TMI Blog2017 (9) TMI 1660X X X X Extracts X X X X X X X X Extracts X X X X ..... present case, the issues are answered in favour of the assessee and against the Department. - D. B. Income Tax Appeal Nos. 8 and 9 of 2014 - - - Dated:- 13-9-2017 - K. S. JHAVERI and VIJAY KUMAR VYAS JJ. Ajay Vohra, Senior Advocate with Aniket D. Agarwal and Sanjeev Singhal for the appellants. R. B. Mathur, K. D. Mathur and Prateek Kedawat for the respondent. JUDGMENT 1. In both these appeals common question of law and facts are involved hence they are decided by this common judgment. 2. By way of these appeals, the appellant has assailed the judgment and order of the Tribunal whereby the Tribunal has partly allowed the appeal of the assessee and reversed the view taken by the Commissioner of Income- tax (Appeals). 3. In the other appeal (9/2014), the Tribunal has by majority of three members decided against the assessee. Therefore, this appeal is preferred. 4. The facts of the case are that the assessee/appellant-company is running a hospital, namely, Escorts Heart Institute and Research Centre Ltd. at Jawarhar Lal Nehru Marg, Jaipur now known as Fortis Hospital and having its registered office at Okhla Road, New Delhi. The appellant entered into s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt benefits : -House rent allowance -Education allowance -Special allowance -Medical reimbursement -Leave travel assistance -Performance linked bonus Consolidated retainership fee Also entitled to performance linked bonus N.A. Also entitled to terminal benefits : -Provident fund -Gratuity N.A. 3. Exclusively Doctors employed on whole-time basis with the hospital-complete restriction on any other work for remuneration (part-time/full time) in any other trade or business Partly restricted-Doctors not to engage in employment with other hospitals ; however, no restriction on private practice 4. Transfer/posting Transfer and posting of doctors at the sole discretion of the hospital N.A. 5. Retirement Retirement age prescribed under the agreement @ 58 years N.A. 6. Leave Eligib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fixed period and that no provident fund or other benefits are being given to the retainer doctors is not acceptable, as even if the contract is for short period and certain benefits are not given to the doctors, it does not change the fact that the relationship between the assessee and the doctors is essentially that of employer-employee. The retainer doctors are appointed for a fixed duration, they have fixed monthly remuneration, they have to abide by the rules set by the assessee organization and they are under specified reporting authority. Con sequently, the payment made to the retainer doctors is chargeable to tax under the head Salaries . Further, the hon'ble Supreme Court in the case of Justice Deoki Nandan Agarwala v. Union of India [1999] 237 ITR 872 (SC) have held that although in the case of the Supreme Court and High Court judges, there is no employer, yet the payment received by them is in the head of salary as salary is a reward for employment. In other words, they have given a wider implication to salary and even the existence of employer-employee relationship is not necessary for holding a payment as salary. The assessee had relied on the hon'ble Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be necessary to review the law in the matter, as explained by the higher courts of law i.e., defining the constituents of, or the essential ingredients of what constitutes, salary, before we pro ceed 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 per son making the payment or on whose behalf 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 con templates every kind of servant, i.e., how, 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 to appointment, right to terminate the employment, the right to take other disciplin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mutual basis. There are certain restrictions imposed on retainer doctors which are essen tial for retaining them by the assessee-hospital, other wise secrecy on technical points may be leaked. Therefore, there are certain restric tions imposed on the retainer doctors. It is also a matter of fact that retainer doctors are entitled for their private practice and they are doing. They are filing their Income-tax return on regular basis. What ever their receipts are from the hospital, they have been disclosed by retainer doctors in their Income-tax return. Therefore, this is not a case of evasion of tax. The assessee has already deducted tax under section 194J and there is no dispute in this regard. The Assessing Officer and the learned Commissioner of Income-tax (Appeals) have considered the decision in the case of St. Stephen's Hospital, Delhi. However, they have ignored the decision of the hon'ble Delhi High Court in the case of CIT v. Coastal Power Co. (supra). In this case it has been held that the consultants are employed on temporary basis and the contracts are generally renewable after the expiration, they are not entitled to participate in any welfare benefits, plans o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of various types of leave to the appointees. However, in the present case, there are no such benefits of various types of leaves to the retainer doctors. 16.3 I further noted that in the case of Apollo Hospitals Interna tional Ltd. (supra), the Income-tax Appellate Tribunal, Mumbai Bench has examined the similar issue and held that 'When there is a specific clause provided in the agreement for payment as fee for ser vices , then there is no reason to read the said clause as fees of services and then there should not be any reason to treat the said payment by the assessee as payment of salary'. The ratio of this deci sion has been explained in the submissions filed by the assessee. Copy of this decision is also placed on record. 