INCOME TAX ACT, 1961

Section 194J

Tax deduction at source - Under section 194J - Payment for services rendered in course of carrying on medical profession -

Assessee-company entered into agreement with various hospitals for extending medical facilities to policy holders of various insurance companies with whom the assessee entered into agreements to act as an agent. Assessee was making payments on behalf of the insurance companies from float funds available with the assessee, which were provided by the insurance companies. AO was of the view that the assessee was required to deduct TDS under section 194J on the payments made to the hospitals. Further, Tribunal held that the assessee made payments to the hospitals towards bed charges, medicines, follow up services, etc., which would not fall within the scope of fee for professional services and therefore, the AO was directed to bifurcate the payments made by the assessee into various heads and to confine the demand only to the payments, which were in nature of fee for professional services. Held: TDS has to be deducted for all services rendered by a person in the course of carrying on medical profession. Incidental or ancillary services which are connected with carrying on medical profession are included in the term 'professional services' for the purpose of section 194J. The words 'services... in the course of carrying on medical profession' in Explanation (a) are used with the intention to include incidental, ancillary, adjunct or allied services connected with and relatable to medical services. Thus, the sweep and scope of the Explanation is not restricted only to payments made to medical or other professionals, but services rendered in the course of carrying on the stipulated profession. Further, section 194J does not permit bifurcation of bills raised in the course of rendering professional services as the services provided by the hospital are umbrella of services. Hence, the order of the Tribunal to the extent it directed bifurcation of payments made by the assessee with reference to the medical services only was quashed.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2009-10

INCOME TAX ACT, 1961

Section 201(1A)

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