TMI Blog2013 (11) TMI 1551X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 192 of the Income-tax Act. - Decided against assessee. Mark up/profits earned by Fortis Health World Ltd. (FHWL) on sale of medicines to the assessee - whether is a commission chargeable to tax under section 194H or is a sale on which provisions of section 194H are not applicable? - Held that:- The agreement has to aspects - one is with regard to sale of the medicines by FHWL to the assessee. As per the agreement, FHWL is to sell the medicines at cost plus certain markup which has been fixed on the basis of turnover as given in paragraph 2.2 of the agreement. The second aspect is the providing of the manpower by FHWL to the assessee for smooth running of their pharmacy. However, as per Paragraph 2.6 of the agreement, all expenses incurred by FHWL on the employees and the smooth running of IPP Pharmacy are to be reimbursed by the assessee to FHWL on monthly basis. Thus, FHWL is not charging anything for providing the manpower for running the IPD Pharmacy. On the above facts, in my opinion, it cannot be presumed that the markup on the sale of medicines is to be treated as consideration for providing the manpower by FHWL to the assessee. Paragraph 2.2 of the agreement is ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see before us, and which we shall take up in seriatim. The Revenue also contests the partial relief allowed to the assessee. 3. The assessee was observed to have paid 'blood processing charges' in the sum of ₹ 8,32,458/- to blood banks, as, e.g., Santokbbha Durlahji Memorial Hospital Cum Medical Research Institute ('SDMR' for short). The Assessing Officer (AO) was of the view that the said payment stood covered u/s. 194J of the Act and, accordingly, queried the assessee in the matter. The assessee, vide its office letter dated 21-01-2008, replied that the same represented the cost of blood units purchased by it for its various inpatients. As it did not own a blood bank, it arranges for the supply of blood from other blood banks. The information from a payee bank (SDMR) was sought by the Revenue by the issue of notice u/s. 133(6) of the Act, requiring it to explain the nature of the transaction/s with the assessee, enclosing copies of the relevant bills in the case of one of the patients, so as to elicit specific answers, vide its office letter dated 22-12-2009. SDMR replied that the charges raised by it vide Bill No. 159 dated 17-08-2007 is for the Packed R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... processing charges, the amount paid by the patient is deducted from the respective bills on production thereof by the patient. On being questioned by the Bench, if there is any payment by the assessee-company to these blood banks against the services rendered to its different patients, he categorically replied in the negative. 5.1 The first question, therefore, that arises is as to the nature of the charges levied and paid to the blood bank. The same would without doubt fall within the scope of technical services as contemplated u/s. 194J of the Act. We observe that the assessee initially did not dispute the same; its only contention being that the payment to the blood banks is toward cost of blood (refer 'statement of facts' before the first appellate authority). It is only on it being clarified, though information sought directly by the Revenue from a blood bank, that sale of blood per se is prohibited by law, and what is being charged by them (blood banks) is 'processing charges' for various tests conducted own the blood issued, as well as in/for extracting the blood components required, that it came to light that the payments made to blood banks were not for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viz. blood group. 5.3 The services being rendered by the blood banks are thus an adjunct to and linked with, and not de hors, that being rendered by the assessee, as sought to be made out before us. This is relevant as the assessee has already charged the patient a composite fee, i.e., for services including these services, so that it can only be considered to have a fair idea of the nature and cost of the services required. Would not the assessee seek redressed if the services rendered by the blood bank, are not up to the mark? For example, where the blood (component) is supplied short or does not meet the quality or other technical specifications. Most certainly, the same directly impacting its treatment, apart from the fact that the patient stands charged by it in respect of those services. The fact that the blood components is requisitoned through the patients or their relatives is only as equivalent blood is to be supplied by them to the blood bank, so that the same is only facilitative, given the mandate of law, and does not impinge the substance of the transaction. Further, the payment to the blood bank is only by the assessee-company. It is stated before us that payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... picted in its accounts as 'cost of medical services', further bearing the narration 'blood processing charges'. So, however, and without prejudice to the foregoing, the payee blood banks would only be assesses on the records of the Revenue, who would have returned their income for the relevant years, including that received through the patients of the assessee-hospital serviced by them. Surely, there can be no double collection of tax by the Revenue, though the onus to adduce evidence to the effect that tax or; the impugned sum/s has indeed been paid to the credit of the Central Government is only on the assessee. As such, though we uphold the assessee's liability to TDS u/s. 194J in principle, the demand u/s. 201(1), as also u/s. 201(1A) of the Act, would only be made after allowing the assessee a reasonable opportunity to present its case in the matter. We decide accordingly. 