16.4 I further noted that in the subsequent year in the case of sister concern of the assessee, i.e., Escorts Heart and Super Speciality Hos pital Ltd. decided in Appeal No. 26/JPR/2010-11 dated October 18, 2011, similar issue has been decided in favour of the assessee fol lowing the decision of the hon'ble Delhi High Court and also taking into consideration the decision in the case of Dr. Shanti Sarup Jain, [1987] 21 ITD 494 (Bom) and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regarding the above issue is concerned, I find that this sort of condition would be always there in all types of employment arrangements, be it a regular, temporary or of consultancy in nature as to ensure discipline and proper co-ordination in running an organi sation. Thus, the same logic cannot be considered as a valid ground to adjudge the retainer doctors as regular employees of the appellant as such. (ii) The other base of the Assessing Officer, in support of his stand, is the condition of the MOU with the retainer doctors, which restrict them not to work for other hospitals. In this regard, it is felt that this is a quite natural condition and would be there in such arrangement, especially in view of the nature of the service/expertise involved in the medical profession. In other words it is mutually agreed upon condition in between two contractual parties and the same cannot be termed akin to an employee relationship, under the given circumstances. (iii) The third issue raised by the Assessing Officer, in his support, is that the retainer doctor is bound by the general instructions/reg ulations of the company and also with the secrecy clause, etc. Here also, I have a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the payment made to them are the subject-matter of TDS to be deducted under section 194J of the Act. Accordingly the demand of ₹ 4,47,974 raised under section 201(1A) of the Income-tax Act, while treating them as regular employees and subjected to the pro visions of section 192 of the Act, is hereby deleted. Consequently, this ground of appeal is upheld. These findings of the learned Commissioner of Income-tax (Appeals) for subsequent year in the case of sister concern, in my considered view are correct finding which are after appreciating all the facts and various cases relied upon by the learned authorised rep resentative before him. In view of these facts and circumstances and in view of the decision of the hon'ble Delhi High Court and also in view of Mumbai Bench of the Tribunal in the case of Apollo Hospital International Ltd. I allow this ground of the assessee. 19. I have carefully considered the arguments of both sides and perused the material placed before me. The limited controversy posed by question No. 2 is whether the payment made to the retainer doc tors is professional charges liable to deduction of tax under section 194J or income from salary f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company, as are in force, or amended from time to time. 9. You will not at any time, during the term of this arrangement or after, without consent in writing of the designated Head of the Hospital, disclose or divulge or make public, except on legal obliga tions, any information regarding the company's affairs or adminis tration or research carried out, of which you shall hereafter become possessed. 10. This agreement may be terminated by either party upon three month's prior notice or payment of three month's retainer fee in lieu to the other party. The notice of termination need not assign any rea son therefor. Neither party shall be liable for any damages to the other consequent upon such termination. 11. It is mandatory for you to raise a monthly bill towards your professional fee, failing which the professional fee would not be pro cessed. 12. If at any time, your conduct is considered by the company as detrimental to its interest, or in violation of one or more terms of this agreement or the regulations and policies of the company, or you neglect or fail or refuse to carry out the duties assigned to you here under, the company may terminate this ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case you are required to travel on the company's business, the company will make appropriate arrangements, or you will be reimbursed expenses as permissible under the rules of the company. 7. You shall not act in similar, or any capacity, for any other com pany engaged in a business similar to that of the company. 8. You shall commit to work in the interests of the company and in accordance with its values and philosophy, abiding by the rules, regu lations and policies, as applicable. You will also follow the work pro cess, technical standards, protocols and general instructions issued thereof, of the company, as are in force, or amended from time to time. 9. You will not at any time, during the terms of this arrangement or after, without consent in writing of the designated Head of the Hospital, disclose or divulge or make public, except on legal obliga tions, any information regarding the company's affairs or adminis tration or research carried out, of which you shall hereafter become possessed. 10. This agreement may be terminated by either party upon three month's prior notice or payment of three month's retainer fee in lieu to other party. The noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be paid a consolidated retainership fee of ₹ 25,000 (rupees twenty five thousand only) per month. 6. In case you are required to travel on company's business, the company will make appropriate arrangements, or you will be reim bursed expenses as permissible under the rules of the company. 7. You shall not act in similar, or any capacity, for any other com pany engaged in a business similar to that of the company. 