Apollo Dkv Insurance Co. Ltd., Gurgaon vs Department Of Income Tax

ITA no. 2816/Del/2012 A.Y. 2009-10 ACIT TDS Circle, Vs. M/s Apollo DKV Insurance Co. Ltd., New Delhi. Apollo Munich Health Insurance Co. Ltd., 10th Floor, Tower-B, Building no. 10, DLF Cyber City, DLF City, Phase-II, Gurgaon. PAN: AAGCA 1654 H

AND C.O. No. 291/Del/12 ( In ITA no. 2816/Del/2012) A.Y. 2009-10 M/s Apollo DKV Insurance Co. Ltd., Vs. ACIT TDS Circle, Gurgaon. New Delhi. ( Appellant ) ( Respondent )

Department by : Mrs. Y. Kakkar DR Assessee by : Shri Rupesh Jain Adv. & Shri Upvan Gupta CA

Date of hearing : 05-11-2014 Date of order : 12-01-2015.

ORDER

PER S.V. MEHROTRA, A.M:-

The department has preferred appeal and the assessee has filed cross

objection against the order dated 21-03-2012, passed by the CIT(Appeals),

Faridabad in appeal no. 145/GGN/2009-10 for A.Y. 2009-10.

2 2. Brief facts of the case are that the assessee is an insurance company

and had entered into contracts with various hospitals for treatment of its

policy holders. Survey/ TDS inspection u/s 133A(1) of the I.T. Act, 1961

was carried out on 12-12-2008 in the case of the assessee. In the course of

inspection, it was noticed that the assessee had made the following payments

to various hospitals for the professional services rendered by the hospitals to

the policy holders of the assessee:

F.Y. Month Amount 2007-08 Jan 2008 Rs. 7065 Feb 2008 Rs. 47200 Mar 2008 Rs. 282368 Total Rs. 336633 2008-09 Apr 2008 Rs. 671176 May 2008 Rs. 2040292 Jun 2008 Rs. 6771674 Jul 2008 Rs. 4755838 Aug 2008 Rs. 6057944 Sep 2008 Rs. 6041210 Oct 2008 Rs. 7888425 Nov 2008 Rs. 8924253 Dec 2008 Rs. 9686827 Jan 2009 Rs. 22480349 Feb 2009 Rs. 20861900 Mar 2009 Rs. 22097739

2.1. The AO was of the opinion that since the payments were made for

professional services, the assessee was obliged to deduct tax u/s 194J of the

I.T. Act. The AO referred to the decision of Hon'ble Karnataka High Court

in the case of Medi Assish India TPA Vs. DCIT, holding that the payments 3

made to hospitals were subject to the provision of sec. 194J. He also

referred to the CBDT Circular no. 8/2009 dated 24-11-2009 on this issue.

AO further observed that assessee had failed to submit any sustainable

documentary evidence in support of its contention that respective hospitals

had already paid tax to govt. a/c and there was no revenue loss to the

department. The AO, therefore, computed the default for non-deduction of

tax u/s 201(1), as under:

Amount of TDS Rs. 13400855 Interest Rs. 1765387

2.2. Further, for delay in depositing the TDS, the interest chargeable u/s

201(1A) was computed at Rs. 17042/- as under:

Amount of tax Due date of Actual date of Interest u/s deducted payment payment 201(1A) to be charged Rs. 1112819/- 07-07-2008 09-07-2008 Rs. 11128/- Rs. 127768/- 07-05-2008 16-05-2008 Rs. 1277/-

Rs. 463729/- 07-07-2008 09-07-2008 Rs. 4637/-

Total Rs. 17042/-

2.3. Before ld. CIT(A), the assessee had filed detailed submissions, which

were forwarded by ld. CIT(A) to AO for his comments, but since no report

was received, therefore, ld. CIT(A) decided the appeal on the basis of

written submissions made by assessee.

4 2.4. Ld. CIT(A) upheld the AO's action in treating the payments being

amenable to deduction under the provisions of section 194J, inter alia,

observing that hospitals had rendered professional services to the assessee,

though policy holders were treated under the cash-less insurance scheme. He

pointed out that there was no contract for the availing of medical services

between the policy holder and the hospital, but a contract between assessee

and the hospitals by virtue of which the insured availed medical facilities

from the hospitals. He observed that though the payments were made on

their behalf, but the same constituted payment to hospitals under the

expression arrangement/ agreement.

