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2016 (3) TMI 629 - ITAT CHANDIGARH

2016 (3) TMI 629 - ITAT CHANDIGARH - TMI - TDS u/s 192 or 194J - payments to doctors appointed on retainership basis - assessee in default u/s 201(1) of the Act for short deduction of tax at source - Held that:- As from the perusal of the agreements with the doctors, we do not see any relationship that of master and servant between the assessee and the doctors on retainership basis. It is also seen from these agreements that the doctors who are on the pay roll of the assessee are debarred from t .....

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that doctors who are engaged on retainership basis are not the servants of the assessee since they are allowed to do whatever they want except joining the similar business while other doctors who are on the pay roll of the assessee are debarred from doing any other activity apart from that of the assessee.

From the perusal of all the material placed before us we see that no relationship of master and servant exists between the assessee and the retainer doctors.

The intentio .....

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rd only has given his finding. In view of the above, we uphold the order of the learned CIT (Appeals) and dismiss the appeal of the Department. - Decided against revenue - ITA No.296/Chd/2015, ITA No.297/Chd/2015, ITA No.297/Chd/2015, ITA No.650/Chd/2015 - Dated:- 14-1-2016 - SHRI BHAVNESH SAINI , JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER For The Assessee : Shr i Manj i t Singh, DR For The Department : Shr i R.M. Mehta ORDER These four appeals appeal filed by the Revenue are directed .....

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d are being disposed off by this consolidated order for the sake of convenience. The decision given in ITA No.296/Chd/2015 for assessment year 2010-11 shall apply mutatis mutandis to all the appeals. ITA No.296/Chd/2015 : 3. Briefly, the facts of the case are that the assessee is running a hospital under the name and style of Fortis Healthcare Ltd. at Mohali. The TDS inspection under section 133A of the Income Tax Act, 1961 (in short 'the Act') was carried out at the business premises of .....

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es relationship between the assessee and these doctors, therefore, TDS has to be deducted under section 194J of the Act. Reliance was placed on the order of the Hyderabad Bench of I.T.A.T. in the case of DCIT Vs. Yashoda Super Speciality Hospital (2010) 33 TTJ 17 (Hyd. ) , in the case of ITO Vs. Apollo Hospitals International Ltd. , ITA No.3363/Ahd/2008 and that of I .T.A.T. , Chandigarh Bench in the case of Ivy Health Life Sciences Vs. Department of income Tax, ITA No.731 and 732/Chd/2012. The .....

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to various clauses of the agreements between the doctors and the assessee and reliance was also placed on the judgments which were earlier placed before the Assessing Officer. After considering the submissions of the assessee, the learned CIT (Appeals) held that to determine whether particular relationship amounts to employer and employee relationship, the existence of a right of control in respect of the manner in which work is to be done by the person employed is very important. He also distin .....

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ee. In this way, the learned CIT (Appeals) allowed the appeal of the assessee. 5. Aggrieved by this order of the learned CIT (Appeals), the Revenue has come up in appeal before us, raising following grounds of appeal : 1. That the Ld, CIT(A), Chandigarh has erred in law in deleting the addition made by the AO on the ground that the AO was not right in concluding that there existed an employer-employee relationship between the Hospital and the professional doctors and in treating the PR as assess .....

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(c) DCIT vs. Ivy Health Life Sciences Pvt. Ltd., in ITA No.731 & 732/Chd/2012. The facts of the case laws cited by the assessee are different from the present case, as the doctors engaged in the above Hospitals were part-time consultants whereas the doctors in the present ease were full time consultants engaged by the Hospital and as per the agreements signed between the Hospital and the doctors were exclusively meant to work for the assessee hospital and were not permitted to do their own .....

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hey were also supposed to do the other works related to the hospital activities as and when required. From this it is clear that there existed an employer-employee relationship between the hospital and doctors. (3) That the appellant craves for permission to add, delete or amend the grounds of appeal before or at the time of hearing of appeal." 6. The learned D.R. relied on the order of the Assessing Officer, specifically mentioning the grounds of appeal raised before us, he tried to distin .....

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there exists a relationship of master and servants between the assessee and these doctors on retainership basis. 7. The learned counsel for the assessee relied on the order of the learned CIT (Appeals). He stated that the learned CIT (Appeals) has taken pains to state at length why there does not exist any employer and employees relationship between the assessee and these doctors. The reliance was placed on the judgments which were placed before the lower authorities. It was stated at Bar that .....

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entatives of both the parties, perused the findings of the authorities below and considered the material available on record. The undisputed facts of the case are that the assessee has engaged three types of doctors i.e. (i) employed doctors (on pay rolls), (ii) empanelled doctors and, (iii) retainers. The only dispute is with regard to retainers, in which case the Assessing Officer found that the payment made to these retainers should be treated as salary and consequently, tax has to be deducte .....

