE FOREGOING, IT IS DISCERNIBLE THAT MR.SESHA SAI, THE SUPPLIER OF SURROGATE MOTHERS HAS BEEN THE CONSULTANT IN TRUE S ENSE TO THE ASSESSEE IN FINDING OUT AND SUPPLYING SUITABLE AND WILLING SURROGATE MOTHERS, WHO ARE ELIGIBLE FOR RENDERING SURROGACY S ERVICES AS PER THE GUIDELINES OF INDIAN COUNCIL FOR MEDICAL RESEARCH ( ICMR) FOR EFFECTIVELY CARRYING OUT THE TREATMENT OF INFERTILI TY BY THE INFERTILITY CENTRE [THE ASSESSEE]. THE ASSESSEE HAVING SET A PA CKAGE PRICE FOR THE TREATMENT OF INFERTILITY, IS RESPONSIBLE TO PRO VIDE FOR ALL REQUIREMENTS NECESSARY FOR COMPLETING THE TREATMENT . IT IS ALSO AN ADMITTED FACT THAT THE ASSESSEE 'PAYS FOR THE SENDE E OF SURROGATE MOTHERS THROUGH THE CONSULTANT. THEREFORE, THE ACTI ON OF SUPPLYING SURROGATE MOTHERS FITS INTO THE DEFINITION OF 'FEE FOR TECHNICAL SERVICES' AS SET OUT IN EXPLANATION.2 TO SECTION.9(1)(VII) TH EREBY ATTRACTING PROVISIONS OF SEC.194J WHICH IS REPRODUCED BELOW: 'FEES FOR TECHNICAL SERVICES' MEANS ANY CONSIDERATI ON [INCLUDING ANY LUMP SUM CONSIDERATION] FOR THE RENDERING OF AN Y MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES [INCLUDING THE PROVISION OF SE RVICES OF TECHNICAL OR OTHER PERSONNEL] BUT DOES NOT INCLUDE CONSIDERATION FOR ANY CONSTRUCTION, ASSEMBLY, MINING OR LIKE PRO JECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATION WHICH WOULD BE INCOME OF THE RECIPIENT CHARGEABLE UNDER THE HEAD ' SALARIES',' AS PER THE ABOVE DEFINITION OF 'FEES FOR TECHNICAL SERVICES' I THE PROVISION OF SERVICES OF 'OTHER PERSONNEL' SQUARELY COVERS THE PROVISION OF SERVICES OF SURROGATE MOTHERS/WOMEN AND AS LONG AS THIS SERVICE DOES NOT FALL WITHIN THE EXCLUSIONS PROVIDED IN THE DEFINITION, THE PAYMENT MADE TOWARDS SUPPLY OF SURROGATE MOTHERS IS 'FEES FOR TECHNICAL SERVICES'. IT IS NOT MATERIAL WHETHER THE SURROGATE MOTHER HAS RENDERED THE SERVICE OF GIVING HER EGG OR CARRY ING PREGNANCY.' IT IS NOT NECESSARY THAT THE SURROGATE MOTHER SHOUL D BE A PROFESSIONAL AS CONTENDED BY THE ASSESSEE. IT IS SUFFICIENT IF THE CONSULTANT/THE SUPPLIER OF SURROGATE MOTHERS PROVIDES THE SERVICES OF THE SURROGATE MOTHERS TO THE HOSPITAL FOR CARRYING ON ITS PROFESS ION. THE CONTENTION OF THE ASSESSEE THAT THE AMOUNT PAID TO SURROGATE M OTHER IS TOWARDS EXPENSES AND IT DOES NOT PARTAKE THE CHARACTER OF I NCOME, IS MISLEADING AND AWAY FROM THE TRUTH. IN FACT, AS PE R THE STATEMENTS GIVEN BY THE ASSESSEE AND THE CONSULTANT, IT IS EVI DENT THAT ALL THE MEDICAL EXPENSES AND MAINTENANCE EXPENSES OF THE SU RROGATE MOTHERS ARE BORNE BY THE ASSESSEE AND THE CONSULTAN T. THEREFORE, THE AMOUNT, PAID TO THE SURROGATE MOTHERS AT RS.2 LAKH FOR SINGLE PREGNANCY AND RS.2.25 LAKH FOR CARRYING PREGNANCY O F TWINS, IS INCOME IN THE HANDS OF THE SURROGATE MOTHERS. BESIDES, THE CONTENTION OF THE ASSESSEE, THAT THE P AYMENTS MADE TO THE SURROGATE MOTHERS THROUGH THE CONSULTAN T ARE NOT KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 5 -: GOVERNED BY THE PROVISIONS OF SEC.194C OF THE IT AC T, IS NOT CORRECT. IT IS VERY CLEAR FROM THE AGREEMENT ENTERED INTO BY TH E CONSULTANT AND THE ASSESSEE THAT THE CONSULTANT IS UNDER OBLIGATIO N TO SUPPLY THE SURROGATE MOTHERS TO THE ASSESSEE AS AND WHEN THE ASSESSEE(HOSPITAL) REQUIRES THE SERVICES OF THE SUR ROGATE MOTHER EITHER FOR DONATION OF EGG OR FOR CARRYING PREGNANC Y FOR A PRICE. SINCE, SUPPLY OF SURROGATE MOTHERS FOR A PRICE TOOK PLACE AS PER THE AGREEMENT BETWEEN THE ASSESSEE AND THE CONSULTANT, THE PAYMENTS MADE FOR SURROGACY SERVICES ATTRACT PROVISIONS OF S EC.194C. THE CONTENTION OF THE ASSESSEE THAT SUPPLY OF SURROGATE MOTHERS DOES NOT FIT INTO THE PHRASE GIVEN U/S 194C IE. 'INCLUDING S UPPLY OF LABOUR FOR ANY WORK' DOES NOT HOLD GOOD. IT IS ONLY EXTENSION OF THE SECTION AND INCLUSIVE IN NATURE BUT DOES NOT RESTRICT THE SCOPE OF SEC.194C TO COVER THE CONTRACTS OR AGREEMENTS ENTERED INTO FOR SUPPLY OF ANY MANPOWER FOR THE PURPOSE OF PROVIDING ANY SERVICE.' FROM THE ABOVE FACTUAL MATRIX AS NARRATED BY THE AO , IT IS CLEARLY ESTABLISHED THAT THE CONSULTANT HAS BEEN SU PPLYING THE SURROGATE MOTHERS (EGG DONORS) TO THE APPELLANT. WI THOUT THE SETUP AS IT EXISTED BY WAY OF A FERTILITY CENTRE, THE DONOR OR THE INTENDED PARENTS COULD NOT BE BENEFITED MERELY BY A MUTUAL A GREEMENT. THEY NEED THE SERVICES OF THE IVF CENTRE TO CULMINATE TH E PROCESS AND PROCEDURE AND THEREFORE, THE INTENDED PARENTS HAVE MADE PAYMENT TO THE IVF CENTRE WHICH IN TURN HAS MADE PAYMENTS 10 T HE SURROGATE MOTHER. THE APPELLANT'S RELIANCE ON THE CASE LAWS CITED HAV E NO BEARING ON THE FACTS OF THIS CASE AND THEREFORE, I DECLINE TO INTERFERE WITH THE ORDER OF THE AO, WHO HAS CLEARLY BROUGHT OUT THE FA ILURE ON THE PART OF THE APPELLANT IN DEDUCTING THE TDS. THIS BEING THE CASE, THE APPELLANT WAS OBLIGATED TO DEDUCT THE TAX AND PAY THE BALANCE TO THE SURROGATE MOTHER AS PART OF THE SURROGACY SERVICES RENDERED BY SUCH SURROGATE MOTHE RS. FAILURE TO DO SO AS PER THE PROVISIONS OF SEC.40(A)(IA) OF ACT LE ADS TO THE DISALLOWANCE AND ACCORDINGLY, I UPHOLD THE ACTION O F THE AO. THE GROUNDS RAISED BY THE APPELLANT ARE DISMISSED. 5. NEXT COME THE BASIC RELEVANT FACTS. THE ASSESSEE/A COMPANY RUNS INFERTILITY CLINIC(S). IT HAD ADMITTEDLY CLAIMED AN AMOUNT OF RS.71,23,300/- TO MR.SAI AS SURROGACY CHARG ES WITHOUT DEDUCTING TDS THEREUPON TO SHRI SESHA SAI, HE REIN ABOVE. THE ASSESSING OFFICERS ASSESSMENT ORDER DT.12 -03-2014 SUGGESTS THAT HE SOUGHT TO TREAT THE SAME AS PAYMENTS MADE KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 6 -: U/S.194J OF THE ACT IN THE NATURE OF FEE FOR TECHNICAL SERVICES AS WELL AS CONTRACTUAL PAYMENTS U/S.194C OF THE ACT, R EQUIRING MANDATORY TDS DEDUCTION GOING BY CHAPTER-XVII OF THE A CT. 6. THE ASSESSEE FILED A COMMON DETAILED REPLY DT.18-1 2- 2013 TO THE SAID SHOW CAUSE NOTICE AS FOLLOWS: SIR, SUB:- INCOME-TAX ASSESSMENT - ASSESSMENT YEAR 2009- 10 TO 2013-14 - KIRAN INFERTILITY CENTRE PVT.LTD., HYDERABAD.PAN- AABCK6053F - REGARDING. KIND REFERENCE IS INVITED TO THE NOTICE IS] S 148 O F THE I.T. ACT REQUIRING THE ASSESSEE TO FILE THE RETURN OF INCOME FOR THE A SSESSMENT YEAR 2009-10 TO 2012-13 WITH A VIEW TO REASSESS THE INCO ME OF THE ASSESSEE COMPANY. IN THIS REGARD, THE ASSESSEE HUMBLY SUBMITS THAT TH E RETURNS OF INCOME FOR THE ABOVE ASSESSMENT YEARS WERE ALREADY FILED AS DETAILED BELOW: SL. NO. ASSESSMENT YEAR DATE OF FILING OF THE ORIGINAL RETURN OF INCOME DATE OF FILING OF THE REVISED RETURN OF INCOME INCOME ADMITTED (RS.) TAX PAID INCLUDING ADVANCE TAX AND TDS 1. 2009 - 10 01 - 10 - 2009 05 - 10 - 2009 17,16,308 5,62,050 2. 2010 - 11 26 - 09 - 2010 -- 35,46,610 11,07,946 3. 2011 - 12 27 - 09 - 2011 07 - 03 - 2013 72,27,106 25,61,800 4. 