8. You shall commit to work in the interests of the company and in accordance with its values and philosophy, abiding by the rules, regu lations and policies, as applicable. You will also follow the work pro cess, technical standards, protocols and general instructions issued thereof, of the company, as are in force, or amended from time to time. 9. You will not at any time, during the terms of this arrangement or after, without consent in writing of the designated Head of the Hos pital, disclose or divulge or make public, except on legal obligations, any information regarding the company's affairs or administration or research carried out, of which you shall hereafter become possessed. 10. This agreement may be terminated by either party upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as may be considered appropriate by the management. Upon satisfactory completion of your probation, your services will be con firmed by written order with the company. 5. During the probationary period and any extension thereof, your services may be terminated on either side by giving one month notice or salary in lieu thereof. However, on confirmation the services can be terminated from either side by giving two-months' notice or salary in lieu thereof. Upon termination of employment, you will also return all company property, which may, be in your possession. It would be obligatory on your part to get a proper relieving letter from the management before your services are deemed to be concluded. 6. You shall, while in the services of the company, devote your full time and attention exclusively for the company's work and respon sibilities assigned to you. You shall not engage in any other commercial/business pursuit, either part time or otherwise, for any monetary gains. 7. You shall be obliged to follow the work processes, technical standards, protocols and general instructions issued thereof, and ser vice rules of the company as in force and/or amended from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k for remuneration (part time or otherwise) or work in an advisory capacity or be inter ested directly or indirectly (except as shareholder/debenture holder), in any other trade or business during your employment with the company, without permission in writing of the chief executive officer of the company. You will also not seek membership of any local or public bodies without first obtaining specific permission from the management. 5. Confidentiality You will not, at any time, during the employment or after, without the consent of the Chief Executive Officer disclose or divulge or make public, except on legal obligations, any information regarding the company's affairs or administration or research carried out, whether the same is confided to you or becomes known to you in the course of your service or otherwise. 6. Intellectual Property If you conceive any new or advanced method of improving designs/processes/formulae/systems, etc. in relation to the business/ operations of the company, such developments will be fully commu nicated to the company and will be, and remain, the sole right/pro perty of the company. 7. Responsibilities and Duties Your work in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mining the jural relation ship of employer and employee. 33. There are cases arising on the borderline between what is clearly an employer-employee relation and what is clearly the inde pendent entrepreneurial dealing. Tests : 34. This court beginning from Shivanandan Sharma v. Punjab National Bank. Ltd. [1955] ILLJ 688 SC and Dharangadhara Chemical Works Ltd. v. State of Saurashtra [1957] ILLJ 477 SC observed that supervision and control test is the prima facie test for determining the relationship of employment. The nature or extent of control required to establish such relationship would vary from business to business and, thus, cannot be given a precise definition. The nature of business for the said purpose is also a relevant factor. Instances are galore there where having regard to conflict in decisions in relation to the similar set of facts, Parliament has to intervene as, for example, in the case of work ers rolling bidis. 35. In a given case it may not be possible to infer that a relationship of employer and employee has come into being only because some persons had been more or less continuously working in a particular premises inasmuch as even in relation th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d skilled people being in salaried employment, it soon became obvious that the test was insufficient (for example in the case of a doctor, architect, skilled engineer, pilot, etc.) and so, despite certain attempts to modernise it, it is now accepted that in itself control is no longer the sole test, though it does remain a factor and perhaps, in some cases, a decisive one. In the search for a sub stitute test, ideas have been put forward of an 'integration' test, i.e., whether the person was fully integrated into the employer's concern, or remained apart from and independent of it. Once again, this is not now viewed as a sufficient test in itself, but rather as a potential factor (which may be useful in allowing a court to take a wider and more realistic view). The modern approach has been to abandon the search for a single test, and instead to take a multiple or pragmatic approach, weighing upon all the factors for and against a contract of employment and determining on which side the scales eventually set tle. Factors which are usually of importance are as follows the power to select and dismiss, the direct payment of some form of remuner ation, deduction of PAYE an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... work entrusted to him. A servant acts under the direct control and supervision of his master. An agent, on the other hand, in the exercise of his work is not subject to the direct control or