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

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ITA 505/DEL/2014Status: DisposedITAT Delhi31 January 20174 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 upheld the CIT(A)'s decision, agreeing that the agreements with consultant doctors did not establish an employer-employee relationship. Therefore, the AO wrongly applied Section 192 for TDS on consultant fees.

What were the facts?

The assessee, a hospital, engaged doctors as consultants on a fee-sharing basis. The Assessing Officer (AO) held that payments to these consultants were salary and thus covered under Section 192 of the IT Act, demanding short deduction of TDS. The CIT(A) deleted the additions, holding that TDS was correctly deducted under Section 194J.

What were the issues?

Whether payments made to consultant doctors constitute 'salary' for the purpose of TDS under Section 192, or professional fees subject to TDS under Section 194J. Whether an employer-employee relationship existed between the hospital and the consultant doctors.

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

Income Tax Appellate Tribunal, DELHI BENCH ‘B’ NEW DELHI

Before: SHRI H.S. SIDHU & SHRI L.P. SAHU

Hearing: 30.01.2017Pronounced: 31.01.2017

Per L.P. Sahu, Accountant Member:

This is an appeal filed by the Revenue against the order of the ld.

CIT(A)-XXX, New Delhi dated 28.11.2013 for the assessment year 2010-11 on the following grounds :

1.

“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.

2. 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 Agreement shows no employer-employee relationship between the consultant doctors and the appellant ignoring the various clauses of 'Agreement' as discussed in detail in the order passed u/s 201(1)/201(1A) of the I.T. Act, which clearly established an employer-employee relationship.

2.

The brief facts of the case are that the assessee is a society and registered u/s. 12A of the Income-tax Act, 1961 (for short ‘the Act’) and running a hospital in the name of Dharamshila Hospital and Research Centre at New Delhi. The assessee society has many doctors. Some of the doctors are employees of the assessee and on pay roll basis. Some others are engaged as independent consultant on fee sharing basis. The ld. Assessing Officer picked up the case for compliance of TDS provisions and issued notice to the assessee. In compliance of this, the assessee appeared before the AO and submitted written submissions as required by the Assessing Officer. The ld. Assessing Officer passed his order u/s. 201(1)/201(1A) of the Act on 30.03.2012 wherein it has been held that the payments made to consultants are also covered under ‘salary’ and section 192 of the Act is applicable. In the assessment order, the Assessing Officer alleged that there is short deduction of TDS of Rs.2,29,71,783/- u/s. 201(1) and interest thereon of Rs.68,91,535/- calculated u/s. 201(1A). Aggrieved by the order of the Assessing Officer the assessee appealed before the first appellate authority and the first appellate authority deleted the additions holding that the assessee has correctly deducted TDS as per section 194 J of the Act. Aggrieved by the order of the ld. CIT(A), the Revenue is in appeal before the ITAT.

3.

The ld. DR relied on the order of the AO and submitted that there was an employee and employer relationship as per agreements between the hospital and doctors.

4.

On the other hand, the ld. AR relied on the order of the ld. CIT(A) and the written submissions submitted before him. He also placed reliance on the judgment of Bombay High Court in the case of CIT vs. Grant Medical Foundation, 116 DTR 45.

5.

After hearing both the parties and perusing the orders of the authorities below and the case laws relied by the assessee, we find that the CIT(A) has done reasoned order and it does not require any interference. For the sake of convenience, we reproduce the finding of the ld. CIT(A) as under :

“6. I have consider the order passed u/s 201(1A) written reply filed by the Ld. AR of the appellant and consider the various case law relied upon by the Ld. AR of the appellant. I find that the Ld. Assessing Officer has not consider the important points of the agreement like serial no. 3 - sharing of provisional fee will be @ 70:30 ratio. Serial No. 10 - this contract can be terminated as per clause no. 17 of policy and terms of appointments and rules for medical provisional. Serial No. 17 - being on full time consultant, you will not admit / doctor / operate patient in any other hospital. You will not attend any other private clinic within 15 KM radius of the hospital during working hours. The contract is for only one year and the performance of the doctors contract is renewable for another year: there is no continuity of the consultant for many years. I have considered the case of Commissioner of I.T. (TDS) vs. Apollo

Hospital International Tax Appeal No.827 of 2011 decided by the Hon'ble Gujarat High Court. The propose question before the Hon'ble High Court was "Whether the Appellate Tribunal is right in law and on facts in cancelling the order passed u/s 201(1) of Rs.24,17,674/-,and interest charge u/s 201(1 A) of Rs.1,03,880/- of the I.T. Act". After considering the material on facts Hon'ble Court held that no question of law arises from that order. The facts of the above case and the facts of the case of the appellant are similar. In the agreement same type of clauses are mentioned. After considering the case of Apollo Hospital International Limited, I am of the opinion that agreement shows no employer employee relation between the consultant doctors and the appellant who were work on the basis of agreement signed for one year. However the agreement was renewed considering their services in some cases. In view of these facts, I hold that the Ld. Assessing Officer has wrongly applied the TDS section 192 of the I.T. Act. The short TDS amount and interest charged thereon by the Ld. Assessing Officer is hereby deleted.

From the above findings recorded by the ld. CIT(A) and the case law relied by the appellant, the deductor has deducted TDS u/s. 194J of the Act which is correct. On perusal of the records produced before us, it appears that there is no relationship between the deductor and deductee. Therefore, we agree with the order of the ld. CIT(A). Accordingly, the appeal of the Revenue is dismissed.

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

Order pronounced in the open court on 31.01.2017.

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