6.1 The next issue is qua the tax deducted at source from payments to 'retainer' doctors. The assessee, as explained by the ld. AR, has three categories of doctors working for it. One is those on its rolls, i.e., the salaried doctors, payment to whom is subject to TDS u/s. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. We have heard the parties, and perused the material on record. 7.1 It would be necessary to review the law in the matter, as explained by higher courts of law, i.e., defining the constituents of, or the essential ingredients of what constitutes, salary, before we proceed to apply the law as explained to the facts of the case. The sine qua non for chargeability of a sum under the head 'salary' is that there must be an employee-employer relationship between the person making the payment or on whose behalf the payment is made, and the assessee, i.e., its beneficiary. Whether the relationship of master and servant exists between the management and the workmen is essentially a question of fact. However, the scope of section 15 contemplates every kind of servant, i.e., howsoever highly or lowly placed the payee may be. Several factors may indicate a relationship of master and servant, none of which may be conclusive. No single factor can be considered as absolutely essential. The decision, thus, rests on the understanding of and with reference to the cumulative effect of all the factors, some of which have been identified as the right to select for appointment; the right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, to whom the retainer doctor is to report, is specified. The general rules and regulations of the assessee-company, as applicable to and governing its work, as well as the conduct, other professional and general, have also been prescribed in adequate detail the conditions which may lead to the termination of the arrangement, and the manner thereof, is also clarified, and which includes a failure or refusal to carry out the duties assigned. In view of the foregoing, on which there is no doubt or dispute, we are unable to see as to how the contract is not one 'of service', leading to the remuneration paid in respect thereof being considered as salary, assessable u/s. 15 of the Act. The TDS provision would only follow in consequence. Merely because the term 'retainer' has been employed in the agreement, rather than being referred to as an 'employee' or 'employment', would be of no consequence. The decision in the case of St. Stephen's Hospital (supra) is also relevant, clarifying the law in the matter, where the contract between the assesses-hospital and the consultant doctors was found by the tribunal as a contract of service, even though the ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate arrangements, one in respect of medicines for in-patient, i.e., the IPD Pharmacy, and the other for out-patients, or the OPD Pharmacy. There is no dispute with regard to the supply of medicines from the OPD Pharmacy, where there is an outright sale to the patients, and in consideration of being allowed to run and manage which, i.e., the said pharmacy, FHWL is to pay the assessee's monthly charges equivalent to 8% of the net revenue or ₹ 25,000/-, whichever is more, deducting TDS thereon u/s. 194-I. However, with regard to the IPD Pharmacy, the assessee has agreed to purchase from FHWL at purchase + mark up, duly defined, and applicable taxes. The mark up varies with the turnover, viz. being at 2% for turnover up to ₹ 12.00 crores; 1.5% for turnover in excess of ₹ 12 crores and up to ₹ 15 crores, and at 1.25% thereafter. The payment is to be made on monthly basis. It was explained that this has been done to obviate the need to either into negotiation each time a purchase is to be made from FHWL. The medicines are supplied to the in-patients through the pharmacy, and get billed into their account by the assessee. While the assessee treats it as a norma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of the two partners, and is by way of defining and determining the revenue streams of FHWL, thus, essentially enabling it know its stakes as well as the revenue it stands to gain from the said business. We have also perused the relevant ledger account (PB pgs 115 to 119), which reveals the parties observing the said agreement scrupulously. There was no occasion to pay interest for delayed payment and, consequently, no occasion to deduct lax at source thereon during the