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2016 (9) TMI 917 - ITAT BANGALORE

2016 (9) TMI 917 - ITAT BANGALORE - TMI - TDS u/s 192 - whether consultant doctors are also salaried employees of the assessee? - relationship of an employer and employee on construction of the terms of agreement entered by the assessee-company with consultant doctors - Held that:- As from the terms of contract entered by the assessee with consultant doctors it is clear that remuneration is fixed irrespective of number of patients attended by the consultant doctors. The timings are fixed. Clause .....

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hospital without prior consent of the assessee-company. All these conditions go to prove that it is a case of contract of service. It is also clear from clauses of the agreement placed at page 26 of the paper book that there is no independence to the consultant doctors, their working hours and service conditions are under the direct control and superintendence of the assessee. All these circumstances go to prove that the assessee is only making an attempt to camouflage real nature of the transac .....

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. 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. - ITA Nos.572, 575 & 576/Bang/2014, ITA Nos.879, 880 & 881/Bang/2014 - Dated:- 11-8-2016 - SHRI VIJAY PAL RAO, JUDICIAL MEMBER and SHRI INTURI RAMA RAO .....

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tax Act, 1961 [hereinafter referred to as 'the Act' for short]. 2. Briefly, facts of the case are as under: The assessee is a company engaged in the business of health-care. The TDS officer conducted survey operations on 25/02/2013 under the provisions of sec.133A of the Act with the intention of verifying TDS compliance 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 Doct .....

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ant 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 a .....

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s decide to leave the organization within 5 years, then the Consultant doctors will not work in Bangalore District for 2 years from the date of leaving. vi. HOSMAT at its sole discretion is entitled to waive any term or envisaged in this agreement. vii. Remuneration of ₹ 60,000/- per month and incentives will be paid as per company policy (amount above is in case of consultant Dr. Somanna M S, and the amount various from doctor to doctor). viii. Consultant doctors will be governed by the r .....

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reporting. x. In addition to above HOSMAT may ask to render appropriate administrative duties as well. xi. Working hour for the Consultant doctors is from 7.30AM to 5.30PM The TDS Officer also found that the agreements entered into with Salaried Doctors by the assessee-company, also contained similar terms and conditions which govern the employment of consultant doctors. Therefore, he concluded that consultant doctors are also salaried employees of the assesseeITA company and thus held the asses .....

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ed, 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 .....

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envisaged in Schedule 1. (d) Nothing in this agreement shall be interpreted as meaning that the consultant is an employee of HOSMAT, and therefore not entitled to any pension, gratuity or other fringe benefits from Hosmat. (e) The consultant has agreed to work for a minimum period of 5 years from the date of joining the organization. 4.3 Schedule 1 forming part of the agreement states the remuneration at ₹ 60,000/- per month, and incentives as per company policy. Description of services a .....

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responsibility of teaching for which details will be given by HOSMAT. The consultant may be asked to render appropriate administrative duties as well, in addition to the above duties, and will attend court as and when required to adduce evidence pertaining to Motor vehicle cases claims and other medico-legal cases. The working hours shall be 7.30 am to 5.30 pm. In emergencies, the consultant shall be available on call, as specified in the call duty register. Another letter dated 7.9.2012 issued .....

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ble for the 'visiting doctors' who may not have entered into an agreement with the appellant for a monthly remuneration for the 7.30 am to 5.30 pm hospital duty, and are not under the service rules and regulations of the appellant hospital. In the submission dated 17.1.2014, letter dated 17.8.2006 addressed to Dr. Shayeeb C.N., Consultant Orthopedic Surgeon has been filed which states that the appellant hospital offers visiting and operation facilities to him, and that the entire consult .....

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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 c .....

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d as 'professional fees' where the tax has rightly been deducted u/s 194J by the appellant, and the same could not be said to be in the nature of 'salary'. Assessing Officer is directed to work out the relief accordingly, in respect of payments to the 'visiting doctors'. 4. Being aggrieved by the decision of the CIT(A) that remuneration paid to visiting doctors is liable for deduction of tax at source only under sec.194J, the revenue is in appeal before us in ITA Nos.879, .....

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nt under section 201(1) of the Act in respect of in house consultants who are not employees of the appellant on the facts and circumstance of the case. 3. The learned CIT(A) erred in holding that in respect of In house consultants TDS under section 192 of the Act is applicable as against 194J of the Act without appreciating the facts and evidence placed before him on the facts and circumstance of the case. 4. The authorities below were not justified in holding that the in house consultant doctor .....

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r-employee on the facts and circumstance of the appellant 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 appre .....

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rts 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 from an assessee in default in the absence of similar provision like that of section 206C(6) and consequently the authorities below ought to have held that the nothing is liable to be paid by the appellant on the facts and circumstance of the case. 10 .....

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cial year under the scheme of TDS and hence the orders passed by him are bad in law on the facts and circumstances of the case. 12. The authorities below failed to appreciate that the liability in respect of TDS is only an alternative liability and the primary liability continues on the person receiving the income and consequently when the matter has been accepted for several years the authorities ought not to have disturbed the said finding without any basis on the facts and circumstance of the .....

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e Act. 15. The appellant craves leave to add, alter, amend, substitute or delete any of the grounds as urged above at the time of hearing of appeal. 16. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and justice rendered. 6. The issue to be adjudicated in the appeals of the assesseecompany is whether there is a relationship of an employer and employee on construction of the terms of agreement ente .....

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tween 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 sta .....

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e factors establish that there is no relationship of employer and employee between the assessee-Company and the doctors. Applying the above law to the facts of the present case from the terms of contract entered by the assessee with consultant doctors it is clear that remuneration is fixed irrespective of number of patients attended by the consultant doctors. The timings are fixed. Clause 7 of the said agreement also stipulates that consultant doctors are working with hospital for a minimum peri .....

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contract of service. It is also clear from clauses of the agreement placed at page 26 of the paper book that there is no independence to the consultant doctors, their working hours and service conditions are under the direct control and superintendence of the assessee. All these circumstances go to prove that the assessee is only making an attempt to camouflage real nature of the transaction by using clever phraseology. It is not the form but the substance of the transaction that matters. The n .....

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ployer and employee relationship as the remuneration drawn is dependent upon the patients attended by the consultant doctor. Similarly, Hon ble Bombay High Court, in the case of CIT vs. Grant Medical Foundation (Ruby Hall 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) .....

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DS 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 CIT(A) that remuneration paid to visiting doctors are subject to deduction only under .....

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