TDS demand stay on doctor payments granted where professional fees and prior tax payment supported an arguable case.

A stay of demand under sections 201 and 201A was considered where the central dispute was whether hospital payments to doctors fell under section 194J as professional fees or section 192 as salary. The assessee showed a prima facie arguable case that the arrangement was for professional and consultancy services rather than an employer-employee relationship. The fact that the doctors had already discharged tax on the same receipts was also relevant, supporting the view that recovery should not be enforced twice for the same income. On that basis, stay of the demand was granted pending disposal of the appeals.

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Issues: Whether stay of the demand arising from the orders under sections 201 and 201A was warranted in view of the dispute whether payments to doctors were liable to deduction under section 194J or section 192, and the fact that the payees had already discharged the tax liability.

Analysis: The dispute turned on the nature of the arrangement between the hospital and the doctors, namely whether it was a professional engagement or an employer-employee relationship. At the stay stage, the merits were not finally adjudicated, but the assessee showed an arguable case that the payments were for professional and consultancy services and not salary. The fact that the recipients had already paid tax on the amounts received was also relevant to the demand and supportable from the principle that recovery should not be enforced twice for the same income.

Conclusion: Stay of the demand was justified and granted pending disposal of the appeals.

Ratio Decidendi: In a TDS default dispute, where the assessee shows a prima facie arguable case on the nature of the payment and the payees have already discharged the tax liability, stay of the demand may be granted pending appeal.

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