DEPUTY COMMISSIONER OF INCOME TAX 1 (1) ( 1), MUMBAI V. DEDICATED HEALTHCARE SERVICES (TPA) INDIA PRIVATE LIMITED , MUMBAI

MA 328/MUM/2018

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 7086 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 01-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Keywords: Rejection of books of accounts; Non-deduction of tax
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/ SHRI B.R. BASKARAN (AM) & SHAKTIJIT DEY (JM) M.A. NO. 328/MUM/2018 ARISING OUT OF I.T.A. NO. 6634 /MUM/20 1 2 (ASSESSMENT YEAR 20 0 8 - 0 9 ) M.A. NO. 329/MUM/2018 ARISING OUT OF I.T.A. NO. 6635 /MUM/2012 (ASSESSMENT YEAR 2009 - 10) DCIT - 1(1)(1) ROOM NO. 533 AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 021. VS. M/S. DEDICATED HEALTHCARE SERVICES (TPA) INDIA P VT . LTD. KAMBATA BUILDING, 3 RD FLOOR EAST WING, 42, M.K. ROAD MUMBAI - 400 020. PAN : AACCD0672J ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI BIREN GABHAWALA DEPARTMENT BY SHRI S.K. BEPARI DATE OF HEARING 17 . 8 . 201 8 DATE OF PRONOUNCEMENT 21 . 8 . 201 8 O R D E R PER B.R. BASKARAN (AM) : - BOTH THE MISCELLANEOUS APPLICATIONS FILED BY TH E REVENUE ARE DIRECTED AGAINST THE COMMON ORDER DATED 10 - 12 - 2014 PASSED BY THE ITAT FOR ASSESSMENT YEARS 2008 - 09 AND 2009 - 10. 2. THE LD D.R SUBMITTED THAT THE ASSESSEE HEREIN IS A THIRD PARTY ADMINISTRATOR, WHO RECEIVES MONEY FROM INSURANCE COMPANIES AND DISBURSES THE SAME TO VARIOUS HOSPITALS AGAINST INSURANCE CLAIM RECEIVED. THE AO NOTICED THAT THE ASSESSEE HAD NOT ROUTED BOTH THE RECEIPTS AND PAYMENTS, REFERRED ABOVE, THROUGH PROFIT AND LOSS ACCOUNT, I.E., THE AMOUNTS RECEIVED FROM INSURANCE COMPAN IES WERE NOT CREDITED TO PROFIT AND LOSS ACCOUNT AND THE PAYMENTS MADE TO HOSPITALS WERE NOT CLAIMED AS EXPENSES. FURTHER THE AO ALSO NOTICED THAT THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE FROM THE PAYMENTS MADE TO THE HOSPITALS. THE AO TOOK THE VIEW THAT THE AMOUNTS M/S. DEDICATED HEALTHCARE SERVICES (TPA) INDIA PVT. LTD. 2 RECEIVED FROM INSURANCE COMPANIES ARE REVENUE RECEIPTS AND THE PAYMENTS MADE TO THE HOSPITALS ARE EXPENDITURE IN THE HANDS OF THE ASSESSEE. HE ALSO TOOK THE VIEW THAT THE PAYMENTS MADE TO HOSPITALS ARE LIABLE FOR TAX DEDUCTION AT SOURCE. ACC ORDINGLY HE TOOK THE VIEW THAT THE RECEIPTS FROM INSURANCE COMPANIES AND PAYMENTS MADE TO HOSPITALS SHOULD HAVE BEEN ROUTED THROUGH THE PROFIT AND LOSS ACCOUNT. HENCE THE AO REJECTED THE BOOKS OF ACCOUNTS AND ADDED THE AMOUNTS SO PAID TO THE HOSPITALS IN BOTH THE YEARS U/S 40(A)(IA) OF THE ACT FOR THE FAILURE TO DEDUCT TAX AT SOURCE. THE LD CIT(A) DELETED THE DISALLOWANCE MADE U/S 40(A)(IA) OF THE ACT IN BOTH THE YEARS UNDER CONSIDERATION AND HENCE THE REVENUE CHALLENGED THE SAME BY FILING APPEALS BEFORE THE TRIBUNAL. 