Payments made to doctors for referring patients to assess are professional fees and were not referral fees, the Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) ruled.
Showing a total income of Rs.11,03,970, the taxpayer Dipen M. Desai has furnished his income return. The assessing officer held that the taxpayer has debited the amount for the referral fees. The same payment would be incurred to distinct doctors or institutions who would have referred the patients to taxpayers for distinct searches.
The Assessing Officer noted that the aforementioned expense was nothing more than a commission given to doctors for patient referrals, which is prohibited by Section 37(1) of the Income Tax Act of 1961.
Hence the assessing officer has performed the addition of Rs 4,98,225 and disallowed the expenses for the referral fees. The dissatisfied taxpayer furnished the petition to CIT (A). The CIT (A) partly allowed the appeal. The revenue filed an appeal to the Tribunal.
Sanjay Jain, counsel for the revenue questioned that CIT(A) erred in permitting the amount of Rs.4,98,225, under Section 37(1) of the Act as payment made for referral fees.
Also, the attorney denied the assertion made by the assessee that originally, patients would call the doctors and that the doctors would then visit his hospital to do surgery utilizing the facilities there, but that the assessee would instead be charged referral fees, which was against the law.
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The decision of the CIT(A) was been supported by S.N. Divatia, and Samir Vora, counsel who appears on the taxpayer’s behalf.
“It is an undisputed fact that the assessee has made payment of Rs.4,98,225/- to the Doctors as their professional fees and the same cannot be termed as referral fees.” the tribunal followed.
Moreover, the bench accepted the taxpayer’s argument that the word “referral fees” was incorrectly read and that the money paid to those doctors was actually a professional fee.
As a result, the single bench of Suchitra Kamble (Judicial Member) overlooked the revenue’s appeal and upheld the CIT’s (A) decision.
| Case Title | Shri Dipen M. Desai Vs.Income Tax Officer |
| Citation | ITA No.1332/Ahd/2019 |
| Date | 17.03.2023 |
| Assessee by | Shri S.N. Divatia, AR Shri Samir Vora, AR |
| Revenue by | Shri Sanjay Jain, Sr. DR |
| Ahmedabad High Court | Read Order |
