Medsave Health Insurance Vs ACIT (ITAT Delhi)
ITAT Delhi held that if the appeal is adjudicated on merits, then, refusing to condone the delay in filing of an appeal is an error. Action of refusing to condone the delay, but, to dispose off the appeal on merit is untenable in law.
Facts- The Assessee is a Third Party Administrator for insurance companies and made payments to various hospitals under cashless scheme on behalf of the insurance companies. The CPC-Bangalore vide intimation u/s. 154 read with section 200A of the Act charged interest on late payments of TDS u/s. 201(1A) of the Act.
Being aggrieved, the Assessee preferred first appeal before the ld. Commissioner, who vide impugned orders dismissed the appeal of the Assessee both on merits as well as on limitation.
Conclusion- In our considered view, once the ld. Commissioner declined to condone the delay in filling of the appeal being time barred by limitation, then there is no need to go into merits of the case, vice versa, once the Ld. Commissioner decided the appeals on merits then the inference can be drawn that delay if any, in filling of appeal is condoned and the appeal is admitted. The Hon’ble Madras High Court in the case of Vijayeswari Textiles Ltd vs. CIT (2003)(131 Taxman 833) also dealt with an issue, where the Tribunal had refused to condone the delay, but disposed off the appeal on merits also. The Hon’ble Madras High Court held that if the appeal is adjudicated on merits, then refusing to condone the delay is an error.
Coming to the instant case, as the ld. Commissioner first should have decided the issue qua condonation of delay in filling of the appeals and on satisfying that the Assessee has failed to establish sufficient cause for not filling the appeals within the prescribed period of limitation, the appeals should have been dismissed at the very threshold only on the point of limitation, whatsoever once the appeals decided on merit, then there was no need to go into the controversy qua limitation and to decline the condonation of delay, hence we are inclined not to approve such view, however as we have already dealt with the findings on merit of the case by the ld. Commissioner and therefore decision of the ld. Commissioner on merit is upheld.
FULL TEXT OF THE ORDER OF ITAT DELHI
These appeals have been preferred by the Assessee, out of which the appeal pertaining to assessment year 2013-14 arises out of order dated 23.03.2022 whereas the appeals pertaining to A.Yrs. 2014-15 & 2017-18 to 2019-20 are directed against the consolidated order of even dated 23.03.2022, passed by the learned Commissioner of Income-tax (Appeals)-27, New Delhi (in short “Ld. Commissioner”), u/s. 250 of the Income-tax Act, 1961 (in short ‘the Act’).
2. Since the common questions of law and facts are involved in all these appeals and the Assessee has raised common grounds therein, hence, the same were heard together and are being disposed of by this composite order for the sake of convenience and brevity.
3. The Assessee neither appeared nor filed any application for adjournment, despite sending notice for hearing at the address given by the Assessee in Form- Nor is there any other alternative address available with the Registry. Therefore, in the peculiar circumstances, we are constrained to decide these appeals as ex-parte qua Assessee.
4. For the sake of brevity, we will quote the facts, issues and impugned order involved in ITA no. 1027/Del/2022 for the assessment year 2014-15 as a lead case and our decision in this appeal shall apply mutatis mutandis to all other remaining appeals under consideration.
5. On merits, the Question involved in all these appeals for adjudication, is whether the ld. authorities below are justified in levying interest on late payment of TDS u/s. 201(1A) of the Act.
6. The brief facts relating to the issue under consideration are that the Assessee is a Third Party Administrator for insurance companies and made payments to various hospitals under cashless scheme on behalf of the insurance companies. The CPC-Bangalore vide intimation u/s. 154 read with section 200A of the Act charged interest on late payments of TDS u/s. 201(1A) of the Act.
Being aggrieved, the Assessee preferred first appeal before the ld. Commissioner, who vide impugned orders dismissed the appeal of the Assessee for A.Y. 20 13-14 on merits and the appeals for A.Yrs. 2014-15 and 2017-18 to 2019-20 on merits as well as on limitation. For ready reference, the decision taken by the ld. Commissioner in the impugned order for the AY 2014-15, is being reproduced herein below:
“6. I have gone through the submission made by the appellant. Both the grounds of appeal pertains to single issue of charging of interest on late payment of TDS, therefore, both the grounds of appeal are taken together.
6.1 The CBDT vide circular No. 8/2009 [F.NO. 385/08/2009-lT(B)], dated 24.11.2009 clarified as under:
“3. The services rendered by hospitals to various patients are primarily medical services and, therefore, provisions of section 194] are applicable on payments made by TPAs to hospitals etc. Further for invoking provisions of section 194], there is no stipulation that the professional services have to be necessarily rendered to the person who makes payment to hospital. Therefore TPAs who are making payment on behalf of insurance companies to hospitals for settlement of medical/insurance claims etc. under various schemes including Cashless schemes are liable to deduct tax at source under section 194] on all such payments to hospitals etc.
3.1 In view of above, all such past transactions between TPAs and hospitals fall within provisions of section 1 94J and consequence of failure to deduct tax or after deducting tax failure to pay on all such transactions would make the deductor (TPAs] deemed to be an assessee in default in respect of such tax and also liable for charging of interest under section 201(1A) and penalty under section 271 C.”
6.2 The appellant company was one of the petitioners in Writ Petition (Civil), No. 121 of 2010 filed before the Hon’ble High Court of Delhi in January 2010 challenging the Circular No. 8/2009 issued by CBDT. The Hon’ble High Court of Delhi passed an interim order that: “in the meantime no recovery shall be made pursuant to the Circular no 8/2009 dated 24.11.2009.”
6.3 The Hon’ble Delhi High Court vide final order dated 30.09.2011 in Writ Petition [Civil) No. 121 of 2010 held that: “It is held that Section 194J applies to the payments made by the petitioners to juristic or corporate entities that are “provide” “professional services”” Hence, it was settled on 30.09 2011 by Hon’ble Delhi High Court that provisions of section 194J of the Act are clearly applicable in TPA’s case and TPA’s are required to deduct TDS @ 10% on the payments made to hospitals on cashless basis on behalf of insurance companies.
6.4 The section 194J of the Act reads as under:
“194]. (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of—
(a) fees for professional services, or
(b) fees for technical services, [orj
[(ba) any remuneration or fees or commission by whatever name called, other than those on which tax is deductible under section 192, to a director of a company; or]
[(c) royalty, or
(d) any sum referred to in clause (va) of section 28]
shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent of such sum as income-tax on income comprised therein”.
6.5 The tax deducted by the payer (i.e., a non-Government payer) is to be paid to the credit of the Government as follows:
