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TMI Blog2019 (11) TMI 1241X X X X Extracts X X X X X X X X Extracts X X X X ..... hence, the corresponding grounds of the assessee are dismissed. With regard to the levy of interest U/s.201A, we find that this assessee s case is almost on similar facts and circumstances and hence in line with the decision canvassed by the assessee, supra. Therefore following that case, we hold that 90% of the advanced tax must have been paid by those hospitals and therefore we direct the Assessing Officer to levy the interest on the shortfall of 10% of TDS amount up to the date of filing of returns by the deductees U/s.201(1A). To this extent the assessee s appeal is allowed for assessment year 2010-11. - I.T.A Nos. 733 to 744 /CHNY/2019 - - - Dated:- 19-11-2019 - Shri N.R.S. Ganesan, Judicial Member And Shri S. Jayaraman, Accountant Member For the Appellant : Shri T. Banusekar, CA For the Respondent : Smt. G.D. Jayanthi Angayarkanni, JCIT ORDER PER S. JAYARAMAN, ACCOUNTANT MEMBER: These appeals of the Assessee are directed against the common orders of the learned Commissioner of Income Tax (Appeals)-17, Chennai passed U/s.201(1) as well as U/s.201(1A). The common groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Income Tax (Appeals) failed to appreciate that the obligation is on the insurance company to deduct tax at source and not on the appellant company. The common grounds of appeal raised by the Assessee in ITA Nos.733, 734, 735, 736, 737 and 738/CHNY/2019 are as under: 1. For that the order of the Commissioner of Income Tax (Appeals) is contrary to law, facts and circumstances of the case to the extent prejudicial to the appellant and is opposed to the principles of natural justice, equity and fair play. 2. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the order of the TDS Officer is without jurisdiction. 3. For that the order passed U/s.201(1A) is barred by limitation. 4. For that the Commissioner of Income Tax (Appeals) erred in upholding the interest levied U/s.201(1A). 5. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the provisions of section 201(1A) are evocable in the facts and circumstances of the case. 6. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the appellant is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee in its capacity as a TPA on behalf of insurance companies. After due processing, the assessee company makes the payment of the approved sums to the hospitals. For purposes of meeting the expenditure on this account, the insurance companies place certain amounts of money at the disposal of the TPA in the form of a Float Fund Account maintained with banks to be specifically utilized for this purpose. As and when the funds are fully utilized / depleted, the principals i.e., the insurance companies replenish the same. 2.1 The Assessing Officer considered that the payments made to the hospitals in lieu of medical services rendered partakes the nature of 'payment for professional services' as provided under section 194J and the applicability of Sec.194J in respect of payments made by TPAs to hospitals was also clarified by the Board vide Circular No.8/2009 dated 24.11.2009 in F.No.385/08/2009 - IT(B) wherein it was provided that all payments made by TPAs to hospitals on behalf of insurance companies for settling medical or insurance claims would attract the provisions of Sec. 194J of the Act. The Circular, inter-alia, provided relief to the deductors (TPA) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be covered by the Board's Circular dated 24.11.2009 Levied interest U/s. 201 (1A) on all the payments including those payments on which the demand U/s.201 (1) was not raised stating that according to the Board's Circular dated 24.11.2009 the interest and the penalty is leviable even on such payments . While calculating the interest U/s.201 (1A), the AO determined the period of levy as under : In the cases where the certificates from Chartered Accountants has been furnished, the AO calculated the interest for the period from the month of October of the relevant previous year till the month in which the return of income ought to have been filed i.e. due date for filing the return of income or up to the month in which the return of income was actually filed In the cases where the certificates from Chartered Accountants has not been furnished, the AO calculated the interest for the period from the month of October of the relevant previous year till September 2015. 3. Aggrieved, the assessee filed appeals before the CIT(A). The ld CIT (A), inter alia, relying on the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Date of passing of orders U/s.201(1) and 201(1A) For the assessment year 2009-10, the ld AR took us through the sequence of events as under: Date Events 27.11.2009 Date of issue of show cause notice by TDS officer 05.01.2010 Date of filing of writ petition before Madras HC 07.01.2010 Order of Madras HC granting stay for a period of 8 weeks 05.08.2010 Order of Madras HC extending period of interim stay granted until further orders 31.03.2012 Due date for passing order U/s.201(3) for assessment year 2009-10, where statement is filed U/s.200 16.12.2014 Order of Madras HC disposing off writ petition 04.02.2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. However, in the instant case, the orders have been passed on 11.09.2015 only and hence those orders are barred by limitation. As a result thereof, the orders passed U/s.201 (1A) are also barred by limitation and relied on the decision in the case of ACIT v Peps; Foods Ltd [2004J 88 TTJ (Del) 111J. 4.2 With regard to the orders passed for the assessment year 2009-10, the ld.AR submitted that the due date for passing order U/s.201 (1) as per section 201 (3) inserted by Finance (No.2) Act, 2009 w.e.f. 01.04.2010 is within (i) two years from the end of the financial year where statement U/s.200 is filed (ii) 6 years from the end of the financial year in which payment or credit is made in any other case. The assessee had filed statement U/s.200 for Form Nos.260 and 240 and the last quarter of such forms was filed in the month of May 2009 i.e. in financial year 2009-10. Therefore, the time limit for passing order U/s.201 (1) in such circumstances would be 31.03.2012 i.e. two years from the end of the financial year where statement U/s.200 is filed. The assessee had challenged the show cause notice issued by TDS officer in a writ petition before the Madras HC and obtaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve considered the rival submissions on either side and perused the relevant material available on record. Sub-section (3) of Section 201 of the Act as it stands now reads as follows:- Consequences of failure to deduct or pay 201. (1) .. .. .. .. .. (2) .. .. .. .. .. (3) No order shall be made under sub-section (1) deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax from a person resident in India, at any time after the expiry of seven years from the end of the financial year in which payment is made or credit is given. 5. By Finance Act, 2014 with effect from 01.10.2014, provisions of sub-section (3) was amended. Before the amendment, sub section (3) of Section 201 of the Act reads as follows:- (3) No order shall be made under sub-section (1) deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax from a person resident in India, at any time after the expiry of (i) two years from the end of the financial year in which the statement is filed in a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered as fees for professional service but just settlement of insurance claim. Even if the insurance company makes the payment directly, it is only in the nature of insurance compensation to indemnify the insured under the circumstances covered by the insurance contract. The amount paid is basically reimbursement of the cost of treatment that was covered for the individual. The person actually responsible for payment is the insured individual. Therefore, even the insurer should not be subjected to TDS. Without prejudice to the contention that insurer is not liable to TDS, the assessee only acts as an agent of the Insurance Company. The Insurance Company provides the Third Party Administrator (TPA) with a corpus fund for the processing and disbursement of claims to the insured. If at all, any liability arises, it cannot be fastened to the agent. It is only the principal who would be liable for deduction of tax at source .As per Proviso 3 to section 194J, individual or HUF shall not be liable to deduct tax if such sum is paid or credited exclusively for personal purpose. Therefore, since the expenditure is incurred exclusively for a personal purpose, the individua ..... X X X X Extracts X X X X X X X X Extracts X X X X
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