2012 - 13 29 - 09 - 2012 05 - 03 - 2013 1,39,55,115 47,33,344 THE ABOVE MENTIONED RETURNS OF INCOME MAY PLEASE BE TREATED AS THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 14 8 OF THE I.T. ACT. THE ASSESSEE HUMBLY SUBMITS THAT THE ASSESSING OFFI CER CONDUCTED SURVEY U/S 133A OF THE IT. ACT ON 22-10-2013 AT THE PREMISES OF THE COMPANY. A STATEMENT WAS RECORDED BY THE ASSESSING OFFICER AT THE TIME OF SURVEY. FROM THE STATEMENT, IT CAN BE ASCER TAINED THAT THE ASSESSING OFFICER ENTERTAINED A DOUBT THAT THE ASSE SSEE SHOULD HAVE DEDUCTED TAX AT SOURCE IN RESPECT OF THE PAYMENTS M ADE TO THE EGG DONORS FROM ABROAD AND THAT THE PROVISIONS OF SEC.1 95 OF THE IT ACT ARE APPLICABLE TO SUCH PAYMENTS. THE ASSESSING OFFI CER ALSO SEEMS TO HAVE ENTERTAINED A VIEW THAT THE PAYMENTS MADE TO T HE SURROGATE MOTHERS AND EGG DONORS IN INDIA ALSO IS TO BE SUBJE CT TO DEDUCTION OF TAX AT SOURCE WHICH WAS NOT DONE. PERHAPS THE ASSES SING OFFICER IS OF THE VIEW THAT TDS WAS NOT MADE IN RESPECT OF SOME E XPENDITURE AND, THEREFORE, AS' PER. THE PROVISIONS OF SEC 40(A)(IA) SUCH AMOUNTS ARE NOT KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 7 -: ALLOWABLE. THEREFORE, THE ASSESSING OFFICER PROPOSE D TO INITIATE PROCEEDINGS U/S 147 OF THE IT ACT. THE ASSESSEE ALS O SUBMITS THAT THE INCOME-TAX 'OFFICER (INTERNATIONAL TAXATION)-I, HYD ERABAD ISSUED A NOTICE TO THE ASSESSEE COMPANY REQUIRING IT TO SHOW CAUSE AS TO WHY THE PROVISIONS OF SEC.195 HAVE NO APPLICATION TO TH E PAYMENTS MADE TO THE SURROGATE MOTHERS OR TO THE EGG DONORS. THE ASSESSEE COMPANY FURNISHED A REPLY TO THE INCOME-TAX OFFICER (INTERN ATIONAL TAXATION), A COPY OF WHICH IS SUBMITTED FOR PERUSAL. IN THIS REGARD THE ASSESSEE HUMBLY SUBMITS THAT NO SUCH DEDUCTION OF TAX NEED BE MADE FOR THE FOLLOWING REASONS: A) THE ASSESSEE IS A COMPANY CARRYING ON THE ACTIVI TY OF MAINTAINING FERTILITY CENTER, DIAGNOSTIC CENTRE AND PATHOLOGICA L LABORATORY FOR THE PURPOSE. B) THE ASSESSEE SUBMITS THAT THE PATIENTS I.E. MOTH ER AND FATHER WHO ARE DESIROUS OF CONCEIVING CHILDREN BUT ARE NOT CAP ABLE OF DOING SO, APPROACH THE ASSESSEE HOSPITAL. THEY ARE KNOWN AS ' GENETIC PARENTS'. C) THEY WOULD BE EXAMINED FOR THE REASONS FOR INFER TILITY. IN MOST OF THE CASES, THE INFERTILITY IN THE COUPLE/PATIENT MA Y BE DUE TO PHYSIOLOGICAL DISORDER, HORMONAL OR CHROMOSOMAL DIS ORDERS. D) ONCE THE REASONS FOR INFERTILITY ARE IDENTIFIED AND IF SUCH DEFECT PREVENTS THE FEMALE PARTNER FROM UTILIZING HER OWN EGGS OR CARRYING PREGNANCY TO TERM THE GENETIC PARENTS CHOOSE A WOMA N FOR DONATING EGGS/OVUM AND A SURROGATE MOTHER TO CARRY THE PREGN ANCY TO TERM. E) A PAYMENT IS TO BE MADE BY THE GENETIC PARENTS F OR GETTING EGGS/OVUM FROM THE WOMAN WHO MAYBE A RELATIVE IN SO ME CASES OR MAYBE ANONYMOUS AND ALSO TO THE SURROGATE MOTHER TO CARRY THE PREGNANCY TO TERM. F) THE EGG SO OBTAINED AFTER OVARIAN STIMULATION IS FUSED WITH THE SPERM OF THE GENETIC FATHER AND THE RESULTANT EMBRY O IS TRANSFERRED IN THE WOMB OF THE GENETIC MOTHER. IN SUCH AN EVENT, T HERE IS NO REQUIREMENT OF A SURROGATE MOTHER. HOWEVER, IN MANY CASES OF INFERTILITY IT IS FOUND THAT THE WOMAN IS NOT CAPAB LE OF CARRYING A PREGNANCY IN HER WOMB TO TERM WHICH MAYBE BECAUSE O F SEVERAL DISORDERS AND THEREFORE NEEDS A SURROGATE MOTHER TO PRESERVE THE PREGNANCY. G) THE GENETIC PARENTS CHOOSE THE SURROGATE MOTHER TO CARRY THE PREGNANCY ON BEHALF OF THE GENETIC MOTHER. THEY CHO OSE THE SURROGATE MOTHER THROUGH ORGANIZATION SUCH AS AMMA WOMEN'S WE LFARE SOCIETY OR FROM OTHERS. ALWAYS IT IS THE CHOICE OF THE GENETIC PARENTS TO CHOOSE THE SURROGATE MOTHER AND IS NOT THE CHOIC E OF THE HOSPITAL. KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 8 -: H) ALL THE CONNECTED PARTIES I.E. THE GENETIC PAREN TS, SURROGATE MOTHER AND THE HOSPITAL (FERTILITY CENTRE) DISCUSS ABOUT T HE ISSUE AFTER THE SURROGATE MOTHER IS CHOSEN BY THE GENETIC PARENTS. AT THAT STAGE THE GENETIC PARENTS, THE HOSPITAL AND THE SURROGATE MOT HER ENTER INTO A TRIPARTITE AGREEMENT, A COPY OF WHICH IS SUBMITTED. I) THE FERTILITY CENTRE CONDUCTS THE PATHOLOGICAL A ND OTHER TESTS IN ORDER TO DECIDE THE POSSIBILITY OF TRANSFERRING THE EMBRY O IN THE WOMB OF SURROGATE MOTHER. IF SHE IS FOUND MEDICALLY FIT, TH E PROCESS COMMENCES AS PER THE TERMS OF THE AGREEMENT. J) IN THE SAID AGREEMENT, THE TOTAL AMOUNT IS PAID BY GENETIC PARENTS WHICH INCLUDES HOSPITAL FEE FOR TREATMENT, THE AMOU NT TO BE INCURRED TOWARDS SURROGATE MOTHER FOR PRESERVING/ CARRYING T HE PREGNANCY FOR A PERIOD OF 9 MONTHS, FOR HER WELLBEING AND REASONA BLE EXPENSES TO HER IS DECIDED. THE AGREEMENT SPECIFIED THAT PAYMEN TS ARE TO BE MADE TO SURROGATE MOTHER TOWARDS HER REASONABLE EXP ENSES. SUCH PAYMENTS ARE TO BE MADE BY GENETIC PARENTS. K) THE AMOUNT SO ARRIVED AT IS FIRST PAID IN ADVANC E IN INSTALLMENTS TO THE HOSPITAL BY THE GENETIC PARENTS WITH A REQUEST THAT THE REASONABLE EXPENSES BE SPENT FOR MEDICAL TREATMENT AND FOR MAI NTENANCE OF HEALTH OF SURROGATE MOTHER AND FOR HER WELLBEING. L) THE PAYMENTS MADE TO THE SURROGATE MOTHER ARE PA ID BY THE HOSPITAL ONLY ON BEHALF OF THE GENETIC PARENTS TO T HEIR NOMINEE AMMA WOMEN WELFARE SOCIETY AND OTHERS IN INDIA. M) THE PAYMENTS FOR FOREIGN EGG DONORS ON BEHALF OF GENETIC PARENTS ARE TO BE PAID BY ASSESSEE COMPANY TO THE NOMINEES CELESTE COETZEE IN SOUTH AFRICA AND ALEXIS THOMAS IN USA BOTH OF WH OM ARE FOREIGN NATIONALS. N) THE AMOUNT SO PAID TO THE SURROGATE MOTHER IS TO WARDS THE EXPENDITURE INCURRED ON MAINTENANCE OF TH~ HEALTH A ND GENERAL WELL BEING OF THE SURROGATE MOTHER FOR A PERIOD OF 10 TO 18 MONTHS, COST OF MEDICINES TO SUSTAIN THE PREGNANCY FOR THE PERIOD O F 9 MONTHS AND TOWARDS HER GENERAL MAINTENANCE. O) HAVING SPENT THE AMOUNT FOR PREGNANCY ON THEIR B EHALF, IT IS IN THE BEST INTEREST OF THE GENETIC PARENTS TO SEE THAT TH E SURROGATE MOTHER IS FOLLOWING ALL NECESSARY REMEDIES TO MAINTAIN A HEAL THY PREGNANCY AND NOT INDULGING IN ANY ACTS WHICH MAY B E DETRIMENTAL TO THE HEALTH OF THEIR UNBORN CHILD AND TO MAKE SURE THAT THERE IS NO BREACH OF AGREEMENT ON BEHALF OF THE SU RROGATE MOTHER THEREFORE, THE GENETIC PARENTS CHOSE CERTAIN ORGANI ZATION OR PERSONS KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 9 -: TO MONITOR AND CARE FOR THE SURROGATE MOTHER IN ALL RESPECTS-- BOTH PHYSICAL, MEDICAL AND SOCIAL. P) ONLY WHEN ALL I.E. GENETIC PARENTS, SURROGATE MO THER; THE ORGANIZATION AND THE HOSPITAL ACTS IN DISCIPLINE AN D ACCORDING TO PLAN, THE PROGRAMME WOULD BE SUCCESSFUL. Q) ON COMPLETION OF THE PERIOD OF PREGNANCY AND WHE N THE SURROGATE MOTHER DELIVERS A CHILD IN THE HOSPITAL, SUCH CHILD WOULD BE HANDED OVER TO THE PARENTS AFTER RECORDING THE ASSURANCE F ROM THE GENETIC PARENTS THAT THE CHILD WOULD BE BROUGHT UP BY THEM AS THEIR OWN CHILD. WHERE THE GENETIC PARENTS ARE FOREIGN NATION ALS, THEY WOULD ALSO FURNISH ASSURANCE TO THE APPROPRIATE AUTHORITY OF THE GOVERNMENT OF INDIA BEFORE TAKING THE CHILD TO THEIR COUNTRY. IT CAN BE SEEN FROM THE SAID LETTER FILED BEFORE IT O OF INTERNATIONAL TAXATION THAT THE PAYMENTS MADE TO TH E SURROGATE MOTHERS AND PAYMENTS MADE TO EGG DONORS DO NOT REQU IRE DEDUCTION OF TAX AT SOURCE AS THEY WERE MADE ON BEHALF OF THE GENETIC PARENTS AND NOT AS AN EXPENDITURE OF THE ASSESSEE AND THAT THE PAYMENTS ARE TOWARDS EXPENDITURE TO BE INCURRED BY THE SURROGATE MOTHER, SUPPLY OF EGGS AND THE ACTIVITY CARRIED ON BY THE SURROGAT E MOTHER, SUPPLY OF EGGS WOULD NOT ATTRACT ANY DEDUCTION OF TAX AT SOUR CE UNDER CHAPTER XVII OF THE IT. ACT. THEREFORE, THE PROVISIONS OF CHAPTER XVII OR SEC.40 (A)(IA) OF THE IT. ACT WOULD NOT APPLY TO THE PAYMENTS MADE TO THE SURROGATE MOTHERS AND PAYMENTS FOR SUPPLY OF EGGS. IT IS ALSO SUBMITTED THAT THE PAYMENT FOR THE SUPPL Y OF EGGS IS FOR THE HUMAN REPRODUCTIVE CELL/GENETIC MATERIAL. I T IS THE PAYMENT FOR THE MATERIAL AND, THEREFORE, NO DEDUCTION OF TAX AT SOURCE NEED BE MADE. IN VIEW OF THE ABOVE, THE ASSESSEE HUMBLY SUBMITS T HAT THE PRESUMPTION OF THE ASSESSING OFFICER THAT THERE IS ANY ESCAPEMENT OF INCOME ON THIS GROUND IS NOT JUSTIFIED. 