relevant year. 9.2 Though the foregoing appears impressive at first blush, the assessee's arrangement; rather, the explanation of the arrangement entered into by it with FHWL, bears an intrinsic flaw. If it is an independent transaction of purchase and sale at, of course, pre-determined price(s) and, consequently, profit, where is the question of reimbursing the labour cost to it, the supplier/seller of the goods? This is all the more so as labour cost is all independent variable, with no relation with the volume of turnover. In fact, the aspect of reimbursement of labour cost, or of the manpower resource having been outsourced to the assessee-company, was also not brought to our notice during hearing, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cost of the manpower services contracted to the assessee-company, liable for deduction of tax at source u/s. 194C. In arriving at our conclusion, regard has also been made for other related aspects. There is nothing to show any deployment of capital by FHWL in business. Even otherwise, the same is of little consequence in view of its incapacity to do any business, as discussed hereinbefore. Also, FHWL has no other organizational costs, i.e. apart from manpower cost; the cost of other inputs, in the form of office and work space (as say for locating staff, sales and stocking of goods); electricity and power (for lighting and air-conditioning, etc.); telephone lines (for communication), etc., being borne only by the assessee-company. In sum, any cost, if at all being borne, has to be considered as in relation to the provision of the manpower services. The mark-up on the turnover of the 1PD Pharmacy, under the given facts and circumstances, thus, represents neither business profit of FHWL or commission allowed to it by the assessee, but a consideration toward the manpower services contracted to the assessee-company, exigible to TDS u/s. 194C. It is open, however, for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is against that the Assessing Officer is justified in holding that the charges paid to blood bank are covered under the provisions of section 194J of the IT Act and hence the assessee is in default under section 201(1) and 201(1A). 5. The brief facts in this regard are that a TDS survey was carried out in the assessee's case on 13.8-2008. During the survey proceedings, the assessee was asked to submit details of various expenses and the TDS deducted thereon. On verification of the said details the Assessing Officer noticed that assessee had paid blood processing charges amounting of ₹ 8,32,458 to Santokba Durlabhji Memorial Hospital (SDMH). Further, on going through the relevant details/documents, the Assessing Officer was of the view that assessee was required to make TDS under section 194J in respect for the aforementioned payments. During the proceedings, the assessee was asked to submit the nature of expenses on account of blood processing charges and details of TDS deducted on the same. As per order of Assessing Officer, it was submitted that blood processing charges amounting to ₹ 8,32,458/- represents the cost of blood units purchased for the vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore Ld. CIT(A) which is placed on record at pages 21 to 30 of Paper Book. 8. On the other hand, the Ld. D/R has placed reliance of the orders of authorities below. 9. I have considered the submissions of both the-parties and the relevant material on record. Copy of written submissions filed on behalf of the assessee is placed in the compilation which comprises of 23 pages. Copy of written submissions filed before Ld. CIT (A) is priced at pages 21 to 30 of the compilation. After going through the order of Ld. CIT (A) and submissions, 1 find that assessee deserves to succeed in this ground. The Ld. CIT(A), in my considered view, has not taken into consideration the written submissions filed before him in right perspective though he has mentioned that detailed written submissions filed before him are same as were filed before the Assessing Officer. If the written submissions of the assessee filed before Ld. CIT(A) and here before the Tribunal are taken into consideration, then it is seen that written submissions filed before the Tribunal is similar to written submissions filed before Ld. CIT(A). It has been categorically stated that there is no relationship between the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o that extent the amount was adjusted against bill of Tulsi Ram, issued by the assessee hospital. It means that this is a case of refund to patient Tulsi Ram and on refund no TDS is deductible as per provisions of law. 11. I further noted that on similar facts, the Assessing Officer for assessment year 2009-10 treated the assessee in default in terms of section 201(1) and 201(1A). Assessee preferred appeal before Ld. CIT (A). Similar written submissions, rather it can be said that identical written submissions were filed before Ld. CIT (A) who after considering the order of Assessing Officer gave following findings recorded in para 2.3 at pages 4 5 of the order of Ld. CIT(A) which are as under:- 2.3. I have carefully examined the observations