TMI Blog2014 (6) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... salary. The terms of appointment clearly indicate appointment of professionals for providing consulting services and not appointment of employee - The Doctors are not precluded from pursuing the professional pursuits elsewhere as long as there is no conflict of interest - once the Doctors achieve some seniority and standing, their remuneration is a percentage of fees collected from patients consulting him - Explanation (a) to sec 194J defines professional services to mean services rendered by a person in the course of carrying on legal, medical - Normally the services rendered by a Doctor should be considered as a professional service unless the contracts of service categorically states and the conditions are clearly and indubitably that of employment - the services rendered by the Doctors are more appropriately classifiable as professional services and therefore Assessee had correctly deducted tax at source from payment to Doctors u/s 196J. The doctors or professional consultants working under contract for rendering professional services and the payments made by the assessee company to the professional doctors does not constitute salary and hence, the assessee would not be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 194-J of the I.T. Act, 1961 and TDS certificates were also issued in Form 16A. 3. Learned Counsel pointed out that the Coordinate Bench of the Tribunal in the case of M/s. Yashoda Super Speciality Hospitals held that the provisions of section 192 were not applicable and had dismissed the appeal of the Revenue. It was pointed out that non-consideration of the decision of the Coordinate Bench is a mistake apparent from record as held by the Hon ble Supreme Court in the case of Honda Siel Power Products Ltd., vs. CIT 295 ITR 466. The Tribunal by order dated 30th December, 2010 recalled the order dated 13.08.2010 as mistake has crept in the order passed by it. We now proceed to adjudicate the recalled order. 4. Briefly stated, assessee company is engaged in the business of running a super-speciality hospital in the name of CARE HOSPITAL . A Survey under sec. 133 was carried out u/s. 133A of the Income Tax Act,1961 to ascertain the Deduction of Tax At Source on the amounts paid to Doctors engaged as Consultants by the hospital. The Assessee Company has been deducting Tax at Source u/s. 194J by treating them as Professionals. The Learned Assessing Officer has applied the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned strictly by the Agreements which cannot be amended or modified unless made in writing and duly executed by all the parties as per Clause 16.4 of the Agreement. f. No day to day attendance Registers are kept for these Doctors I Professionals and these Doctors are not obliged to stay longer than what was required as per the needs of the particular Patients. The Agreement has given a range of services that encompass a particular field of Medicine and the manner in which the service is rendered to the patient is left to the discretion of the professional. g. The Professionals are not subjected to Administrative responsibilities except that of being members of certain Standing Committees like CAPEXI OPEX Committee for selection of Equipments Drugs and Disposables as and when requested by the Board of Directors. h. The Agreement does not specify anywhere that during the course of his engagement he should seek directions from any other person working in the Company. The Agreement only speaks of the Scope of the areas expected to be covered under contractual agreement like ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices. The Company is liable to pay Interest to the Professional at the rate of 10% per annum for the period commencing from the date when the payment is due up to the date of actual payment of the Fees. The Agreement is valid for a period of 2 years which may extended with the mutual consent of both the parties. n. The Company can terminate the Agreement with the Professional, only upon happening of events like Professional Breach of Terms of the Agreement, conviction of the Professional of any serious crime, committing of any act which injures the reputation of the Company. o. The Professional can terminate the Agreement by giving 60 days notice in the event of the Company committing breach of any of the terms of the Agreement other than failure to pay fees as stipulated in the Agreement. If any dispute arises between the parties to the Agreement the matter shall be referred to Arbitration, proceedings of which shall be held in Hyderabad. In view of the above terms of the Service Contracts, Professional fees paid by QCIL cannot be termed as Salary although the amount of Fees is structured as a Fixed Sum i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir Return of Income by taking into account the payments made by the Assessee Company, the details of which were also furnished to the Assessing Officer pertaining to majority of the Payees. 6. The Learned DR on the other hand, relied on the orders of the ITAT Hyderabad Coordinate Bench in the case of DCIT, Hyderabad vs. Wockhardt Hospitals Ltd. 24 taxmann.com 190 (Hyd.) wherein the facts are as follows ; The assessee company was running hospital with branches. It had engaged services of some doctors and was deducting TDS from payments made to them under section 194J. According to the assessee, the doctors were appointed as consultants whose remuneration was liable for TDS under section 194J and there was no employer and employee relationship. The A.O. However, treated the relationship between the doctors and the assessee as one of employer and employee and held that said payments were liable to TDS under section 192. The Commissioner (Appeals) allowed the assessee s appeal. On the revenue s appeal : 24. A careful perusal of the appointment order issued to the doctor shows that a fixed monthly amount was paid by the assessee as remuneration and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and the doctors and not on any other basis. As per the well known cannon of construction of document, the intention generally prevails over the word used and that such a construction placed on the word 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. In our opinion, the real intention of the parties herein as already discussed with reference to the terms of the appointment letter issued to the doctors in the light of service regulations of the assessee hospital was to have an employer and employee relationship between them and it was