TaxTMI 
TaxTMI 
TaxTMI 
2015 (1) TMI 605
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....; Feb 2008 Rs. 47200 Mar 2008 Rs. 282368 Total Rs. 336633 2008-09 Apr 2008 Rs. 671176 May 2008 Rs. 2040292 Jun 2008 Rs. 6771674 Jul 2008 Rs. 4755838 Aug 2008 Rs. 6057944 Sep 2008 Rs. 6041210 Oct 2008 Rs. 7888425 Nov 2008 Rs. 8924253 Dec 2008 Rs. 9686827 Jan 2009 Rs. 22480349 Feb 2009 Rs. 20861900 Mar 2009 Rs. 22097739 2.1. The AO was of the opinion that since the payments were made for professional services, the assessee was obliged to deduct tax u/s 194J of the I.T. Act. The AO referred to the decision of Hon'ble Karnataka High Court in the case of Medi Assish India TPA Vs. DCIT, holding that the payments made to hospitals were subject to the provision of sec. 194J. He also referred to the CBDT Circular no. 8/2009 dated 24-11-2009 on this issue. AO further observed that assessee had failed to submit any sustainable documentary evidence in support of its contention that respective hospitals had already paid tax to govt. a/c and there was no revenue loss to the department. The AO, therefore, computed the default for non-deduction of tax u/s ....
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....of this position of law, ld. CIT(A) required the assessee to file the details regarding taxes paid by various hospitals by way of TDS, advance tax and self assessment tax, so as to determine the correct liability towards non/short deduction of tax and interest chargeable u/s 201(1A) of the Act. 2.6. In response to ld. CIT(A)'s direction, the assessee filed necessary details, enclosing therewith, the PB, containing 425 pages and certificate issued by the hospitals. Ld. CIT(A) has observed that these evidences could not be filed before the AO due to time constraints and voluminous exercise, but the same were called for and admitted by exercising power under Rule 46A(4) of the I.T. Rules in order to decide various grounds of appeal judiciously. 2.7. Ld. CIT(A), after examining the certificates filed by the assessee, pointed out that hospitals obtained a general certificate from their auditors to the effect that they had paid taxes on income. After considering the details, ld. CIT(A), inter alia, observed as under: "During the FY 2008-09, the appellant has made payments of Rs. 20,000/- or less to 243 hospitals on which TDS of Rs. 2,88,465/- and interest of Rs. 37,072/- has been work....
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.... payments made without deduction of tax prior to due dates of advance tax payments by the deductees would deprive the revenue of legitimate taxes. The appellant has worked out interest on monthly basis up to 31-03-2009. In respect of TDS amount of Rs. 4,18,312/- for which no certificates have been filed, the interest has been worked out at Rs. 1,11,276/-. However, the same is required to be charged up to the due date of filing of returns in the case of deductees i.e. up to September 2009. Thus, the interest for further period of 6 months works out to Rs. 25,098/-. In respect of no certificate cases of deductees, the total interest works out to Rs. 1,36,374/-. In respect of hospitals from which the certificates have been filed, the amount of interest has been worked out by the appellant on monthly basis up to 31-03-2009 at Rs. 4,23,084/-(i.e. Rs. 5,34,360/- minus Rs. 1,11,276/-). However, the interest in these cases is also required to be charged up to the due date of filing of returns by the deductees. By estimating that the deductees must have paid at least 90% of their taxes by way of advance tax, the interest on short fall of 10% of TDS amount i.e. s. 12,98,254/- for 6 months wo....
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....ively. The word "services" in the expression "professional services" is significant and has to be given due weightage. The primary purpose and objective of the definition clause is to define the services included and regarded as professional services and not the person who renders the said services. Section 194J under sub-section 1 applies when payment is made to a resident towards any sum by way of fee for professional services. The object of the definition clause Explanation (a) is not to identify the 'resident', or the recipient, who receives or is paid fee for professional services but to define the services. 3.2. Hon'ble Delhi High Court agreeing with the view taken by Hon'ble Bombay High Court in the case of Dedicated Health Care Services TPA (India)(P) Ltd. 232 CTR 41, held as under: 24. In Dedicated Health Care Services' case (supra), after referring to Section 119 of the Act, following observations have been made:- "14. Section 119 of the Act provides that the Board may, from time to time issue such orders, instructions and directions to other income-tax authorities as it may deem fit for the proper administration of the Act and that such authorities and all other perso....
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....so independently and shall not regard the exercise of their quasi-judicial powers as being foreclosed by the issuance of the circular." 4. Therefore, ground nos. 2 and 3 of the cross objection filed by the assessee are dismissed. As far as ground nos. 1 & 4 are concerned, they will be considered while deciding the appeal filed by department because ld. CIT(A) has partly allowed the assessee's ground of appeal. 5. Now coming to the department's appeal and ground nos. 1 & 4 of cross-objection, the main contention of ld. DR is that ld. CIT(A) wrongly observed that assessee was not given sufficient opportunity for filing the necessary details. He referred to page 1 of the assessment order and pointed out that survey took place on 12-12-2008 and the order u/s 201(1) and 201(1A) was passed on 5-10-2010. Ld. DR pointed out that at page 21, the ld. CIT(A) has observed that vide letter dated 7-3-2011 the paper book and written submissions filed by the assessee were forwarded to the AO, but no report was received from assessee. He referred to page 70 to 101 of the PB and pointed out that before ld. CIT(A) the assessee had filed various evidence on 5-3-2012 and ld. CIT(A) passed the order o....