3. THE LD D.R SUBMITTED THAT THE TRIBUNAL HAS CONFIRMED THE ORDERS PASSED BY LD CIT(A) BY FOLLOWING ORDERS PASSED BY CO - ORDINATE BENCHES IN OTHER CASES. HE SUBMITTED THAT THE TRIBUNAL, HOWEVER, DID NOT CONSIDER THE FACT THAT THE AO HAS REJECTED THE BOOKS OF ACCOUNT ON ACCOUNT OF NON - ROUTING OF THE IMPUGNED TRANSACTIONS THROUGH PROFIT AND LOSS ACCOUNT. HE SUBMITTED THAT THE AO HAS ALSO RECAST THE PROFIT AND LOSS ACCOUNT BY INCLUDING THE RECEIPTS FROM INSURANCE COMPANIES AS INCOME AND PAY MENTS MADE TO HOSPITALS AS EXPENDITURE. THE LD D.R SUBMITTED THAT THE TRIBUNAL DID NOT CONSIDER THE ABOVE SAID FACTS AND HENCE THE ORDERS PASSED BY THE TRIBUNAL NEED RECONSIDERATION. 4. THE LD A.R, HOWEVER, SUBMITTED THAT THE REVENUE HAS NOT RAISED ANY SPECIFIC GROUND IN THIS REGARD, I.E., NOT BRINGING THE RECEIPTS FROM INSURANCE COMPANIES AND PAYMENTS MADE TO HOSPITALS IN THE PROFIT AND LOSS ACCOUNT. HE SUBMITTED THAT THE ASSESSEE HAS REITERATED ITS STAND BEFORE THE TRIBUNAL THAT IT IS ACTING AS PA SS THROUGH ENTITY ONLY BETWEEN INSURANCE COMPANIES AND HOSPITALS. HENCE THE ASSESSEE DID NOT ROUTE THE RECEIPTS AND PAYMENTS REFERRED ABOVE THROUGH THE PROFIT AND LOSS ACCOUNT. SINCE THE ASSESSEE DID NOT CLAIM THE PAYMENTS MADE TO HOSPITALS AS EXPENDITUR E, THE QUESTION OF M/S. DEDICATED HEALTHCARE SERVICES (TPA) INDIA PVT. LTD. 3 DISALLOWANCE U/S 40(A)(IA) OF THE ACT DOES NOT ARISE. HE FURTHER SUBMITTED THAT THE TRIBUNAL, BY FOLLOWING THE ORDERS PASSED BY THE TRIBUNAL ON IDENTICAL SET OF FACTS, HAS TAKEN A CONSCIOUS VIEW OF THE MATTER AND HENCE THE PRESENT PETIT IONS FILED BY THE REVENUE WOULD RESULT IN REVIEW OF THE DECISION RENDERED BY THE TRIBUNAL, WHICH IS NOT PERMISSIBLE U/S 254(2) OF THE ACT. 5. THE LD D.R, IN THE REJOINDER, SUBMITTED THAT THE REVENUE HAS STATED IN THE GROUND THAT THE BOOKS HAVE BEEN RE JECTED BY THE AO U/S 145 OF THE ACT. FURTHER THE AO HAS ALSO RECAST THE PROFIT AND LOSS ACCOUNT BY INCLUDING THE RECEIPTS FROM INSURANCE COMPANY AS INCOME OF THE ASSESSEE AND PAYMENTS MADE TO HOSPITALS AS EXPENDITURE. ACCORDINGLY HE SUBMITTED THAT THE AO HAS TREATED THE PAYMENTS MADE TO HOSPITALS AS EXPENDITURE OF THE ASSESSEE AND RIGHTLY APPLIED THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT. HE SUBMITTED THAT THE NON - CONSIDERATION OF THE ABOVE SAID FACTS HAVE RESULTED IN MISTAKES APPARENT FROM RECORD. 