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TMI Blog2016 (9) TMI 917X X X X Extracts X X X X X X X X Extracts X X X X ..... mpliance by the assessee-company. During the course of such survey operations, it was found that the assessee-company is employing three categories of Doctors viz., salaried Doctors, Inhouse Consultants and Visiting Consultants. It was also found that the assessee-company has been deducting tax at source in respect of In-house Consultants and Visiting Consultants under the provisions of sec.194J of the Act. The TDS Officer also found agreements entered into by the assessee-company with the Consultant Doctors. The TDS officer, thereafter, noticing the following clauses in agreements had come to conclusion that TDS is required to be deducted u/s 192 of the Act: i. Consultant doctors to act in the best interest of HOSMAT at all times and undertakes to observe all reasonable directions of HOSMAT diligently and faithfully. ii. Consultant doctors have to make available such information as the MD may require in order that the he may evaluate and assess services. iii. Material failure to meet the requirements of any specification set out in schedule 1 after having been given a reasonable opportunity to correct, will entitle HOSMAT to reject such part of the services and, at HOSMAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 65,36,668/- 22,54,711/- 87,91,379/- 2012-13 2013-14 1,82,15,782/- 14,57,263/- 1,96,73,045/- 3. Being aggrieved, an appeal was preferred before the CIT(A), who, after considering the following clause of the said agreement, concluded that consultant doctors are the employees of the assessee-company as under: (a) The consultant agrees to provide the relevant services with reasonable skill and care to the satisfaction of HOSMAT, and as per terms of this agreement, to act in the best interest of Hosmat at all times and observe all directions diligently and faithfully, and to make available such information as the MD may require in order to evaluate and assess services. (b) The consultant undertakes that he/she shall not engage in any other work/business/service on carry out any other assignment or work in any other medical institution, hospital, nursing home or Clinic, while rendering professional services at Hosmat, without prior written consent/permission from Hosmat. (c) In consideration to the services provided to Hosmat by the consultant, Hosmat Will pay the professional and technical fee as envisaged in Schedule 1. (d) Nothing in this agreement shall be i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to him, and that the entire consultation fees will be paid 100% at the end of the month, after the amount is collected from the patient. Although no evidence has been filed with regard to the 20 doctors identified as Visiting doctors during FY 2011-12, in terms of agreement or arrangement, it is common knowledge that senior doctors and specialists are on the panel of visiting doctors of a hospital who are engaged for special procedures, such as neuro-surgeons or a plastic or reconstructive surgeon, on a case to case basis, on the request of the patient or requirement of the treating hospitals. Due to the nature and specialization, or the experience and expertise, such doctors prefer to work as free-lancers, catering to the medical requirements of more than one hospital. They may not be required to do routine duty at a given hospital and are not on monthly remuneration, though may receive monthly retainer ship in some cases, however, their fees are related to the patient and treatment to the specific patients. They are certainly not bound by the service rules of any particular hospital, and are not under their control and supervision. Payments by the hospital to such visiting doct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. They failed to appreciate that the manner in which they have interpreted the agreement is not in accordance with accepted cannons of interpretation of an agreement. They failed to appreciate that it is the understanding between the parties as understood by them that matter which according to the appellant is one of professional service and not salary on the facts and circumstance of the case. 7. The authorities below failed to appreciate that once the appellant has given details of the three conditions in proviso to section 201 (1) the appellant cannot be deemed to be an assessee in default and consequently nothing can be collected from the appellant on the facts and circumstance of the case. 8. The authorities below erred in law in not considering the tax liability already discharged by the deductee and the same is contrary to the provisions of section 201(1) proviso and to various decisions of the apex court and high courts in such regard. The learned CIT(A) failed to adjudicate this ground inspite of a specific ground before him. 9. The appellant submits and urges that there is no mechanism under section 201(1) to collect any short deducted or non deducted amount fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contract entered into between the parties is 'contract for service' or 'contract of service'. The Hon'ble jurisdictional High Court in the case of CIT vs. Manipal Health System (P) Ltd. (375 ITR 509) vide para.13 of the judgment held as follows: "13. To decide the relationship of employer and employee we have to examine whether the contract entered into between the parties is a 'contract for service' or a 'contract of service'. There are multi-factor tests to decide this question. Independence test, control test, intention test are some of the tests normally adopted to distinguish between 'contract for service' and 'contract of service'. Finally, it depends on the provisions of the contract. Intention also plays a role in deciding the factor of contract. The intention of the parties can also determine or alter a contract from its original shape and status if both parties have mutual agreement. In the instant case, the terms of contract ipso facto proves that the contract between the assessee-Company and the doctors is of 'contract for service' not a 'contract of service'. The remuneration paid to the doctors depends on the treatment to the patients. If the number of pati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all Clinic) (375 ITR 49), held that in a case where doctors are paid fixed remuneration and tenure the amount paid to such doctors constitutes salaries. Thus, having regard to the ratio laid down by the Hon'ble jurisdictional High Court in the case of Manipal Health System (P) Ltd. (supra) as well as the Hon'ble Bombay High Court in the case of Grant Medical Foundation (Ruby Hall Clinic) (supra) in the instant case also since consultant doctors were paid fixed remuneration and the working conditions are under supervision and control of the hospital authorities, in our considered opinion, services are rendered in the nature of employee. Hence, payments are subject to tax deduction at source u/s 192 of the Act. The assessee has failed to controvert the findings of the TDS officer that the terms and conditions of consultant doctors are same as that of salaried doctors. The fact that consultant doctors have declared their income under the head 'professional charges', has no bearing on the issue on hand. Accordingly, the assessee's appeals are dismissed. 8. As regards the revenue's appeals, the revenue is in appeal before us being aggrieved by the direction of the finding of the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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