TMI Blog2005 (10) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... e permanent employees and the terms of employment of consultant doctors, the fact remains to be seen is that they were the employees of the assessee falling in the category of fixed period/contract employee and/or part-time employee. It, therefore, follows that the relationship between the assessee and the consultant doctors was purely that of employer and employee and remuneration paid to them in terms of the said relationship was salary which attracted the provisions of section 192. As such, we are of the considered opinion that there was an employer-employee relationship between the assessee and the consultant doctors and cones- quently, remuneration paid to them was chargeable to tax under the head Salaries . The said payments thus were subject to deduction of tax as per the provisions of section 192 and not as per the provisions of section 194J. In that view of the matter, we hold that the Assessing Officer was fully justified in treating the assessee as in default for short deduction of tax at source from the payments made to the consultant doctors and there was no infirmity in the impugned order of the learned CIT(A) upholding the action of the Assessing Officer on this coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Assessing Officer, however, perused the appointment letters issued by the assessee to the consultant doctors and found the following points as emerging from the said appointment letters: 1. The hospital itself has titled the remuneration paid to the consultant as salary and the same is paid on monthly basis. 2. There is a clear mention in the appointment letter that the appointee shall abide by the existing service regulations. 3. There is also a clause which provides for the entitlement of various types of leaves to the appointees. 4. It also provides that the decision of the Director shall be final in all the matters. 3. Keeping in view the aforesaid points borne out from the appointment letters issued by the assessee to the consultant doctors, he inferred that the contract between the assessee and the consultant doctors was that of service and there existed the employer-employee relationship between them. Accordingly, he held that the assessee should have deducted tax at source from the payments made to the consultant doctors at the rates applicable in the case of salary and worked out the short deduction of tax in respect of such payments excluding the payments made to Dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to any pay. Monthly fees or retainer is determined on the basis of negotiation. Entitled to annual increments as per scale of pay. Not entitled to annual increments. Prohibited from doing private practice. Is free to do private practice. Is paid non-practising allowance. Not eligible for payment of non-practising allowance. Is entitled to contribute to PF. Not entitled to contribute to PF. Eligible for gratuity and pension. Not eligible for gratuity or pension. The retirement age is 60. There is no retirement age. The engagement is generally for a period of one or two years at a time. Eligible for dearness allowance as determined from time to time. Not eligible for dearness allowance. Eligible for leave travel assistance. Not eligible for leave travel assistance. Master-servant relationship subsists between hospital and doctor. Is not a servant of the Hospital. 6. On the basis of the aforesaid distinctive features concerning the full-time employee doctors and consultant doctors, the following points of contention were raised on behalf of the assessee before the learned CIT(A): ( i ) The facts stated in above paras show that consultants were not employees of the Hospital. There was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yer-employee relationship is very much manifest. In this regard reliance is placed on the jurisdictional High Court decision in the case of C.S. Mathur v. CBDT [1998] 99 Taxman 142 (Delhi) wherein, it was held that the expressions employee and employer cover cases of consultant and technician also. The appellant s exercise of drawing distinctions between various groups of persons working for it only suggests that different categories of employees exist and so long as all categories stand the test of employer-employee relationship as gathered from the letters of appointment, it can be safely assumed that whatever name one may give them, they do not cease to be the employees. As regards the argument that consultants in other hospitals are not treated as employees, I am afraid to take cognizance of the same in the absence of the terms and conditions of employment or, should we say, consultancy existing there. Eventually, I treat the appellant as an assessee in default as done by the Assessing Officer. Aggrieved by the aforesaid order of the learned CIT(A), the assessee is in appeal before the Tribunal. 8. The learned counsel for the assessee at the outset took us through the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsultant doctor (copy placed at page 20 of his paper book) to further explain the distinction between doctors who are regularly employed in the hospital by the assessee and the consultant doctors appointed for rendering the professional services. He contended that the relation between the assessee and the consultant doctors is required to be ascertained from the intention of both the parties and such intention has to be gathered from how both the sides have acted upon the arrangement between them and not by interpreting strictly the contract or appointment letter. In support of this contention, he relied on the decisions in the case of Sri Sri Nilkantha Narayan Singh v. CIT [1951] 20 ITR 8 (Pat.) and in the case of CIT v. Bhojraj Harichand [1946] 14 ITR 277 (Lahore). He submitted that the remuneration paid to the consultant doctors was debited by the assessee under the head Professional fees and even the concerned consultant doctors had declared the said income in their income-tax returns under the head Income from profession . He contended that both the sides thus had acted upon the arrangement between them as a professional assignment and there was no intention to have an employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alary of Rs. 18,000 per month to the said doctor. He also highlighted that as per the said appointment letter, the concerned doctor was obliged to take up any other responsibility assigned by the Director of the hospital in addition to his routine work specified therein. He pointed out that the said doctor was also entitled to 15 days of annual leave, 5 days of casual leave and 4 days of sick leave during the calendar year as per the said appointment letter and his appointment was also governed by the existing service regulations of the hospital as well as the changes and amendments that may be introduced by the