ITAT grants relief to Thyrocare
ITAT grants relief to Thyrocare
Thyrocare Technologies received relief from the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) after the court ruled that no TDS was applicable since the assessee does not make payments to Thyrocare Services Providers (TSPs).
Providing pathological testing services, the assessee has its own Diagnostic Laboratory. Thyrocare Services Providers (TSPs) have been instructed to collect patient samples by the assessee. Besides being local collection centres, TPSs also involve hospitals and small businesses, insurance companies, hospitals, clinics and insurance companies. An agreement is formed between the assessee and the TPS. A TSP collects samples from patients and sends them to an assessing entity for testing according to the terms and conditions of the agreement.
Assesses issue periodic invoices on TSPs, against which TSPs pay assesses after making deductions for Tax at Source (TDS) in accordance with section 194J of the Act. The ld. Counsel explained that the terms of the agreement do not require that TSPs send all collected samples to be tested to the assessee. Other specialized testing laboratories may be used by TSPs to test the samples. In most cases, TSPs do not need to send samples to the assessee unless the patients insist on the test being performed at the assessee's home.
During the survey action of 14.10.2011, the assessee's premises were surveyed. As a result of the survey operation, proceedings were started against the assessee under section 201 of the Act. An assessment officer (AO) found the assessee in default for failing to deduct taxes for payments made to TSPs under section 194H of the Act during assessment proceedings. The ld. According to counsel, the AO had mistakenly recorded the fact that the assessee is making payments to TSPs. As the assessee is not making payments to the TSPs, but the TSPs are making payments to the assessee that is the correct fact. Payment to the assesses for professional services is made after TDS is deducted under section 194J of the Act. As an additional element of support, the Ld. Several TSPs provided examples of the TDS certificates they received and forms 26AS for AY 2009-10 to counsel. Following an appropriate assessment of the facts, the CIT (A) concluded that the assessee is not in default under Section 194H of the Act and subsequently deleted the demand of the Assessing Officer.
The assessment firm's CIT (A) findings show that the TSPs and assesses do not have a payer-payee relationship. Due to the lack of payments to TSPs, TDS provisions do not apply to the assessee. Section 194 of the Act is not relevant to the assessee because there is no principal-agent relationship. TSPs are not liable for brokerage or commission when they provide different prices. In the case of TSPs (payers), tax has been deducted from the payments to the assessee under section 194J of the Act.
Vikas Awasthi and G.S.Pannu have stated that "it is blatantly obvious that the case of the Revenue was based on the wrong assessment of facts." Following an examination and appreciation of the correct facts in para-5.5 of the judgment, the CIT (A) has correctly observed that the TSPs do not receive payment directly from the appellant, but instead, the TSPs make payment directly to the appellant for the tests the appellant performs. The ld. No affirmative response has been provided by the DR to the above observation from the CIT (A). Having collapsed, the Revenue appeal is liable to fail due to the substratum for invoking the provisions of section 201 of the Act. In this case, our review of the facts shows no merit in the Revenue's appeal, therefore, we are dismissing it as devoid of merit.
