TMI Blog2018 (9) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and the evidences filed on record, concluded that the assessee cannot be treated as an ‘assessee in default’ u/s 201(1) but however charged interest u/s 201(1A) for the delayed period of remittance of tax dues to the exchequer. Hence the additional ground of appeal raised by the assessee is devoid of any merit and is hereby dismissed. We find lot of force in this argument of the AR in as much as the interest u/s 201(1A) of the Act is only compensatory in nature and the Government should be compensated for the delayed remittance of TDS from the date of default by the deductor to the actual date of remittance of taxes by the deductees. Accordingly, we direct the AO to recomputed the interest u/s 201(1A) of the Act accordingly. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal ground of appeal before us along with the original grounds of appeal. But we find that the effective issue involved in all these grounds is as to whether the assessee could be charged with the levy of interest u/s 201(1A) of the Act, in the facts and circumstances of the case. 3. The brief facts of this case are that the assessee is a company functioning as Third Party Administrator (TPA in short) for which it had obtained license from Insurance Regulatory Development Authority (IRDA in short). As a licensed TPA, it renders services in connection with health insurance business or health cover to various customers. It makes payment to hospitals for the treatment of policy holders. The ld AO found that no TDS was made on such payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to hospital or through float fund account . In case of latter, the TPA gets reimbursed upon the amount of claim processed . 3.1. The assessee company has agreements with M/s New India Assurance , M/s United India Insurance, M/s National Insurance and M/s Oriental Insurance. After studying the issue, it was felt that apparently the assessee is taking on the role of insurance companies in settling the claims of policy holder. From the point of view of TDS, it can be said that the assessee is the person responsible for making payments to hospitals under cashless system for the medical services rendered by them to the policy holders. The ld AO observed that the service rendered by the TPAs could be compared with that of service render ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Year 2008-09. The action of the ld AO was upheld by the ld CITA. Aggrieved, the assessee is in appeal before us. 4. We have heard the rival submissions. At the outset, we find that the assessee had raised an additional ground of appeal before us stating that show cause notice has not been issued by the ld AO u/s 201(1) and 201(1A) of the Act before charging interest u/s 201(1A) of the Act on the assessee. In this regard, we find that the ld AO in his assessment order had categorically recorded that the assessee has been given several show cause notices in the course of assessment proceedings stating as to why it should not be treated as an assessee in default u/s 201(1) of the Act and consequential charging of interest u/s 201(1A) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O to recomputed the interest u/s 201(1A) of the Act accordingly. 4.2. The ld AR further argued that since the ld AO had held that the assessee is not to be treated as an assessee in default u/s 201(1) of the Act. Having held so, he ought not to have charged interest u/s 201(1A) of the Act. In this regard, we find that the provisions of section 201(1A) of the Act are independent of section 201(1) of the Act inasmuch as it starts with Without Prejudice to the provision of sub-section(1), . . . There is no choice available to the revenue and interest u/s 201(1A) of the Act is to be mandatorily charged for the delayed period of remittance and is automatic in nature. It is not in dispute before us that the tax is required t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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