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2018 (10) TMI 604 - AT - Income TaxLevy of interest u/s 201(1)/201(1A) and penalty u/s 271C - failure to deduct TDS - production of certificate that relevant taxes have been paid by the deductee of the hospital - TDS liability u/s 194J - TPAs making the payments on behalf of the insurance company to the hospitals over settlement of medical insurance claim etc. under various schemes - Circular No. 8/2009 issued by CBDT clarifying the issue. The assessee, after the CBDT Circular came into force made very herculean effort for obtaining 1614 certificates, out of which the assessee before the AO as well as before the Ld. CIT (A) had produced almost 1584 certificates for which Ld. CIT (A) has given the benefit. Now the dispute is with regard to 90 certificates which assessee could not procure, the tax liability u/s 201 and 201(1A) has been determined. Apart from that, assessee has also challenged the levy of interest by the AO u/s 201(1A) on the payments, on which assessee has produced the certificates. Held that:- professional services relating to medical services alone should be liable for deduction of TDS u/s 194J. The medical services here would include operation fees, Doctor’s consultancy fee or any kind of medical investigation fee. The payments towards bed charges, medicines used on the patients, transportation charges, implants, consumables, etc. will not fall into professional medical services. AO directed to examine these payments and only payment relating to ‘professional medical services’ like, professional charges and medical investigation fees should alone be held to be liable for TDS u/s 194J and not other reimbursements. Only with regard to these payments which are held to be professional charges, the liability u/s 201(1) should be charged and consequently the interest u/s 201(1A) will also be levied. In so far as interest charged under first proviso to section 201(1A), we have already given a finding that in the case of payments where auditor’s certificates have been produced then assessee can not held to be ‘assessee in default’ and consequently, no interest u/s 201(1A) can be charged. Levy of penalty u/s 271C - Held that:- there cannot be a case of automatic levy of penalty u/s 271C. Since the circular has come much after the expiry of the financial year ending on 31st March 2009, therefore, assessee was clearly under a bonafide belief that no TDS is liable to be deducted. Accordingly, we hold that it is not a fit case for levy of penalty u/s 271C and hence same is directed to be deleted. Decided partly in favor of assessee.
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