Hospital doctors treated as independent professionals, so salary TDS under section 192 was not required.

The article explains that full-time doctors engaged by a hospital were treated as independent professionals, not employees, because the real nature of the engagement showed a contract for services rather than a contract of service. The absence of employment indicia such as provident fund, terminal benefits, and a master-servant relationship was decisive, while fixed hours, discipline requirements, and the remuneration structure were held insufficient by themselves to create employment. On that basis, section 192 was not attracted and the hospital was not required to deduct tax as salary; payments to the doctors fell within section 194J instead.

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Issues: Whether the full-time doctors engaged by the hospital were employees so as to attract deduction of tax at source under section 192 of the Income-tax Act, 1961, or whether they were independent professionals whose payments were liable to be covered under section 194J of the Income-tax Act, 1961.

Analysis: The determining factor was the real nature of the engagement and whether the terms of contract disclosed a contract of service or only a contract for services. The record did not show that the doctors were subjected to the usual indicia of employment such as provident fund, terminal benefits, or other features establishing a master-servant relationship. Fixed working hours, discipline requirements, and remuneration structure by themselves were held insufficient to convert a professional engagement into employment. Following the jurisdictional High Court decision on similar facts, the doctors were treated as independent professionals rendering medical services, and not as regular employees of the hospital.

Conclusion: Section 192 was not attracted. The hospital was not liable to deduct tax at source on the doctors' payments as salary, and the addition treating it as short deduction was unsustainable.

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