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TMI Blog2015 (2) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... 6A, which is a form for furnishing Accountants Certificate under the First Proviso to Sub Section of S.201 of the Act refers to a C.A. within the meaning of the Chartered Accountants Act, 1949. The Circular nowhere specify that the Certificate should be given by the statutory auditor of the payee hospitals. The purpose is to verify whether the payee has paid the tax or not. In our view such interpretation sought to be placed by the revenue is unwarranted. On facts, the AO has not found any defect during the verifications of these Certificates given by the C.A. of the payee hospitals/nursing homes. There is no finding given by the AO that these CAS are not the auditors of the payees or nursing homes, nor that this is not sufficient evidence for the purpose of reducing the demand. In fact he reduced the demand after verification. In our view such ground is unnecessary and hence we dismiss the same. - Decided in favour of assessee. - ITA Nos. 2014–2015–2016 and 2017/Del/2012, ITA Nos. 2507–2508 – 2509 and 2510/Del/2012 - - - Dated:- 30-1-2015 - SHRI H.S.SIDHU AND J.SUDHAKAR REDDY, JJ. For The Appellant : Shri Amit Goel, Adv. For The Respondent : Sh. R.S. Gill, CIT, DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on these payments made to individual policy holders is not justified. (c) S.194J is not applicable to individual policy holders, as they get payments from assessee in the form of reimbursement of their medical expenses. (d) S.194J is applicable where a professional organization such as a hospital is giving professional service through TPA. (e) The assessee is merely a conduit pipe for making payments to hospitals on behalf of the insurance companies. The payments are not debited to assessee s profit and loss account. Hence the insurance companies are liable to deduct TDS u/s 194J of the Act and not the assessee company. (f) Anyhow in view of the jurisdictional Delhi High Court judgement in the case of M/s Vipul Medcorp TPA Pvt. Ltd. Others vs. CBDT dt. 30th September,2011, the assessee company is liable to deduct TDS u/s 194J of the Act. (g) The demand raised u/s 201(1) of the Act, is to be reduced to the extent the assessee has furnished CA Certificates in proof of the payee hospitals and nursing homes having accounted for in their books of accounts of this income and that they have filed the return of income. The demand raised by the AO u/s 201(1) of the Act is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cular no.8 of 2009 dt. 24.11.2009 holding that the certificate issued by the CAs would be sufficient compliance for the purpose of taxes paid by the deductees. On the contrary the Circular specifically speaks of the company s Auditors as the correct authority who can give this certificate. 3. In admitting the additional evidence can only be accepted if the AO refused to admit the evidence. That the appellant craves leave to add, alter, amend any of the grounds of appeal at the time of hearing. 4. The Ld.CIT, D.R. Mr.R.S.Gill submitted that the assessee filed application under Rule-46A(1) before the Ld.CIT(A) and the Ld.CIT(A) admitted the same by holding that the AO has not provided reasonable opportunity to the assessee during the course of assessment proceedings to produce the evidence in support of its claim. He submitted that the assessee failed to file the relevant details and complete evidence before the AO and hence the AO passed the order on the last day of the F.Y. as it was time barring. He further argued that the issue as to whether tax has to be deducted at source u/s 194J of the Act by TPAs, is no more res integra in view of the decision of Hon ble Bombay Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the IT Rules specify that the certificate should be given by a CA. He submitted that this aspect of the auditor certifying is beyond the control of the assessee, as it is the payee hospitals which are providing certificate of the CA. He argued that there is no violation of Rule 46A and submitted that the Ld.CIT (A) has given elaborate reason for admitting additional evidence and has also directed the AO to verify these Certificates before passing orders. He relied on a number of case laws. 5. Rival contentions heard. On a careful consideration of the facts and circumstances of the case, orders of lower authorities and case laws cited, we hold as follows. 6. The assessee company is engaged in the business of providing Third Party Administrator Services (TPAs) for policies issued by the Insurance Companies. The issue whether the assessee is liable to deduct tax at source u/s 194J of the Act, for various payments made to hospitals is no more res integra. The Hon ble Bombay High Court in the case of M/s Dedicated Health Care Services vs. ACIT reported in 324 ITR 345 (Bombay) held as follows. Whether the provision of medical services takes place within the institutional framew ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in order to determine whether the deductee has paid the tax or not, a certificate from the auditor of the deductee company stating that tax and interest due from the deductee assessee has been paid for the concerned AY would be produced by the assessee company and shall be verified by the AO. We observe that Ld.CIT(A) had directed the AO to give due credit to the assessee if the assessee company produced such certificate and recovery of TDS amount u/s 194J should not be enforced to that extent. We are of the considered view that there is no infirmity in the said order of Ld.CIT(A) as he has given direction to the AO that if the assessee company produces such certificate of the auditors of the deductee company stating that the tax and interest due from the deductee has been paid by them for the concerned AY, recovery of TDS amount u/s 194J should not be enforced. 6.5. Similarly the Hon ble Madras High Court in the case of SAA Ispahani Trust vs. ITO(TDS), Ward 11(2) (2013) 34 taxmann.com 29 (Madras) held as follows: S.201 of the Income Tax Act, 1961 - Deduction of tax at source - consequence of failure to deduct or pay (interest)-AY 2003-04 - whether where recipient deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assified as business if required however, all businesses are not professions. Further, Section 2(b) of the Indian Partnership Act, 1932 defines business as including every trade, occupation and profession. The High Court relying on the decision of Dedicated Health Care Services TPA (India) Private Limited held that tax needs to be deducted on payments made to the recipient for rendering services in course of carrying on medical profession or other professions. It is immaterial whether the recipient is an individual, firm or an artificial person. I The words 'in the course of carrying on' as appearing in Explanation (a) to Section 194J of the Act do not mean that the person who renders service must be a professional. These words signify that services rendered in the course of carrying on medical profession were covered under Section 194J of the Act. The High Court observed that a corporate hospital is not a professional and does not earn professional income but it can be paid fees for services in the course of carrying on professional services. It is not necessary that the person who renders service should himself carry on the medical profession. Therefore, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order was passed on 30.3.2011 and that too without seeking explanation from the assessee in this regard. In any event the AO has verified all these additional evidences and in his consequential order granted relief. The AO should have not raised the demand in the first place and should have directed the assessee to produce the evidence as per the CBDT Circular. This was not done. In any event these evidences are necessarily required for proper determination of the demand to be raised on the assessee u/s 201 and 201(1A) of the Act. As the AO has already verified these evidences, this ground is academic in nature. 7.5. In view of the above discussion this ground of Revenue is dismissed. 7.6. In the result, the Revenue s appeal is dismissed. 8. This brings us to the assessee s appeal. 8.1. Ground no.1 is general in nature. 8.2. On ground no.2 the Mumbai Bench of the ITAT in Health India TPA Services (P) Ltd. has held as follows. 12. During the course of hearing, Ld.AR from the said chart submitted that the only balance amount left out of ₹ 9,92,48,570 is ₹ 7,34,60,140 on which assessee is liable to pay TDS. Ld.AR also conceded that assessee is also liabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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