7. THE ASSESSING OFFICER THEREAFTER CONSIDERED THE ASSESSEES DIRECTORS AS WELL AS SHRI SAIS STATEMENTS TO CONCLUDE THAT THE IMPUGNED SURROGACY PAYMENTS ATTRACTED SECTION 194J AS WELL AS 194C OF THE ACT AS FOLLOWS: 4. HOWEVER FROM THE ABOVE SUBMISSIONS AS WELL AS F ROM THE STATEMENTS OF SRI.SESHA SAI (THE CONSULTANT AND SUP PLIER OF SURROGATE MOTHERS) AND THE DIRECTOR OF THE COMPANY SRI.SAMIT SEKHAR [THE RELEVANT QUESTIONS AND ANSWERS OF THESE STATEMENTS ARE GIVEN IN KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 10 -: SUBSEQUENT PAGES], THE OPERATIONS OR THE FUNCTIONIN G OF THE HOSPITAL CAN BE BROADLY SUMMARIZED AS UNDER: A) THE ASSESSEE IS ENGAGED IN THE TREATMENT OF INFE RTILITY BY EMPLOYING VARIOUS METHODS LIKE IVF TREATMENT, SURRO GACY SERVICE AND OTHER RELATED SERVICES. ONE OF THE METHODS IS PROVI DING SURROGACY SERVICES WHERE IN WHEN A COUPLE APPROACH THE ASSESS EE FOR INFERTILITY TREATMENT THE ASSESSEE ASCERTAINS THE SUITABILITY O F GENETIC PARENTS FOR CARRYING PREGNANCY AND WHEN THE GENETIC PARENT IS FOUND TO BE UNSUITABLE FOR CARRYING PREGNANCY OR TO PRODUCE EGG , THE ASSESSEE PROVIDES THE SERVICE OF SURROGACY WHEREIN AS PER TH E REQUIREMENT THE EGG IS OBTAINED FROM THE EGG DONOR AND FUSED WITH T HE SPERM AND THE EMBRYO IS INTRODUCED INTO THE WOMB OF ANOTHER WOMEN HAIRED FOR CARRYING THE PREGNANCY TO ITS FULL TERM ON BEHALF O F THE INTENDED GENETIC PARENT. ON DELIVERY OF THE BABY THE GENETIC PARENTS TAKE OVER THE BABY AS THEIR OWN AND THE SURROGATE MOTHER WILL NOT HAVE ANY RIGHT OVER THE BABY. IN ORDER TO PROVIDE THIS METHO D OF SERVICE THE ASSESSEE CHARGES THE PATIENTS/GENETIC PARENTS A LUM P SUM AMOUNT. IT IS THE RESPONSIBILITY OF THE ASSESSEE TO PROVIDE FO R ALL THE RELATED SERVICES TO ENSURE THAT THE GENETIC PARENTS BEGET T HEIR BABY. B) FOR THE PURPOSE OF EFFECTIVELY DOING ITS BUSINES S, THE ASSESSEE ENTERS IN TO AN AGREEMENT/CONTRACT WITH THE SUPPLIE R OF SURROGATE MOTHERS / EGG DONORS AND IN THE INSTANT CASE THE SU PPLIER HAS BEEN SRI. T.SESHA SAI. THE CONTENTS OF AGREEMENT/CONTRAC T DATED 09.05.2012 PROPOSED BY SUPPLIER OF SURROGATE MOTHER S IS PRODUCED BELOW: 'TO DR. SAMIT SEKHAR, EXECUTIVE DIRECTOR, KIRAN INFERTILITY CENTRE, HYDERABAD. INDIA, DEAR SIR, SUB: PROPOSAL OF ARRANGING SURROGATE MOTHER & EGG D ONOR'S AMMA WOMEN WELFARE SOCIETY REG.NGO.NO.806/2012 REPR ESENTED BY ITS VICE PRESIDENT T.SESHASAI AGED ABOUT 50 YEAR S IS AND NGO WORKING FOR THE UPLIFTMENT OF POOR AND DESTITUTE WO MEN IN THE STATE OF ANDHRA PRADESH. WE PROVIDE FOOD HOUSING AND REHABILITATION FOR WOME N WHO HAVE BEEN NEGLECTED BY THEIR FAMILIES WE WORK TOWARDS RECONCI LIATION AND HELPING THEM LEARN VOCATIONAL TRADES ARID BECOME SE LF RELIANT. KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 11 -: I HAVE LEARNT ABOUT YOU ESTEEMED INSTITUTE ONLINE A ND SOME OF THE WOMEN AT OUR NGO HAVE COME FORWARD TO PROVIDE THIS VERY NOBLE SERVICE TO HELP CHILDLESS COUPLES BY BECOMING SURRO GATE MOTHERS AND EGG DONORS BECAUSE THEY UNDERSTAND THE PLIGHT OF CH ILDLESS COUPLES IN THE INDIAN SOCIETY. AMMA WILL ARRANGE FOR SURROGATE MOTHERS AND EGG DON ORS FOR KIRAN INFERTILITY CENTRE AND ON THE BASIS OF THE DECIDED REMUNERATION WHICH WILL BE 4 LAKHS FOR A SINGLE PREGNANCY AND 4,50,000 FOR CARRYING TWINS. IN THE MENTIONED AMOUNTS AMMA WILL ARRANGE FOR FOOD ACCOMMODATION, CLOTHING, TRAVEL AND ANY OTHER NON M EDICAL EXPENDITURE FOR THE SURROGATE MOTHERS AND EGG DONOR S INCLUDING THEIR COMPENSATIONS. ALL MEDICAL PROCEDURES AND TREATMENTS AND MEDICAL / SURGICAL CARE WILL BE THE RESPONSIBILITY OF THE KININ INFERTILITY CENTRE. AMMA IS ALSO IN THE PROCESS OF APPLYING WITH ICMR F OR REGISTRATION AS AN ART BANK. THANKING YOU, FOR AMMO WOMEN WELFARE SOCIETY, SD/- (T. SESHA SAI) VICE-PRESIDENT. THE AGREEMENT/CONTRACT DATED 10.05.2012 ACCEPTING T HE ABOVE SAID PROPOSAL IS IDENTICAL IN ALL ITS CONTENT EXCEPT FOR AN ADDITIONAL PARA WHICH IS GIVEN BELOW: 'ALL THE PAYMENTS WILL BE MADE TO T.SESHA SAI ON BE HALF OF AMMA WOMEN WELFARE SOCIETY WHO WILL THEN RELEASE PAYMENT S TO EGG DONORS AND SURROGATE MOTHERS AS PER TERMS AND CONDI TIONS DISCUSS WITH COMMISSIONING PARENTS AND SURROGATE MOTHERS.' FROM THE CONTENTS OF THE ABOVE PROPOSAL AND ACCEPTA NCE IT IS SEEN THAT IT IS BASICALLY A CONTRACT BETWEEN THE SU PPLIER OF SURROGATE MOTHERS AND THE ASSESSEE (M/S.KIRAN INFERTILITY CEN TRE PVT LTD) AND CONTAINS THE AMOUNT TO BE PAID FOR EACH SURROGATE M OTHER AND THE DUTIES AND RESPONSIBILITIES OF BOTH THE PARTIES. IT IS VERY IMPORTANT TO MENTION HERE THAT THE NGO AMMA WOMEN WELFARE SOCIET Y CAME INTO EXISTENCE ONLY ON 08.05.2012 AND HENCE A WRITTEN AG REEMENT WAS ENTERED INTO. DURING THE RELEVANT YEAR THERE WAS NO NGO BUT THE CONSULTANT/SUPPLIER WAS SUPPLYING SURROGATE MOTHERS ON SIMILAR TERMS. KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 12 -: 5. FOR THE PURPOSE OF ASSESSMENT, IT IS ALSO NECESS ARY TO VERIFY/EXAMINE THE ANSWERS GIVEN IN THE SWORN STATE MENTS GIVEN BY THE DIRECTOR SRI.SAMITH SEKHAR AND SRI.T SESHA SAI (THE CONSULTANT AND SUPPLIER OF SURROGATE MOTHERS). THE RELEVANT QU ESTIONS AND ANSWERS ARE PRODUCED BELOW: DR. SAMIT SEKHAR: Q.5. [SWORN STATEMENT DT. 22.10.13] DO YOU INCUR AN Y EXPENDITURE FOR MARKETING YOUR SERVICES ABROAD? ANS. WE PAY EGG DONORS COMPENSATION THROUGH RESIDEN T FREELANCER IN SOUTH AFRICA MS.CELESTE COETZEE. SHE IS PAID ABOUT 10,000 TO 15,000 SAF RANDS AS DONOR COMPENSATION AND ALSO FOR ADDITI ONAL EXPENSES SUCH AS FLIGHTS, VISA AND MEDICAL TESTS FOR THE EGG DONOR. THERE ARE CERTAIN OTHER EXPENSES FOR CONFERENCES, A DVERTISEMENTS ETC AS BUSINESS PROMOTION EXPENDITURE THESE EXPENSES OF EGG DONORS ARE SHOWN AS MARKETING EXPENSES FOR OUTWARD REMITTANCE BECAUSE THE BANK DOES NOT HAVE P ROVISION FOR EGG DONOR EXPENSES AND AS SUGGESTED BY BANK Q.6. [SWORN STATEMENT DT.22.10.13] PLEASE GIVE THE DETAILS OF FEE CHARGED FOR VARIOUS SERVICES PROVIDED BY THE COMPAN Y? ANS. RS.75,000 TO RS.2,00,000 FOR IVF PACKAGE [PER CYCLE] FROM FIN. YEAR 2011-12 US$32,000 FOR COMPREHENSIVE SURROGACY PACKAGE WITH INDIAN DONOR FROM FIN.YEAR 2011-12, IT WAS ABOUT US $20,000 TO 25,000 BEFORE F.Y.2011-12. Q.7. PLEASE EXPLAIN THE PROCESS OF TREATMENT GIVEN TO THE PATIENTS. ANS. IVF : ON REGISTRATION AND CONSULTATION OF THE PATIENTS, DETAILED HISTORY IS TAKEN FOLLOWED BY INVESTIGATION IF REQUI RED TO REACH A DIAGNOSIS. BASED ON THE DIAGNOSIS, A PARTICULAR TYP E OF TREATMENT IS SUGGESTED WHICH MAY BE LUI / IVF / ICSI / SURROGACY MAJORITY OF PATIENTS REQUIRING TREATMENT OF IUI / IVF / ICSI. D O NOT REQUIRE PROLONGED ADMISSION / STAY IN THE HOSPITAL. SURROG ATE MOTHERS MAY REQUIRE TO STAY IN THE HOSPITAL FROM 12 WEEK PREGNA NCY TO TILL THE DELIVERY, WHICH DIFFERS FROM CASE TO CASE. HOWEVER THE GENETIC PARENTS AND THE DONORS IN MAJORITY CASES MAY NOT RE QUIRE ANY HOSPITALIZATION BUT THEY ARE REQUIRED TO VISIT THE HOSPITAL FOR DALLY MONITORING. AS A PART OF PACKAGE, ANY COMPLICATION RELATED TO THE SURROGACY IS THE RESPONSIBILITY OF THE HOSPITAL. AS FAR AS IVF TREATMENTS ARE CONCERNED, OUR MONITORING EXTENDS UP TO 12 WEEKS OF PREGNANCY. Q.11. PLEASE EXPLAIN THE PROCEDURE FOLLOWED FOR IDE NTIFYING THE SURROGATE MOTHERS? KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 13 -: ANS. AMMA WOMEN WELFARE SOCIETY, AN NGO HAS PANELLE D VOLUNTARY WOMEN FOR SURROGACY AND ON REQUIREMENT BASIS, AND W HENEVER THERE IS A REQUIREMENT THE CLINIC INFORMS THE NGO/ABT BAN K. THEN THE SCREENING OF THE SURROGATE MOTHER IS CARRIED OUT FO R HER SUITABILITY. INTENDED SURROGATE MOTHER IS INTRODUCED TO THE GENE TIC COUPLE UPON HER REQUEST. ONCE THE MOTHER MEETS THE CRITERIA, SH E IS SUBJECTED TO EMBRYO TRANSFER AND THEN SHE IS TAKEN CARE OF BY TH E SOCIETY AND CLINIC. Q. 20. ARE THE GENETIC PARENTS FROM ABROAD AWARE AS TO WHAT AMOUNT IS PAID TO THE SURROGATE MOTHER PARTICULARLY WHEN T HEY AGREE TO PAY THE PACKAGE AMOUNT? ANS. THE DETAILS ARE COMMUNICATED IN PERSON DURING CONSULTATION OR PHONE CONVERSATION. Q.2. [SWORN STATEMENT DATED 23.10.2013] PLEASE EXPL AIN WHY THE AMOUNTS OF RS.4,00,000/- OR 4,50,000/- PER SURROGAT E MOTHER IS PAID TO SRI.THURAGA SESHA SAI, A MEDICAL PRACTITIONER. W HETHER THERE IS ANY AUTHORIZATION FROM SURROGATE MOTHERS TO PAY THE IR COMPENSATION THROUGH SRI.SESHA SAI. ANS. SESHA SAI IS THE VICE PRESIDENT OF THE AMMA WO MEN WELFARE SOCIETY AND UPON CONSENT FROM COMMISSIONING PARENT, AND SURROGATE MOTHER WHO AUTHORIZE MR.SESHA SAI OF AMMA WOMEN WEL FARE SOCIETY TO ENTER INTO AGREEMENT WITH THE NECESSARY PARTIES, THE PAYMENTS ARE RELEASED ON THEIR BEHALF TO TAKE CARE OF SURROGATE MOTHER COMPENSATION, FOOD, SHELTER, CLOTHING, TRAVEL AND A LL OTHER NON MEDICAL EXPENDITURE FOR THE SURROGATE MOTHERS DURING THEIR COMPLETE MEDICAL PROCESS/IVF/ICSI/PREGNANCY/DELIVER/CAESAREAN SECTIO N AND POST BIRTH FOR 6 MONTHS IF ANY NONMEDICAL EXPENDITURE IS NEEDE D. THIS IS DONE WITH CONSENT AND AUTHORISATION OF ALL PARTIES INVOL VED. THE CLINIC NEVER MAKES ANY PAYMENT OR ENTERS INTO ANY FINANCIAL AGRE EMENT WITH THE SURROGATE MOTHER DIRECTLY. Q.7. WHEN IT IS THE RESPONSIBILITY OF AMMA WOMEN WE LFARE SOCIETY AS TO THE PAYMENT OF COMPENSATION TO THE SURROGATE MOT HER AND HER WELL BEING, WHY YOU ARE COLLECTING THE CHARGES ON THEIR BEHALF FROM THE COMMISSIONING PARENTS? THE CHARGES COULD WELL BE PA ID TO THE SOCIETY DIRECTLY. PLEASE EXPLAIN? ANS SURROGACY IS A COMPLEX MEDICAL PROCEDURE AND BE CAUSE OF SEVERAL LOGISTICAL ISSUE INVOLVED IN THE PROCESS AN D IN ACCORDANCE OF AN UNDERSTANDING WITH ALL PARTIES INVOLVED, THE MON EY IS COLLECTED AND RELEASED TO MR.SESHA SAI BY CHEQUE FOR DISBURSA L TO THE SURROGATE MOTHER IN A TIMELY AND ORDERLY MANNER. Q.8. BY YOUR OWN ADMISSION, IT IS CLEAR THAT YOU AR E RECEIVING PAYMENT FOR ALL THE SERVICE INVOLVED IN THE COMPLEX MEDICAL PROCEDURE KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 14 -: AND EVEN THE COMPENSATION TO THE SURROGATE MOTHERS IS RELEASED BY YOU IN AN ORDERLY MANNER SUGGESTING THAT YOU OWN UP RESPONSIBILITY FOR ENSURING SUCCESSFUL COMPLETION OF THE COMPLEX S URROGACY MEDICAL PROCEDURE. PLEASE SAY YES OR NO. ANS. THIS ANSWER NEEDS A DETAILED EXPLANATION BECAU SE OF THE COMPLEXITY INVOLVED AND CANNOT BE ANSWERED IN YES/N O. Q.9. DO YOU STATE THAT MR.SESHA SAI HAS BEEN PROVID ING THE HUMAN RESOURCES INDEPENDENTLY FOR THE SUCCESS OF THE YOUR PRACTICE? ANS. AMMA WOMEN'S WELFARE SOCIETY PROVIDES FOR SURR OGATE MOTHERS AND EGG DONORS TO OUR CLINIC UPON REQUEST FROM COMM ISSIONING PARENTS TO US AND HE ALSO TAKES CARE OF LOGISTICAL REQUIREMENT SUCH AS FOOD, TRAVEL, STAY ETC FOR SURROGATE MOTHERS AND EG G DONORS. Q.10.WHEN THE NGO HAS BEEN PROVIDING THE HUMAN RESO URCES, WHY THE COMPENSATION TO SURROGATE MOTHERS IS BEING PAID INTO THE PERSONAL ACCOUNT OF MR.SESHA SAI BUT NOT INTO THE ACCOUNT OF THE NGO ? ANS. ACCORDING TO MR. SESHA SAI HIS NGO IS INVOLVED IN SEVERAL WELFARE ACTIVITIES FOR THE BETTERMENT OF POOR WOMEN AND TO STREAMLINE THE TIMELY PAYMENTS FOR BENEFIT OF SURROGATE MOTHERS TH E PAYMENTS FOR THEM IS MADE INTO HIS ACCOUNT UPON AUTHORISATION FR OM HIS NGO. SRI.T .SESHA SAI : Q.4 [SWORN STATEMENT DT.23.10.2013] PLEASE GIVE DET AILS OF PAYMENTS RECEIVED FROM M/S KIRAN INFERTILITY CENTRE PVT LTD. FOR EACH SURROGATE MOTHER ARRANGED BY YOU? ANS. I AM GETTING RS.4 LAKH FOR EVERY SURROGATE MOT HER FOR SINGLE PREGNANCY AND RS.4.5 LAKH FOR TWIN PREGNANCY FOR M/ S KIRAN INFERTILITY CENTRE PVT LTD AND ALSO I ENTER INTO AN AGREEMENT ON BEHALF OF OUR NGO WITH MIS KIRAN INFERTILITY CENTRE PVT LT D .FOR THE SURROGACY SERVICE AND A COPY OF WHICH ALSO WILL BE PROVIDED T O YOU TOMORROW. OUT OF THE AMOUNT RECEIVED I PAY RS.2 LAKH TO EVERY SURROGATE MOTHER IN INSTALMENTS FROM CONCEPTION TO DELIVERY OF SURRO GATE MOTHER. IN ADDITION TO THAT I HAVE TO PROVIDE FOOD, SHELTER AN D TRAVELLING EXPENSES FOR SURROGATE MOTHERS FOR NEARLY 12 TO 18 MONTHS. Q.7. WHY THE AMOUNTS TOWARDS COMPENSATION TO THE SU RROGATE MOTHERS IS DEPOSITED INTO YOUR PERSONAL ACCOUNT BUT NOT INTO THE NGO ACCOUNT? ANS. THE NGO M/S. AMMA WOMEN WELFARE SOCIETY WAS ES TABLISHED ONLY ON 08.05.2012 BUT I HAVE BEEN PROVIDING SURROG ATE MOTHERS TO M/S KIRAN INFERTILITY CENTRE PVT LTD SINCE 2008 AND THE PRACTICE OF DEPOSITING IN MY PERSONAL ACCOUNT IS CONTINUED. KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 15 -: Q.8. WHY M/S KIRAN INFERTILITY CENTRE HAS BEEN PAYI NG YOU THE COMPENSATION/AMOUNTS PAYABLE TO THE SURROGATE MOTHE RS? ANS. SINCE M/S KIRAN INFERTILITY CENTRE DOES NOT HA VE TIME FOR SEARCHING WILLING SURROGATE MOTHERS IT USES MY SERV ICE. AS AND WHEN A REQUEST IS RECEIVED FROM M/S KIRAN INFERTILITY CE NTRE FOR SURROGATE MOTHERS, I SEARCH FOR THE WILLING WOMEN THROUGH VAR IOUS CONTACTS AND SUPPLY THEM TO M/S KIRAN INFERTILITY CENTRE. I TAKE THE RISK OF CONTROLLING AND MONITORING THE SURROGATE MOTHERS TI LL ONE MONTH AFTER THE DELIVERY. AS MOST OF THE SURROGATE MOTHERS DO N OT HAVE ANY BANK ACCOUNTS AND THEY ARE REQUIRED TO BE KEPT UNDER STR ICT DISCIPLINE, THE MONEY PAYABLE TO THEM IS BEING PAID TO ME AND I AM ALSO PAID BY M/S KIRAN INFERTILITY CENTRE TOWARDS MAINTENANCE EX PENSES OF THE SURROGATE MOTHERS. Q.9. HAVE YOU EVER MET ANY COMMISSIONING/GENETIC PA RENT FROM ABROAD IN CONNECTION WITH THE