2.5. As regards the assessee's reliance on the decision of Hon'ble Supreme

Court in the case of Hindustan Coca Cola Beverages Ltd. V. CIT 293 ITR

226 and CBDT Circular no. 275/201/95-IT(B) dated 29-01-1997, ld. CIT(A)

observed that as per circular though no demand visualized u/s 201(1), should

be enforced after the tax deductor has satisfied the officer-in-charge of TDS,

that taxes due had been paid by the deductee-assessee. However, that would

not alter the liability to charge interest u/s 201(1A) of the Act till the date of

payment of taxes by the deductee- assessee, or the liability for penalty u/s

271C. He also referred to the decision of Hon'ble Supreme court in the case

of CIT Vs. Eli Lilly & Co. India Pvt. Ltd. 312 ITR 225, wherein it had been 5

held that once the deductees had paid taxes on their salary income by way

of self assessment tax, tax could not be recovered from the employers u/s

201(1) of the Act. In view of this position of law, ld. CIT(A) required the

assessee to file the details regarding taxes paid by various hospitals by way

of TDS, advance tax and self assessment tax, so as to determine the correct

liability towards non/short deduction of tax and interest chargeable u/s

201(1A) of the Act.

2.6. In response to ld. CIT(A)'s direction, the assessee filed necessary

details, enclosing therewith, the PB, containing 425 pages and certificate

issued by the hospitals. Ld. CIT(A) has observed that these evidences could

not be filed before the AO due to time constraints and voluminous exercise,

but the same were called for and admitted by exercising power under Rule

46A(4) of the I.T. Rules in order to decide various grounds of appeal

judiciously.

2.7. Ld. CIT(A), after examining the certificates filed by the assessee,

pointed out that hospitals obtained a general certificate from their auditors to

the effect that they had paid taxes on income. After considering the details,

ld. CIT(A), inter alia, observed as under:

6 "During the FY 2008-09, the appellant has made payments of Rs. 20,000/- or less to 243 hospitals on which TDS of Rs. 2,88,465/- and interest of Rs. 37,072/- has been worked out. As regards total payments of Rs. 112,039,526/- having TDS implication of Rs. 1,26,94,078/- the appellant has field certificates regarding taxes paid by the hospitals as page 1 to 425 of the paper book. Some of the hospitals have also enjoyed exemption from deduction of tax by virtue of certificates obtained u/s 197(1) of the Act. The appellant has not been able to file certificates in respect of remaining TDS amount of Rs. 4,18,312/-. In the light of decision of Hon'ble supreme Court in the case of Hindustan Coca Cola Beverages Ltd. V. CIT (293 ITR 226) and CBDT's Circular no. 275/201/95-IT(B) dated 2901-1997, no demand of TDS can be recovered except the amount of Rs. 4,18,312/- for which the appellant has not been able to satisfy that the amount of tax to that extent has been paid by concerned hospitals. Hence, in absence of any evidence, the demand raised to the extent of Rs. 4,18,312/- u/s 201(1) on account of non deduction of tax is confirmed and balance demand of Rs. 1,29,82,543/- is deleted. Ground no. 4 of appeal is partly allowed."

2.8. As regards the demand u/s 201(1A), ld. CIT(A), inter alia, observed

that in view of the decision of Hon'ble Supreme Court in the case of

Hindustan Coca Cola Beverages Ltd. (supra), there remained no dispute that

the interest is required to be charged up to the date of payment made by the

deductees.

