2013 (5) TMI 718 - AT - Income Tax

Non deduction of TDS u/s 194J - TPA - payments made to hospitals towards claims for insurance policy holders of insurance companies as their facilitator under the Third Part Administrator Agreement with the Insurance Companies - demand u/s 201(1) and 201(1A) - Held that - As decided in assessee s own case 2010 (5) TMI 98 - BOMBAY HIGH COURT the services rendered by the hospitals are in the course of carrying of the medical profession. Hence, it is not possible to accept the submission that TPAs, when they make payments to hospitals are not liable to deduct tax at source under the provisions of section 194-J. Three appeals of the assessee are dismissed.

Summary

Issues:
Three appeals filed by the assessee against the orders of CIT (A)-14, Mumbai for the assessment years 2008-09, 2009-10, and 2010-11 are being considered and adjudicated together.

Analysis:

1. Condonation of Delay in Filing Appeal (ITA No.91/M/2011 - AY: 2008-2009):
The appeal was filed belatedly due to the retirement of the assessee's Accountant, leading to late consultation with professionals. The Tribunal condoned the delay of 342 days, considering it a reasonable cause for not filing the appeal on time, and proceeded to adjudicate the appeal on merits.

2. Grounds Raised in ITA No.91/M/2011:
The grounds raised in this appeal questioned the CIT (A)'s decision to uphold the demand raised under sections 201(1) and 201(1A) for alleged failure to deduct tax at source under section 194J. The assessee argued that the payments made to hospitals were not for professional or technical services, but for settling insurance claims on behalf of the insurer-policy holders.

3. Issue of Applicability of Section 194J to TPA Payments:
The Tribunal examined whether Third-Party Administrators (TPAs) are required to make TDS under section 194J while making payments to hospitals. The Tribunal considered the judgment of the Hon'ble Bombay High Court in the assessee's case, which held that TPAs are liable to deduct tax on payments to hospitals under section 194J. The Tribunal dismissed the grounds raised by the assessee, citing the settled position of the issue at the High Court level.

4. Consolidated Decision on All Appeals:
Since the issues in all three appeals were identical, the decision given in ITA No.91/M/2011 (AY: 2008-2009) was applied to the remaining two appeals. Consequently, the grounds raised in ITA No.92/M/2011 (AY: 2009-10) and ITA No.511/M/2011 (AY: 2010-11) were also dismissed. Ultimately, all three appeals of the assessee were dismissed by the Tribunal.

In conclusion, the Tribunal upheld the demand raised under sections 201(1) and 201(1A) for failure to deduct tax at source under section 194J on payments made by the assessee to hospitals. The decision was based on the interpretation of the law and the precedent set by the Hon'ble Bombay High Court in a similar case involving the assessee.