ACIT, NEW DELHI vs. M/S. DHARAMSHILA CANCER FOUNDATION AND RESEARCH CENTRE, NEW DELHI

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ITA 106/DEL/2015Status: DisposedITAT Delhi03 October 20176 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the payments to consultant doctors were in the nature of professional fees and not salary, as there was no employer-employee relationship. Therefore, the assessee was correct in deducting TDS under Section 194J.

What were the facts?

The assessee hospital deducted TDS under Section 194J on payments to consultant doctors, treating them as professionals. The Assessing Officer (AO) held that an employer-employee relationship existed and demanded TDS under Section 192, along with interest.

What were the issues?

Whether payments made to consultant doctors constitute salary requiring TDS under Section 192, or professional fees subject to TDS under Section 194J.

Which sections of the Income-tax Act were involved?

Section 192,Section 194J,Section 201(1),Section 201(1A)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI BENCH “B” BENCH NEW DELHI

Before: AMIT SHUKLA & SHRI WASEEM AHMED

For Appellant: Shri Sanjeev Jain, CA
For Respondent: Shri Anshu Prakash, Sr. DR, Shri Sanjeev Jain, CA
Hearing: 25/09/2017Pronounced: 25/09/2017

ORDER

PER AMIT SHUKLA, JUDICIAL MEMBER:

1.

The aforesaid appeals have been filed by the Revenue against impugned order dated 30.10.2014, passed by the ld. CIT (Appeals)- IX, New Delhi for the quantum of assessment passed u/s 201(1)/201(1A) for the A.Y. 2011-12. In the grounds of appeal

the revenue has raised following grounds:-

1. On the facts and in the circumstances of the case as well as in law, the Ld.CIT( Appeals) has erred in holding that the Assessing Officer has wrongly applied the TDS Section 192 of the I T Act on the payment of fee by the assessee to the consultant doctors. Page 1 of 6

2. On the facts and in the circumstances of the case as well as in law, the Ld. (Appeals) has erred in holding that the Agreement shows no employer-employee relationship between the consultant doctors and the appellant ignoring the carious clauses of 'Agreement' as discussed in detail in the order passed u/s 201(1)/201(1 A) of the I.T. Act, which clearly established an employer-employee relationship.

3.

The appellant craves leave to add alter or amend any of the Grounds of appeal at the time of hearing.”

2.

At the outset, the ld. counsel for the assessee submitted that the issues raised in the grounds of appeal are squarely covered by the decision of the Tribunal in assessee’s own case for the A.Y. 2010- 11, wherein on similar issue the Tribunal has decided it in favour of the assessee. The Ld. DR also admitted that the issue is squarely covered.

3. The brief facts qua the issue involved are that the assessee is running a hospital which is mainly providing medical treatment in the field of cancer care and cancer related test diagnosis, treatment and prevention. It had appointed doctors who were providing consultancy services to the assessee’s hospital and for the professional payment to such doctors; it has been deducting tax u/s 194J. The assessee also had doctors on its pay roll who were employed as full time employees to whom it had paid salary on which tax was deducted u/s 192. The Assessing Officer however has treated the amount paid to the consultant doctors as salary and show caused the assessee as to why TDS has not been deducted u/s 192 and also why demand u/s 201(1)/201(1A) should not be raised. In response, the assessee submitted copy of agreements with the consultant doctors and also referred to various clauses to show that Page 2 of 6 no employer - employee relationship exists between the assessee and the consultant doctors, because these doctors were working as independent consultants and therefore, they have been treated as professionals engaged for professional assignment and that is why payments made to them has been treated as professional fees for which tax has been deducted u/s 194J. The ld. Assessing Officer relying upon the decision of his predecessor Assessing Officer held that TDS should have been deducted u/s 192 and worked out a short charge of tax u/s 201(1) of Rs. 51,62,380/- as per details were given at pages 6 to 8 of the assessment order and interests u/s 201(1A) of Rs. 23,24,593/-.

4.

The Learned CIT(Appeals) deleted the said demand after considering the entire gamut of facts, the agreement and also the earlier year order of the Learned CIT(Appeals) after observing and holding as under:- “4.3 The reason given by the AO, the written reply filed by the Id. AR of the appellant and the various case laws relied upon by the Id. AR of the appellant are considered. It is not the case of the revenue that the appellant does not have any full time doctors. The appellant has 25 full time doctors on its payroll. From the perusal of the agreements entered by the appellant with the doctors, the following facts emerge: a. There is a sharing of professional fees between the appellant and the doctors. In the agreement of Dr. Meenu Walia, such sharing is in the ratio of 70:30 between the appellant and the consultant doctor. b. The consultant doctors are allowed to carry on private practice beyond 15KM radius of the hospital c. There is no continuity of consultants as the contract is for a specific term. d. The doctors are working as independent consultants.

e. No supervisory control is exercised by the appellant on the doctors. f. The doctors are not governed by the service rules of the appellant and are not eligible for any gratuity, PF and leave encashment. Based on the above, there is no ground to hold that the consultant doctors are employees of the appellant. The decision of the Hon’ble ITAT in case of DCIT v. Yashoda Super Specialty Hospital [2010] 133 TTJ 17 and ITO v. Apollo Hospitals International Ltd. [2011] 9 taxmann.com 95 is squarely applicable to the facts of the appellant. My Ld. predecessor, CIT (A) in the AY 2010-11 in appellant’s own case also took a similar view that “the agreement shows no employer-employee relationship between the consultant doctors and the appellant and accordingly the AO has wrongly applied section 192 of the Act. Therefore the short TDS amount and the interest charged thereon by the AO is hereby deleted. Therefore, it can be hold that, no employer-employee relationship exists between the appellant and the consultant doctors and the payment made by the appellant to the consultant doctors is in the nature of professional fees and not in the nature of salary. M/s. Dharamshila Cancer Foundation and Research Centre Appeal No. TR-216/14-15 A.Y. 2011-12 Therefore, the TDS and interest demand raised by the AO is hereby deleted and the ground of appeal is allowed.”

5. We find that the Tribunal in assessee’s own case for the A.Y. 2010-11 have confirmed the similar finding of the Learned CIT(Appeals) vide order dated 13.1.2017 in ITA no. 505/D/2014. Thus, following the precedence of the earlier year which are applicable on the similar facts permeating in this year also, therefore, we also hold that the assessee was not required to deduct TDS on the payments on the payments made to consultant doctors u/s 192 and the assessee was legally correct in deducting the tax at Page 4 of 6 source u/s 194J. Accordingly, the grounds raised by the revenue are dismissed.

6.

In the result, the appeal of the revenue is dismissed.

Order pronounced in the open court on 25.09.2017.

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