super vision of the principal, though he is bound to exercise his authority in accordance with all lawful orders and instructions which may be given to him from time to time by his principal. But this test is not universal in its application and does not determine in every case, hav ing regard to the nature of employment, that he is a servant. A doctor may be employed as a medical officer and though no control is exer cised over him in respect of the manner he should do the work nor in respect of the day-to-day work, he is required to do, he may none theless be a servant if his employment creates a relationship of master and servant. Similar is the case of a chauffeur who is employed to drive the car for his employer. If he is to take the employer or any other person at his request from place 'A' to place 'B' the employer does not supervise the manner in which he drives between those places. Such examples can be multiplied. A person who is engaged to manage a business may be a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of his employment. A similar view has been expressed by the Scottish Court of Session in Anderson v. James Sutherland (Peterhead) Ltd. [1941] S.C. 203 where Lord Nor mand at page 218 said : '. . . the managing director has two functions and capacities. Qua managing director he is a party to a contract with the company, and this contract is a contract of employment ; more specifically I am of opinion that it is a contract of service and not a contract for service'. 8.3 In Employees' State Insurance Corporation's Medical Officer's Asso ciation v. Employees' State Insurance Corporation [2014] 16 SCC 182, it has been held as under : 7. We notice, that the medical officers appointed in the various dispensaries/hospitals are entrusted with the task of examining and diagnosing patients and prescribing medicines to them and they are basically and mainly engaged in professional and intellectual activities to treat patients. 8. This court in Heavy Engineering Corporation Ltd. v. Presiding Officer, Labour Court, [1996] 11 SCC 236 examined the question as to whether General Duty Medical Officers Grade II were performing supervisory functions. In that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udy and mastery of specialised knowledge and usually has a professional association, ethical code and process of certification or licensing. Classically, there were only three professions : ministry, medicine and law. These three professions each hold to a specific code of ethics and members are almost universally required to swear to some form of oath to uphold those ethics, therefore 'professing' to a higher standard of accountability. Each of these professions also provides and requires extensive training in the meaning, value and importance of its particular oath in the practise of that profession. 39. A member of a profession is termed a professional. However, professional is also used for the acceptance of payment for an activity. Also a profession can also refer to any activity from which one earns one's living, so in that sense sport is a profession. 40. Therefore, it is clear that respondent No. 1 herein is a profes sional and never can a professional be termed as a workman under any law. 10. We may, in this respect, also refer to an earlier judgment of this court in A. Sundarambal v. Govt. of Goa, Daman and Diu [1988] 4 SCC 42, wherein this court held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AIR 1957 SC 264 ; [1956-57] 11 FJR 439 (SC). A 'contract for services' implies a contract whereby one party undertakes to render services, e.g., professional or technical services, to or for another in the performance of which he is not sub ject to detailed direction and control but exercises professional or technical skill and uses his own knowledge and discretion. (See : Oxford Companion to Law, page 1134). A 'contract of service' implies relationship of master and servant and involves an obligation to obey orders in the work to be performed and as to its mode and manner of performance. (See : Stroud's Judicial Dictionary, 5th Edn., page 540 ; Simmons v. Heath Laundry Co. [1910] 1 KB 543 and Dharangadhara Chemical Works (supra) at page 159). We entertain no doubt that Parliamentary draftsman was aware of this well accepted distinction between 'contract of service' and 'contract for services' and has delib erately chosen the expression 'contract of service' instead of the expression 'contract for services', in the exclusionary part of the definition of 'service' in section 2(1)(o). The reason being that an employer cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such service benefits and further they were required to take professional indemnity insurance on their own. It was on the basis of such relevant factual aspects the Commissioner of Income-tax (Appeals) took the view that payments made to them were professional fees for which the assessee had rightly deducted tax under section 194J of the Act . . . As discussed above, the Tribunal took into account all the relevant aspects from the material on record to arrive at a conclusion that the consultant doctors were not getting salary, but the payment to them was in the nature of professional fees. The contract with them by the assessee was one of contract 'for service' and 'not of service'. There fore, tax was being rightly deducted at source under section 194J and section 192 of the Act had no application. The findings and conclu sions 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. 