2.9. After examining the certificates, issued by the hospitals, ld. CIT(A)

observed that no specific information as to the payment by way of TDS,

advance tax or self assessment tax was given by the hospitals and general

certificate had been issued stating the total taxes paid by them on their 7

returned income. He pointed out that to collect hospital-wise information

separately for TDS, advance tax or self assessment tax was not feasible on

account of the same being time consuming and voluminous exercise. He

further pointed out that even if such exercise was done, the result could not

make much difference if the interest was charged considering the provisions

relating to payment of advance tax. He pointed out that under the existing

provisions, the assessees were required to pay advance tax either in three or

four quarterly installments whereas the assessee had made payments

regularly to the hospitals. In the backdrop of this position, ld. CIT(A)

computed the interest payable u/s 201(1A), observing as under:

"Thus, payments made without deduction of tax prior to due dates of advance tax payments by the deductees would deprive the revenue of legitimate taxes. The appellant has worked out interest on monthly basis up to 31-03-2009. In respect of TDS amount of Rs. 4,18,312/- for which no certificates have been filed, the interest has been worked out at Rs. 1,11,276/-. However, the same is required to be charged up to the due date of filing of returns in the case of deductees i.e. up to September 2009. Thus, the interest for further period of 6 months works out to Rs. 25,098/-. In respect of no certificate cases of deductees, the total interest works out to Rs. 1,36,374/-. In respect of hospitals from which the certificates have been filed, the amount of interest has been worked out by the appellant on monthly basis up to 31-03-2009 at Rs. 4,23,084/-(i.e. Rs. 5,34,360/- minus Rs. 1,11,276/-). However, the interest in these cases is also required to be charged up to the due date of filing of returns by the deductees. By estimating that the deductees must have paid at least 90% of their taxes by way of advance tax, the interest on short fall of 10% of TDS amount i.e. s.

8 12,98,254/- for 6 months works out to Rs. 77,895/-. Consequently, the total interest chargeable in these cases of deductees works out to Rs. 5,00,979/-. Considering the above facts, charging of interest of Rs. 6,37,353/- (i.e. Rs. 1,36,374/- plus Rs. 5,00,979/-) u/s 201(1A) is confirmed and balance interest of Rs. 11,28,034/- is deleted. Ground no. 5 of appeal is partly allowed."

2.10. Being aggrieved, with the order of ld. CIT(A), the department is in

appeal before us and assessee has filed cross objections.

3. We have considered the submissions of both the parties. First we take

up the cross objections, taken by the assessee, wherein the assessee has

primarily assailed the findings of lower revenue authorities in invoking the

provisions of section 194J to the present set of facts. The facts are not

disputed. The assessee had made payments to various hospitals for the

alleged professional services rendered by the hospitals to its policy holders.

The assessee company is engaged in health insurance business and offered

health insurance, personal accident and travel insurance products to both

retail and corporate customers. The assessee, in the course of its business,

received claims from policy holders and made payments on behalf of policy

holders to hospitals. The assessee's contention was that it was not required

to deduct tax u/s 194J of the Act, since it was not the recipient of services

provided by the hospitals. The submission was that the payment to hospital 9

was made by the assessee not on its own account but on behalf of policy

holders.

3.1. Ld. counsel for the assessee fairly conceded that the issue regarding

applicability of the provisions of section 194J to the present set of facts has

been decided by Delhi High Court against the assessee in the case of Vipul

Medicorp TPA (P) Ltd. & others Vs. CBDT 245 CTR 125, wherein it has

been held as under:

19. The question, therefore, is what is covered by the expression "professional services" under Explanation (a) and requires deduction of TDS under Section 194J. What is the legislative intent behind the definition in Explanation (a) to Section 194J of the Act? As noticed above, Section 2(36) defines the term "profession" and Section 14 also refers to profits and gains of business or profession. The term used in Section 194J, however, is "professional services" and Explanation (a) defines the said term for the said Section exclusively. The word "services" in the expression "professional services" is significant and has to be given due weightage. The primary purpose and objective of the definition clause is to define the services included and regarded as professional services and not the person who renders the said services. Section 194J under sub-section 1 applies when payment is made to a resident towards any sum by way of fee for professional services. The object of the definition clause Explanation (a) is not to identify the 'resident', or the recipient, who receives or is paid fee for professional services but to define the services.

