TMI Blog2021 (11) TMI 506X X X X Extracts X X X X X X X X Extracts X X X X ..... restore the matter to the Assessing Officer to re-consider the matter in the light of the incentive policy and the return of income filed by the in-house consultant doctors ORDER - The orders of the Assessing Officer, CIT (Appeals) and the Tribunal insofar as treating the appellant as assessee in default with respect to the in-house consultant doctors are set aside - whatever the benefits extended to the assessee in all other aspects, remain undisturbed. The matter is restored to the file of the Assessing Officer to re-consider the matter in the light of the observations made hereinabove and the Assessing Officer shall take expedite decision in accordance with law after providing an opportunity of hearing to the assessee. - I.T.A.No.676/2016 - - - Dated:- 7-10-2021 - HON BLE MRS.JUSTICE S. SUJATHA AND HON BLE MR. JUSTICE RAVI V. HOSMANI Appellant (By Sri S. Annamalai, Adv. A/w Sri M. Lava, Adv.) Respondent (By Sri K.V. Aravind, Adv.) JUDGMENT S. SUJATHA, J., This appeal is filed by the assessee under Section 260A of the Income Tax Act, 1961 ( Act for short) assailing the order dated 11.08.2016 passed in ITA Nos.572, 575 and 576/Bang/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified in law in not holding that the department cannot take different stand in TDS provisions and assessment proceedings of the consultant doctors on the facts and circumstances of the case? 3. Whether the Tribunal was not justified in law in holding that the appellant is not liable to pay interest under Section 201(1A) of the Act on the facts and circumstances of the case? 4. Whether the order passed under Sections 201(1) and 201(1A) of the Act is in accordance with law on the facts and circumstances of the case? 5. Whether the deduction granted by the authorities on account of recipient having offered the income is in accordance with scheme of the Act and various decisions in this regard on the facts and circumstances of the case? 4. Learned counsel for the assessee submitted that the difference between the employee and consultant doctors as per the agreement is ex-facie apparent. The assessee hospital has employed doctors under 3 categories 1) salaried doctors, 2) in-house consultants 3) visiting consultants. There was no dispute with respect to the category of salary for doctors. Though the Assessing Officer held that inhouse consultants and visiting c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requirements. 10. NIL Conditions: Nothing in this agreement shall be interpreted as meaning that the Associate Consultant-Orthopaedic Surgeon is an employee of HOSMAT, and therefore shall not be entitled to any pension, gratuity, any bonus or other fringe benefits from HOSMAT. 11. NIL Undertakes and agrees to take out adequate professional indemnity insurance cover with an insurance company of good repute to cover its professional liability and agrees to produce at HOSMAT s Management request a copy of the insurance policy for inspection by HOSMAT. 5. It was argued that Section 192 of the Act is not applicable in respect of in-house consultant doctors . On the contrary, the professional charges paid for services of the in-house consultant are covered under Section 194J of the Act. The appellant is not an assessee in default and consequently the tax could be collected invoking the provisions under Section 201 (1) and 201(1A) of the Act. Placing reliance on the Coordinate bench decision of this Court in the case of Commissioner of Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d into between the assessee and such other in-house consultant doctors . As per the agreements, the payment made to the in-house consultant doctors cannot be construed as payment towards the professional services, as the same fulfills the characteristics of a salary. Learned counsel submitted that the material now placed on record before this Court deserves to be examined by the Assessing Officer and no conclusion would be possible sans examining the case in that angle of variance in incentive depending on various circumstances/factors, decided by the company assessee. 8. We have carefully considered the rival submissions and perused the material on record. 9. In Manipal Health Systems (P.) Ltd., (where one of us Hon ble SSJ was a member) supra , the Co-ordinate bench of this Court has held thus: 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 'c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al income and the same is said to have been accepted by the department. This Court has held that the multi-factor tests would be available to examine whether the contract entered into between the parties is a contract for service or contract of service . Finally, it depends on the provisions of the contract; intention also plays a role in deciding the factor of contract. Considering the contract between the assessee - company therein and the doctors, it was found that the income of the doctors varies, depending on the patients and their treatment. Thus, held, there was no relationship of employer and employee between the assessee - company and the doctors. 10. In Ivy Health Life Sciences (P.) Ltd., supra , the terms of the agreement on the basis of which the Assessing Officer issued show-cause notice therein reads thus: (i) The second party shall be associated exclusively with M/s IVY Hospital as full-time consultant and shall not associate himself with any other hospital. (ii) the second party shall paid professional charges for services rendered by him in IVY Hospital as under with a minimum guarantee of Rs ..per month subject to TDS deductions as per Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st under Section 201(1A) is compensatory measure for withholding the tax which ought to have gone to the exchequer. The levy of interest is mandatory and the absence of liability for tax will not dilute the default. The liability of deducting tax at source is in the nature of a vicarious liability, which pre-supposes existence of primary liability. The said liability is a vicarious liability and the principal liability is of the person who is taxable. A bare reading of Section 201(1) shows that interest under Section 201(1A) read with Section 201(1) can only be levied when a person is declared as an assessee-in- default. For computation of interest under Section 201(1A), there are three elements. One is the quantum on which interest has to be levied. Second is the rate at which interest has to be charged. Third is the period for which interest has to be charged. The rate of interest is provided in the 1961 Act. The quantum on which interest has to be paid is indicated by Section 201 (1A) itself. Sub-section (1A) specifies on the amount of such tax which is mentioned in sub-section (1) wherein, it is the amount of tax in respect of which the assessee has been declared in default. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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