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Income Tax Appellate Tribunal, “DB” BENCH, JABALPUR
Before: SHRI OM PRAKASH KANT & SHRI PAVAN KUMAR GADALE
TAN No. : JBPC01763G Appellant .. Respondent Assessee by : Shri.Sapan Usrethe. Adv.AR Respondentby : Shri.SaadKidwai. CIT -DR Date of Hearing 20.09.2023 Date of Pronouncement 21.09.2023 आदेश / O R D E R PER PAVAN KUMAR GADALE JM: These are the six appeals filed by the assessee against the separate orders of the National Faceless Appeal Centre (NFAC)/CIT (A) Delhi passed U/Sec 201(1) & Sec 201(1A) and 250 of the Act.
At the time of hearing, the Ld.AR of the assessee submitted that there is a delay in filing the appeals before the Hon’ble Tribunal and filed the applications and ,85,86,87,88 &89/JAB/2023 Chief Medical and Health Office - 2 - affidavits for condonation of delay. Whereas, the facts mentioned in the applications are reasonable and the Ld.DR has no specific objections. Accordingly, we condone the delay and admit the appeals.
Since the issues involved in these appeals are common and identical, hence are clubbed, heard and consolidated order is passed. For the sake of convenience, we shall take up the A.Y.2014-15 as a lead case and the facts narrated. The assessee has raised the following grounds of appeal:
The learned CIT(A), NFACwas not justified in dismissing the appeal filed by appellant against the order passed by ITO TDS without giving any proper opportunity of hearing as no notice was issued on the email which was given in form 351.e"bhoumikca@gmail.com" and notice was issued in email id "CMHOANU-MP@NIC.IN" which is not in the portal of appellant and even otherwise when e mail of tax practitioner was given in form 35 notice should have been issued on that email as per the scheme of faceless appeal. 2.The learned CIT(A), NFAC was not justified in dismissing the appeal filed by appellant against the order passed by ITO TDS without giving any proper opportunity of hearing as all the notices issued at the time of covid pandemic and it is not in dispute that all the hospitals at that time are full of patients and are doing their duties to save the lives of human being. 3.The learned CIT(A), NFAC was not justified in dismissing the appeal filed by appellant without appreciating that AO has also ,85,86,87,88 &89/JAB/2023 Chief Medical and Health Office - 3 -
not provided proper opportunity as during the course of assessment proceeding only one notice of hearing was issued and thus appellant was denied with reasonable opportunity.
4.The learned CIT(A), NFAC was not justified in dismissing the appeal without appreciating that the payments made to the hospitals are in the nature of reimbursement of expenses and does not fall under section 194J of the IT Act and therefore appellant is not liable to deduct TDS on such payment as these are paid from the grants received from state Govt. under the Scheme.
The learned CIT(A), NFAC was not justified in dismissing the appeal without appreciating that Since all the bills were raised in the name of the patients and the CMO has acted only as disbursement officer on behalf of the State Government therefore the actual payment has been made by the patient whois an individual and has also made the payment towards personal purposes of such individual falling within the meaning of second proviso to the section 194J and therefore the person is not required to deduct any tax as per the provisions of section 194J of the Act therefore invoking the provisions of section 201(1) of the Act was not required as per the provisions of Law.
