NAHAS HOSPITAL,PARAPPANANGADI vs. THE ACIT TDS, KOZHIKKODE

The brief facts of the case are that a survey under Section 133A of the Income Tax Act, 1961 (hereinafter "the Act") was conducted by the Income Tax officers (TDS) in the premises of M/s. Nahas Hospital on 20.08.2013. During the course of survey various details were collected. It was observed that out of the total professional fee collected 80% was paid to Dr.Sankaranarayanan and Dr.Raveendran. It was also observed that no TDS has been deducted under Section 194J of the Act. On perusal of the Profit and Loss Account the Income Tax Officer (TDS) observed that the assessee has incurred an amount of Rs.16,94,137/- towards advertisement charges and no TDS has been deducted as per 194C of the Act in the cases wherein single payment of more than Rs.30,000/- and the cumulative payment above Rs.1,00,000/- were paid. Relying on the Circular No. 5 of 2002 dated 30.07.2002 the AO held that the assessee was bound to deduct the required taxes but the assessee failed to do so. Therefore the assessee was held as an assessee in default. Aggrieved by the order of the AO the assessee filed appeal before the CIT(A). The CIT(A) deleted the addition made towards non-deduction of TDS under the head Professional Charges under Section 194J of the Act but he uphold for the non-deduction of tax at source for payment of advertisement charges

The learned D.R. strongly relied on the orders of the lower authorities.

From a perusal of the material available before us we observe that the assessee has paid advertisement charges to the 15 parties as per para 3 of the assessment order. On perusal of the record we find that the assessee has submitted details of the payments made for the whole year on different dates to the tune of. Rs.16,94,137/- out of which Rs.14,18,581/- has been disputed by the AO. On perusal of the details of all 15 parties it has been observed that in some cases the payment is below Rs.1,00,000/- to a single recipient during the year. As per Section 194C(5) of the Act the twin conditions must be satisfied, i.e. the payment should exceed Rs.30,000/- and the aggregate payment should be more than Rs1,00,000/- in a year to one recipient. But in the case before us there are some payments made to the parties which are less than Rs.1,00,000/-. Therefore in this case TDS provision will not be applied as the total payment is below Rs.1,00,000/- during the year to a single party. However, as per proviso of Section 201(1) of the Act if the recipient pays the tax on the amount received from the assessee the assessee will not be treated as an assessee in default,if the recipients have complied as per the proviso of Section 201(1) of the Act then the assessee shall not be treated as an assessee in default. As per the documents available before us, there no any such proof submitted by the assessee for complying the proviso of Section 201(1) of the Act. Therefore, considering the totality of the facts and circumstances of the case we consider it fit to send back the matter to the file of the AO for verification if the recipients have fulfilled the conditions of the proviso ofSection 201(1) of the Act and if the AO finds as per the proviso of Section 201(1) of the Act then the assessee shall not be treated as assessee in default. We make it further clear that interest shall be charged as per Section 201A(1) of the Act. Needless to say the assessee should be provided reasonable opportunity of hearing and the assessee is directed to file the necessary documents for

In the result, the appeal filed by the assessee is allowed for statistical purposes.