3.2. Hon'ble Delhi High Court agreeing with the view taken by Hon'ble

Bombay High Court in the case of Dedicated Health Care Services TPA

(India)(P) Ltd. 232 CTR 41, held as under:

10 24. In Dedicated Health Care Services' case (supra), after referring to Section 119 of the Act, following observations have been made:-

"14. Section 119 of the Act provides that the Board may, from time to time issue such orders, instructions and directions to other income-tax authorities as it may deem fit for the proper administration of the Act and that such authorities and all other persons employed in the execution of the Act shall observe and follow such orders, instructions and directions of the Board. The proviso to sub-section (1) however stipulates that no such orders, instructions or directions shall be issued (a) so as to require any income-tax authority to make a particular assessment or to dispose of a particular case in a particular manner; or (b) so as to interfere with the discretion of the Commissioner (Appeals) in the exercise of his appellate functions. The Board has by the circular taken the view that payments which are made by TPAs to hospitals fall within the purview of section 194J. No exception can be taken to the circular to that extent, consistent with the interpretation placed on the provisions of section 194J in the course of this judgment.

However, the grievance of the petitioners is that the circular proceeds to postulate that a liability to pay a penalty under section 271C will be attracted for a failure to make a deduction under section 194J. Section 273B of the Act provides that notwithstanding anything contained in the provisions inter alia of section 271C no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the provision if he proves that there was a reasonable cause for the failure. The vice in the circular that has been issued by the Central Board of Direct Taxes lies in the determination which has been made by the Board that a failure to deduct tax on payments made by TPAs to hospitals under section 194J will necessarily attract a penalty under section 271C. Besides interfering with the quasi-judicial discretion of the Assessing Officer or, as the case may be, the appellate authority the direction 11

which has been issued by the Board would foreclose the defence which is open to the assessee under section 273B. By foreclosing a recourse to the defence statutorily available to the assessee under section 273B, the Board has by issuing such a direction acted in violation of the restraints imposed upon it by the provisions of sub- section (1) of section 119. To that extent, therefore the circular that was issued by the Board would have to be set aside and is accordingly set aside. We also clarify that in making assessments or, as the case may be, in passing orders on appeals filed under the Act, the Assessing Officers and the Commissioner (Appeals) shall do so independently and shall not regard the exercise of their quasi-judicial powers as being foreclosed by the issuance of the circular."

4. Therefore, ground nos. 2 and 3 of the cross objection filed by the assessee are dismissed. As far as ground nos. 1 & 4 are concerned, they will be considered while deciding the appeal filed by department because ld. CIT(A) has partly allowed the assessee's ground of appeal.

5. Now coming to the department's appeal and ground nos. 1 & 4 of cross-objection, the main contention of ld. DR is that ld. CIT(A) wrongly observed that assessee was not given sufficient opportunity for filing the necessary details. He referred to page 1 of the assessment order and pointed out that survey took place on 12-12-2008 and the order u/s 201(1) and 201(1A) was passed on 5-10-2010. Ld. DR pointed out that at page 21, the ld. CIT(A) has observed that vide letter dated 7-3-2011 the paper book and written submissions filed by the assessee were forwarded to the AO, but no report was received from assessee. He referred to page 70 to 101 of the PB and pointed out that before ld. CIT(A) the assessee had filed various evidence on 5-3-2012 and ld. CIT(A) passed the order on 21-3-2012. Therefore, AO had no sufficient time to examine the details. Ld. DR 12

submitted that the details were to be considered under Rule 46A(3) and not under Rule 46A(4). On merits ld. DR referred to provisions of sections 201(1A) to submit that the interest is to be paid from the date on which such tax was deductible to the date of furnishing of return of income by the recipient.

6. As far as the ld. DR's submissions with reference to the proviso to section 201(1A) are concerned, the said proviso has been inserted by the Finance Act 2012 w.e.f. 1-7-2012 and, therefore, the said proviso is not applicable for AY 2009-10.

7. The assessee's submission before ld. CIT(A) was that even if interest was to be levied, it could not be levied beyond the closing of the financial year. However, ld. CIT(A) did not accept this contention of the assessee and computed the interest up to the date of payment by deductee.

