TMI Blog2015 (12) TMI 1063X X X X Extracts X X X X X X X X Extracts X X X X ..... ived by any of the doctors from the assessee under the head 'income from salary'. Concurring with the findings recorded by the CIT(A), it has been correctly held by the Tribunal that there does not exist employer-employee relationship between the assessee and the persons providing professional services. It has been further recorded that on consideration of the agreement in its entirety vis a vis the case law relied upon by the assessee, it is evident that it is not a case of employer-employee relationship between the assessee and the doctors. Assessing Officer was not right in concluding on the combined reading of the above stipulations that the income of the doctors was salary. ITAT was correct in treating chargeability of payments made to doctors who are regular employees of the hospital as per the provisions of Section 194J - Decided against revenue - I. T. A. No. 142 and 143 of 2013, 156, 157, 159 and 160 of 2014 (O&M) - - - Dated:- 26-8-2015 - MR. AJAY KUMAR MITTAL AND MR. RAMENDRA JAIN, JJ. For The Appellant : Mr. Yogesh Putney, Advocate For The Respondent : Mr. Pankaj Jain, Sr. Advocate with Mr.Divya Suri, Mr. Sachin Bhardwaj, Mr. Deepanshu Jain and Mr. Madhu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is given a receipt for it and then he consults the doctor to whom he wants to consult. The concerned doctor prescribes the treatment on the Hospital's letter pad. If the patient is to be admitted in the hospital for indoor treatment, then he is admitted for treatment. The working days and hours of the doctors in OPD of the hospital are fixed as per contract between these doctors and the hospital. They are not allowed to do their own practice or work with another hospital during the period for which they are engaged with the hospital. Apart from these doctors, there are some doctors who attend the hospital on call. Thus the respondent has employed these professional doctors as their employees to provide full time services to the patients as per contract for service entered with them. The respondent company deducted tax under Section 194J of the Act from the payments made to them treating the payments as professional fees instead of salaries. The Assessing Officer concluded that there existed an employer and employee relationship between the respondent company and the doctors and held that tax should have been deducted under section 192 of the Act and not under Section 194J of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction between contract of service and contract for service. Reliance was placed on judgments in Dharangadhra Chemical Works Limited vs. State of Saurashtra and others, AIR 1957 SC 264, Commissioner of Income Tax Bombay City vs. Mrs. Durga Khote, (1952) 21 ITR 23 (Bom.), CIT vs. Grant Medical Foundation (Ruwi Hall Clinic), (2015) 375 ITR 49 (Bom.), CIT vs. Apollo Hospitals International Limited, (2013) 359 ITR 78 (Guj.), CIT vs. Yashoda Super Specialty Hospital, (2014) 365 ITR 356 (AP), Hindustan Coca Cola Beverage Pvt. Limited vs. CIT, (2007) 203 ITR 226 (SC) and CIT vs. Rishikesh Apartment Cooperative Housing Society Limited, (2002) 253 ITR 310 (Guj.). Support was also gathered from pronouncement of Apex Court in Gestetner Duplicators (P) Limited vs. CIT, (1979) 117 ITR 1 (SC), this Court in CIT vs. Deep Nursing Home and Children Hospital, Ludhiana, ITA No.169 of 2007 decided on 4.10.2007, Calcutta High Court in ITO vs. Calcutta Medical Research, 2001(75) ITD 484 (Cal.) and Delhi High Court in CIT vs. Maruti Udyog Limited, (2012) 66 DTR 201. 7. It would be expedient to reproduce relevant statutory provisions i.e. Sections 192(1) and 194J of the Act, which read thus:- 192. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... individual or a Hindu undivided family referred to in the second proviso shall be liable to deduct income-tax on the sum by way of fees for professional services in case such sum is credited or paid exclusively for personal purposes of such individual or any member of Hindu undivided family. Explanation.-For the purposes of this section,- (a) professional services means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of section 44AA or of this section; (b) fees for technical services shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9; (ba) royalty shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9; (c) where any sum referred to in sub-section (1) is credited to any account, whether called suspense account or by any other name, in the books of account of the person liable to pay such sum, such crediting shall be deemed to be credit of such sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employeremployee relationship. 10. We now proceed to examine the judicial precedents on the subject. In Dharangadhra Chemical Works Limited vs. State of Saurashtra and others, AIR 1957 SC 264, while discussing employeremployee relationship, the Apex Court observed thus:- 9. The principles according to which the relationship as between employer and employee or master and servant has got to be determined are well settled. The test which is uniformly applied in order to determine the relationship is the existence of a right of control in respect of the manner in which the work is to be done. A distinction is also drawn between a contract for services and a contract of service and that distinction is put in this way: In the one case the master can order or require what is to be done while in the other case he can not only order or require what is to be done but how itself it shall be done. (Per Hilbery, J. in Collins v. Hertfordshire County Council). 