2023 (1) TMI 208 - AT - Income Tax

TDS u/s 195 - withhold tax on the payments made to the MRI company - assessee contended that it is acting as a collection agent on its behalf - HELD THAT - This issue has thus not been examined by the CIT(A). Before us also the assessee has only placed on record the MOU between the Hospital and the MRI company. No further details with regard to the collections made corresponding payments to the MRI company ledgers etc. has been provided which would substantiate their contention that these payments were collected/recovered on behalf of the MRI company and that the company did not retain any mark-up or profit therein (except their fixed fee of Rs.25 lacs). The assessee has also not placed copies of sample invoices and/or the copies of MRI reports issued to the patients which would substantiate its contention that the privity of contract was between the patients and the MRI company and not the patients and the assessee. For instance whether the test reports are given by the MRI Centre directly to the patients referred to by the assessee hospital or are they issued to the assessee hospital by MRI Centre who in turn issue the test results in their own letterheads. It is thus noted that none of these aspects have been looked into by the lower authorities. Neither the assessee nor the lower authorities have been able to bring on record the correct facts as to the relationship between the assessee and the MRI company viz. whether it is a principal-agent or principal - principal relationship. Hence the contentions raised by the assessee before us remains unsubstantiated and unverified. Upon query from the Bench the Ld. AR had claimed that the MRI company had deducted taxes on the fees of Rs.25 lacs paid to the Hospital for the collection supervisory services rendered by it but no evidence in support thereof was placed before us. According to us all these factors needs to be analyzed to decide about the nature of relationship and the relevant facts needs to be ascertained as to whether the payments were in the nature of reimbursements or not. The questions raised before us are mixed question of facts and law. Since none of the above aspects and the relevant facts have been properly looked into and examined by the lower authorities in the fitness of the matters we consider it fit to set aside the issue back to the file of the AO to examine this issue afresh. 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 as well as based on judicial precedents. The assessee is also directed to furnish all the relevant facts and explanation called for by AO and the assessee is at liberty to file relevant evidences/ documents/ written submission/ case laws relevant to this issue. Appeals of the assessee are allowed for statistical purposes.

Summary

Issues:
Appeal against action of Ld. CIT, Limited purpose of adjudicating specific grounds, Contention regarding deduction of tax at source on MRI charges, Interpretation of Memorandum of Understanding (MOU) with MRI company, Agent-principal relationship, Application of TDS provisions, Privity of contract, Interest u/s 201(1A) of the Act.

Analysis:
The judgment pertains to appeals filed by the assessee against the action of the Ld. CIT for multiple assessment years. The Tribunal recalled its previous order for the limited purpose of adjudicating specific grounds that were not addressed earlier. The primary issue revolved around the deduction of tax at source on MRI charges collected from patients and paid back to the MRI company. The assessee contended that as per the MOU with the MRI company, it acted as a supervising agent and was not liable to deduct tax on these payments. The MOU specified the terms of operation, supervision, and payment between the hospital and the MRI company.

During the hearing, the Ld. AR highlighted the clauses of the MOU emphasizing the supervisory role of the hospital in collecting charges from patients on behalf of the MRI company. The assessee argued that it was entitled to a fixed fee for these services and did not retain any mark-up or profit. The Ld. AR referred to a CBDT circular and asserted that the assessee was not obligated to deduct tax at source. However, the Ld. DR countered that the payments were subject to TDS under Section 194J due to the professional skill involved in MRI services. The AO had held that the assessee should have deducted tax at 10% under Section 194J.

The Tribunal noted that the assessee's contentions were not raised before the Ld. CIT(A) and detailed evidence supporting the agent-principal relationship was lacking. The nature of the relationship between the parties and the reimbursement aspect needed further examination. As crucial aspects were not adequately addressed by the lower authorities, the Tribunal set aside the issue for fresh examination by the AO. The assessee was directed to provide all relevant facts and evidence for a comprehensive review.

In conclusion, the Tribunal allowed the appeals for statistical purposes, emphasizing the need for a thorough examination of the facts and legal aspects surrounding the deduction of tax at source on MRI charges. The judgment highlighted the importance of substantiating claims with concrete evidence and ensuring a comprehensive analysis of the relationship dynamics between the parties involved in such transactions.