8. As far as ld. DR's submission with regard to the evidence filed before ld. CIT(A) under Rule 46A(3) and not under Rule 46A(4) is concerned, we find that during the hearing on 6-2-2012, as mentioned in para 6.1, ld. CIT(A) had required the assessee to file the details in the light of judgment of Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverges Ltd. 293 ITR 226 and CBDT Circular no. 275/201/95-IT(B) dated 29-1- 1997,. These details were filed by assessee on 5-3-2012 and further submissions were made on 13-3-2012. However, in para 6.2 of his order we find that before ld. CIT(A), the assessee had made submissions on 25-2- 2011 and had also filed a paper book, containing 117 pages. These submissions dated 21-2-2011 are contained at page 66 of the PB, in which assessee had made application for admission of additional evidence under Rule 46A. In these submissions itself the assessee had, inter alia, submitted as under:-

13 "It is most respectfully prayed that the appellant be allowed to lead evidence in the matter in support of its contentions. The appellant has moved a separate application before your honour seeking permission to adduce additional evidence in the matter, which opportunity was denied to the appellant by the assessing officer. It would be seen from the application that out of total payment of Rs. 3,36,633 made for assessment year 2008-09 and Rs. 11,82,77,627/- made for assessment year 2009-10, the appellant has been able to furnish evidence in support of its contention to the extent of Rs. 1,66,428/- for assessment year 2008-09 and Rs. 5,88,17,651 for assessment year 2009-2010. Accordingly, it is prayed that tax demand of Rs. 18,856 for AY 2008-09 and Rs. 66,70,647 for assessment year 2009-2010 may kindly be quashed. The consequential interest levied on the aforesaid amounts may also be deleted."

9. These submissions were duly sent to AO for his comments on 7-3- 2011 but as observed by ld. CIT(A), even after a gap of one year, AO did not file any reply. Some more details along with the details filed on 25-2-2011 were filed by assessee on 5-3-2012 in response to Ld. CIT(A)'s directions. Therefore, keeping in view the entirety of facts, it would be proper to conclude the AO had been provided due opportunity in terms of the decision of Hon'ble Delhi High Court in the case of CIT Vs. Manish Buildwell (P) Ltd. (2012) 204 Taxman 106, holding as under:

"24. In the present case, the CIT (A) has observed that the additional evidence should be admitted because the assessee was prevented by adducing them before the assessing officer. This observation takes care of clause (c) of sub-rule (1) of Rule 46A. The observation of the CIT (A) also takes care of sub-rule (2) under which he is required to record his reasons for admitting the additional evidence. Thus, the requirement of sub-rules (1) and (2) of Rule 46A have been complied with.

However, sub-rule (3) which interdicts the CIT (A) from taking into account any evidence produced for the first time before him unless the Assessing Officer has had a reasonable 14

opportunity of examining the evidence and rebut the same, has not been complied with. There is nothing in the order of the CIT (A) to show that the Assessing Officer was confronted with the confirmation letters received by the assessee from the customers who paid the amounts by cheques and asked for comments. Thus, the end result has been that additional evidence was admitted and accepted as genuine without the Assessing Officer furnishing his comments and without verification. Since this is an indispensable requirement, we are of the view that the Tribunal ought to have restored the matter to the CIT (A) with the direction to him to comply with sub-rule (3) of Rule 46A. In our opinion and with respect, the error committed by the Tribunal is that it proceeded to mix up the powers of the CIT (A) under sub- section (4) of Section 250 with the powers vested in him under Rule 46A. The Tribunal seems to have overlooked sub-rule(4) of Rule 46A which itself takes note of the distinction between the powers conferred by the CIT (A) under the statute while disposing of the assessee's appeal and the powers conferred upon him under Rule 46A. The Tribunal erred in its interpretation of the provisions of Rule 46A vis-à-vis Section 250(4). Its view that since in any case the CIT (A), by virtue of his conterminous powers over the assessment order, was empowered to call for any document or make any further enquiry as he thinks fit, there was no violation of Rule 46A is erroneous. The Tribunal appears to have not appreciated the distinction between the two provisions. If the view of the Tribunal is accepted, it would make Rule 46A otiose and it would open up the possibility of the assessees' contending that any additional evidence sought to be introduced by them before the CIT (A) cannot be subjected to the conditions prescribed in Rule 46A because in any case the CIT (A) is vested with conterminous powers over the assessment orders or powers of independent enquiry under sub- section (4) of Section 250. That is a consequence which cannot at all be countenanced".