of the AD and submissions of the Ld. AR, made in this regard, in the light of the legal position of relevant TDS provision of the Act. From the same, the following undisputed aspects can be perceived:- 1. The technical services of blood processing was being obtained by patients in his personal capacity only, as the relevant processing charges bills were raised by the services providers in the name of the patient only. 2. The pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from payment made to those doctors. In this connection, the Assessing Officer went through the sample appointment letters issued by the assessee i.e., in the case of empanelled consultants and also in the case of retainer doctors. On consideration of the same, the Assessing Officer was of the view that retainer doctors were employees of the assessee. The Assessing Officer noted that the conditions mentioned in the appointment letters are the same for other retainers and empanelled doctors. The main features of appointment of an empanelled doctor are that he should give consultation to out-patients, to in-patients and emergency patients on referral basis, he should be available for rotational calls including emergency duties, should provide complimentary services to staff, and follow the guidelines framed for empanelled doctors. The payments to empanelled doctors are to be made on revenue sharing basis. The guidelines for empanelled doctors include the rights and duties, levy of charge of fee, tenure and performance appraisal, in case of retainer doctors, the main features of appointment include reporting to director/HOD/any other person appointed by the management, restriction on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tionship and, therefore, fixed monthly payment to the retainer doctors was in the nature of salary. 13.4 Reliance was placed on the decision of Delhi Bench of Tribunal in case of St. Stephen's Hospital (supra), by the Assessing Officer. However, in view of the decision of Hon'ble Supreme Court in case of Hindustan Coca Cola Beverages (P.) Ltd. (supra), the liability under section 201(1) has been cancelled for the reason that they have already paid tax on the amount of receipts. No finding has been given in respect of other retainer doctors in respect to the fact that if they have filed the return and shown the receipts. If they have paid the tax on the receipts, then in view of the decision of Hon'ble Supreme Court in case of Hindustan Coca Cola Beverages (P.) Ltd. (supra), no liability can be fastened on the assessee under section 201(1) of the Act. The alternate contention in respect to calculation of interest under section 201(1A) was also accepted by the Ld. CIT (A) by recording his finding in para 4.3.3 at pages 11 and 12. 13.5 The Ld. A/R of the assessee relied upon the written submissions placed on record. Further, facts of the case were also explained. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration, they are not entitled to participate in any welfare benefits, plans or programs maintained by the assessee like medical plan, accidental death plan etc. In such circumstances, it was held that the provisions of section 192 of the IT Act were not applicable. This decision is tendered by the Hon'ble Delhi High Court and, therefore, Assessing Officer should have taken into consideration instead of taking a decision of Tribunal of Delhi Bench. It is further seen that the Assessing Officer has relied upon a decision of Hon'ble Supreme Court in case of Justice Deoki Nandan Agarwala (supra) wherein it has been held that although in the case of Supreme Court and High Court Judges, there is no employer - employee relationship, yet the payment received by them is in the head of salary as salary is a reward for employment. In my considered view, this ratio relied upon by Assessing Officer goes in favour of the assessee because all Judges are issued Form No. 16 and not Form 16A and return filed accordingly by the Judges. All Judges are entitled to retirement benefits, all Judges are entitled to employment benefits such as PF, HRA, LTA, transports and other applicable allowances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Ld. CIT (A) have been recorded in para 3.3 at pages 6 to 9 which reads as under :- 3.3. I have carefully considered all the dimensions of the issue under consideration. The basic controversy in the present issue is about that nature of the relationship in between the appellant and the doctors employee on retainership basis and weather the TDS provision of Sec. 192 or 194J would apply on the payment made to them, as such. The brief facts of the issue are that the appellant, a super specialty hospital, apart from having certain doctors as regular employees, also has obtained services of others doctors in two manners, one way through the empanelment doctors and other are retainer doctors, both on contractual basis. The appellant has treated both types of doctors as consultant and deducted the TDS u/s. 194J of the Act. However, in view of the facts that the retainer doctors, being paid fixed monthly amount and reporting to the HOD, having restriction on working affiliation