2019 (4) TMI 711 - HC - Income Tax

Assessee in default u/s 201(1) - non deduction of TDS in appropriate section - 192 vs 194J vs 194C - service of cooking - work contract vs fees for technical services - service of full time doctor covered under salary or fee for professional service - interest under Section 201(1A) - HELD THAT - TDS on Payment to Monginis Hospitability Services Pvt. Ltd. - 194C vs 194J - HELD THAT - The concurrent finding of fact rendered by the CIT (A) and the Tribunal that service of cooking does not include any technical service, is not shown to be perverse. In the above view, no fault can be found with the impugned order of the Tribunal. - No substantial question of law arise TDS on Remuneration to Doctor - TDS u/s 192 or 194J - HELD THAT - It is an agreed position between the parties that this issue stand covered in favour of the respondent assessee by the decision of this Court in case of Commissioner of Income Tax (TDS)I Vs. Asian Heart Institute, 2019 (3) TMI 543 - BOMBAY HIGH COURT . In the above case, a similar issue raised by the Revenue came to be dismissed by a speaking order dated 5th March, 2019. No distinction in facts and/or law has been pointed to us in the present case from that existing in the above case of Asian Heart Institute (supra), which would warrant our taking different view in this matter - No substantial question of law arise TDS on actual payment recovered directly from the patient by the Doctors - HELD THAT - Tribunal also independently found that there is no tangible evidence and material on record to show that any amount of fees was credited in the doctors account or paid to the doctor by the assessee. We note that in the face of concurrent findings of fact that there is no evidence of crediting or making payments to the doctors by the respondentassessee, no liability for deduction of tax under Section 194J of the Act at the hands of the respondentassessee can arise. This in the absence of the finding of fact being shown to be perverse - No substantial question of law arise However, as above question had been answered in favour of the respondent assessee, other questions become academic in the present facts. Thus, not entertained.

Summary

Issues:
1. Classification of payments made to M/s Monginis Hospitability Services Pvt. Ltd.
2. Tax deduction on payments made to full-time Doctors.
3. Tax deduction on payments made directly by patients to doctors.
4. Deletion of demand under section 201(1A) of the Act.
5. Default in tax deduction under section 201(1) and levy of interest under section 201(1A).

Issue 1: Classification of Payments to M/s Monginis Hospitability Services Pvt. Ltd.:
The appellant challenged the Tribunal's order regarding the classification of payments made to M/s Monginis Hospitability Services Pvt. Ltd. The Revenue argued that the payments should be considered fees for technical services under section 194J, while the respondent argued that they were for work contracts covered under section 194C. The Tribunal and CIT(A) found that the services provided by M/s Monginis were related to work, not technical services, and thus, the tax was correctly deducted under section 194C. The High Court upheld this finding, stating that the services did not involve technical aspects, and therefore, the tax deduction was appropriate under section 194C.

Issue 2: Tax Deduction on Payments to Full-time Doctors:
The appellant contested the acceptance of the claim by the respondent that tax should be deducted under section 194J for payments made to full-time doctors, rather than under section 192. The High Court noted that a similar issue had been decided in favor of the respondent in a previous case, and no new facts or legal arguments were presented to warrant a different decision. Therefore, the High Court upheld the decision that tax deduction under section 194J was appropriate for payments to full-time doctors.

Issue 3: Tax Deduction on Payments Directly by Patients to Doctors:
Regarding the tax deduction on payments made directly by patients to doctors, the Assessing Officer initially held that tax should be deducted under section 194J. However, both the CIT(A) and the Tribunal found no evidence that the hospital had credited or paid fees to the doctors, leading to the conclusion that no tax deduction was required under section 194J. The High Court agreed with this finding, stating that in the absence of evidence showing payments to doctors, no liability for tax deduction under section 194J existed.

Issue 4: Deletion of Demand under Section 201(1A) of the Act:
The Tribunal had deleted the demand under section 201(1A) of the Act. The appellant argued that this deletion was incorrect, citing a previous case involving Hindustan Coca Cola Beverage Pvt. Ltd. The High Court noted that the Tribunal's decision was based on the lack of evidence of tax deduction, and since the earlier issues had been decided in favor of the respondent, the demand deletion was upheld.

Issue 5: Default in Tax Deduction and Levy of Interest:
The appellant challenged the Tribunal's rejection of the Assessing Officer's order, arguing that the respondent was in default under section 201(1) and liable for interest under section 201(1A). However, the High Court found that since the previous issues had been decided in favor of the respondent, there was no default in tax deduction or liability for interest. Therefore, the Tribunal's decision was upheld, and the appeal was dismissed.

In conclusion, the High Court dismissed the income tax appeal, upholding the decisions made by the Tribunal and the CIT(A) regarding the classification of payments, tax deductions on payments to doctors, and the deletion of demand under section 201(1A) of the Act. The High Court found no substantial questions of law in the issues raised by the appellant, leading to the dismissal of the appeal without costs.