ITA No. 1015/DEL/2022: Medsave Health Insurance TPA Limited vs. ACIT, CPC TDS, Ghaziabad

Understanding the Judgment in ITA No. 1015/DEL/2022 Case

The Income Tax Appellate Tribunal’s (ITAT) deliberation on the case numbered ITA 1015/DEL/2022 presents a compelling discourse on the interpretation and application of tax laws concerning the deduction of Tax at Source (TDS) and the levying of interest on late payments under the Income-tax Act, 1961. This case between Medsave Health Insurance TPA Limited, Delhi (appellant) and the ACIT, CPC TDS, Ghaziabad (respondent) for the assessment year 2018-19 unravels the complexities surrounding the responsibilities of Third Party Administrators (TPAs) in the health insurance sector regarding TDS provisions.

Case Background

The dispute centers around the levy of interest on late payments of TDS u/s. 201(1A) of the Income-tax Act, 1961, a matter that was taken to the ITAT for resolution. The Appeals preferred by the Assessee encompass a wider period, extending to multiple assessment years, highlighting recurring issues in TDS compliance faced by the appellant, Medsave Health Insurance TPA Limited.

Final Judgment Summary

The ITAT, through its judicial members, examined the appeals, considering the legal framework, judicial precedents, and specific circumstances of the case. The tribunal’s decision to dismiss the appeals focuses on two main aspects: the merits of the case concerning the levy of interest on late TDS payments and the question of whether the appeals were filed within the permissible period or were barred by limitation.

On the merit of the case, the tribunal referenced the Circular No. 8/2009 issued by the CBDT, clarifying the applicability of Section 194J of the Act on payments made by TPAs to hospitals under cashless schemes on behalf of insurance companies. This circular and subsequent judgments highlighted the appellant’s responsibility to deduct TDS on such payments and underscored the consequences of failure to do so, including the levy of interest as mandated by the Act.

Regarding the appeals’ timeliness, ITAT observed substantial delays in filing by the appellant, attributing them to internal management issues and the pursuit of corrections in demand via various channels, including legal remedies. Despite these efforts, the tribunal found no sufficient cause for condonation of the significant delays and hence did not adjudicate on the merits of those cases barred by limitation.

In conclusion, the ITAT upheld the respondent’s position, reinforcing the applicability of TDS provisions to payments made to hospitals by TPAs and the imposition of interest on late TDS payments. This case serves as a critical reminder of the stringent compliance requirements and the legal consequences of delays in adhering to tax obligations.

ITA No. 1015/DEL/2022: Medsave Health Insurance TPA Limited vs. ACIT, CPC TDS, Ghaziabad