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‘Secret Commission’ paid to Doctors for Scanning and Medical Examinations are subject to TDS

In M/s Parco Diagnostics and Research Centre Pvt Ltd v. DCIT(TDS), the Cochin bench of the ITAT held that assessee-company is liable to pay TDS under section 194H of the Income Tax Act in respect of payment of secret commission to doctors for scanning and medical examinations. Assessee, is a company engaged in the business of running a diagnostic centre with CT and MRI scan facilities. 

 AO treated the entire business promotion expenses as commission payments to the doctors who referred the cases to the assessee for scanning and other medical examinations.

Before the appellate authorities, assessee claimed that TDS is not leviable on business promotion expenses under section 194H since between the assessee and the doctors cannot be termed as a principal and agent but on a principal to principal basis. It was therefore, submitted that there is no justification to create the demand under Section 201(1) r.w.s. 194H and 201(1A) of the Income Tax Act, 1961.

 Article referred: http://www.taxscan.in/secret-commission-paid-doctors-scanning-medical-examinations-subject-tds-itat-cochin/8487/

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