TaxTMI 
TaxTMI 
2019 (11) TMI 1241
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....on. 3. For that the order passed U/s.201(1) is barred by limitation. 4. For that the Commissioner of Income Tax (Appeals) erred in upholding the demand raised U/s.201(1). 5. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the appellant is not liable to deduct tax at source under the provisions of the Income Tax Act. 6. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the provisions of section 194J is not evocable in the facts and circumstances of the case. 7. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the payments made by the appellant company to the hospitals is not in the nature fees for professional services. 8. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the payments were made by the appellant company under a contractual obligation that it has with the insurance company, the insurance company in turn paying the hospital in terms of a contract of indemnity. 9. For that the Commissioner of Income Tax (Appeals) failed to appreciate that when the person insured (being an individual) himself is not liab....
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....nsurance company. The insurance company in turn paying the hospital in terms of a contract of indemnity. 10. For that the Commissioner of Income Tax (Appeals) failed to appreciate that when the person insured (being an individual) himself is not liable to deduct tax at source under the provisions of section 194J, there is no obligation on the part of the appellant company to deduct tax at source on the payments made on behalf of the person insured to the hospitals. 11. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the onus is on the revenue to verify whether the deductee assessees have shown the impugned payments as income and have paid the relevant taxes due on such amount. 12. For that assuming without conceding that tax is deductible at source on the payments made to the hospitals, the Commissioner of 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. 13. For that without prejudice to the above, the TDS Officer erred in the computation of period, for levy of interest U/s.201(1A). 2. M/s Family Health Plan (TPA) Ltd.....
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.... cause notices as well as questioning the validity of Board's Circular dated 24.11.2009. The Hon'ble High Court ordered an interim stay on the proceedings relating to the show cause notice which was further extended. Subsequently, the assessee withdrew the writ petitions and accordingly the Hon'ble High Court dismissed the same vide the order dated 16.12.2014 holding, inter alia, that " ... Since the validity of the circular has already been upheld by various High Courts in the country including the Bombay High Court and Delhi High Court, the petitioner has today withdrawn the Writ Petitions challenging the validity of the circular dated 24. 11.2009. Therefore, the petitioner is bound by the said circular." and directed the assessee company to respond to the show cause notices within eight weeks. 2.2 After considering various submissions of the assessee, the Assessing Officer passed orders U/s.201(1) and U/s 201(1A) dated 11.09.2015 and 12.11,2005, respectively, raising the demand for the assessment years from 2005-06 to 2010-11. In passing those orders, the TDS Officer has: • Exempted from the computation, the quantum of tax deductible in ca....
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....e 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 31.03.2011 Due date for passing order as per proviso to section 201(3) for the assessment years 2008-09 and assessment years prior to AY 2008-09 16.12.2014 Order of Madras HC disposing off writ petition 04.02.2015 Receipt of order of Madras HC 01.04.2015 Expiry of eight week period granted by HC, from the date of receipt of order of Madras HC, for assessee to submit its reply to the SCN 31.05.2015 Extended time for passing order as per proviso to explanation 1(ii) to section 153 [60 days will be available for passing the order after excluding the stay period and the time granted by HC for submitting reply to SCN by assessee.] 11.09.2015 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 ....
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.... passing the order U/s.201 (1) from the date of expiry of 8 week time limit granted by Madras H C. Therefore, the extended time period for passing the order U/s.201 (1) will be 31.05.2015. 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 th....
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....e order are barred by limitation. As a result thereof, the order passed U/s.201 (1A) is also barred by limitation. 5. We have 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 afte....
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.... be construed as fees for professional services but in the hands of the assessee, who is an agent it cannot be considered 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 pur....