Applicability of section 194J of the Income Tax Act - The assessee, a Private Limited Company, is engaged in the business of providing third party administration services (TPA) on health insurance issued by the Insurance Companies and is governed by the Insurance Regulatory and Development Authority (IRDA) - Assessee was not deducting TDS on the payments made to the hospitals Assessee contended that he was not obliged to make TDS in respect of the payments made to the hospitals as such payments do not fall within the ambit of s. 194J of the Act Held that - Relying upon the judgment of the Bombay High Court in the case of Dedicated Health Care Services TPA (India) Pvt. Ltd Others v. ACIT Others 2010 (5) TMI 98 - BOMBAY HIGH COURT , it was held that the assessee was required to deduct tax at source under the provisions of s. 194J of the Act for the payments made to the hospitals. Applicability of section 194J on the professional fee part of the composite bill paid to the hospitals Held that - Reliance has been placed upon the judgment in the case of Arogya Sri Health Care Trust v. ITO 2012 (4) TMI 400 - ITAT HYDERABAD , wherein it has been held that it is only the element of fee for professional services comprise in each of the payment made by assessee trust to the hospitals which falls which falls within the scope of s. 194J of the Act. Elements of payment towards bed charges, medicines, follow up services, out-patient services, transportation charges, implants, expenditure incurred for conducting camps at village levels, do not strictly fall within the scope of fee for professional services which alone can be considered as falling within the scope of the provisions of s. 194J of the Act. Direct the assessing officer to bifurcate the payments made by the assessee trust to the hospitals into various elements as noted above and confine the demand raised in terms of s. 201(1) of the Act, only to the payments which assume the nature of fee for professional services In the present case, the matter restored to the file of A.O. so that he can file the list of payments made by it to the hospitals duly bifurcated into various elements. Period upto which interest is chargeable u/s 201(1A) of the Income tax act in the instant case - Interest chargeable under section 201(1A) of the Act has been calculated up-to the due date of filing of return(s) instead of calculating the same till the date of payment of taxes by the deductees Held that - Relying upon the decision in the case of Solar Automobiles India (P) Ltd v. Deputy Commissioner of Income-tax reported in 2011 (9) TMI 637 - KARNATAKA HIGH COURT , it has been held that AO has to find out whether the creditors (hospitals) have filed their returns and paid the taxes. If they have filed the returns and paid the taxes, the liability of the asessee ceases from the day they have paid the taxes. .............................. Income Tax - Case Law
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