not a case of appointment of consultants. In view of this, in our opinion, there was an employer and employee relationship between the assessee and the doctors. Consequently, the remuneration paid to them was chargeable to tax under the head 'salaries' and liable for deduction of tax u/s. 192 of the Act and not under the provisions of section 194J of the Act. However, we make it clear that wherever the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmed the Order of the Tribunal in the case of CIT vs. M/s Yashoda Super Speciality Hospital, Hyderabad in I.T.T.A. No. 196 of 2013 by order dated 04.07.2013 and has held as follows: This appeal is sought to be preferred against the judgment and order of the learned Tribunal dated 30.06.2010 in relation to the assessment year 2008-2009, on the following suggested questions of law: Whether on the facts and in the circumstances of the case/ the Appellate Tribunal is justified in setting aside the order passed against the assessee under Secs.201 and 201 (A) of the Income Tax Act? Whether on the facts and in the circumstances of the case/ the finding of the Appellate Tribunal that there existed no relationship of employer and employee between the assessee and Consultant Doctors/ employed in the Hospital/ can be said to be based on material on record? The whole issue involved in this matter is whether the doctors are employees of the assessee or not, if so, payment made to the doctors are treated to be salaries so as to attract the provisions of Sec. 192 of the Income Tax Act. Learned Tribunal as well as the Commissioner of Income Tax (Appeals), on fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or consultant doctors. They are governed by Medial Staff regulations. 2. The employee doctors are not entitled for any other full time employment. The Consultant doctors are free to do any job and there are no restrictions. 3. There is incentive scheme applicable for FGCs over and above guaranteed amount based on the service rendered. 4. There is an insurance cover for consultants to indemnify for any loss or damage to the property. 5. There are no timings specified in the agreement. 10. We also find that the Chandigarh Bench in the case of IVY Health Life Sciences P. Ltd. vs. Department of Income Tax has elaborately discussed and at para 8 states as follows : A bare perusal of the case law, relied upon by the appellant and submissions made in the synopsis reveals that there does not exist employer/employee relationship between the assessee/appellant and the persons providing professional services. On consideration of the agreement in its entirety vis-a-vis the case law relied upon by the assessee/appellant, it is evident that it is not a case of employer/employee relationship between the assessee/appellant and the doctors. Therefore, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Servant whereas in a 'Contract for Service' such relationship would not be present. In the case of a 'Contract for Service' the employer not only orders requires what is to be done but also directs as to how it shall be done, whereas in a 'Contract for Service', the master can only require as to what is to be done. The test which is often applied to determine existence of such a relationship is whether the Master has the authority to order or require what is to be done but also how it should be done. An independent Contractor is one who undertakes to produce a given result but in the actual execution of the work he is not under the order or control of the person for whom he does it, and may use his own discretion in things not specified beforehand. The Assessee Company is different from that of the Max Mueller Case on which the Assessing officer has relied upon. 10.4. Further in the case of Chandi Prasad Singh vs State of UP AIR 1956 SC 149, reference has been made to Halsbury's Laws of England which distinguishes between a Servant and Agent . A servant acts under the direct control and supervision of the master, and is bound to conform to al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tionship between the assessee-deductor and the Doctors is not that of employer and employee. We are of the view that the doctors or professional consultants working under contract for rendering professional services and the payments made by the assessee company to the professional doctors does not constitute salary and hence, the assessee would not be responsible for deducting tax at source on the said payments treating them as (salaries) in terms of section 192(1) of the I.T. Act. We also understand that the terms of the agreement with the consultants/professionals that there is no master and servant relationship between the consultants/professionals and that of the assessee and hence, the agreements entered into by the assessee with the professionals as one of contract for services . The consultant Doctors do not take directions from the assessee on how a patient is to be treated and clearly there is no employeremployee relationship between the assessee and the professionals. In short, following the decision of jurisdictional High Court in the case Yashoda Super Specialities Hospitals, In the circumstances We agree and confirm the decision of the learned CIT(Appeals) in holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly, the appellant would not be responsible for deducting tax at source on the said payments treating them as salaries in terms of section 192(1) of the I.T. Act, 1961. Further, the appellant has fairly established that all the payees are income tax assessees having permanent account numbers and that they have accounted the payment in question in their books of accounts or gross receipts or gross income. Follo9wing the decision of the Apex Court in Hindustan Coca Cola Beverages P. Ltd. Vs. CIT (293 ITR 226), the Assessing Officer is not justified in recovering the tax from the appellant. Thus, on the totality of the facts and circumstances of the case and applying the provisions of Chapter XVII-B of the I.T. Act, 1961, there is no justification for the A.O. To treat the appellant as assessee in default in terms of section 201(1) and thereafter levying of interest u/s. 201(1A) of the I.T. Act, 1961. 14. In our opinion, as observed by the CIT(A) the issues for these assessment years i.e., 2007-08 and 2009-10 are identical to that in A.Y. 2008-09. In the preceding paragraphs at para No. 8 to 10, we have discussed and confirmed the order of the CIT(A) and dismissed the Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X
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