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2015 (3) TMI 185 - AT - Income TaxNon deduction of TDS u/s 194J - payments made to hospitals - disallowance u/s 40(a)(ia) - proceedings under section 201 initiated - Held that:- Provisions of section 40(a)(ia) cannot be invoked for non deduction of tax by TPA service provided being a conduit between the insurer and hospital/ the insured. Though the assessee is under the obligation to deduct tax at source under section 194J however, the consequential liability is only under section 201 and 201(1A) and the disallowance under section 40(a)(ia) cannot be automatic when the assessee has not claimed this payment as expenditure against the income. The assessee has shown the income, only the service charges receivable from insurance companies for rendering services as 3rd party administrator and not having any margin or profit element in the payment received from the insurers for the purpose of remitting to the hospitals to settle medical claim of the insured. Therefore, when the said payment has not been claimed as expenditure incurred for earning the income by the assessee then the provisions of section 40(a)(ia) is not attracted for non deduction of tax at source in respect of the said payment. Thus we hold that no disallowance can be made under section 40(a)(ia) in respect of the payment in question. - Decided in favour of assessee.
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