Case Law Details
Family Health Plan (TPA) Ltd. Vs ITO (ITAT Chennai)
The issue under consideration is whether TDS u/s 194J will be applicable on payments made by TPA to hospitals on behalf of insurance companies for settling medical or insurance claims?
In the present case, M/s Family Health Plan (TPA) Ltd., the assessee, is a company acting as a Third Party Administrator (TPA) in respect of various general insurance companies and processes the insurance claims for those insurance companies. The role of the assessee includes making payments for the medical treatment and other services availed by the insured at the various networked and non-networked hospitals. The Assessing Officer considered that the payments made to the hospitals in lieu of medical services rendered partakes the nature of ‘payment for professional services’ as provided under section 194J. However, on verification, the AO found that the assessee was not deducting TDS in respect of the payments made by it to various hospitals for the services rendered by them. Therefore, the Assessing Officer passed orders U/s.201(1) and U/s 201(1A).
ITAT states that, it is clear that the third party administrator, who is responsible for making payment to hospitals for rendering medical services to policy holders under various health insurance policies issued by several insurers, he is obliged to deduct tax at source U/s.194J from the payments made to hospitals. Therefore, ITAT do not find any merit in the submission of the assessee and hence, the corresponding grounds of the assessee are dismissed.
FULL TEXT OF THE ITAT JUDGEMENT
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