SURROGACY SERVICE? DI D YOU EVER ENTER INTO AGREEMENT WITH THE COMMISSIONING/GENETIC PAREN T FROM ABROAD IN CONNECTION WITH THE SURROGACY SERVICE? ANS. NO. I HAVE NEVER MET ANY COMMISSIONING/GENETIC PARENT FROM ABROAD IN CONNECTION WITH THE SURROGACY SERVICE. I HAVE NOT ENTERED INTO ANY AGREEMENT WITH THE COMMISSIONING/GENETIC P ARENT FROM ABROAD IN CONNECTION WITH THE SURROGACY SERVICE. Q.10. HAVE ANY SURROGATE MOTHER GAVE YOU ANY CONSEN T FOR ACCEPTING OR RECEIVING MONEY ON THEIR BEHALF FROM M/S KIRAN I NFERTILITY CENTRE? ANS. NO SURROGATE MOTHER GAVE ANY SUCH CONSENT. IN FACT I TAKE AN UNDERTAKING FROM THE SURROGATE MOTHERS SPECIFYING T HAT ONLY RS.2,00,000 WILL BE PAID AS COMPENSATION FOR THE SU RROGACY SERVICE IN INSTALMENTS AND THAT THEY WILL NOT GO AWAY TILL ONE MONTH AFTER THE DELIVERY. Q.11. WHEN YOU PAY ONLY RS.2 LAKH TO THE SURROGATE MOTHER, WHAT DO YOU DO WITH THE REMAINING RS.2 LAKH OR 2.25 LAKH? ANS. I HAVE TO PAY RS.50,000 TO 60,000 TO THE MIDDL EMEN AND I HAVE TO MEET THE EXPENDITURE TOWARDS SALARY TO THE CARE TAKER J.VIJAYA LAKSHMI, COOKS, DRIVERS ETC. Q.12. DO ANY COMMISSIONING/GENETIC PARENT EVER QUES TIONED YOU ABOUT THE WELL BEING OF THE SURROGATE MOTHER OR THE Y EVER MADE YOU RESPONSIBLE FOR THE WELL BEING OF THE SURROGATE MOT HERS? ANS. AS I SAID EARLIER, THERE IS NO CONTACT WITH TH E COMMISSIONING/GENETIC PARENT. BUT MOSTLY DR.SAMIT S EKHAR OF M/S KIRAN INFERTILITY CENTRE MONITORS THE ENTIRE PROCES S. I AM ANSWERABLE ONLY TO DR.SAMIT SEKHAR OF M/S KIRAN INFERTILITY CE NTRE, HYDERABAD. KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 16 -: Q.3. [SWORN STATEMENT DT.30.10.2013] HOW MANY SURRO GATE MOTHERS ARE UNDER YOUR CARE AND HOW AND ON WHAT BASIS YOU M AINTAIN THE SURROGATE MOTHERS? ANS. AS ON DATE ABOUT 20 SURROGATE MOTHERS ARE UNDE R MY CARE IN THE ABOVE SAID ADDRESS AND ABOUT 35 SURROGATE MOTHERS A RE IN THE M/S KIRAN INFERTILITY CENTRE PVT LTD. AS AND WHEN I REC EIVE THE REQUIREMENT FROM THE M/S KIRAN INFERTILITY CENTRE PVT LTD, I CO NTACT THE KNOWN PEOPLE WHO HAVE INFORMATION ABOUT THE WILLING WOMEN FOR SURROGACY AND AFTER PAYING SOME AMOUNT RANGING FROM RS.10,000 TO RS.15,000 TO THE FAMILY MEMBERS OF THE WOMEN, SHE IS BROUGHT TO MY ADDRESS AND LOOK AFTER HER ALL NEEDS TILL HER SUITABILITY I S ESTABLISHED. IF THE WOMAN IS FOUND NOT SUITABLE, SHE IS SENT BACK AFTER PAYING NECESSARY EXPENSES. HOWEVER, ON SUITABILITY OF A WOMAN FOR SU RROGACY, ALL HER. EXPENDITURE IS BORNE BY ME TILL ONE TO THREE MONTHS AFTER DELIVERY. ALL THE EXPENDITURE RELATING TO THE MAINTENANCE OF SURR OGATE MOTHERS AND EXPENSES ON NON-SUITABLE WOMEN IS MET BY ME OUT OF THE AMOUNTS RECEIVED ON. ACCOUNT OF ONLY SUITABLE SURROGATE MOT HERS. HOWEVER WHEN THERE IS A FAILURE AFTER PREGNANCY, DEPENDING UPON THE STAGE OF PREGNANCY, I AM PAID RS.50,000 TO RS.2,00,000 TOWAR DS EXPENSES. Q.9. WHO SUPERVISES YOUR MAINTENANCE WORK AS TO THE WELL BEING OF THE SURROGATE MOTHERS HOUSED IN THE HOSPITALS? ANS. THE DOCTORS OF M/S KIRAN INFERTILITY CENTRE PV T LTD OVERSEE THE WELL BEING OF THE SURROGATE MOTHERS AND ACCORDING T O THEIR INSTRUCTIONS, THE DIET IS PROVIDED TO THE SURROGATE MOTHERS BUT THE EXPENDITURE IS MET BY ME. Q.10. PLEASE PROVIDE THE PERMANENT ACCOUNT NUMBERS OF ALL THE SURROGATE MOTHERS WHO WERE PROVIDED BY YOU DURING 2 010 TO TILL DATE. ANS. OBTAINING PAN IN RESPECT OF SOME SURROGATE MOT HERS HAS STARTED IN 2012. I WILL PROVIDE THE DETAILS AT THE EARLIEST .] 6. AN ANALYSIS OF THE SUBMISSIONS OF THE ASSESSEE A ND THE STATEMENTS GIVEN BY THE ASSESSEE, SRI.T.SESHA SAI AND THE SURR OGATE MOTHERS REVEALS THAT [A] THE TRIPARTITE AGREEMENT AS ALLEGED BY THE ASSE SSEE IS ENTERED INTO WITHOUT THE KNOWLEDGE OF THE SURROGATE MOTHER. IT I S ALSO EVIDENT FROM THE STATEMENTS OF THE SURROGATE MOTHERS AND THE CON SULTANT SRI.T.SESHA SAI THAT THEY ARE NOT AWARE OF THE GENE TIC PARENTS FOR WHOM THEY ARE CARRYING THE PREGNANCY OR RENDERING T HE SERVICE AS THE CASE MAY BE. THEREFORE, IT IS THE ASSESSEE WHO TAKES ALL THE RES PONSIBILITY AND COORDINATES ALL THE ACTIVITIES FOR THE SUCCESS OF T HE TREATMENT. KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 17 -: [B] SRI T.SESHA SAI AS PER THE AGREEMENT WITH THE A SSESSEE, IS REQUIRED TO SUPPLY WILLING SURROGATE MOTHER TO THE ASSESSEE HOSPITAL FOR WHICH SERVICE HE IS PAID. MR.T.SESHA SAI IS HA VING NETWORK IN ALL THE DISTRICTS AND THROUGH VARIOUS CONTACTS OBTAINS INFORMATION ABOUT POOR WOMEN WHO ARE IN NEED OF MONEY AND THESE WOMEN ARE MADE TO GET CONVINCED ABOUT THE REMUNERATION THEY GET FOR P ROVIDING THE SURROGACY SERVICE OR THE EGG AS THE CASE MAY BE. F OR THIS PURPOSE, HE PAYS TO MIDDLEMEN. MR.T.SESHA SAI ALWAYS MAINTAI NS 8. GROUP OF WILLING WOMEN AND HE EMPLOYED A CARETAKER TO TAKE C ARE OF THEIR MAINTENANCE. AS AND WHEN HE GETS A REQUISITION FROM THE ASSESSEE, HE READILY PROVIDES WILLING WOMAN OF THE PRESCRIBED AGE GROUP FOR THE SURROGACY SERVICE. 7. THE ISSUE INVOLVED IN THE ASSESSMENT IS WHETHER THE PAYMENTS MADE TOWARDS SURROGACY SERVICES ATTRACT TAX DEDUCTI ON PROVISIONS U/. U/S 194J/194C OF THE IT ACT. FROM THE FOREGOING, IT IS DISCERNIBLE THAT MR.SESHA SAI, THE SUPPLIER OF SURROGATE MOTHERS HAS BEEN THE CONSULTANT IN TRUE S ENSE TO THE ASSESSEE IN FINDING OUT AND SUPPLYING SUITABLE AND WILLING SURROGATE MOTHERS, WHO ARE ELIGIBLE FOR RENDERING SURROGACY S ERVICES AS PER THE GUIDELINES OF INDIAN COUNCIL FOR MEDICAL RESEARCH ( ICMR) FOR EFFECTIVELY CARRYING OUT THE TREATMENT OF INFERTILI TY BY THE INFERTILITY CENTRE [THE ASSESSEE]. THE ASSESSEE HAVING SET A PA CKAGE PRISE FOR THE TREATMENT OF INFERTILITY, IS RESPONSIBLE TO PRO VIDE FOR ALL REQUIREMENTS NECESSARY FOR COMPLETING THE TREATMENT . IT IS ALSO AN ADMITTED FACT THAT THE ASSESSEE PAYS FOR THE SERVIC E OF SURROGATE MOTHERS THROUGH THE CONSULTANT. THEREFORE, THE ACTI ON OF SUPPLYING SURROGATE MOTHERS FITS INTO THE DEFINITION OF 'FEE FOR TECHNICAL SERVICES' AS SET OUT IN EXPLANATION.2 TO SECTION. 9(1)(VII) T HEREBY ATTRACTING PROVISIONS OF SEC.194J WHICH IS REPRODUCED BELOW: 'FEES FOR TECHNICAL SERVICES MEANS ANY CONSIDERATIO N[INCLUDING ANY LUMP SUM CONSIDERATION] FOR THE RENDERING OF ANY MA NAGERIAL, TECHNICAL NR CONSULTANCY SERVICES [INCLUDING THE PR OVISION OF SERVICES OF TECHNICAL OR OTHER PERSONNEL] BUT DOES NOT INCLU DE CONSIDERATION FOR ANY CONSTRUCTION, ASSEMBLY, MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATION WHICH WOULD BE INCOME OF THE RECIPIENT CHARGEABLE UNDER THE HEAD 'SALARIES'.' AS PER THE ABOVE DEFINITION OF 'FEES FOR TECHNICAL SERVICES', THE PROVISION OF SERVICES OF 'OTHER PERSONNEL' SQUARELY COVERS THE PROVISION OF SERVICES OF SURROGATE MOTHERS/WOMEN AND AS LONG AS THIS SERVICE DOES NOT FALL WITHIN THE EXCLUSIONS PROVIDED IN THE DEFINITION,. THE PAYMENT MADE TOWARDS SUPPLY OF SURROGATE MOTHERS IS 'FEES FOR TECHNICAL SERVICES'. IT IS NOT MATERIAL WHETHER THE SURROGATE MOTHER HAS RENDERED THE SERVICE OF GETTING HER EGG OR CARR YING PREGNANCY. KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 18 -: IT IS NOT NECESSARY THAT THE SURROGATE MOTHER SHOUL D BE A PROFESSIONAL AS CONTENDED BY THE ASSESSEE. IT IS SUFFICIENT IF T HE CONSULTANT/THE SUPPLIER OF SURROGATE MOTHERS PROVIDES THE SERVICES OF THE SURROGATE MOTHERS TO THE HOSPITAL FOR CARRYING ON ITS PROFESS ION. THE CONTENTION OF THE ASSESSEE THAT THE AMOUNT PAID TO SURROGATE M OTHER IS TOWARDS EXPENSES AND IT DOES NOT PARTAKE THE CHARACTER OF I NCOME, IS MISLEADING AND AWAY FROM THE TRUTH. IN FACT, AS PER THE STATEMENTS GIVEN BY THE ASSESSEE AND THE CONSULTANT, IT IS EVI DENT THAT ALL THE MEDICAL EXPENSES AND MAINTENANCE EXPENSES OF THE SU RROGATE MOTHERS ARE BORNE BY THE ASSESSEE AND THE CONSULTAN T THEREFORE, THE AMOUNT, PAID TO THE SURROGATE MOTHERS AT RS.2 LAKH FOR SINGLE PREGNANCY AND RS.2.25 LAKH FOR CARRYING PREGNANCY O F TWINS, IS INCOME IN THE HANDS OF THE SURROGATE MOTHERS. BESIDES, THE CONTENTION OF THE ASSESSEE, THAT THE P AYMENTS MADE TO THE SURROGATE MOTHERS THROUGH THE CONSULTANT ARE NO T GOVERNED BY THE PROVISIONS OF SEE.194C OF THE IT ACT, IS NOT CORREC T. IT IS VERY CLEAR FROM THE AGREEMENT ENTERED INTO BY THE CONSULTANT AND TH E ASSESSEE THAT THE CONSULTANT IS UNDER OBLIGATION TO SUPPLY THE SU RROGATE MOTHERS TO THE ASSESSEE AS AND WHEN THE ASSESSEE[HOSPITAL] REQ UIRES THE SERVICES OF THE SURROGATE MOTHER EITHER FOR DONATIO N OF EGG OR FOR CARRYING PREGNANCY FOR A PRICE SINCE, SUPPLY OF SUR ROGATE MOTHERS FOR A PRICE TOOK PLACE AS PER THE AGREEMENT BETWEEN THE ASSESSEE AND THE CONSULTANT, THE PAYMENTS MADE FOR SURROGACY SER VICES ATTRACT PROVISIONS OF SEC 194C. THE CONTENTION OF THE ASSES SEE THAT SUPPLY OF SURROGATE MOTHERS DOES NOT FIT INTO THE PHRASE GIVE N U/S.194C IE. 'INCLUDING SUPPLY OF LABOUR FOR ANY WORK' DOES NOT HOLD GOOD. IT IS ONLY EXTENSION OF THE SECTION AND INCLUSIVE IN NATU RE BUT DOES NOT RESTRICT THE SCOPE OF SEC 194C TO COVER THE CONTRAC TS OR AGREEMENTS ENTERED INTO FOR SUPPLY OF ANY MANPOWER FOR THE PUR POSE OF PROVIDING ANY SERVICE. (THE ASSESSEE IN FACT HAS TWO CONSULTANTS NAMELY SR I.T.SESHA SAI AND SRI,T.V.RAMANA RAO WHO ARE ENGAGED FOR SUPPLY O F SURROGATE MOTHERS. THE ASSESSEE VIDE LETTER SUBMITTED ON 28.0 2.2014 STATED THAT SRI,T.V .RAMANA RAO HAS BEEN SUFFERING FROM CH RONIC MULTIPLE DISEASES AND IS NOT AVAILABLE IN HYDERABAD. SINCE T HE WHERE ABOUTS OF T.V. RAMAN A RAO WERE NOT FURNISHED, HE COULD NO T BE EXAMINED.) 7.1. THE ASSESSING OFFICER PROCEEDED WITH VERY REAS ONING TO DISALLOW THE ASSESSEES SURROGACY PAYMENTS IN ISSUE. THE CIT(A) HAS UPHELD THE IMPUGNED DISALLOWANCE AS PER H IS LOWER APPELLATE DISCUSSION EXTRACTED IN THE PRECEDING PARAGRA PHS. KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 19 -: 8. WE HAVE HEARD RIVAL SUBMISSIONS. THE ASSESSEES ASSESSMENT YEAR-WISE PAPER BOOK OF 75 PAGES IN AY.20 10-11 INTER ALIA COMPILING ITS INCOME TAX RETURN, STATEMENT OF TOTAL INCOME, FORMS-3CA AND 3CD, AUDIT REPORT, FINANCIAL STATEMENTS, ITOS LETTER DT.26-11-2013, ITS REPLY DT.19-12- 2014, SAMPLE SURROGACY AGREEMENT, AMMA WELFARE SOCIE TYS LETTER DT.09-05-2012 SECTION 131 SUMMONS DT.11-11-2013, SECTION 148 NOTICE DT.01-11-2013, ITS REPLY DT.18-12-20 13 (SUPRA), REQUEST LETTER TO ITO, LETTER SUBMITTING INFORMATIO N TO ITO WITH ALL ENCLOSURES, DETAILS OF IMPOUNDED DOCUMEN TS ETC., DR.SEKHARS SWORN STATEMENT DT.12-11-2013, CIT, HYDERAB ADS ORDER DT.04-11-2013 U/S.133A(3), DETAILS OF PAYMENT MA DE TO SURROGATE MOTHERS FROM 01-04-2009 TO 31-03-2015, EXPENDITURE ON SURROGATE MOTHERS, OUTSTANDING ADMIN EXPENSES, LEDGER COPIES FOR AY.2013-14; OTHER CURREN T LIABILITIES, OTHER EXPENSES, LEDGER COPIES FOR AY.201 4-15 ETC., PERTAINING TO ALLEGED SURROGATE MOTHERS; RESPECTIVELY AL ONG WITH SIMILAR DETAILS IN ASSESSMENT YEARS IN ISSUE, S TAND PERUSED. COUPLED WITH THIS, WE HAVE ALSO GONE THROUG H ASSESSEES AND REVENUES DETAILED WRITTEN SUBMISSIONS REITERATING THEIR RESPECTIVE STANDS AGAINST AND IN SUPPO RT OF THE IMPUGNED IDENTICAL DISALLOWANCE ALONG WITH FORMER S NOTE ON THE HISTORICAL/MYTHOLOGICAL PERSPECTIVE OF SURROGAC Y ALSO BEEN CONSIDERED. 9. LEARNED AUTHORISED REPRESENTATIVE VEHEMENTLY CONTEND ED DURING THE COURSE OF HEARING THAT BOTH THE LOWER AUTHOR ITIES HAVE ERRED IN LAW AND ON FACTS IN HOLDING THE IMPUGNE D SURROGACY PAYMENTS AS CONTRACTUAL AS WELL AS FEE FOR TECHNICAL KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 20 -: SERVICES REQUIRING TDS DEDUCTION U/S.194C AND 194J OF THE ACT; RESPECTIVELY. HE SUBMITTED THAT ASSESSEE/INFERTILIT Y CLINIC IS NEITHER A PARTY TO THE CORRESPONDING AGREEMENT EXEC UTED BETWEEN THE GENETIC PARENTS AND SURROGATE MOTHER(S) NOR HAS IT AVAILED ANY TECHNICAL SERVICES FROM EITHER OF THEM SO AS TO DEDUCT TDS IN ISSUE. LEARNED COUNSEL NEXT REFERRED TO ASSESSEES SAMPLE AGREEMENT (PGS.31 TO 34) AY.2010-11S PAPER BOOK THAT TH IS TAXPAYER IS NOT IN ANY WAY LIABLE FOR THE CORRESPONDIN G OBLIGATIONS BETWEEN THE GENERIC PARENTS AND SURROGATE MOTHERS AND THEREFORE, IT NEITHER ENJOYS ANY RIGHT NOR ANY LIAB ILITY FLOWING THEREFORE. 10. MR.RAMA RAO THEREAFTER TOOK PAINS TO MAKE US GO THROUGH ALL THE RELEVANT CLAUSES IN THE SAMPLE AGREEMEN T. AND THAT THE PURPOSE OF ENTERING INTO THE SAID KIND OF AGREEM ENT IS THAT IT IS THE DESIRE OF MAINLY THE OVERSEAS GENETIC P ARENTS WISHING TO HAVE A CHILD BY WAY OF IN VITRO FERTILIZATIO N IVF BY ENGAGING AN INDIAN SURROGATE MOTHER SO AS TO CARRY AND DELIVER THEIR BIOLOGICAL CHILD. AND THAT THE SAID OVERSEAS GEN ETIC PARENTS THEMSELVES ARRANGE SURROGATE MOTHERS ON THEIR OWN. SHE IS THEN BROUGHT TO THE CLINIC FOR THE ENTIRE IVF PROCESS FOLLOWED BY DULY MONITORED GESTATION CYCLE OF A HUMAN PREGNANCY INVOLVING NORMAL TIME SPAN OF 36 WEEKS IN AVERAGE, FINALLY CULMINATING IN DELIVERY OF THE SURROGATE CHILD . 11. LEARNED COUNSEL FURTHER ARGUED THAT THIS ENTIRE IV F PROCESS LEAVES VERY MUCH A LIMITED ROLE SO FAR AS A SSESSEES RESPONSIBILITY IS CONCERNED WHEREIN IT HAS TO MONITOR THE SAME INVOLVING SURROGATE PREGNANCY COUPLED WITH THE NECES SARY KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 21 -: TESTS FOR MONITORING THE FOETUS CARE RIGHT FROM 1 ST TO 36 TH WEEKS. LEARNED COUNSEL REITERATED THAT THE ASSESSEE IS NOT LIABLE AT ALL TO ANY OF THE PARTIES INVOLVED I.E., GENE TIC PARENTS OR SURROGATE MOTHERS. COMING TO THE IMPUGNED PAYMENTS MADE TO SURROGATE MOTHERS, THE ASSESSEE HIGHLIGHTED THE F ACT THAT IT HAD DULY ENGAGED SERVICES OF AN NGO FOR SUP PLYING THE SURROGATE MOTHERS. 12. THE REVENUE HAS STRONGLY SUPPORTED THE IMPUGNED DISALLOWANCE MADE IN THE COURSE OF ASSESSMENT AND AF FIRMED IN THE CIT(A)S ORDER. 