Case Law Details
ITO Vs Thyrocare Technologies Ltd. (ITAT Mumbai)
The assessee is providing pathological testing services through its diagnostic laboratories. The assessee has made arrangement with various sample collection centres referred to as Thyrocare Services Providers (TSPs) for collection of samples and forwarding the same for testing to the assessee. It is an admitted fact that the TSPs have option to forward the specimen samples for testing, either to the assessee or any other specialized testing laboratory. In other words, the TSPs are not under obligation to send every sample for testing to the assessee unless the patients/customers specifically ask the TSPs to send the samples to the assessee for testing. The assessee is remunerated for the testing services provided to the TSPs at an agreed rate. The assessee raises periodical invoices on the TSPs. The TSPs make payment to the assessee after deducting TDS under section 194J of the Act for rendering professional services.
The ld. DR submitted that the TSPs with whom assessee has arrangement to collect samples are the agents of the assessee, hence, there is a relation of principal-agent. On the payments made by the assessee to its agents, the assessee is liable to deduct tax under section 194H of the Act. The ld. DR referring to table at page no. 39 & 40 of the assessment order submitted that the AO after having tested the transactions between the assessee and TSPs on various factors has established that TSPs are agents of the assessee and they are allowed to collect charges from clients for collecting samples and delivering test reports. The sharing of testing charges between the TSPs and the assessee are in the nature of commission or brokerage on which TDS is required to be deducted under section 194H of the Act. The TSPs charge their clients at rates given in the rate catalogue provided by the assessee. The ld. DR vehemently supported the assessment order and prayed for reversing the findings of CIT(A).
Thus, what emanates from the submissions made by ld. AR and the supporting documents is, it is the TSPs who are the payers and not the assessee. The assessee is a recipient of the amount for providing testing services to the TSPs. The assessee receives the payment on the basis of periodical invoices raised on TSPs, the TSPs make payment to the assessee after deducting TDS under section 194J of the Act. Thus, the findings of the AO are contrary to the facts, the AO) on presumptions, surmises and conjectures has entirely made out a new case by reversing the payer and payee. The AO has erred in observing that the assessee is a payer and the TSPs are recipients of the amount. The AO further erred in holding that since the assessee is making payment to the TSPs, the assessee was under obligation to deduct TDS under section 194H of the Act on commission paid to the TSPs.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
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