10. Now, coming to the merits of the case, we find that before ld. CIT(A) it was submitted that out of total payment of Rs. 3,36,633/- made or AY 2008-09 and Rs. 11,82,77,627/- made for AY 2009-10, the assessee had 15

been able to furnish evidence in support of its contention to the extent of Rs. 1,66,428/- for AY 2008-09 and Rs. 5,88,17,651/- for AY 2009-10. Accordingly, it was submitted that tax demand of Rs. 18,856/- for AY 2008- 09 and Rs. 66,70,647/- for AY 2009-10 could not be recovered from the assessee. It was further pointed out that interest u/s 201(1A) was also not leviable as there was no loss of revenue in view of the fact that hospital had paid tax during the relevant year in relation to the income received (including the payment made by the assessee). In this regard, the assessee relied on the decision of Hon'ble Gujarat High Court in the case of CIT Vs. Rishikesh Apartments Co-operative Housing Society Ltd. 253 ITR 310, wherein it has been held that where the assessee fails to deduct the amount of tax, which was required to be deducted under the provisions of the Act and the payee has paid sufficient advance tax and tax on self-assessment, on due date, no interest could be levied u/s 201(1A) of the Act on the assessee, out of which tax was required to be deducted at source by the assessee, for the reason that no loss was caused to revenue on account of non-deduction of such tax.

11. The assessee also referred to the decision of Delhi Bench of the Tribunal in the case of ITO Vs. Sood Enterprises 41 ITD 234, wherein also similar view was taken.

12. The assessee also referred to the decision of Delhi Bench of the Tribunal in the case of Salwan Construction Co. Vs. ACIT 53 TTJ 39; and decision of Bangalore Bench of the Tribunal in the case of Wipro Finance Ltd. Vs. ITO 81 TTJ 887.

16 13. The assessee vide submissions dated 5-3-2012 furnished before ld. CIT(A) following evidences in response to the evidence requisitions by ld. CIT(A) on 6-2-2012:

Financial Category Total Total Total Evidence Annexure year Payment tax Interest Availability Number Amount Amount Amount 2007-08 A.Claim 12,414 1,407 327 Annex payment of -I Rs. 20,000 or less 2007-08 B.Claim 324,219 36,734 8,184 Enclosed Annex.

payment of -I Rs. 20,000 or more evidence collected.

Total for FY 2007-08 336,633 38,141 8,511 2008 A.Claim 2,546,025 288,465 37,072 Annex -09 payment -II of Rs. 20,000 or less 2008 B.Claim 112,039,52 12,694,07 1,689,84 Enclosed Annex. -09 payment 6 8 1 -II of Rs. 20,000 or more evidence collected . 2008 C.Claim 3,692,076 418,312 56,983 Collectio Annex -09 payment n in -II of Rs. progress 20,000 or more evidence pending.

Total for FY 2008-09 118,277,627 13,400,855 1,783,896 118,614,260 13,438,996 1,792,407

We request relief from the payment of tax of Rs. 13,020,684 and interest of Rs. 1,735,424 in respect of the payments of Rs. 20,000 or less and the payments for which evidence for payment of tax had been collected as per following details:-

17 Category Total Total tax Total payment Amount Interest Amount Amount A.Claim payment of Rs. 12,414 1,407 327 20,000 or less in FY 2007-08 A.Claim payment of Rs. 2,546,025 288,465 37,072 20,000 or less in FY 2008-09 B. Claim payment of Rs. 324,219 36,734 8,184 20,000 or more Evidence collected in FY 2007-08 B. Claim payment of Rs. 112,039,526 12,694,078 1,689,841 20,000 or more Evidence collected in FY 2008-09 Total Amount for which relief 114,922,184 13,020,684 1,735,424 is requested for FY 2007-08 & 2008-09 (A+B)

14. The main contention of assessee was that at best interest could be charged for the period during which revenue sustained loss and in case where such tax had been deposited by the recipient then default in deducting tax at source were ceased and, therefore, no interest could be charged beyond the period of which recipient had deposited the tax. The assessee relied on the decision of Hon'ble supreme Court in the case of Hindustan Coca Cola Beverage P. Ltd. V. CIT 293 ITR 226, wherein it has been held that deduction of tax at source by a payer and direct payment of tax by the payee were alternative and not cumulative methods of tax recovery, so that once there is direct payment of tax by the payee, the liability of the payer for interest under section 201(1A) of the Act for default in deducting tax at source would cease.