13. IT EMERGES FROM A PERUSAL OF PG.35 IN AY.2010-11 PAPER BOOK THAT THE NGO HEREIN M/S.AMMA WELFARE SOCIETY; THR OUGH ITS VP/PAYEE SHRI SESHA SAI; HAD OFFERED TO ARRANGE F OR SURROGATE MOTHERS AND EGG DONORS FOR THE ASSESSEE. TH IS NGO CLAIMED ITSELF TO BE ENGAGED IN UPLIFTMENT OF POOR AND DESTITUTE WOMEN. IT FURTHER MADE IT CLEAR THAT IT WOULD BE CHARGING REMUNERATION OF RS.4 LAKHS FOR SINGLE PREGNANCY AND RS.4.50 LAKHS IN CASE OF TWINS WHEREIN THE ASSESSEE WOULD BE RESPONSIBLE FOR ALL MEDICAL PROCEDURES & TREATMENTS A LONG WITH MEDICAL/SURGICAL CARE AS WELL. LEARNED COUNSEL CONTE NDED BEFORE US THAT BOTH THE LOWER AUTHORITIES HAVE NOT APPR ECIATED THE CORRECT LAW WHILST FASTENING THE TDS LIABILITY OF TH IS TAXPAYER WITHOUT PIN-POINTING THE TAXABILITY OF THE SURR OGATE MOTHERS FORMING A CONDITIONS PRECEDENT SO AS TO ATTRACT SECTION 194C. 14. MR.RAMA RAO REPEATED ALL THE PRECEDING FACTS ONCE AGAIN AND STATED THAT THE IMPUGNED PAYMENTS ALSO DO NOT INVOLVE ANY FEE FOR TECHNICAL SERVICES U/S.194J EXPLANATION(B ) MAKING KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 22 -: IT CLEAR THAT THE LEGISLATIVE EXPRESSION FEE FOR TECHNI CAL SERVICES CARRYS THE SAME MEANING AS U/S.9(1)(VII) EXPLANATION- 2 OF THE ACT TO BE TAKEN AS ANY CONSIDERATION; INCLUDING LUMPSUM , FOR RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THE PROVISIONS OF SERVICES OR OTHER PERSON NEL) BUT DOES NOT INCLUDE CONSIDERATION FOR ANY CONSTRUCTION, A SSEMBLY, MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATION WHICH WOULD BE INCOME AND SO ON. 15. LEARNED COUNSELS LAST ARGUMENT IS THAT THE IMPUGNED TDS MECHANISM APPLIES ONLY IN CASE THE CORRESPONDING INCOME IS ASSESSABLE IN THE PAYEES HANDS UNDER ANY HEADS D EFINED IN SECTION 14 OF THE ACT. AND THAT THE SURROGATE MOTHERS HE REIN DO NOT PERFORM ANY BUSINESS OR PROFESSIONAL SERVICES THEREBY DERIVING TAXABLE INCOME. HIS FURTHER CASE IS THAT PROVI DING SURROGACY SERVICES DOES NOT AMOUNT TO COMMERCIAL USE OF A FEMALE WOMB IN ANY MANNER AND THEREFORE, THE IMPUGNED PAYMENTS ARE OTHERWISE EXEMPT FROM TAXATION AS WELL AS PER HINDUSTAN COCOCOLA BEVERAGES PVT. LTD VS. CIT 293 ITR 226 (SC) AND GE INDIA TECHNOLOGY CENTRE P. LTD. VS. CIT [ 327 ITR 456] (SC) THAT LIABILITY OF TDS DEDUCTION IS APPLICAB LE ONLY WHEN THE CORRESPONDING INCOME IS TAXABLE IN THE RECIP IENTS HANDS. 16. MR.RAMA RAOS CONCLUDING REMARKS NEXT TOUCHED UPO N THE ISSUE OF SECTION 40(A)(I) R.W.S.195 DISALLOWANCE OF FOREIGN EGG DONORS PAYMENTS MADE THROUGH THE PAYEE BASED IN S OUTH AFRICA IN LATTER THREE ASSESSMENT YEARS (SUPRA) SINCE H E HAS NOT PERFORMED ANY SERVICES IN INDIA. HE ACCORDINGLY CON TENDED THAT THE IMPUGNED DISALLOWANCE MADE UNDER BOTH U/S.40(A)(I ) AS KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 23 -: WELL AS U/S.40(A)(IA) OF THE ACT ARE LIABLE TO BE DELE TED IN ABOVE TERMS. 17. MR.MUJUMDAR HAS STRONGLY SUPPORTED THE IMPUGNED TW IN DISALLOWANCE(S) ON THE OTHER HAND. HE HAS FILED A DE TAILED NOT TO THE EFFECT THAT LEARNED LOWER AUTHORITIES HAVE RIGHTLY INVOKED SECTION 194C R.W.S.194J R.W.S.40(A)(IA) AND 40(A)(I ) DISALLOWANCE R.W.S.195 IN ISSUE. 18. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE PRECEDING RIVAL CONTENTIONS. THERE IS HARDLY ANY DISP UTE BY NOW THAT WE ARE DEALING WITH A VERY MUCH AN UN-TOUCHED ISSUE AS TO WHETHER PAYMENTS MADE TO SURROGATE MOTHERS ATTRACT CHAPTER-XVII OF THE ACT REQUIRING TDS DEDUCTION. WE THE REFORE DEEM IT APPROPRIATE FIRST OF ALL TO HAVE CLARITY FROM TH E ENTIRE PROCEDURE OF SURROGACY IN SUCCEEDING PARAS. THERE IS NO DISPUTE BETWEEN THE PARTIES THAT THIS SURROGACY PROCESS INVOLVES GENETIC PARENTS I.E. A MA LE AND A FEMALE; WHERE IN EGGS COLLECTED FROM IVF ARE FERTILI ZED WITH THE LATTERS SPERM AND THEN PLACED IN THE WOMB OF THE SURROG ATE MOTHER WHICH IN TURN IS CARRIED TILL DELIVERY OF THE FE ATUS. AND THAT SUCH GENETIC PARENTS COULD BE A SOLO FEMALE OR A MALE ONLY AS WELL. APART FROM THE FACT THAT THE DIGITAL PLATFORM THRO WS ENOUGH LIGHT ON SURROGACY RIGHT FROM ANCIENT TIMES COMI NG TO THE RESCUE OF ISSUELESS COUPLES AS PER THE LEARNED CO UNSELS WRITTEN SUBMISSIONS DISCUSSING THE MYTHOLOGICAL SIDE, TH E FIRST SUCCESSFUL INSTANCE OF ARTIFICIAL INSEMINATION OF A WO MAN THROUGH SURROGACY REPORTED ONLY IN THE YEAR 1884. AFTE R A LONG TIME SPAN OF ALMOST A CENTURY THEREAFTER SAW THE FIRST C ASE OF A COMPLETED IVF TRANSFER. THIS WAS FOLLOWED BY THE FI RST LEGAL KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 24 -: SURROGACY AGREEMENT BROKERED IN USA WHICH IN TURN WAS USED TO ESTABLISH AN INFERTILITY CENTRE. THE YEAR 1978 SAW TH E FIRST BABY BORN THROUGH IVF TRANSFER. 19. WE CONTINUE TO NOTICE THAT NEXT DECADE OF 1980S TO 198 9 WITNESSED THE FAMOUS SURROGATE CHILDS CUSTODY DISPUTE BABY M CASE IN THE YEAR 1986 WHEREIN THE NEW JERSE Y SUPREME COURT (USA) REJECTED THE CORRESPONDING SURROGA CY AGREEMENT AS AN ILLEGAL ONE. IT WAS DURING ALL THESE DEVELOPMENTS ONLY THAT THE YEAR 1985 WITNESSED THE FIR ST SUCCESSFUL GESTATIONAL SURROGACY AND THE SAME PRACTICE PROCEDURE HAS BEEN CONTINUING AS ON DATE TO HELP ISSUE LESS COUPLES OR THOSE FEMALE(S) OR MALE(S) WHO WISH TO HAV E A SURROGATE CHILD. 20. COMING TO INDIA, IT WAS IN THE YEAR 2002 THAT THE SURROGACY WAS LEGALISED ON COMMERCIAL LINES AND CON TINUED UPTO YEAR 2015 WHEN THE GOVERNMENT OF INDIA PROHIBITED ITS COMMERCIAL PRACTICE. WE ARE INFORMED THAT THE LEGISLATU RE HAS ALSO APPROVED THE SURROGACY (REGULATION) BILL, 2020 AS WELL. 21. WE FURTHER NOTE FROM VALUABLE ASSISTANCE COMING FR OM BOTH THE PARTIES THAT THE ISSUE OF SURROGACY HAS NOT ONL Y BEEN CONFINED TO MERE PROCEDURES AND REGULATORY MECHANISMS . HON'BLE APEX COURT IN BABY MANJI YAMADA VS. UNION OF INDIA WRIT PETITION (CIVIL) NO.369/08, DT.29-09-2008 ALSO DE ALT WITH A CASE OF A SURROGATE CHILDS PRODUCTION/CUSTODY WHO HAD OVERSEAS GENETIC PARENTS AND AN INDIAN SURROGATE MOTHE R. KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 25 -: 22. WE NOW PROCEED TO DEAL WITH THE IMPUGNED ISSUE OF TDS DEDUCTION ON SURROGACY PAYMENTS BEFORE US KEEPING IN MIND THE ABOVE CONCEPTIONAL BACKDROP. THE ASSESSEES CASE ADMITTEDLY IS THAT IT IS NO A PARTY TO ANY AGREEMENT OR A CONTRACT AT ALL SO AS TO BE ELIGIBLE TO SECTION 194C OF THE ACT. WE SEE NO REASON TO ACCEPT THE INSTANT ARGUMENT. WE MAKE IT CLEAR THAT PGS.31 TO 34 OF THE PAPER BOOK CONTAINES THE ASSESSEES SAMPLE SURROGACY AGREEMENT IN THIS REGARD . THE INTRODUCTORY PORTION THEREOF DULY CONTAINS THE CLAUSE TH AT THE SAME IS BY AND AMONG THE GENETIC PARENTS, SURROGATE MOTHERS AND THE ASSESSEE IN OTHER WORDS. NOT ONLY THIS, MATERI AL BREACH CLAUSE 17.2 THEREIN ALSO SUGGESTS THAT IT IS THE INFERTILITY CENTRE/PHYSICIAN ONLY WHO SHALL REIMBURS E INTENDED PARENTS FOR ALL SUMS EXPENDED PLUS INTEREST AT THE MAXIM UM ALLOWABLE RATE. ALL THIS SUFFICIENTLY NEGATES THE ASSES SEES STAND THAT IT IS NEITHER A PARTY TO THE SURROGACY AGREEMEN T NOR ANY RIGHT OR LIABILITY FLOWS THEREOF ON ITS ROLE AS AN INFERTILITY CLINIC. 23. WE FURTHER NOTICE WITH THE REVENUES ABLE ASSISTANC E AND FROM A PERUSAL OF THE CASE FILE AT PG.35 THAT THE NGO ( SUPRA) HEREIN HAS PROPOSED THE ASSESSEE TO ARRANGE FOR SURR OGATE MOTHERS IN LIEU OF THE DECIDED REMUNERATION OF RS.4 LA KHS FOR SINGLE AND RS.4.5 LAKHS IN CASE OF TWINS PREGNANCI ES; RESPECTIVELY. THIS NGO FURTHER CLAIMED ITSELF AS WOR KING FOR REHABILITATION FOR POOR & DESTITUTE WOMAN AFTER THEY WERE NEGLECTED BY THEIR FAMILIES FACING POVERTY AND OTHER A DVERSE CIRCUMSTANCES. THE ASSESSEE IS FAIR ENOUGH IN NOT DI SPUTING THE FACT THAT IT HAD DULY AGREED TO THE SAID PROPOSAL ONL Y ALONGWITH ITS UNDERTAKING TO PAY FOR THE MATERIAL BREACH OF KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 26 -: CONTRACT TO THE GENETIC PARENTS ON ACCOUNT OF THE SURROGATE MOTHERS DEFAULT. 