assessee from time to time. He also invited our attention to a copy of such service rules placed at page 5 of the assessee s paper book volume-2 and pointed out that as per rule 3.bb, employee was defined to mean any person employed by the Institution to do any kind of work for the Institution including technical and supervisory work on payment of remuneration. He submitted that no doubt the honorary consultants were specifically excluded from the said definition of employee given in the rules, the remuneration in question paid to the consultant doctors was not honorarium a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ising in the present case is what exactly is the nature of remuneration paid by the assessee to the consultant doctors rendering their services in its hospital. In this regard, it is important to ascertain the relationship between the assessee and the consultant doctors and the learned representatives of both the sides having mainly relied on the appointment letters issued by the assessee to the consultant doctors to put forth their case, it would be relevant to refer to the said appointment letters especially the terms and conditions of the appointments stipulated therein to ascertain such relationship. A careful perusal of the said appointment letters shows that out of the eighteen consultant doctors in question, eleven doctors were being paid a fixed monthly amount by the assessee whereas the remaining seven doctors were being paid some fixed share of fees received from private patients treated by them in addition to the fixed monthly payment. Barring this aspect, there was no material difference in the terms and conditions of their appointment, which were generally as follows : ( i ) The appointment letters were issued to the consultant doctors with reference to their applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he matters either not mentioned in an individual Contract/appointment letter, or even in the absence of appointment letter or Contract of service, the provisions contained in these rules shall apply to the employees concerned. 3. Definitions : In these rules, unless there is anything repugnant in the subject or context : 3( bb ) Employee means any person employed by the Institution to do any kind of unskilled, semi-skilled, skilled, manual, supervisory, technical, operational or clerical work for the Institution on payment of remuneration but does not include : 3( e ) Honorarium means the recurring or non-recurring payment granted to an employee as remuneration for special work of an occasional or intermittent character. 3( q ) Salary except otherwise defined means the basic pay and applicable allowances approved from time to time. The Governing Body may, however, sanction any other allowance which may include personal pay or special pay at its discretion and such an allowance, if sanctioned, will form part of the salary for the purpose of these rules. 3( r ) Service means the actual period of duty and periods of authorised leave including holidays and authorised period of leave wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lary in the appointment letters. (4) The consultant doctors were appointed initially for a contract period of one year which was further extendable as per the mutual consent of the assessee as well as the concerned doctors. (5) Most of the doctors were entitled for different types of leave and all of the consultant doctors were subject to the existing service regulations of the hospital and the amendments made therein from time to time. (6) As mentioned in rule (2) of the aforesaid service rules, the said rules were applicable to all the employees of the assessee s hospital and the very fact that the consultant doctors were governed by the said rules was sufficient to show that there was an employer-employee relationship between the assessee and the consultant doctors. (7) As per the definition of employee given in rule (3.bb), any person employed by the Institution to do, inter alia, any kind of technical, supervisory or operational work for the Institution on payment of remuneration was treated as employee of the assessee s hospital and the categories of employees excluded from the said definition also did not include the consultant doctors since the remuneration received by them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inted as a consultant in a hospital. She, however, was entitled to receive only 30 per cent share of particular operations carried out by her. The said doctor thus was neither entitled for a fixed remuneration nor the service regulations of the employer hospital were applicable to her, which facts clearly are different from the facts of the present case. Similarly, in the case of Calcutta Medical Research ( supra ), assessee-institute had collected fees/charges from patients and paid the same to visiting doctors after deducting 10 per cent collection as administrative charges. In these facts and circumstances, it was held by Calcutta Bench of ITAT in the said case that the assessee-institute had merely provided infrastructure for visiting doctors to carry out their professional activities in its premises in lieu of commission and there being no employer-employee relationship between the said doctors and the assessee-institute, payments made to them could not be held to be salary . In the case of Dr. Shanti Sarup Jain ( supra ), the consultant doctor was having his own staff, telephone, furniture, etc., in consultancy room and the rules, regulations and service conditions applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proceedings. 17. In the case of Bhojraj Harichand ( supra ) cited by the learned counsel for the assessee, it was observed by the Hon ble Lahore High Court that as per the well-known cannon of construction of documents, the intention generally prevails over the words used and that such a construction should be placed on the words in a deed as is most agreeable to the intention of the grantor. If there are grounds appearing from the face of the instrument affording proof of the real intention of the parties, then that intention would prevail against the obvious and ordinary meaning of the words used. Keeping in view these observations recorded by the Hon ble Lahore High Court, we are afraid that this decision relied upon by the learned counsel for the assessee actually supports the case of the revenue since the real intention of the parties, as already discussed with reference to the terms of appointment letter issued to the consultant doctors in the light of service regulations of the assessee s hospital, was to have an employer-employee relationship between them and it was not a case of appointment of a consultant simplicitor. As such, considering all the facts of the case as we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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