2022 (7) TMI 846 - AT - Income Tax

Income Tax Tribunal: Section 194J applies to healthcare institution's payments to doctors

The Tribunal concluded that Section 194J of the Income Tax Act applied to payments to on-roll, retainer, and consultant doctors by a healthcare ... TDS u/s 194J OR 192 - TDS on on-roll doctors, retainer doctors and consultant doctors with regard to applicability of Section 194J and Section 192B and also Section 201(1A) - HELD THAT:- Having gone through the provisions of section 192, Section 194J, Section 201 of the Income tax Act 1961, facts of the instant case and the judicial pronouncements on the issue involved, we are inclined to hold that the provisions of section 194J are applicable to the assessee and not those of section 192 of the Income tax Act 1961 therefore, the appellant cannot be treated as an 'assessee in default' in so far as the question of deducting tax at source in respect of doctors engaged as retainers and consultants was concerned. Appeal of revenue dismissed. Issues Involved:1. Applicability of TDS provisions on on-roll, retainer, and consultant doctors.2. Interpretation of agreements between doctors and healthcare institutions.3. Distinction between employer-employee relationship and professional services.4. Legal position regarding TDS obligations on payments to doctors.5. Applicability of Section 194J and Section 192 of the Income Tax Act, 1961.Analysis:Issue 1: Applicability of TDS provisions on different categories of doctorsThe case involved a dispute over the applicability of TDS provisions on on-roll, retainer, and consultant doctors engaged by a healthcare institution. The Tribunal considered past judgments and legal provisions to determine whether Section 194J or Section 192 of the Income Tax Act, 1961 applied to payments made to doctors. Various clauses in the agreements were analyzed to distinguish between the different categories of doctors and their employment terms.Issue 2: Interpretation of agreements between doctors and healthcare institutionsThe Tribunal examined the agreements between the healthcare institution and the doctors to ascertain the nature of the relationship. Clauses related to employment conditions, professional obligations, and ownership of intellectual property were scrutinized to determine if an employer-employee relationship existed. The Tribunal referenced previous decisions and legal principles to interpret the agreements accurately.Issue 3: Distinction between employer-employee relationship and professional servicesA crucial aspect of the case was distinguishing between a contract for service and a contract of service to determine the nature of the relationship between the doctors and the healthcare institution. The Tribunal analyzed the level of control, professional discretion, and obligations under the agreements to establish whether an employer-employee relationship existed or if the doctors provided professional services independently.Issue 4: Legal position regarding TDS obligations on payments to doctorsThe Tribunal considered the legal position established by various High Courts and ITAT benches regarding TDS obligations on payments made to doctors. Reference was made to judgments highlighting the distinction between different categories of doctors and the corresponding TDS provisions applicable to their remuneration. The Tribunal emphasized the importance of adhering to settled legal principles in determining TDS liabilities.Issue 5: Applicability of Section 194J and Section 192 of the Income Tax Act, 1961After a thorough analysis of the provisions of Section 192, Section 194J, and Section 201 of the Income Tax Act, 1961, along with relevant judicial pronouncements, the Tribunal concluded that the provisions of Section 194J applied to the assessee for payments to retainers and consultants. The Tribunal dismissed the appeals of the Revenue, affirming that the appellant could not be treated as an 'assessee in default' concerning TDS obligations for doctors engaged in different capacities.Overall, the Tribunal's decision was based on a comprehensive analysis of the agreements, legal provisions, and precedents, leading to a clear determination of the TDS obligations applicable to the healthcare institution in relation to payments made to doctors in various roles.