15. In the alternative, the assessee submitted that even if interest was to be levied, it could not be levied beyond the close of the financial year. In this regard the assessee referred to the decision of Jodhpur Bench of the Tribunal in the case of Emrald Construction Co. (P) Ltd. 304 ITR 338 (AT), wherein 18

the Tribunal, relying on the decision of Hon'ble Gujarat High Court in the case of Rishikesh Apartments Co-operative Housing Society Ltd. (supra) held that where the entire tax had been paid by the payee as advance tax and tax on self-assessment, interest u/s 201(1A) could not be levied.

16. The assessee also referred to the decision of Hon'ble Jurisdictional High Court in the case of CIT Vs. Rajasthan Rajya Vidyut Prasaran Nigam Ltd. 161 Taxman 133 (Raj.), wherein the recipient was awarded refund and, therefore, it was held that no interest u/s 201(1A) was leviable. The assessee also relied on following decisions:

- CIT v. Manager M.P. State Cooperative Development Bank Ltd. 137 ITR 230;

- CIT Vs. Divisional Manager, New India Assurance Co. Ltd. 140 ITR 818

- CIT v. Life Insurance Corporation 166 ITR 191 (MP.

17. Ld. CIT(A), after considering the evidences filed by assessee, in the light of decision of Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverage P. Ltd. (supra), and CBDT Circular no. 275/201/95-IT(B) dated 29-1-1997, considered the details filed in paper book, containing 425 pages and certificate issued by the hospitals. Ld. CIT(A) observed in para 6.2 & 6.3 as under:

6.2. The learned counsel has filed necessary details enclosing therewith the paper book containing 425 pages and certificates issued by the hospitals. These evidences could not be filed before the AO earlier due to time constraints and voluminous exercise but the same are called for and admitted by exercising power under u/e 46A(4) .of the Income Tax Rules, 1962 in order to decide various grounds of appeal judiciously. A perusal of certificates reveals that some of them are issued in the name of appellant and others in the name of various TPAs. The appellant has contended 19

that the TPAs were earlier issued notices by the department for not deducting tax on payments to hospitals. As per CBDT's Circular, the TPAs requested the hospitals to furnish certificates from their auditors regarding taxes paid. A hospital works with several TPAs and insurance companies and it was not practically possible for the hospitals to provide certificate from their auditors to each of the TPAs and insurance companies separately. The hospitals obtained a general certificate from their auditors to the effect that they have paid taxes on income. Incidentally, some of the certificates were addressed to the insurance companies, some to TPAs and some were addressed to public in general. In case of the appellant, some of the certificates, though containing the information as mandated in the aforesaid CBDT circular, have been addressed to the TPAs. The practical difficulty in obtaining multiple certificates by each hospital would not affect the claim of the appellant since the certificates fully comply with the conditions laid down in the said CBDT circular. During the F.Y.2008-09, the appellant has made payments of Rs.20,000/- or less to 243 hospitals on which TDS of Rs.2,88,465/- and interest of Rs.37,0721 - has been worked out. As regards total payments of Rs.112,039,526/- having TDS implication of Rs.1,26,94,078/- the appellant has filed certificates regarding taxes paid by the hospitals as per page 1 to 425 of the paper book. Some of the hospitals have also enjoyed exemption from deduction of tax by virtue of certificates obtained u/s 197(1) of the Act. The appellant has not been able to file certificates in respect of remaining TDS amount of Rs. 18,312/ -. In the light of decision of Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverages Ltd.

v. CIT (293 ITR 226) and CBDT's Circular No. 275/201/95 - IT' (B) dated 29.01.1997, no demand of TDS can be recovered except the amount of Rs 4,18,312/- for which the appellant has not been able to satisfy that the amount of tax to that extent has been paid by concerned hospitals. Hence, in absence of any evidence, the demand raised to the extent of Rs. 4,18,312/- u/s 201(1) on account of non deduction of tax is confirmed and balance demand 20

of Rs.1,29,82,543/ - is deleted. Ground No. 4 of appeal is partly allowed.

