ASSURED BEST CARE HOSPITAL P LTD.,TRICHY vs. ACIT CENTRAL CIRCLE 2(1), CHENNAI

The assessee filed this appeal against the order of Commissioner of Income Tax (Appeals)-18, Chennai in dated 21.09.2017 for assessment year 2009-10.

M/s. Assured Best Care Hospital Pvt. Ltd., the assessee is engaged in hospital services. While making the assessment for assessment year 2009-10, the Assessing Officer found that the assessee has paid referral fees for consulting Doctors. After examining the assessee’s claim, the AO disallowed the claim holding that the referral charges paid to Doctors is clear cut violation of the Medical council law.

The case was heard through video conferencing. The Ld. AR submitted that the Ld. CIT(A) has failed to note that the referral fees are paid to outsiders for referring the patients which is inevitable in this industry. He further submitted that the Ld. CIT(A) failed to note that the Circular No. 5/2012 (F.No. 225/142/2012-ITA.II dated 01.08.2012) imposing a prohibition on the medical practitioner and their professional associations from taking any gift, travel facility, hospitality, cash or monetary grant from the pharmaceutical and allied health sector industries is on the code of conduct of Medical council for the Medical Practitioner and not for healthcare services companies such as Assured Best Care which is a hospital. Since, the assessee is a company which :-3-: Ld. AO without examining the components of the expenditure simply disallowed which has been wrongly upheld by the Ld. CIT(A). Therefore, the Ld. AR submitted that this case may be remitted back to the AO for a proper examination as to whether the payments were made to Doctors or other agencies and whether such payments are liable under the provisions of Income Tax Act. Per contra, the Ld. DR inviting our attention to the assessment order submitted that the Ld. AO has clearly recorded a finding that the assessee has paid referral fees for consulting Doctors against which the Ld. AR inviting our attention to the order of the Ld. CIT(A) submitted that before the Ld. CIT(A) the assessee submitted that the impugned amount was being paid to various agencies who refer customers and institutions for continued relationship and successful business operations. However, this aspect has not been examined. Therefore, the Ld. AR reiterated his submissions for re-examination.

We heard the rival submissions and gone through the relevant material. Though, the Assessing Officer recorded a finding that the impugned amount was paid to consulting doctors, the assessee has taken a plea before the Ld. CIT(A) that the impugned amount was paid

In the result, the assessee’s appeal is treated as partly allowed for statistical purposes.