The learned CIT(A), NFAC was not justified in dismissing the appeal without appreciating that various Hospitals to whom the payment has been made, have submitted their respective income tax returns and paid the tax chargeable to their respective income as such they have duly discharged their respective tax liabilities, therefore, on the facts and circumstances there is no loss of revenue caused to alleged non-compliance of TDS provisions by the assessee deductor, therefore, in no case be the assessee deductor be treated as defaulter and the amount of revenue loss to the extent of ,85,86,87,88 &89/JAB/2023 Chief Medical and Health Office - 4 -
amount deductible on such payments be recovered from the assessee deductor. 7. The appellant craves for leave to amend, add to or omit any ground of appeal
4. The brief facts of the case are that, the assessee is a Government Hospital and engaged in providing medical assistance to needy persons. The payments to Hospital made under “State Illness Assistance Fund” which has been created in the state of Madhya Pradesh for providing grants to below poverty line cases that need major surgical procedures within and outside the state. Whereas the survey was conducted u/s 133A of the Act on 26.02.2019 at Chief Medical Health Officer (CMHO) and the income tax department found some irregularities in respect of non deduction of TDS on the payments and a show cause notice was issued. The revenue found that the assessee has made the payments to doctors/medical practitioners without deduction of tax u/s 194J of the Act. The Assessing Officer (TDS) considered the submissions and found that the payments are in the nature of professional fees u/s 194J of the Act and there are violation of provisions of TDS and worked out the short credit of TDS of Rs.7,05,142/-and interest of Rs. 5,53,364/- and passed the order u/s 201(1) and 201(1A) of the Act dated 31.12.2019.
,85,86,87,88 &89/JAB/2023 Chief Medical and Health Office - 5 -
5. Aggrieved by the order the assessee has filed an appeal before the CIT(A), whereas the CIT(A) considered the grounds of appeal, statement of facts and findings of the AO found that there was no proper compliance by the assessee and sustained the action of the AO and dismissed the assessee appeal. Aggrieved by the order of the CIT(A) the assessee has filed the appeal before the Tribunal.
6. At the time of hearing, the Ld.AR submitted that the CIT(A) has erred in sustaining the action of the A.O in passing the order u/s 201(1) and 201(1A) in respect of payments made to the doctors. The contentions of the Ld. AR that these payments are in the nature of the reimbursements of grant and was wrongly considered as payments U/sec194J of the Act. The Ld. AR substantiated the submissions with paper book and judicial decisions and prayed for allowing the appeal. Per Contra, the Ld. DR relied on the order of the CIT(A).
7. We heard the rival submissions and perused the material on record, the sole crux of the disputed issue envisaged by the Ld. AR that the CIT(A) has erred in sustaining the order of the AO u/s 201(1) and 201(1A) of the Act. The Ld.AR explained that the assessee is a Government Hospital ,85,86,87,88 &89/JAB/2023 Chief Medical and Health Office - 6 - and is engaged in providing medical assistance to needy persons. The payments to Hospital made under “State Illness Assistance Fund” which has been created in the state of Madhya Pradesh for providing grants to below poverty line cases that need major surgical procedures within and outside the state. The scheme has been launched by the State Government to save the life of the people of below poverty line from 13 major diseases requiring surgery and treatment. The Office of CMHO is a nodal agency via which this scheme is run and the ultimate benefit is passed to the economically weak patients. Further the Ld.AR has explained the scheme/ guidelines and submitted that the payments are made on behalf of the patients and referred to the page 85 and 91 of the paper book where the hospitals have provided the services and referred to the individual names of the patients to whom services are granted. The contentions of the Ld. AR that the sanctioned bills are as per the scheme provided by the Government to various needy persons and highlighted the sample bills of sanction under the scheme at page 37 to 76 of the paper book.