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD. THERE SHOULD NOT BE ANY DISPUTE THAT THE POWER GIVEN TO THE TRIBUNAL U/S 254(2) OF THE ACT IS TO RECTIFY THE MISTAKES APPARENT FROM RECORD. THE TRIBUNAL IS NOT ENTITLED TO REVIEW ITS ORDER UNDE R THE GARB OF RECTIFICATION. THE DISPUTE THAT WAS ADJUDICATED BY THE TRIBUNAL WAS RELATING TO THE LIABILITY OF THE ASSESSEE TO DEDUCT TAX AT SOURCE U/S 194J OF THE ACT IN RESPECT OF PAYMENTS MADE TO HOSPITALS AGAINST THEIR CLAIMS LODGED WITH INSURANCE COM PANIES. IT IS AN ADMITTED FACT THAT THE ASSESSEE DID NOT SHOW THE RECEIPTS FROM INSURANCE COMPANIES AS ITS INCOME AND DID NOT CLAIM THE PAYMENTS MADE TO HOSPITALS AS EXPENDITURE. THE TRIBUNAL HAS RELIED UPON THE DECISION RENDERED BY THE CO - ORDINATE BENCH IN THE CASE OF PARAMOUNT HEALTH SERVICES (TPA) PVT LTD (ITA NO.2188/MUM/2013), WHICH IN TURN PLACED RELIANCE ON THE DECISION RENDERED BY THE TRIBUNAL IN THE CASE OF M/S HEALTH INDIA TPA SERVICES P LTD (ITA NO.5856/M/2011 DATED 22 - 02 - 2013). IN THE CASE OF HEALTH INDIA TPA SERVICES P LTD, THE TRIBUNAL HAS TAKEN THE VIEW THAT THE PROVISIONS OF SEC. 40(A)(IA) WILL M/S. DEDICATED HEALTHCARE SERVICES (TPA) INDIA PVT. LTD. 4 NOT APPLY TO THE PAYMENTS MADE TO HOSPITALS, AS THE SAID PAYMENTS HAVE NOT BEEN CLAIMED AS EXPENDITURE. THE FACTS, IN THE PRESENT CASE, BEING IDEN TICAL, THE TRIBUNAL HAS FOLLOWED THE ABOVE SAID DECISIONS RENDERED BY THE CO - ORDINATE BENCHES. 7. IN THESE MISCELLANEOUS APPLICATIONS, THE REVENUE HAS STATED THAT THE TRIBUNAL HAS NOT CONSIDERED THE FACT OF REJECTION OF BOOKS OF ACCOUNTS BY THE AO U/S 1 45 OF THE ACT AND ALSO THE FACT THAT THE AO HAS TREATED THE RECEIPTS FROM INSURANCE COMPANIES AS REVENUE RECEIPTS AND THE OUTFLOW AS EXPENSES. ACCORDING TO THE REVENUE, NON - CONSIDERATION OF ABOVE FACTS HAS GIVEN RISE TO MISTAKE APPARENT FROM RECORD. AS P OINTED OUT BY THE LD A.R, WE NOTICE THAT THE REVENUE HAS NOT RAISED A SPECIFIC GROUND QUESTIONING THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE. IN THE ABSENCE OF ANY SPECIFIC GROUND, THE PRAYER MADE BY THE REVENUE IN THE MISCELLANEOUS APPLICATION, TH E TRIBUNAL WOULD BE CONSTRAINED TO DRAW INFERENCES AND THE SAME, APPARENTLY BY A LONG DRAWN PROCESS. IN THIS SITUATION, IN OUR VIEW, THE PRAYER OF THE REVENUE WOULD FALL OUTSIDE THE SCOPE OF THE POWERS GIVEN TO THE TRIBUNAL U/S 254(2) OF THE ACT. HENCE W E ARE OF THE VIEW THAT THE PLEA MADE BY THE REVENUE IN ITS MISCELLANEOUS APPLICATIONS COULD NOT BE CONSIDERED BY THE TRIBUNAL AT THIS STAGE. ACCORDINGLY WE ARE UNABLE TO ENTERTAIN THE PLEA RAISED BY THE REVENUE IN BOTH THE MISCELLANEOUS APPLICATIONS. 8. IN THE RESULT, BOTH THE MISCELLANEOUS APPLICATIONS OF THE REVENUE ARE DISMISSED. ORDER HAS BE E N PRONOUNCED IN THE COURT ON 21 . 8 .201 8 . SD/ - SD/ - (SHAKTIJIT DEY ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 21 / 8 / 20 1 8 COPY OF THE ORDER FORWARDED TO : M/S. DEDICATED HEALTHCARE SERVICES (TPA) INDIA PVT. LTD. 5 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, // TRUE COPY// ( SENIOR PRIVATE SECRETARY ) PS ITAT, MUMBAI