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TMI Blog2015 (12) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... ile determining the income, would not attract disallowance. The consequence of failure to deduct the tax is found in Section 201 of the Act and it does not in any way permit the addition of an amount, which has not subjected tax deduction at source. The Sine qua non for the application of Section 40(a)(ia) of the Act to apply is claiming of the amount sought to be disallowed as an expenditure / deduction to determine the taxable income of the assessee. In the present case, the Revenue is not challenging the concurrent finding of the fact that the amount of ₹ 4.58 crores, which is being sought to be added to the Respondent's income has not been considered i.e. deducted to arrive at its income. Thus in such a case, the stand of Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid over to the hospitals. As the above payments are merely routed through them, the Respondent Assessee does not deduct any tax at source under Chapter XVII B of the Act nor does it debit the payment to its profit and loss account. In view of the failure of the Respondent Assessee to deduct the tax under Chapter XVII B of the Act, the Assessing Officer by its order dated 9th December, 2010 held that the entire amount which was paid over to the hospitals would be disallowed under Section 40(a)(ia) of the Act. Consequently, an amount of ₹ 4.58 crores was added to the Respondent Assessee's income being the amount disallowed under Section 40(a) (ia) of the Act. 4. In appeal, the Commissioner of Income Tax (Appeals) by an order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 2007-08 had been accepted by stating as follows : 4. On perusal of the relevant records, it is seen that for A.Y. 2007-08, no appeal was preferred against the CIT(A)'s order as it was observed that the payment made by the TPA to the hospitals on behalf of the Insurance company is not an expenditure of the assessee and the same was not debited in P L account. It was noted that even though the assessee company was bound to deduct TDS on payments made to hospitals on behalf of the insurance company, the same was not an expenditure debited to P/L account. Therefore, the decision of the CIT(A), of deleting the disallowance u/s 40(a)(ia), was held to be correct and no further appeal before the ITAT was preferred. 7. Mr. Suresh Kum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not attract disallowance. The consequence of failure to deduct the tax is found in Section 201 of the Act and it does not in any way permit the addition of an amount, which has not subjected tax deduction at source. The Sine qua non for the application of Section 40(a)(ia) of the Act to apply is claiming of the amount sought to be disallowed as an expenditure / deduction to determine the taxable income of the assessee. In the present case, the Revenue is not challenging the concurrent finding of the fact that the amount of ₹ 4.58 crores, which is being sought to be added to the Respondent's income has not been considered i.e. deducted to arrive at its income. Thus in such a case, the stand of Revenue contrary to the clear provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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