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2015 (12) TMI 568 - BOMBAY HIGH COURT

2015 (12) TMI 568 - BOMBAY HIGH COURT - TMI - Disallowance made under Section 40(a)(ia) - CIT(A) deleted the addition - Held that:- We note that both the order i.e. of the Commissioner of Income Tax (Appeals) as well as the impugned order of the Tribunal have recorded a finding of fact that the Respondent Assessee has not claimed any expenditure while computing its income chargeable to tax. As a consequence, there can be no occasion to disallow such expenditure under Section 40(a)(ia) of the Act .....

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aiming of the amount sought to be disallowed as an expenditure / deduction to determine the taxable income of the assessee. In the present case, the Revenue is not challenging the concurrent finding of the fact that the amount of ₹ 4.58 crores, which is being sought to be added to the Respondent's income has not been considered i.e. deducted to arrive at its income. Thus in such a case, the stand of Revenue contrary to the clear provisions of section 40(a)(ia) of the Act is unsustainable. .....

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-09. 2. The appellant Revenue has urged following question of law for our consideration. (i) Whether on the facts and circumstances of the case, the Tribunal was correct in law, in deleting the disallowance made under Section 40(a)(ia) of the Act ? 3. The Respondent Assessee is a Third Party Administrator (TPA) in respect of the mediclaim Insurance. The business of the Respondent Assessee inter alia involves facilitating an insured person to avail the services of the hospital without payment in .....

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any tax at source under Chapter XVII B of the Act nor does it debit the payment to its profit and loss account. In view of the failure of the Respondent Assessee to deduct the tax under Chapter XVII B of the Act, the Assessing Officer by its order dated 9th December, 2010 held that the entire amount which was paid over to the hospitals would be disallowed under Section 40(a)(ia) of the Act. Consequently, an amount of ₹ 4.58 crores was added to the Respondent Assessee's income being the .....

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Thus the appeal of the Respondent Assessee was allowed. 5. Being aggrieved the Revenue carried the issue in an appeal to the Tribunal. By the impugned order, the Tribunal recorded a finding of fact viz. that the Respondent Assessee had not claimed any expenditure in respect of the payments made by it to the hospitals on receiving the same from the Insurance company. It acted as a mere conduit to carry the amounts for the Insurance company to the concerned Hospital. These amounts were not reflect .....

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filed an affidavit seeking to explain why the order of the Commissioner of Income Tax (Appeals) for the Assessment Year 2007-08 had been accepted by stating as follows : "4. On perusal of the relevant records, it is seen that for A.Y. 2007-08, no appeal was preferred against the CIT(A)'s order as it was observed that the payment made by the TPA to the hospitals on behalf of the Insurance company is not an expenditure of the assessee and the same was not debited in P&L account. It wa .....

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f the Act, ipso facto the entire amount which has not suffered TDS, would be added to the income of the assessee as a consequence of disallowance of deduction under Section 40(a) (ia) of the Act. Thus, the order of the Assessing Officer adding the amount of ₹ 4.58 crores, cannot be found fault with as the TDS on the aforesaid amount has admittedly not been deducted by the Respondent Assessee. So far the affidavit dated 6th October, 2015 is concerned, Mr. Suresh Kumar, learned Counsel for t .....

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