6.3. As regards charging of interest u/s 201(1A), it is seen that the AO has charged interest upto the date of order which is in contradiction to the CBDT's Circular and the decision of Hon'ble Apex Court. The interest is required to be charged upto the date of payments made by the deductees on their income. The appellant has relied upon large number of decisions on this issue. The Hon'ble Gujarat High Court in Rishikesh . Apartment Co- operative Housing Society Ltd. (supra) has held that no interest can be charged beyond the F.Y. in which tax was deductible. However, this was a case where assessee claimed refund on account of excess taxes paid within the financial year. After the decision of Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverages Ltd. (supra), there remains no dispute that the interest is required to be charged upto the date of payments made by the deductees. Therefore, the case laws relied upon by the learned counsel are either distinguishable or not applicable in the facts of appellant's case. A perusal of certificates issued b the has ital reveals that there is no specific information as to the payments by way of TDS, advance tax or self assessment tax but general certificates have been issued stating the total taxes paid 'by them on their returned income. Consequently to collect hospital wise information separately for TDS advance tax or self assessment tax is not feasible, in addition to being very-time consuming and voluminous exercise. Even if such exercise is done, the result would not make much difference if the interest is charged considering the provisions relating to payment of advance tax. under the existing provisions, the assessees are required to pay advance tax either in three or four quarterly installments whereas the appellant has made payments regularly to the hospitals. Thus, payments made without deduction of tax prior to due dates of advance tax payments by the deductees would deprive the revenue of legitimate taxes. The appellant has worked out interest on 21

monthly basis upto 31.03.2009. In respect of TDS amount of RsA,lB,312/- for which no certificates have been filed, the interest has been worked out at Rs.1,11,276/-. However, the same is required to be charged upto the due date of filing of returns in the case of deductees i.e. upto September 2009. Thus, the interest for further period of 6 months works out to Rs.25,098/-. In respect of no certificate cases of deductees, the total interest works out to Rs.1,36,374/-. In respect of hospitals from which the certificates have been filed, the amount of interest has been worked out by the appellant on monthly basis upto 31.03.2009 at Rs.4,23,084/- (i.e. Rs.5,34,360/- minus Rs.l,11,276/-). However, the interest in these cases IS also required to be charged upto the due date of filing of returns by the deductees. By estimating that the deductees must have paid at least 90% of their taxes by way of advance tax, the interest on short fall of 10% of TDS amount i.e. Rs.12,98,254/- for 6 months works out to Rs.77,895/-. Consequently, the total interest chargeable in these cases of deductees works out to Rs.5,00,979/-. Considering the above facts, charging of interest of Rs.6,37,353/- (i.e. Rs.l,36,374/- plus Rs.5,00,979/- u/s 201(1A) is confirmed and balance interest of Rs. 11,28,034/ - is deleted. Ground No. 5 of appeal is partly allowed."

(emphasis supplied by us).

19. We find that ld. CIT(A) keeping in view the complexity of the issue involved and the feasibility of evidence to be available in the given facts considered the entire issue on the basis that 90% of the advance tax must have been paid by the hospital and, therefore, he has computed the interest on short fall of 10% of TDS amount. Considering the entire conspectus of the case and the voluminous exercise required in obtaining the details, we do not find any infirmity in these findings of ld. CIT(A) as the final conclusion, in any case, will not be materially different from that arrived at by ld. CIT(A) and, accordingly, confirm the same, as the interest has been charged 22

up to the due date of filing of return by the deductees. We are not in agreement with the submissions of ld. counsel for the assessee that the interest should have been charged only up to the 31st March of financial year because as held by Hon'ble Madras High Court in the case of CIT Vs. Chennai Metropolitan Water Supply and Sewerage Board 348 ITR 530, interest is required to be paid up to the date on which the return had been filed by the payee.

20. In any view of the mater, we do not find any flaw or infirmity in the order of ld. CIT(A) so to take a different view in the matter. Order of CIT(A) is, accordingly, upheld.

21. In the result, Revenue's appeal as well as assessee's cross objections are dismissed.

Order pronounced in open court on 12-01-2015.

Sd/- Sd/- ( A.T. VARKEY ) ( S.V. MEHROTRA ) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 12-01-2015. MP Copy to : 1. Assessee 2. AO 3. CIT 4. CIT(A) 5. DR 23