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2015 (6) TMI 61 - ITAT BANGALORE

2015 (6) TMI 61 - ITAT BANGALORE - [2015] 39 ITR (Trib) 649 (ITAT [Bang]) - Assessee in default to deduct tds - short deduction of tax - payment made by the assessee to Doctors was in the nature of “Salary” and therefore the Assessee ought to have deducted tax at a higher rate than what the Assessee had deducted treating the payment as “fees for professional or technical services - Held that:- As these doctors/experts are at liberty to do the works other than the assessee’s contractual engagemen .....

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Bang/2014 - Dated:- 27-3-2015 - Shri N.V. Vasudevan And Shri Jason P. Boaz JJ. For the Appellant : Dr. P.K. Srihari, Addl. CIT(DR) For the Respondent : Shri Sudheendra, C.A. ORDER Per N.V. Vasudevan, Judicial Member ITA No.704/B/14 is an appeal by the Revenue against the common order dated 21.10.2013 of the CIT(Appeals), Mysore relating to assessment year 2012-13, allowing the appeal of the assessee against the order dated 12.2.2013 of the Assessing Officer passed u/s. 201(1) & 201(1A) of th .....

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ing their medical skills. The Doctors are required to provide services round the clock and throughout the year. The assessee accordingly fixes time schedule for various Doctors to ensure their availability at any point of time. The Doctors, according to assessee, provide services independently by exercising their skill sets, experience and expertise. The manner in which they study X-ray, CT scans, etc., and write their analysis and findings is not controlled by the assessee. These are matters in .....

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t in dispute before us that the Assessee had deducted tax at source u/s.194J of the Act on the payment made to the doctors treating the payment as Fees for Professional or technical services . 3. According to the Revenue, the payment made by the assessee to Doctors was in the nature of Salary and therefore the Assessee ought to have deducted tax at a higher rate than what the Assessee had deducted treating the payment as fees for professional or technical services rendered and therefore there wa .....

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services. The CIT(A) also found that the decision of the Tribunal has been confirmed by the Hon ble High Court of Karnataka in ITA Nos.168/2009 & 170/2009 by its judgment dated 4.2.2010. The CIT(A) therefore held that the assessee could not be treated as an assessee in default and cancelled the order passed u/s. 201(1) & 201(1A) of the Act. 5. The facts of the assessee s case and the facts as it prevailed in the case of Elbit Diagnostics Ltd. (supra) have been tabulated in para 5.1 of th .....

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chart given in para 5.1 of the impugned order of CIT(Appeals). In our view, the issue is squarely covered by the decision rendered by this Tribunal in the case of Elbit Diagnostics Ltd. (supra). 6. In the case of Elbit Diagnostics Ltd. (supra), this Tribunal took the following view:- 6. After going through the rival submissions and the material on record, we find that the assessee is a company engaged in the business of medical diagnosis under name and style M/s Elbit Medical Diagnostics Ltd. Th .....

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3 years from (date of issue of the contract to each in-house doctor) b) The consolidated gross payment towards your consultation fee will be Rs. ………./per month subject to the applicable TFDS c) During the period of your contract with the company, you will be entitled to increments based upon your performance. d) You are free to render your services to other concern or individuals at such times that do not conflict, with the terms of the contract with the company. e) You wil .....

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) Your services can be deputed to other centre of Elbit as and when required. You will take special permission from the Management in case you are presenting any papers in conferences and other scientific publications. 7. Dr.Vinod P Joseph s appointment order reveals that the appointment is only contractual for a period of three years. It also mentions the relationship between the company and the doctor are governed by the terms of contract entered into between the assessee company and skilled p .....

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doctors in-house doctors who are appointed on contractual basis on consolidated gross payment per month as stated above. Whether they should be treated as employee and there exists employee-employer relationship to attract deduction u/s 192 on the payments made to them and treating the same as salary. The fundamental aspect for deciding the employee-employer relationship depends on fact, whether there exist the contract of service or contract for service. In contract for service the master can .....

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follow the conclusion arrived by them on the basis of data/material brought to their knowledge. It is difficult to lay down any one test to distinguish the relationship of master servant from that of an employer and independent contractor. In many cases, the test laid down is that in case of master servant relation, master can order or require what is to be done and how it has to be done. But incase of independent contractor an employer can only suggest that what is to be done but not how it sh .....

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the remuneration. Whether a person is a servant or an agent would be determined by the duties of employee, the nature of business, terms of his employment/engagement and kind of supervisory control over his work. A person who is engaged to manage the business may be servant or agent, according to the nature of his service and authority of his employment. The profession involves occupation required purely intellectual or manual skill, as held by the Hon ble Supreme Court in the case of CIT Vs Mo .....

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y intellectual skills, depending on individual characteristics of persons pursuing that vocation, requiring specialized advance education or expertise. The professional service , which are termed as independent personal service in the phraseology employed in tax treaties are, however, not defined in text treaties or even official commentaries on UN and OED model conventions. The meaning of this term is illustrated by some examples of typical liberal professions, and this enumeration of professio .....

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defines profession as a vocation or occupation requiring special, usually advanced, education and skill e.g. in law and medicine and observes that the labour and skill involved in a profession is predominantly mental or intellectual rather than physical or manual; 8. The school of thought, thus emerging from this deliberation is that; broadly speaking a profession will imply any vocation carried on by an individual, or group of individuals, requiring predominantly intellectual skill, dependant .....

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sons. They purely render skilled services to assessee on the .basis of contract entered by them with the assessee company. They reach to certain intellectual conclusion on the basis of analysis of data put forward before them. During the analysis and intellectual conclusion arrived by them is based on their specialized skill. The assessee company has no interference in their diagnostics arrived at. These specialists are governed by their specialized knowledge in their field. The payment made, in .....

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rol of assessee over doctors/specialist mentioned above, with regards to specialized service rendered by them to assessee at the strength of specialized knowledge. This is only a contract for rendering the specialized service and there is no employer-employee relationship. The nature of service of doctors are different from other employees because, the method of work of doctors/specialists are not controlled by the assessee in any way. The control of method of activity is the essence of employme .....

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