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2017 (10) TMI 1078 - AT - Income TaxTDS u/s 194C OR 194J - TDS on maintenance of specialized machines in hospitals for skilled professionals/ technical engineers - short deduction of tds - Held that:- The expenditure on account of AMC of medical equipments etc., is not in the nature of fee for professional and technical services as construed u/s 194J of the Act and hence, not liable to deduct TDS u/s 194J of the Act. The assessee has deducted TDS u/s 194C of the Act in regard to payments on AMC of medical equipments and machines etc. Accordingly, we find no infirmity in the order of CIT(A) on this issue and hence, the same is confirmed. This issue of revenue’s appeal is dismissed. Income from sale of Scraps being old equipment and machineries - attract provisions of tax collection at sources under section 206C - Held that:- We find from the facts of the case that the assessee is neither engaged in manufacturing or processing or industrial activity nor generate scrap rather its activities relates to medical facilities to the public. The word ‘scrap’ itself in ordinary parlance presupposes manufacture, processing or industrial activity. In running a medical hospital question of generation of scrap is inconceivable. Therefore provisions of s.206C of the Act, ‘Prima Facie’ are not applicable to the assessee. AO is merely harbouring wrong notion that what is sold out by the assessee is scrap having zero value and such items are not usable. But, assessee is neither a trader nor a manufacturer generating or dealing in resale of scrap generated as waste material or unusable. Secondly, the assessee has sold the product under buy back and useable items i.e. hospital equipments and machinery. In view of the above, we find no infirmity in the order of CIT(A) and hence, the same is affirmed. - Decided against revenue Payments in the nature of Honorium - TDS purview of 192 OR under section 194J - Held that:- The assessee being a hospital, it is expected to maintain its image the reputation and image and this expectation of the hospital cannot be construed as exercising control and supervision over the doctors in their professional activities and thereby cannot lead to the conclusion that an employee-employer' relationship exists. We also find that the AO has merely compared the appointment letter in case of Honorary Consultants and independent professional doctors and brought out differences to hold that the independent professional doctors are employees. In doing so, he has overlooked the similarities in the two which essentially is necessary to draw the point that both are professionals. He chose to ignore assessee's submissions on the comparison between the assessee's employees entitled to provident fund, different categories of leave, gratuity, HRA, etc. benefits which the independent doctors were not entitled to. Apart from the above, we are of the opinion that the real intention of the parties in the present case is appointment of consultants and not to create employer-employee relationship and accordingly TDS is liable to be deducted u/s 194J of the Act. Another aspect in this matter is that the fact that the TDS is liable to be deducted u/s. 194J of the Act on payment to the independent professional doctors, the AO has ignored the excess of TDS amount deducted u/s. 194J in certain cases, in comparison with the TDS liability determined u/s 192 of the Act, thereby raising a demand u/s 201(1). Further, these doctors have filed their return of income and declared the receipts from the assessee hospital and have paid taxes thereon. Accordingly, interest u/s. 201(1A) is not chargeable
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