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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 ..... an assessee in default, for the reason that tax was not deducted at source from payments made to various policy holders, as well as to various hospitals on behalf of the insurance companies. 2.1. The Assessing Officer (hereinafter referred to as the AO) held that these payments to hospitals for professional and technical services and hence the provisions in S.194J of the Act are attracted and the assessee has to deduct tax at source. Hence he held that the assessee is liable to pay the default amount u/s 201(1) as well as interest u/s 201(1A) of the Act for the AY 2005- 06 to 2008-09. The contentions of the assessee were rejected by the A.O. Aggrieved the assessee carried the matter in appeal. 2.2. After considering various arguments of the assessee, the First Appellate Authority held as follows: (a) The AO has not followed the principles of natural justice, as no proper and adequate opportunity was allowed to the assessee. Hence the application for admission of additional evidence under Rule 46A of the Act was accepted and the additional evidence is sent to the A.O. for verification. (b) The AO at page 2 para 4 of his order, held that payments to hospitals are for professional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... separately to the AO and to this office within one month of receipt of this order. 2.3. Aggrieved both the assessee and the Revenue have filed these Cross Appeals. 3. The grounds filed by the assessee are as under. "1. That after having held that Insurance Companies were liable to deduction of TDS u/s 194-J of the Income Tax Act, 1961 and not the appellant company, the Ld.CIT(A) ought not to have sustained the addition u/s 201(1) of the Act. 2. That the appellant was also not liable to pay any interest u/s 201(1A) of the Act. 3. That the Ld.CIT(A) ought to have deleted the addition as sustained u/s 201(1) and also the interest u/s 201(1A) of the Act. At any rate, without prejudice, the addition and the interest as maintained are very excessive. 4. That the appellant reserves its right to add, amend/modify the grounds of appeal." 3.1. The grounds filed by the Revenue are as under. "On the facts and in the circumstances of the case as well as in law, the Ld.CIT(A) has erred in : 1. Deleting the demand raised by the AO u/s 201(1)/201(1A) r.w.s.194 holding that appellant had furnished the CA Certificates in compliance to the judgement of Delhi High Court in the case of M/s Vip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , must be a professional but these words signify that services rendered in the course of carrying on medical profession were covered u/s 194J of the Act. He relied on CBDT Circular no.8/2009 and submitted that non deduction of tax u/s 194J of the Act necessarily attracts penalty u/s 271(1)(c ) of the Act and that the defense available to the assessee u/s 273B is foreclosed. He argued that the High Court decision does not differentiate between payment by way of reimbursement to individual policy holder or the cashless payment. He prayed that the order of AO be restored. 4.1. The Ld.Counsel for the assessee Mr.Amit Goel on the other hand opposed the contentions and submitted that the First Appellate Authority has followed various judgments of High Courts and Tribunals, as well as CBDT Circulars, while coming to a conclusion that, TDS liability does not arise when the assessee furnishes CA Certificates from the payee hospitals/nursing homes specifying that the amount paid to them by the assessee company has been included and considered by them in their income tax returns. He further submitted that all such certificates issued by the C.A. were verified by the AO, subsequent to the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has furnished Certificate issued by the CAs of the payee hospitals/nursing homes, as proof of the fact that the amount paid to them by the assessee company, has been included/considered by them in their income tax returns. 6.3. The CBDT in Circular no.8/2009 dt. 24th November,2009 at para 4 it is stated as follows. "4. The Board is also of the view that tax demand arising out of s.201(1) in situations arising above, may not be enforced if the deductor (TPA) satisfies the officer in charge of TDS that the relevant taxes have been paid by the deductee assessee (hospitals etc.). A certificate from the auditor of the deductee assessee stating that the tax and interest due from deductee assessee has been paid for the AY concerned would be sufficient compliance for the above purpose. We find no infirmity in the order of the Ld.CIT(A) as the same is in line with this Circular of the CBDT, which is binding on all revenue authorities. 6.4. The ITAT "H" Bench of the Mumbai in the case of Health India TPA Services/ITO(OSD) 1(1) Pvt.Ltd. vide order dt. 17.4.2013 at para 11 held as follows. "11. We observe that Ld.CIT(A) in para 8 after considering the decision of Hon'ble Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome, assessee could be treated as assessee in default in terms of s.201(1) - Held, no. 6.7. In the case of CIT, Delhi vs. Adidas India Marketing P.Ltd. the Hon'ble Delhi High Court has held as follows: "S.201 of the Act - Deduction of tax at source - Consequences of failure to deduct or pay - Ays 2000-2001 and 2001-02 - Whether period for which interest can be claimed u/s 201(1A) is from date on which such tax was deductible to date on which such tax is actually paid and, consequently, no interest beyond date of actual payment of tax can be claimed by department - Held, yes - Whether S.201 does not state that tax should have been paid by assessee (deductor) alone, and tax may actually be paid by assessee or deductee - Held, yes." 6.8. The Ld.CIT(A) has followed the ratio of the above referred judgements. Hence in view of these binding precedents, we find no infirmity in the order of the First Appellate Authority on this aspect. We uphold the same. 7. The second issue raised in ground no.1, is whether payments made to individual policy holders are covered u/s 194J of the Act. We are of the considered opinion that the view of the First Appellate Authority on this issue has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax being deducted at source does not arise. Thus this ground of Revenue also is dismissed. 7.3. Ground no.2 in our view is, totally misconceived. The Revenue tries to make a distinction between an auditor and a C.A. Form no.26A, 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. 7.4. The last ground is on the admission of additional evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X
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