8.6 In CIT (TDS) v. Grant Medical Foundation [2015] 375 ITR 49 (Bom), it has been held as under (page 62) : However, we are in agreement with Mr. Bajpai that the founda tion or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in their entirety before arriving at a conclusion that there exists an employer-employee relationship. The Tribunal found that the Com missioner was in error. We also agree with the Tribunal because in the Commissioner's order in relation to these two doctors the find ings are little curious. The Commissioner of Income-tax (Appeals) referred to the tests in paragraph 9 of the order at running page 62 and at internal page 14 in paragraph 10 the Commissioner of Income- tax (Appeals) concluded that doctors drawing fixed remuneration are full time employees. However, in relation to the second category of doctors drawing fixed plus variable pay with written contracts the terms and conditions of Dr. Zirpe and Dr. Phadke have been referred and the Tribunal concluded that neither of the doctors was entitled to provident fund or any terminal benefits. Both were free to carry on their private practice at their own clinic or outside hospitals but beyond the hospital timings. Both doctors treated their private patients from the hospital premises. All of which could be seen as indicators that they were not employees but independent profes sionals (see paragraph 14). However, they were fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and the Commissioner, therefore, were in complete error. We have also perused these contracts and copies of which are annexed to the paper book being part of the order of the Assessing Officer. We find that the communications which have been relied upon, namely, November 25, 2008 and May 14, 2009 do not contain any admission by the assessee. All that the assessee admitted is the existence of a written contract and with the above terms. Those terms have also been perused by us minutely and carefully. We do not find that any stipulations regarding working hours, academic leave or attachments would reveal that these doctors are employees of the assessee. In fact, Dr. Zirpe was appointed as a Junior Consultant on three years of con tract. He was paid emoluments at fixed rates for the patients seen by him in the OPD. That he would not be permitted to engage himself in any hospital or nursing home on pay or emoluments cannot be seen as an isolated term or stipulation. In the case of Dr. Uday Phadke, we do not find any such stipulation. In these circumstances, the only agreement between the parties being that certain private patients or fixed or specified number seen by the consultant c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eases that consultants and doctors prefer these hospitals. Sometimes they hop from one medical centre or clinic to another throughout the day. Retaining them for fixed days and specified hours requires offering them friendly terms and conditions. In such circumstances, we do not think that the Tribunal committed any error of law apparent on the face of the record in confirming the findings rendered by the first appellate authority. The findings of fact from paragraph 16 onwards in the Commissioner's order on ground No. 2 and from paragraph 20 onwards on ground No. 3 do not suffer from any serious legal infir mity. The appreciation and appraisal of the factual materials is not such as would enable us to interfere in our limited jurisdiction. Our further appellate jurisdiction is limited. As a result of the above discussion, we need not advert to the entire case law in the field. Suffice it to note that the Revenue relied on the judgments which were rendered in cases where the terms and conditions denoting employee and employer relationship included a fixed pay or monthly remuneration only. For all these reasons we are of the opinion that the questions of law termed as substan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that they have become employees of the hospital. Further, the Department had not taxed the payments received by any of the doctors from the assessee under the head 'Income from salary'. Concurring with the findings recorded by the Commissioner of Income-tax (Appeals), it has been held by the Tribunal that there does not exist the 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. It was noticed thus (page 192 of 20 ITR (Trib)) : 'We have heard the rival submissions, facts of the case and the relevant 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 September 28, 2011. During the course of such inspection and assessment pro ceedings under section 201(1)/201(1A) of the Act, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act was required to be con ducted. Therefore, the assessee is liable to pay a difference of ₹ 16,30,770 as tax of ₹ 7,40,121 under section 201(1A) of the Act as per the calculation enclosed as annexure 1 to this order. Accordingly, the total payable tax demand comes to ₹ 23,70,891 for the assess ment year 2009-10'. Similarly, for the assessment 2010-11, the Assessing Officer worked out the total payable tax demand at ₹ 75,60,672 (difference net tax deducted at ₹ 62,50,560 and interest of ₹ 12,50,112 under section 201(1A) of the Act. Learned Commissioner of Income-tax (Appeals), on appreciation of the factual matrix of the Act and case law, cited by the appellant, adjudicated the issue in favour of the assessee-appellant, as per the following finding : 5. I have considered the submission filed by the learned counsel. I have also gone through the memorandum of understandings between the appellant-company and the professional doctors. The various clauses of the memorandum of understanding need to be examined in the light of the criteria laid down by the courts to deter mine whether the doctors attached to the appellant-hospital are emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer was not right in concluding on the combined reading of the above stipulations that the income of the doctors was salary. It nowhere suggests that there exists relation ship of employer-employee between the assessee and the said doc tors, rather it is a pointer to the contrary. 