11. The issue before the Bombay High Court in Commissioner of Income Tax, Bombay City vs. Mrs. Durga Khote, (1952) 21 ITR 23, was whether the income of assessee, a film actress should be computed under Section 7 or Section 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs' there is a list of allowances such as Basic, HRA, Trans. Allw. Edu. Allw. B P Allw. Tel. Allw. Other Allw. On the other hand, in case of Rs.consultant doctors' there is a clause of lump-sum monthly payment. The consultant doctors, however, are not paid any such allowance. (b) In the case of Rs.employee doctors' there is a clause of entitlement of leave prescribed for a specific period, however, there is no such condition mentioned in case of agreement with the Rs.consultant doctors'. (c) An Rs.employee doctor' is entitled for Medical Benefit and Personal Accident Benefit provided by the assessee as per the policy of the hospital. Contrary to this there is no such benefit granted to the Rs.Consultant Doctors'. (d) There is a specific mention of General Service Rules Regulation to govern the service matters, but in the agreement of FGCs they are not governed by such Rules and Regulations, rather they were confined within the terms of the agreement. (e) For Rs.Employee Doctors' the employment is full-time employment and they are not entitled for any other full time employment or private practice.On the other hand consultant doctors are fre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly deducted at source under section 194J and section 192 of the Act had no application. The findings and conclusions of the Tribunal are proper. There is no error of appreciation. We are in agreement with the same. No substantial question of law arises for consideration. 14. Adverting to the judgments relied upon by the learned counsel for the revenue, in Ram Prashad's case (supra), it was held by the Apex Court that a Managing Director who has to exercise powers within the terms and limitations prescribed under articles of association and subject to control and supervision of the Board of Directors of the company is employed as a servant of the company and remuneration payable to him is salary. Similar issue was adjudicated by the Karnataka High Court in M.S.P.Rajes's case (supra). In Dr. Mrs. Usha Verma's case (supra), the High Court was examining whether the income from the paying clinic should be taxed under the head 'Profit or gains of profession' or under the head 'salary'. The assessee-doctors were employed by the Government Medical College. Doctors working in Government hospitals used to examine patients at their residence. To stop this p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant records. The brief facts of the case are that the appellant company is running a hospital, known as Ivy Hospital at Mohali. The Department conducted a TDS inspection under section 133A of the Act, at the business premises of the assessee appellant on 28.9.2011. During the course of such inspection and assessment proceedings under section 201(1)/ 201(1A) of the Act, it was noticed by the ACIT(TDS) that the hospital is running different OPDs, apart from indoor patients' treatment. The procedure of treating patients in OPD is that when a patient comes for the treatment in Hospital's OPD, he deposits a consultation fee for the particular Medical Department in which he wants to consult, at the cash counter of the hospital and he is given a receipt for it and then he consults the doctor to whom he wants to consult. The concerned doctor prescribes the treatment on the hospital's letter pad. If the patient is to be admitted in the hospital for indoor treatment, then he is admitted under his treatment. The working days and hours of the doctors working in OPD of the hospital, are fixed and as per the contract between these doctors and the hospital they are not allowed to do t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in the light of the criteria laid down by the courts to determine whether the doctors attached to the appellant hospital are employees of the hospital. The test which is uniformly applied in order to determine whether a particular relationship amounts to employer-employee relationship is the existence of a right of control in respect of the manner in which work is to be done by the person employed. The nature and extent of control which is requisite to establish the relationship of employee and employer varies from business to business.' 8. 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, having regard to the detailed analysis and findings of the CIT (Appeals) on the issue in question, it cannot be said that findings of the learned CIT(Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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