8. The Ld.AR contentions are that the assessee is only a nodal agency and they are acting on behalf of the patients ,85,86,87,88 &89/JAB/2023 Chief Medical and Health Office - 7 - and the provisions of Sec. 194J of the Act shall not apply. At this juncture, we considered it appropriate to refer to the decision of Coordinate Bench of the Honble Tribunal, were identical issue was dealt and the relief was granted in the case of CMO, Ujjain Vs. ITO TDS in & 504/Ind/2012 A.Y 2009-10&2010-11 has observed at Para 7 to 9 of the order as under:
We have considered the rival contentions, carefully gone through the orders of the authorities below and found from record that payments were made by District Hospital, Agar Road, Ujjain. Out of the grant-in-aid received for treatment of low income group patients from the State Government under "M.P. State Measure Assistant Fund" set up by the Government of Madhya Pradesh for the personsliving below poverty line, to various hospitals. The payments so made includes all investigation charges as well as doctors consulting fee, cost of equipment used etc. Chief Medical Officer of State Government was made responsible for not deducting tax at source and also for interest on default in delay of such payment u/s 201 & 201(1A) of the Income-tax Act, 1961. As per A.O., the Chief Medical Officer has made payments of professional fee to hospitals and for which he was liable to deduct tax at source under provisions of sec. 194-J. From the record, we found that low income group patients were provided medical aid by the Government under M.P. State Measures Assistance Fund. When such patients were treated at the hospital, payment was made by the Government. Such payment includes investigation charges, Doctor's consultation fee, cost of equipment used for the patients etc. There is no dispute that as per provisions of Sec 194J only payment made for professional fee is liable for TDS. However, payment made for equipment’s like pace maker, ,85,86,87,88 &89/JAB/2023 Chief Medical and Health Office - 8 -
stunt etc Cannot be said to be payment for professional fee These are the equipment’s put in heart and the cost of such equipment’s cannot be said to be professional fee paid to the Doctors In the instant case before us, professional services were rendered by Hospitals/Doctors directly to the low income group patients. However, the payment were made by the State Government on behalf of such patients, who are individuals. For the professional services rendered to the patients, bills were raised in the names of patients and not in the name of State Government. However, to provide assistance to the poor patients, payment was made by the State Government on behalf of such patients. Thus, the State Government acted as agent of such patients. Services were directly rendered by the Hospital/ Doctors to these patents who were responsible for making the payment. However, due to the scheme framed by the State Government for the patients below poverty level, the payment was routed through it. However, as per provisions of Sec 194J, the assessee should be a person responsible to make payment. In the instant case, individual patients to whom treatment was given, were liable to make the payment, therefore, the first criteria of section 1943, is not satisfied. The fact that hospital/Doctors rendered services to patients and patients were to make payments for the services rendered, were not denied. It is also not in dispute that State Government was making payment on behalf of such poor patients with respect to the bills raised by the hospital for the treatment carried out in respect of such patients. Since all the bills were raised in the name of patients and the CMO has acted only as Disbursement Officer on behalf of the State Government, therefore, the actual payment has been made by the patients, who are an individuals and has made payment towards their personal purposes. Since it being the personal expenses of such poor patients, as per second proviso to sec 194J, the patients who, are individuals are not required to deduct any tax at source. Under these circumstances, the AO was not ,85,86,87,88 &89/JAB/2023 Chief Medical and Health Office - 9 - justified in invoking of provisions of Sec 201 and 201(1A) in respect of payment made under Sec 194-J.
Our view is also supported with the view of the decision of the Coordinate Bench Dy. CIT vs. Movies Stunt, 6 SOT 4 (2004), wherein it was held that payment made to artist through the assessee, who is association of stunt artist is not liable to deduct tax u/s 194J. No contrary judgment was brought to our notice by the Department. We, are, therefore, inclined to follow the decision of the Coordinate Bench as stated above and allow the appeals of the assessee.
In the result, the appeals of the assessee are allowed.
9. We found the facts of the present case are identical to the decision of the Honble Tribunal discussed and we follow the judicial precedence and set-aside the order of the CIT(A) and direct the Assessing officer to delete the demand raised u/s 201(1) and 201(1A) of the Act and allow the grounds appeal in favour of the assessee.
In the result, the appeal filed by the assessee is allowed. to 89/Jab/2023, A.Y 2015-16 to 2019-20
As the facts and circumstances in these appeals are identical to , for theA.Y2014-15 (except variance in figures) and the decision rendered in above paragraphs 7 & 8 would apply mutatis mutandis for these ,85,86,87,88 &89/JAB/2023 Chief Medical and Health Office - 10 - appeals also. Accordingly, the orders of the CIT(A) are set aside and direct the Assessing Officer to delete the demand raised u/s 201(1) and 201(1A) of the Act and allow the grounds appeal in favour of the assessee.
In the result, the appeals filed by the assessee are allowed.
Order pronounced in the open court on 21.09.2023