24. MR.MUJUMDAM NEXT TOOK US TO MR.SESHA SAI STATEMENT(S ) DT.23-10-2013 AND 30-10-2013 THAT ALTHOUGH HE HAD BEEN RECEIVING THE CORRESPONDING AMOUNT FROM THE ASSESSEE/INFERTILITY CENTRE SINCE 2008 THROUGH BANKIN G CHANNELS BUT HE HAD NOT MAINTAINED ANY PROPER ACCOUNT F OR THE CORRESPONDING EXPENDITURE INCURRED ON SURROGATE M OTHERS. THIS PAYEE FURTHER ADMITTED IN QUESTION NOS.4 TO 10 INTER ALIA THAT HE HAD ENTERED INTO AN AGREEMENT WITH ASSESSEE AND ALSO THAT NO SURROGATE MOTHER HAD GIVEN HIM ANY CONSENT FOR ACCEPTING AND RECEIVING MONEY ON THEIR BEHALF FROM TH E INFERTILITY CENTRE. APART FROM THE FACT THAT WE ARE ONLY DEALING WITH INCOME TAX LITIGATION, ALL THIS ARRANGEMENT ADOPTED BETWEEN THE ASSESSEE AND ITS PAYEE SHRI SESHA SAI {A CTING FOR THE NGO (ALLEGEDLY LOOKING AFTER POOR AND DESTITUTE WOM EN)} SPEAKS VOLUMES ABOUT THE MECHANISM ADOPTED; MORE PARTICULARLY FROM THE LATTERS SIDE, NOT ONLY EXPLOITIN G THE POOR SURROGATE MOTHERS BUT ALSO PROVING CLEAR CUT CHEATING O F THE FEMALE WOMBS. WE MAKE IT CLEAR THAT THIS PAYEE HAD ALS O FAILED TO THROW ANY LIGHT ON PAYMENTS MADE TO SURROGATE MOTHERS WHOSE SERVICES HAD BEEN UTILIZED BY THE ASSESSEE/INFE RTILITY CENTRE FOR THE PURPOSE OF SURROGATE PREGNANCY ON BEHAL F OF THE GENETIC PARENTS. WE THEREFORE EXERCISE OUR INHERENT JUR ISDICTION VESTED U/S.254 OF THE ACT AS WELL TO OBSERVE THESE PAR TIES HAVE DONE NOTHING ELSE BUT EXPLOITED THE POOR AND DESTITUTE SURROGATE MOTHERS WITHOUT EVEN PAYING THE ADEQUATE COMPENSATION. RATHER THE PAYEE NGO AND ITS OFFICE BEARER(S) HAVE PRIMA FACIE SWINDLED THE ENTIRE MONEY. THIS CONCLUSION KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 27 -: FLOWS FROM THE ENTIRE SURROGACY PROCEDURE ADOPTED BY T HE ASSESSEE WITH THE SO CALLED NGO AND ITS AUTHORISED PER SON AS IT IS EVIDENT FROM THE PERUSAL OF THE CASE FILE IN THE L IGHT OF HUMAN PROBABILITIES AFTER REMOVING ALL BLINKERS AS HE LD IN SUMATI DAYAL VS. CIT (1995) [214 ITR 801] (SC) AND CIT VS. DURGA PRASAD MORE (1971) [82 ITR 540] (SC). WE THUS CONCLUDE THAT SO FAR AS THE APPLICATION OF 194C R.W.S. 40(A)(IA ) IS CONCERNED, THE ASSESSEES ALL OTHER ARGUMENTS REGARDI NG TAXABILITY OF THE SURROGATE MOTHERS ALSO DESERVE TO BE R EJECTED SINCE ITS PAYEE HIMSELF HAD ADMITTED THAT IT HAD NOT MAINTAINED ANY ACCOUNTS OF THE PAYMENTS MADE TO THE SURROGATE MOTHERS. WE THUS UPHOLD THE LEARNED LOWER AUTHORITIES ACTION INVOKING SECTION 194C R.W.S. 40(A )(IA) DISALLOWANCE OF RS.71,23,300/-, RS.3,35,52,200/-, RS.89,02,746/-, RS.70,50,000/- ASSESSMENT YEAR-WISE; RESPECTIVELY IN CASE OF MR.SAI AND THE OTHER PAYEE (S UPRA). THE SAME STANDS CONFIRMED. 25. NEXT COMES YET ANOTHER EQUALLY IMPORTANT ASPECT AS TO WHETHER ALL THESE PAYMENTS ATTRACT SECTION 194J SO AS TO HOLD THAT THE PAYEE CONCERNED HAD RENDERED ANY TECHNICAL SE RVICE IN ARRANGING POOR AND DESTITUTE WOMEN AS SURROGATE MOTH ERS. WE DO NOT FIND ANY TECHNICAL SERVICE ELEMENT INVOLVED IN ALL THIS SURROGACY PROCESS INVOLVING THE RECIPIENT OR THE S URROGATE MOTHERS ATTRACTING THE CLINCHING STATUTORY EXPRESSION(S) OF MANAGERIAL, PROFESSIONAL AND TECHNICAL SERVICES U/S. 194J R.W.S.9(I)(VII) EXPLANATION (SUPRA). WE THUS REVERSE BOTH THE LOWER AUTHORITIES ACTION INVOKING SECTION 194J IN FAC TS OF THE INSTANT CASE(S). IT IS THEREFORE CONCLUDED THAT OUR INSTA NT LATTER ADJUDICATION HAS NO BEARING ON FINAL OUTCOME OF THE I MPUGNED KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 28 -: 40(A)(IA) DISALLOWANCE AS THE SAME ALREADY STANDS CON FIRMED U/S.194C OF THE ACT. ASSESSEES FIRST APPEAL ITA NO.866/HYD/2016 RAISING THIS SOLE ISSUE FAILS THEREFORE. 26. NEXT COMES THE LATTER ISSUE OF SECTION 40(A)(I) R.W. S.195 DISALLOWANCE IN AYS.2011-12 TO 2013-14 INVOLVING VAR YING SUMS OF MONEY. IT IS NOT IN DISPUTE THAT THE SOUTH AFRIC A BASED PAYEE MS.CELESTE COETZEE HAS NOT PERFORMED ANY SERVIC ES IN INDIA HERSELF EVEN IF EGG DONATION ACTIVITY TAKEN AS A TECHNICAL SERVICES. WHAT ALL SHE HAS DONE IS TO ARRANGE OVERSEA S EGG DONORS NOT ON SALARY OR CONTRACTUAL ASSIGNMENT BUT ON F REE LANCER BASIS ONLY. THERE IS FURTHER NO INDICATION B EFORE US THAT ASSESSEES EGG DONOR PAYMENTS PER HEAD EXCEED THE THRE SHOLD LIMIT U/S.194J(1) 1 ST PROVISO AS WELL. ALL THIS MAKES IT SUFFICIENTLY CLEAR THESE PAYMENTS ARE NOT TAXABLE IN IN DIA SO AS TO BE HELD LIABLE FOR TDS DEDUCTION GOING BY M/S.GE INDIA TECHNOLOGY CENTRE P. LTD. VS. CIT (2010) [327 ITR 456 ] (SC); CIT VS. FAIZAN SHOES PVT. LTD. [367 ITR 155] (MAD); & DCIT VS. WELSPUN CORPORATION LTD., (2017) [55 (TRIB) 405] (AHM EDABAD). WE THUS HOLD THAT THE IMPUGNED 40(A)(I) DISALLOWANCE IN CASE OF THE OVERSEAS PAYEES DESERVES TO BE DELETED FOR THIS REASON ALONE. THE ASSESSEES INSTANT SUBSTANTIVE GROUND IN AY S.2011- 12 & 2013-14 SUCCEEDS THEREFORE. THESE THREE LATTER AP PEALS ITA NOS.867, 868/HYD/2016 AND ITA NO.1673/HYD/2017 ARE PARTLY ACCEPTED IN ABOVE TERMS. 27. BEFORE PARTING, WE DEEM IT APPROPRIATE TO OBSERVE IN LIGHT OF THE ABOVE NARRATED FACTS OF THE POOR AND DESTITUTE WOM ENS WOMBS EXPLOITATION EVIDENT HEREIN IN MOST HEINOUS MANN ER KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 29 -: THAT THE LEARNED CIT-DR SHALL FORWARD A COPY OF OUR IN STANT DETAILED DISCUSSION TO THE SECRETARY, MINISTRY OF WOMAN AND CHILD WELFARE, GOVERNMENT OF INDIA, NEW DELHI AND THE CORRESPONDING DEPARTMENT IN THE STATE OF TELANGANA SO TH AT SUCH PRACTICES ARE ALTOGETHER CURBED. WHILST DIRECTING SO, WE QUOTE HON'BLE BOMBAY HIGH COURTS FULL BENCHS DECISI ON AHMEDABAD ELECTRICITY CO., LTD. VS. CIT (1993) 199 IT R 351 (BOM) THAT SECTION 254 INVOLVING THE STATUTORY EXPRESSION MAY PASS SUCH ORDERS AS IT THINKS FIT CONFERS WIDEST POS SIBLE JURISDICTION ON THE TRIBUNAL. WE EXERCISE THE SAME AND ORDER ACCORDINGLY. 28. TO SUM-UP, ASSESSEES FIRST APPEAL ITA NO.866/HY D/2016 IS DISMISSED AND WHEREAS THE REMAINING THREE APPEALS ITA NOS.867/HYD/2016, 868/HYD/2016 AND 1673/HYD/2017 AR E PARTLY ALLOWED IN ABOVE TERMS. A COPY OF THIS COMMON ORDER BE PLACED IN THE RESPECTIVE CASE FILES. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH APRIL, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 08-04-2021 TNMM KIRAN INFERTILITY CENTRE PRIVATE LTD (GROUP CASES) :- 30 -: COPY TO : 1.KIRAN INFERTILITY CENTRE PRIVATE LTD., C/O. SRI S .RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYAS ELEGANCE, 3-6-643, STREET NO. 9, HIMAYAT NAGAR, HYDERABAD. 2.THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(1 ), HYDERABAD. 3.THE INCOME TAX OFFICER, WARD-2(1), HYDERABAD. 4.CIT(APPEALS)-KURNOOL. 5.CIT(APPEALS)-2, HYDERABAD. 6.PR.CIT-II, HYDERABAD. 7.D.R. ITAT, HYDERABAD. 8.GUARD FILE.