with other hospitals and also subjected to the general rules and regulations of the appellant hospital etc., the AO formed the opinion that such doctors are similar to the regular employee of the appellant ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employment/consultancy arrangement, to ensure the proper functioning of such origination and also ensure the quality of medical services of the appellant. Accordingly, having such clause in the contract for the retainer doctor, does not convert from the status of the consultant them into a regular employee of the appellant, as such. The last point raised by the AO, in this regard, is that they are paid fixed monthly salary like the regular employee of the assessee. In this regard, I find force in the Ld, AR's argument that had they been engaged as regular employee, then they would have also entitled for various other benefits/facilities, which are available only to the general salaried employee as such. This is an undisputed fact that the retainer doctor is not entitled for any sort of such benefits, therefore, for all practical purposes, they can not be considered as a regular employee, as envisaged by the AO. iv. It is also noted that unlike the regular employee, the retainer are engaged of the fixed period on temporary basis which may or may not be renewed as such. Similarly they are not entitled for other benefits like PF contribution, retirement benefits, live benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nes are specifically meant for the in-patients and not open to sale for the patients as is the case in OPD. Whatever medicines are required by the assessee are being provided for fixed margin by FHWL and hence FHWL is an agent of the assessee. Hence, the amount paid to FHWL is commission paid to it on which 'TDS is deductible u/s 194H of the IT. Act. 19. The Ld. CIT (Appeals) confirmed the findings of the Assessing Officer by observing as under :- I have considered the facts of the case and submissions of Ld. A.R. On perusal of the relevant details / documents. I am in full agreement with the Ld. AO in holding that the Fortis Health World Ltd. was an agent of the appellant and was making available medicines to the IPD for a fixed margin and therefore, that mark-up price or the margin amount was nothing but the commission being paid to the Fortis Healthworld Ltd. and thus, the appellant was liable to make TDS u/s 194-H of the I.T. Act in respect of such margin amount / commission. Therefore, it is held that Ld. AO was fully justified in creating the impugned liability u/s 201(1A) of the I. T. Act in the appellant's case. Consequently, this ground of appeal is rejecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under consideration. In light of the above, the addition u/s 201(1 A) is hereby deleted. Humble appellant prays for grant of relief by deleting the additions sustained by the ld. CIT (A) and also grant the benefit of consequential Interest on account of relief given in the Order and as per the prevailing law in force.' 21. After considering the submissions and perusing the material on record, I find that here also assessee deserves to succeed. The assessee is purchasing medicines from FHWL on certain terms and conditions, rates are reduced but the fact remains that FHWL is issuing bills of sales to the assessee and showing the sale in its turnover and is filing regular return of income. This fact was brought to the knowledge of the Assessing Officer. Therefore, in my considered view a sale conducted by another party on certain conditions cannot be treated as sale on commission basis. I further noted that on identical facts for subsequent year also similar liability was fastened on the assessee. However, the Ld. CIT (A) while deciding the appeal no. 403/JPR/09-10 dated 30.8.2011 has allowed the issue in favour of the assessee. The finding of Ld. CIT (A) has been recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal before the Tribunal. It means the order of Ld. C1T (A) in subsequent year has been accepted by the department. Findings of Ld. CIT (A), in my considered view in this case for subsequent year are correct and on the reasoning given by Ld. CIT (A) for subsequent year, I set aside the order of Ld. CIT (A) for the current year and allow the issue in favour of the assessee by holding that provisions of section 194H are not applicable. 22. Now I will take Lie appeal of the department for assessment year 2008-09 mentioned in ITANo.326/JP/2011. 23. The department is objecting in holding that assessee was entitled to benefit as per the ratio of decision in case of Hindustan Coca Cola Beverages (P.) Ltd. (supra) even when the requisite ingredients such as, inclusion of income, payment of taxes etc. were not on record in case of all the deductees. 24. The Ld. CIT (A) has directed the Assessing Officer to verify the correctness of aforesaid working given by the Ld. A/R. 25. The brief facts on this issue have already been discussed while disposing the ground no. 3 in appeal of assessee. In short, the assessee was making payment to its retainers and as per provisions of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of Mumbai Bench of the Tribunal. Therefore, on the same reasoning given by me already in case of other assessee, 1 confirm the order of Ld. CIT (A) in the present case on this issue. 