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at the retainer doctors shall be associated exclusively with the assessee as full time consultant and shall not associate himself with any other hospital. The point No.(v) is also related to this point No.(i) only, whereby it has been objected by the Assessing Officer that the retainers are barred from engagement with any other organization engaged in a similar business. On perusal of the agreement with these retainer doctors filed before us in the Paper Book, we see that there is a clause at po .....

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sessee in a very positive perspective in the sense that these doctors are not barred from having their own practice and barring them to join any other similar organization is just to avoid shifting of patients to other places, also this bar itself does not create employer and employee relationship between the assessee and the retainer doctors. 10. At point No.(ii), the Assessing Officer stated that the retainer doctors are bound to work from time to time in accordance with the requirements of th .....

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ed by the Assessing Officer at No.(iii) is with regard to the fact that the retainers are duty bound to participate in all academic activities, such as CMEs, conferences, seminars, publications of articles undertaken by the hospital and as advised by the hospital management from time to time. From this contention also, it cannot be inferred that the relationship is that of the employer and employee. 12. At point No.(iv), the Assessing Officer referred to the submission of the assessee that the r .....

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doctors is a long term association, it cannot be said that the relationship between the assessee and the doctors is that of employer and employees. 13. The point No.(vi) raised by the Assessing Officer is with regard to the condition that the retainers may develop or create either individually or jointly with company any original concepts, ideas, plans, designs, presentations, data base, floppies, products etc. but as per the clauses of the agreement these creations shall be treated as sole and .....

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sed is very common. 14. We see that some of the objections taken by the Assessing Officer are on basic and general conditions laid down in the retainership agreement which do not in any way infer that the payment is salary in nature. The learned CIT (Appeals) has very appropriately dealt with these objections of the Assessing Officer in his order and given a finding that by these types of conditions, it does not make the retainer doctors employees of the assessee. 15. We are also in agreement wi .....

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fically stated that the cases relied on by the assessee are distinguishable on facts. We now advert to analyze whether the facts of these cases are applicable to the assessee or not. The first case is that of Yashoda Super Speciality Hospital case (supra). This case is relied on by the assessee as in this case, the doctors were required to work only for the assessee and cannot do any practice elsewhere. It has been held by the Hyderabad Bench of the Tribunal that there is no prohibition in law t .....

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nsultant doctors engaged by the assessee hospital were receiving fixed salary and guarantee money and are not entitled to any allowance or benefit. In such a circumstance, payments were held to be subject to deduction under section 194J and not under section 192 of the Act. In the present case also, the retainer doctors are not provided with any allowance or benefit in the form of retirement benefit, gratuity, PF or any other allowances etc. Therefore, the facts of these cases are also applicabl .....

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t apply the facts of the said case to the present case. We also observe that the said case has not been discussed on facts by the Assessing Officer in his order. The learned CIT (Appeals) is correct in holding that the Assessing Officer ought to have considered the issue on merits rather than summarily rejecting the reliance placed by the assessee. During the course of hearing before us, it was stated that this order of the I.T.A.T., Chandigarh Bench was later on affirmed by the Hon'ble Punj .....

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9. Apart from these findings given in the order of the Assessing Officer, we have also gone independently to the terms and conditions in the sample of agreements with the doctors engaged by the assessee, filed by it in the Paper Book. Different types of agreements are made both for doctors engaged on retainership and those who are regular employees. After perusing both types of agreements, we see that there are a number of differences between various clauses in both types of agreement. To the em .....

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while said clauses are there in the agreement with the salaried doctors. Another interesting clause with regard to posting and transfer also appears in the case of salaried doctors, whereby the assessee company may determine to transfer the doctors at the sole discretion of the management to any department, section, location, associate, sister concern or subsidiary at any place in India or abroad, whether existing today or which may come up in future. While in the case of retainer doctors, it h .....

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o be drawn between the 'contract for service' and 'contract of service'. This issue has been very aptly dealt with by the learned CIT (Appeals) in his order at para 5.1. The contract 'for service' implies a contract, whereby one party undertakes to render the service, for example professional or technical services, to or for another in the performance of which he is not subject to detailed directions and control but exercises professional or technical skill and uses his o .....

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ll of the assessee are debarred from taking up any other work for remuneration part time or otherwise or work in advisory capacity or on interest directly or indirectly in any other trade or business during the employment with the assessee without permission of the assessee, while the doctors on retainership basis are only debarred from not getting in similar or any capacity for any other company engaged in a business similar to that of the assessee. The difference between this clause in two typ .....

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