👍👍👍Payment made to Doctors for Referring Patient to Assesee is Professional fee, not Referral Fee: ITAT

Clipped from: https://www.taxscan.in/payment-made-to-doctors-for-referring-patient-to-assesee-is-professional-fee-not-referral-fee-itat-read-order/268636/

By Aparna. M – On April 11, 2023 8:34 pm – 2 mins read

The Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) has recently held that payment made to doctors for referring patients to assess are professional fees which were not referral fees.

Assesse  Dipen M. Desai filed his return of income declaring total income of Rs.11,03,970/-. The Assessing Officer observed that the assessee debited an amount towards referral fees. This payment is made to different Doctors/Institutions who have referred patients to the assessee for various investigations.

The Assessing Officer observed that the said expenditure was nothing but commission paid to Doctors for referring patients which is not allowable under explanation to Section 37(1) of the Income Tax Act, 1961.

Thereafter, the Assessing Officer made an addition of Rs.4,98,225/- and disallowed the expenses in respect of referral fees. Aggrieved assessed filed appeal before CIT (A). The CIT (A) partly allowed the appeal. Thereafter, the revenue filed appeal before the Tribunal.

Sanjay Jain, counsel for the revenue contented that CIT(A) erred in allowing the amount of Rs.4,98,225/- under Section 37(1) of the Act being payment made for referral fees.  

Further, the counsel contented that assessee’s claim that initially patients contact to the Doctors and the Doctors come to his Hospital to perform surgery using facilities available in the Hospital of the assessee but instead of those Doctors paying fees to the assessee’s Hospital the assessee is incurring referral fees which is contrary to the stand.

S.N. Divatia, and Samir Vora, counsel appearing for the assessee  supported the decision of the CIT(A).

The tribunal observed that “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.”

Further, the bench admitted the assessee’s contention that terminology of referral fees was wrongly interpreted and it is a professional fee which has been paid to those Doctors.

Therefore, the single bench of  Suchitra Kamble, (Judicial Member)dismissed the appeal of the revenue and confirmed the decision of the CIT(A).To Read the full text of the Order CLICK HERE

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Income Tax Officer vs Shri Dipen M. Desai


Counsel for Appellant:   Shri S.N. Divatia, Shri Samir Vora

Counsel for Respondent:   Shri Sanjay Jain

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