29. Ground No. 2 is against in holding that the payments made to Fortis Health World Ltd. is in fact correct and covered under section 19AC and not under section 194H. 30. This very issue was also involved in case of another assessee i.e. Escorts Heart Institute . Research Centre Ltd. In that case, the Ld. CIT (A) has confirmed the action of the Assessing Officer. However, I have reversed the order of Ld. CIT (A). I have taken into consideration the subsequent decision of Ld. CIT (A) for assessment year 2009-10 where identical issue was decided in favour of assessee. I find that the subsequent decision of Ld. CIT (A) was correct which was after appreciating the facts in right perspective and I have held that the order of Ld. CIT (A) in subsequent year is correct and on this basis the order of Ld. CIT (A) for assessment year 2008 09 was set aside and the issue was decided in favour of the assessee. 31. Facts are identical in the present case also. Therefore, following the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority for a subsequent year, particularly when the same was not pressed during hearing and, accordingly, the parties not heard thereon. 2. I am in agreement with the Question No. 2 as proposed by my ld. brother, JM. 3.1 Whether, can, on the admitted set of facts brought on record by the parties, the inferential finding/s by the Appellate Tribunal differ from that of cither party before it, or is it to necessarily match therewith? Further, is not the tribunal duly bound to, in deciding an issue before it, apply the law as applicable to the facts found by it, including such inferential finding/s? 3.2 Whether, in the facts and circumstances of the case, the supply of medicines by Fortis Health World Ltd. (FHWL) to the assessee-company for its IPD Pharmacy, constitutes an independent business being carried on by FHWL, or is the said supply only the result of the work carried on by FHWL, or is the said supply only the result of the work carried out by its relevant manpower, whose services stand already contracted to the assessee-company and subject to tax deduction u/s. 194C of the Act? THIRD MEMBER ORDER G.D. Agrawal, Vice-President (As a Third Member) - There be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ines by Fortis Health World Ltd. (FHWL) to the assessee-company for its IPD Pharmacy, constitutes an independent business being carried on by FHWL, or is the said supply only the result of the work carried out by its relevant manpower, whose services stand already contracted to the assessee-company and subject to tax deduction u/s. 194C of the Act? 4. I have heard both the parties first with regard to the questions which are to be answered by the Third Member. Section 255(4) of the Income-tax Act, 1961 reads as under:- 255. (4) if the members of a Bench differ in opinion on any point, the point shall be decided according to the opinion of the majority, if there is a majority, but if the members are equally divided, they shall state the point or points on which they differ, and the case shall be referred by the President of the Appellate Tribunal for hearing on such point or points by one or more of the other members of the Appellate Tribunal, and such point or points shall be decided according to the opinion of the majority of the member of the Appellate Tribunal who have heard the case, including those who first heard it. 5. From the above, it is evident that as per Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the assessee to the blood bank. The assessee changed the stand before the learned CIT(A). He further submitted that payment to blood bank was made for processing charges. The payment was made by the patients on behalf of the assessee hospital. That in the assessee's books of account also the payment made to blood bank has been shown. He, therefore, submitted that the order of learned AM should be sustained. 8. In the rejoinder, it is stated by the learned counsel that the assessee's staff who prepared the reply before the Assessing Officer was not aware about the correct facts, therefore, some factual mistake did occur in the reply furnished before the Assessing Officer. That before the learned CIT(A), there was no change in the stand of the assessee but only the correct facts were brought on record. That before the Assessing Officer, it was stated that the assessee purchased blood units from the blood bank. While the blood can neither be Purchased nor sold, the blood bank usually asks the patient's relatives to donate the blood and then they issue the required blood to them. The charges collected by the blood bank are for the processing of blood. He, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- UHID - 1506 Finance Dept IPID - 234 Cash Paid Dated : 5/9/07 Amount: 15,938/- Total 2,460/- Sd/- Cashier 11. That during assessment proceedings, the Assessing Officer called for the information from Santokba Durlabhji Memorial Hospital, i.e., the blood bank and hereinafter will be referred to