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....rnish evidence in support of its contention to the extent of Rs. 1,66,428/- for assessment year 2008-09 and Rs. 5,88,17,651 for assessment year 2009-2010. Accordingly, it is prayed that tax demand of Rs. 18,856 for AY 2008-09 and Rs. 66,70,647 for assessment year 2009-2010 may kindly be quashed. The consequential interest levied on the aforesaid amounts may also be deleted." 9. These submissions were duly sent to AO for his comments on 7-3- 2011 but as observed by ld. CIT(A), even after a gap of one year, AO did not file any reply. Some more details along with the details filed on 25-2-2011 were filed by assessee on 5-3-2012 in response to Ld. CIT(A)'s directions. Therefore, keeping in view the entirety of facts, it would be proper to conclude the AO had been provided due opportunity in terms of the decision of Hon'ble Delhi High Court in the case of CIT Vs. Manish Buildwell (P) Ltd. (2012) 204 Taxman 106, holding as under: "24. In the present case, the CIT (A) has observed that the additional evidence should be admitted because the assessee was prevented by adducing them before the assessing officer. This observation takes care of clause (c) of sub-rule (1) of Rule 46A. The obse....
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....subsection (4) of Section 250. That is a consequence which cannot at all be countenanced". 10. Now, coming to the merits of the case, we find that before ld. CIT(A) it was submitted that out of total payment of Rs. 3,36,633/- made or AY 2008-09 and Rs. 11,82,77,627/- made for AY 2009-10, the assessee had been able to furnish evidence in support of its contention to the extent of Rs. 1,66,428/- for AY 2008-09 and Rs. 5,88,17,651/- for AY 2009-10. Accordingly, it was submitted that tax demand of Rs. 18,856/- for AY 2008- 09 and Rs. 66,70,647/- for AY 2009-10 could not be recovered from the assessee. It was further pointed out that interest u/s 201(1A) was also not leviable as there was no loss of revenue in view of the fact that hospital had paid tax during the relevant year in relation to the income received (including the payment made by the assessee). In this regard, the assessee relied on the decision of Hon'ble Gujarat High Court in the case of CIT Vs. Rishikesh Apartments Co-operative Housing Society Ltd. 253 ITR 310, wherein it has been held that where the assessee fails to deduct the amount of tax, which was required to be deducted under the provisions of the Act and the pay....
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....ore Evidence collected in FY 2007-08 324,219 36,734 8,184 B. Claim payment of Rs. 20,000 or more Evidence collected in FY 2008-09 112,039,526 12,694,078 1,689,841 Total Amount for which relief is requested for FY 2007-08 & 2008-09 (A+B) 114,922,184 13,020,684 1,735,424 14. The main contention of assessee was that at best interest could be charged for the period during which revenue sustained loss and in case where such tax had been deposited by the recipient then default in deducting tax at source were ceased and, therefore, no interest could be charged beyond the period of which recipient had deposited the tax. The assessee relied on the decision of Hon'ble supreme Court in the case of Hindustan Coca Cola Beverage P. Ltd. V. CIT 293 ITR 226, wherein it has been held that deduction of tax at source by a payer and direct payment of tax by the payee were alternative and not cumulative methods of tax recovery, so that once there is direct payment of tax by the payee, the liability of the payer for interest under section 201(1A) of the Act for default in deducting tax at source would cease. 15. In the alternative, the assessee submitted that even if interest w....
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....icate from their auditors to each of the TPAs and insurance companies separately. The hospitals obtained a general certificate from their auditors to the effect that they have paid taxes on income. Incidentally, some of the certificates were addressed to the insurance companies, some to TPAs and some were addressed to public in general. In case of the appellant, some of the certificates, though containing the information as mandated in the aforesaid CBDT circular, have been addressed to the TPAs. The practical difficulty in obtaining multiple certificates by each hospital would not affect the claim of the appellant since the certificates fully comply with the conditions laid down in the said CBDT circular. During the F.Y.2008-09, the appellant has made payments of Rs. 20,000/- or less to 243 hospitals on which TDS of Rs. 2,88,465/- and interest of Rs. 37,0721 - has been worked out. As regards total payments of Rs. 112,039,526/- having TDS implication of Rs. 1,26,94,078/- the appellant has filed certificates regarding taxes paid by the hospitals as per page 1 to 425 of the paper book. Some of the hospitals have also enjoyed exemption from deduction of tax by virtue of certificates o....
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....g the provisions relating to payment of advance tax. under the existing provisions, the assessees are required to pay advance tax either in three or four quarterly installments whereas the appellant has made payments regularly to the hospitals. Thus, payments made without deduction of tax prior to due dates of advance tax payments by the deductees would deprive the revenue of legitimate taxes. The appellant has worked out interest on monthly basis upto 31.03.2009. In respect of TDS amount of RsA,lB,312/- for which no certificates have been filed, the interest has been worked out at Rs. 1,11,276/-. However, the same is required to be charged upto the due date of filing of returns in the case of deductees i.e. upto September 2009. Thus, the interest for further period of 6 months works out to Rs. 25,098/-. In respect of no certificate cases of deductees, the total interest works out to Rs. 1,36,374/-. In respect of hospitals from which the certificates have been filed, the amount of interest has been worked out by the appellant on monthly basis upto 31.03.2009 at Rs. 4,23,084/- (i.e. Rs. 5,34,360/- minus Rs.l,11,276/-). However, the interest in these cases IS also required to be char....