The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ), ordered fresh adjudication to determine TDS on MRI charges paid back to company as there was no proper examination of facts by Lower Authorities.
The assessee, The Bhatia General Hospital contended that, as per the Memorandum of Understanding (MOU) with M/s. Bombay MRI Pvt. Ltd (MRI company), the assessee was only supervising and collecting the MRI charges from the patients at the Hospital for the purpose of effectively ensuring supervision and control of the prices and timely collections on behalf of the MRI company.
It has been claimed that these MRI charges collected from the patients were reimbursed/paid to the MRI company after reducing the fixed fee which was agreed upon to be paid to the assessee for rendering such collection and supervision services.
According to the assessee, it was not liable to deduct tax at source on these MRI charges paid back to the MRI company. Hence, it has been urged that the question of levy of interest under Section 201(1A) of the Income Tax Act does not arise.
The Counsel for the assessee contended that since the assessee did not charge any mark-up or profit over and above the charges stipulated by the MRI company to be charged from the patients, it was a case of pure reimbursement and therefore there was no necessity for deduction oftax at source.
Relying on the order of the AO, the Departmental Representative contended that the MRI services which were been rendered by the payee in the Hospital involved professional skill, technical knowledge etc and its ROI had offered the payments for tax, that fact would not absolve the assessee’s liability u/s 201(1A) of the Income Tax Act to pay interest on non-deducting of tax under Section 194J of the Income Tax Act
A Coram consisting of Pramod Kumar, Vice President and Aby T Varkey, Judicial Member observed that “The relevant facts have been properly looked into and examined by the lower authorities, in the fitness of the matters, we consider it fit to set aside the issue back to the file of the AO to examine this issue afresh.”
“Accordingly, we set aside the order of the CIT(A) on this issue and restore the same to the file of the assessing officer with the direction to examine the same in the light of discussions made supra as well as based on judicial precedents” the Tribunal noted.
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