8.8 In CIT v. Manipal Health Systems P. Ltd. [2015] 375 ITR 509 (Karn), it has been held as under (page 514) : The main points considered by the Revenue on the relationship of employer and employee are : (a) payment of remuneration (b) employer's control and supervision (c) service rules of the company binding on the doctors (d) relationship of master and servant (e) bar from private practice We have examined the terms of the contract entered into between the assessee-company and the doctors and the reasons given by the assessee to treat the arrangement between the doctors and the asses see-company in the nature of consultancy. 1. The earnings available to the doctor are dependent on patients coming to hospitals to get the consultancy service. 2. If in a month the number of patients is zero they do not get any income. In this regard month on month earni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l services as and when they are called upon to attend the patients. Profession implies any vocation carried by an individual or a group of individuals requiring predominantly intellectual skill, depending on individual characteristic of person(s) pursuing with the vocation, requiring specialized and advance education or expertise. Consultancy charges are paid to the doctors towards rendering their professional skill and expertise which are purely in the nature of pro fessional charges. The assessee-company has no control over the doc tors engaged by them with regard to treatment of patients. Mere providing of non-competition clause in the agreement shall not invalidate the nature of profession. It is common that the doctors are rendering their professional services as visiting doctors in different hospitals. Imposing a condition of bar to private practice is to make use of the expertise, skill of a doctor exclusively to the assessee-com pany, i.e., to get the attention and focus of the professional skill and expertise only to the patients of the assessee-company and to discourage doctors from transferring patients to their own clinics or any other hospital. This condition impose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Thereafter the Commissioner of Income-tax (Appeals) found that the said matter is covered by the decision of the Tribunal in the case of Elbit Medical Diagnostics Ltd., and further confirmed by this court, the appeal was allowed. 8.10 In CIT (TDS) v. Yashoda Super Speciality Hospital [2014] 365 ITR 356 (AP) ; [2014] 270 CTR (AP) 457, it has been held as under (page 358) : The learned Tribunal as well as the Commissioner of Income-tax (Appeals), on facts and on examining the document-agreement of engagement of the consultant doctors by the assessee, found that there is no relationship of employer and employee. After examining the agreement and various terms and conditions, it was found that the doctors are not administratively controlled or managed by the assessee and they are free to come at any point of time as far as their attendance is concerned and treat the patients. In the agreement, there is no provision for payment of any provident fund and gratuity. The only clause in the agreement is that the doctors cannot take up any other assignment. Reading the agreement as a whole, both the authorities below observed that the existence of one prohibito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax under sub- rule (4) thereof ; (viii) the contribution made by the Central Government or any other employer in the previous year, to the account of an employee under a pension scheme referred to in section 80CCD ; Payment of Wages Act, 1936 2(vi) Wages means all remuneration (whether by way of salary, allowance or otherwise) expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or work done in such employment, and includes- (a) any remuneration payable under any award or settlement between the parties or orders of a court ; (b) any remuneration to which the person employed is entitled in respect of overtime work or holidays or any leave period ; (c) any additional remuneration payable under the terms of employment (whether called a bonus or by any other name) ; (d) any sum which by the reason of the termination of employ ment of the person employed is payable under any law, contract or instrument which provides for the payment of such sum, whether with or without deduction, but does not provide for the time within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 and 221 of the Consti tution deal with the salaries of Supreme Court and High Court judges respectively and expressly state that what the judges receive are sal aries. It is not possible to hold, therefore, that what judges receive are not salaries or that such salaries are not taxable as income under the head of salary. 9.2 He also relied upon the decision of the Supreme Court in CBDT v. Aditya V. Birla [1988] 170 ITR 137 (SC) wherein the Supreme Court held as under (page 139) : The respondent applied to the Central Government in India for its approval of his employment with the Thai company under the agree ment for the purpose of securing the benefit conferred by section 80RRA of the Income-tax Act, 1961 (hereinafter called 'the Act'). On June 8, 1979 the Government informed the respondent that it was unable to approve the employment with the Thai Rayon Company Limited, Bangkok, as per the terms and conditions contained in the agreement dated May 5, 1978 for the purpose of section 80RRA of the Act as the section, according to Government contemplated rendering of service outside India in the status of an 'employee'. It was further stated that it was seen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... technician and the terms and conditions of his service outside India are approved in this behalf by the Central Government or the prescribed authority. Explanation.