as blood bank, under Section 133(6). The blood bank was asked to submit the following details:- 1. I am enclosing copies of bills raised by you in the case of patient Shri Tulsi Ram. You are requested to explain the nature and purpose of raising this bill. 2. Kindly give a detailed note on investigation procedures involved/services provided by you against this bill. 3. Kindly explain why the money has been received from Fortis Escorts Hospital and if you are having any agreement with Fortis Escorts Hospital for investigation pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ood bank, 'A' was required to take certain services from the blood bank for which 'A' was required to make the payment of ₹ 1,000/- to the blood bank. The assessee refunded the same to 'A' now, in substance, the fee received by the hospital was only ₹ 99,000/- as fee from the patient 'A' and debited ₹ 1,000/- as blood processing charges, it cannot be said that the assessee made the payment of blood processing charges. In substance, the payment of ₹ 1,000/-is made by the patient 'A' to the blood bank and ₹ 99,000/- to the assessee. 14. In view of the above, I am of the opinion that when the assessee did not make any payment to the blood bank, the question of affixing the liability under section 194J upon the assessee does not arise. Therefore, I agree with the learned Judicial Member with regard to question No. 1. 15. The second point of difference which is agreed by both the Member reads as under:- 2 Whether in the facts and circumstances of the cases, the provisions of section 192 or section 194J are applicable in case of retainer doctors? 16. At the time of hearing before me, it is submitted by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides and perused the material placed before me. The limited controversy posed by question No.2 is whether the payment made to the retainer doctors is professional charges liable for deduction of tax under Section 194J or income from salary from which tax is liable to be deducted at source under Section 192. Therefore, it has to be examined whether the relationship between the assessee and the retainer doctors is the employer employee relationship. To ascertain the above fact, it would be essential to refer to the retainership agreement. The assessee has given the sample copy of retainership agreement with few doctors. For ready reference, I shall reproduce herein below the agreement with Dr. Anshu S.S. Kotia :- May 7, 2007 Dr. Anshu S.S. Kotia E-41 Siddharth Nagar, Scctor-13, Malviya Nagar, Jaipur-302017 Rajasthan, Dear Anshu, Sub: Services on Retainership basis As discussed and mutually agreed, we are pleased to engage your services as Consultant - Anaesthesia for our Escorts Heart Institute Research Centre Ltd., based at Jaipur, on the following terms and conditions: 1. This agreement shall initially be w.e.f. May 7, 2007 till September 30, 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, or in violation of one or more terms of this agreement or the regulations and policies of the company, or you neglect or fall or refuse to carry out the duties assigned to you hereunder, the company may terminate this agreement without notice and without any payment in lieu of notice. 13. You shall upon completion or termination of the engagement hereunder, immediately deliver up to company all correspondence, documents, paper and property belonging to the company which may be in your possession or under your control. 14. The Jaipur courts will have exclusive Jurisdiction for any issue or dispute arising out of or in connection with this arrangement. You are requested to return the duplicate copy of this letter in confirmation of your acceptance of the above terms and conditions. Looking forward to a mutually beneficial association. Yours faithfully For Escorts Heavrt Institute Research Centre Ltd. 20. From the above agreement, it is evident that the agreement is for a limited period. The retainer doctor has to provide the services in the Department of Anaesthesia. For this purpose, he has to report to the Head of the Department Anaesthesia or any other p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assets of the Company for satisfaction of any debts arising out of this Agreement. Consultant agrees to indemnify and hold harmless company and its officers, directors, employees, agents, parents, subsidiaries and affiliates from and against any and all liabilities, penalties, demands and damages, including attorney's fees and costs of defense, which it may suffer incur, arising out of or in connection with this Agreement of the performance of services hereunder. [Emphasis supplied] 8. It is clear on a reading of Clause 11 of the Agreement that there is no employer-employee relationship between the parties. Moreover, it is unlikely that in any corporation, an employee would indemnify his employer and other employees against all liabilities, as provided for in Clause 11 of the Agreement. 9. Both the appellate authorities have looked at the Agreements and examined them in detail and have come to the conclusion that there is no employer-employee relationship between the parties and, therefore, the provisions of section 192 of the Act are not applicable. 10. We do not find any reason to disagree with the view taken by the Commissioner of Income-tax (Appeals) as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ployer doctor, general service rules and regulations were made applicable but not in the case of consultant doctors. That in the case under appeal before us, in the case of retainer doctors also, the rules, regulations and policies of the company have been made applicable. In the case of Apollo Hospitals International Ltd. (supra), the consultant doctors were free to take up any other job while in the case under consideration before me, there is prohibition for the retainer doctors to take up assignment with any other company. In the case of Apollo Hospitals International Ltd. (supra), the consultant doctors were entitled to share the fees between the hospital and themselves and fixed remuneration per month mentioned was only the minimum guarantee money which they were supposed to get from the Apollo Hospital. The consultant doctors were required to take professional indemnity insurance on their own. Thus, the facts in the above mentioned case were altogether different than the facts in the present appeals under consideration before me. 26. In view of the above, after considering the facts of the assessee's case in the light of the agreement between the assessee and the reta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is due. In case of any delay in the payment of the amounts payable to FHWL by EHIRCL FHWL is entitled to charge penal interest @ 1.5% (one and half percent) per month for the actual period of delay. 2.5 The sale of the products at the IPD Pharmacy shall be made under the supervision of the Registered Pharmacist and the amounts for the same shall be collected by the Store Manager/incharge appointed by the FHWL All the amounts so collected for the sale of the products shall be deposited with the EHIRCL nominated personnel the next day along with a daily report on safes and sale returns. 2.6 All the expenses incurred by the FHWL on the employees and the smooth operation of the IPD Pharmacy shall be reimbursed by the EHIRCL to FHWL on monthly basis. 2.7 EHIRCL shall also spend the necessary amounts and investments in the infrastructure for the IPD Pharmacy and the same shall be shared between the FHWL and EHIRCL on equal basis. 2.8 The Parties agree to provide each other such reports as are mutually agreed upon or as either Party shall reasonably request during the continuance of this Agreement for any or all matters emanating from this Agreement. 29. The Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been given an opportunity to explain why Section 194C is not applicable. Learned DR also fairly stated that as per Revenue, Section 194H is applicable on the markup charged by FHWL on the sale of medicines to the assessee. Learned DR, however, stated that, at present, he had no option but to support the order of the learned AM because he is conscious of the fact that the Third Member has to agree with one of the conflicting views, then only, there can be majority view. The learned JM's order is against the Revenue and the learned AM's order is partly in favour of the Revenue, therefore, he supported the order of the learned AM through the stand of the Revenue is still that, on such payment, Section 194H is applicable and not Section 194C. 32. After considering the arguments of both the sides and going through the agreement, I find that the agreement has to aspects - one is with regard to sale of the medicines by FHWL to the assessee. As per the agreement, FHWL is to sell the medicines at cost plus certain markup which has been fixed on the basis of turnover as given in paragraph 2.2 of the agreement. The second aspect is the providing of the manpower by FHWL to the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s earned by Fortis Health World Ltd. (FHWL) on sale of medicines to the assessee is a commission chargeable to tax under section 194H or is a sale on which provisions of section 194H are not applicable? 4. Whether in the facts and circumstances of the case, on the mark up/profits the provisions of section 194C can be invoked by the Tribunal where neither this is a case of department nor of the assessee? 2. The Ld. A.M. proposed the following separate questions: 1.1 Whether the payments to the blood banks for carrying out investigation procedures, are, in the facts and circumstances of the case, made by the assessee-hospital or by its patients? 1.2 Whether, while deciding an issue under appeal, the tribunal required to apply its independent mind thereon, without being influenced by the decision by the first appellate authority for a subsequent year, particularly when the same was not pressed during hearing and, accordingly, the parties not heard thereon? 2. I am in agreement with the Question No. 2 as proposed by my Ld. Brother, JM. 3.1 Whether, can, on the admitted set of facts brought on record by the parties, the inferential findings/s by the Appellate Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X
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