-For the purposes of this section- (a) 'foreign currency' shall have the meaning assigned to it in the Foreign Exchange Regulation Act, 1973 (46 of 1973) ; (b) 'foreign employer' means,- (i) the Government of a foreign State ; or (ii) a foreign enterprise or (iii) any association or body established outside India ; (c) 'technician' means a person having specialised knowledge and experience in- (i) constructional or manufacturing operations or mining or the generation or distribution of electricity or any other form of power ; or (ii) agriculture, animal husbandry, dairy farming, deep sea fish ing or ship building ; or (iii) public administration or industrial or business management ; or (iv) accountancy ; or (v) any field of natural or applied science including medical sci ence or social science ; or (vi) any other field which the Board may prescribe in this behalf, who is employed in a capacity in which such specialised knowledge and experience are actually ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icians, etc., who work for a short period during a financial year with a foreign Government or a foreign enterprise are liable to Indian tax if they remain resident in India for tax purposes in that year, on the whole of the remuneration received by them from the foreign employer, without any allowance in respect of expenditure incurred by them out of such remuneration for meeting higher living costs and other essen tial expenditure in foreign countries. To relieve this hardship, the Bill seeks to make a provision in the Income-tax Act for allowing a deduction in the computation of the taxable income, of 50 per cent. of the remuneration received by them from a foreign Government or a foreign enterprise or any association or body established outside India.' We find nothing to warrant a restricted construction as canvassed by Mr. Ahuja. We were also referred to the speech of the hon'ble Minister introducing the Bill before Parliament, where the hon'ble Minister, inter alia, stated as follows (page 116 of 98 ITR (St.)) : There are at present certain Income-tax exemption limits applying to salaried assessees relating to house rent allowance and leave travel concessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llness ; members of the atrical establishments in case their labour should be needed ; house hold servants in performance of their duty when their masters wish ; in these and other similar cases the requirement of actual service is distinct from the employment by the party employing'. In an agree ment to 'retain and employ', 'employ' means only to 'retain' in the service 'and is mere tautology'. See in this connection, Stroud's Judi cial Dictionary, 4th Edition, Vol. 2 at page 893. The expression, how ever, must depend upon the context of the particular provision in which the expression appears. It was held in England that an engi neer appointed by a local authority to supervise the execution of works, but not subject to the local authority's supervision, is never theless an 'employee' within the meaning of section 40(1) of the Local Government Superannuation Act 1937, in Morren v. Swinton and Pendlebury Borough Council [1965] 1 WLR 576 (QB). In Cham bers 20th Century Dictionary 'employ' has been indicated to mean to occupy the time or attention of 'employment' means an act of employing. In the Concise Oxford Dicti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to do but also the man ner in which he shall do his work. The nature or extent of control which is requisite to establish the relationship of employer and employee must necessarily vary from business to business and is by its very nature incapable of precise definition. The correct method of approach, therefore, would be to consider whether having regard to the nature of the work there was due control and supervision by the employer. A person can be a workman even though he is paid not per day but by the job. The fact that rules regarding hours of work, etc., applicable to other workmen may not be conveniently applied to them and the nature as well as the manner and method of their work would be such as cannot be regulated by any directions given by the Industrial Tribunal, is no deterrent against holding the persons to be workmen within the meaning of the definition if they fulfil its requirement.' . . . From the above discussion, it is clear that in the case of a contract of service, the employer not only orders/requires what is to be done but also directs as to how it shall be done, whereas in a contract for service, the master can only require as to what is to be done ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service/appointment order, there is prohibition for grant of benefit which are required to be given under the law and are granted to the employees whereas in the case of retainership it is only an honorary or professional agreement is entered into between the parties which may be analogous to the major service conditions but both the contract are different. One is contract as an employee and the other contract is service for honorary or expert service not as an employee which was entered into between the parties. Therefore, the question which came for our consideration is whether payment which was made to the professional is salary or professional fees. 13. Taking into consideration the case law which has been cited by both the sides, the judgment of the Karnataka High Court (supra) which has been relied upon by the counsel for the appellant and after taking into consideration that all the judgments and the rulings cited by both the sides were considered in the said judgment and the issue was decided as under (page 521 of 375 ITR) : The contention of the learned counsel appearing for the assessee that Commissioner of Income-tax had issued an order under section 10(23C)(via) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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