TaxTMI 
TaxTMI 
2005 (10) TMI 433
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....remuneration paid to the consultant doctors was chargeable to tax under the head 'Income from salary' and the same should have been subjected to TDS as per the provisions of section 192 and not as per section 194J as was done by the assessee. He, therefore, required the assessee to explain its stand in the matter. In reply filed vide its letter dated 24-4-2003, it was explained by the assessee that medical profession is covered in the category of profession even under the Income-tax Act and since remuneration paid to the consultant doctors comprised of share in the fees collected from the patients and some minimum amount agreed to be paid to them, their total remuneration was not fixed but was dependent on receipts from patients treated by them. It was also pointed out that the said consultant doctors were free to do private practice outside the hospital and non-practising allowance was not paid to them. It was further explained that the consultant doctors were being appointed as per the requirement of the hospital when their services were needed. It was, therefore, contended that there was no employer-employee relationship between the assessee and the consultant doctors and the re....
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....icular grade of pay or increments. The appointment of an employee doctor is made by due process of selection and he is fitted in the scale of pay appropriate to his qualifications and experience. He cannot bargain for special benefits. However, a consultant is engaged depending upon his standing in his particular field of speciality. The amount payable to him is negotiated in advance and settled. He could ask for a higher amount than that paid to a full-time employee of the Hospital. While it is the Hospital's policy to engage professionals as far as possible as full-time employees, because of the situation prevailing in different fields of specialization it is not always that a suitable full-time employee can be found, and if found, is willing to work as a full-time employee. The engagement of consultants is not peculiar to St. Stephen's Hospital. It is widely prevalent. A few other hospitals that engage consultants are Sir Ganga Ram Hospital, Moolchand Hospital and Apollo Hospital." 5. Further, a tabular statement was also furnished by the assessee before the learned CIT(A) to point out the distinction between a full-time employee doctor and consultant doctor as under:- F....
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....SC)." 7. The above submissions made on behalf of the assessee, however, did not find favour with the learned CIT(A) and he proceeded to uphold the order of the Assessing Officer treating the assessee as in default for the short deduction of tax from the remuneration paid to consultant doctors for the following reasons given in paragraph No.7 of his impugned order:- "7. I have considered the matter carefully after perusing the impugned order under section 201(1)/201(1A), the submissions tendered on behalf of the appellant and the cases relied upon. I am, however, unable to persuade myself to agree to the point of view of the appellant when the letters of appointment of various employees and consultants are gone through. It is not just the mention of the word 'salary' that has led the Assessing Officer to conclude that the consultants are also employees. On the contrary, it is the entire language and the context thereof that was weighed with him before holding that the consultants are also employees and tax should have been deducted at source by the appellant accordingly. The letters issued by the appellant carry sufficient directions suggesting the manner in which the consultants....
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....ance was being paid to them. According to him, the said doctors were required to come to the hospital for attending to the patients for a fixed period of time and the assessee had no control over their activities including medical practice beyond such fixed hours. He contended that the remuneration paid to them thus was not in the nature of salary and the arrangement being for rendering the professional services by them to the assessee's hospital, the same was in the nature of professional fees paid to them for such services. He also contended that a similar stand taken by the assessee was accepted by the Department in earlier as well as in subsequent years and, therefore, there was no reason to take a different stand in the year under consideration in violation of rule of consistency as held by Hon'ble Delhi High Court in the case of CIT v. A.R.J. Security Printers [2003] 264 ITR 276 . He also submitted that in the individual assessments of the concerned consultant doctors, the Department had accepted the remuneration received from the assessee declared as 'professional income' and it was, therefore, not permissible for the department to take a different view about the same income....
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....s treated as professional fees and not salary. He contended that the tax deducted by the assessee from the remuneration paid to the consultant doctors treating the same as professional income, thus, was in accordance with law and there was no case of any short deduction of tax as attempted to be made out by the authorities below. 9. The learned DR, on the other hand, submitted that the vital question which requires consideration of the Tribunal in the present case is about the exact relationship between the assessee and the consultant doctors and if such relationship is found to be that of employer-employee, it would follow that the payments made to them in whatever form are chargeable to tax under the head 'Income from salary' on which tax was liable to be deducted as per the provisions of section 192. He submitted that no doubt there was a distinction between the doctors employed on full-time basis and the doctors employed on part-time basis. However, according to him, the fact remains to be seen is that both the full-time as well as part-time doctors were employees of the assessee and only their category was different as per the service rules. He invited our attention to a copy....
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.... also contended that the TDS returns filed by the assessee for the earlier years as well as subsequent years were simply accepted by the Assessing Officer without any examination or verification and, therefore, it is not a case of violation of rule of consistency in any case. He also pointed out from the copy of income-tax return filed by one of the consultant doctors placed at page 78 of the assessee's paper book that the main income declared by him for the relevant year was from the remuneration received from the assessee. As regards the decisions in ITO v. Calcutta Medical Research [1999] 107 Taxman 250 (Cal.) (Mag.) and Dr. Shanti Sarup Jain v. First ITO [1987] 21 ITD 494 (Bom.) relied upon by the learned counsel for the assessee, he contended that the facts involved in these cases were entirely different from the facts of the present case and if the ratio laid down therein is properly appreciated in the facts of the present case, the same supports the case of the revenue and not of the assessee. 11. We have considered the rival submissions and also perused the relevant material on record to which our attention was drawn during the course of hearing. We have also carefully gon....
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....arium was to be paid to the other eleven doctors. (viii) The eleven doctors receiving consolidated monthly payment were entitled to different types of leave, i.e., casual leave, annual leave, sick leave, etc. They were also expected to shoulder any responsibility assigned to them by the hospital management in addition to primary responsibilities assigned to them. 12. It is evident from the aforesaid terms that the appointments were governed by and subject to the service regulations of the assessee's hospital and it would thus be appropriate to appreciate the said terms in the light of such service regulations to ascertain the exact relationship between assessee and consultant doctors. Such rules, which are relevant in this context, are extracted below :- "1. Title and commencement : These rules may be called the St. Stephen's Hospital Employees Service Rules. These rules shall replace the rules already issued from time to time and will come into force with effect from 1-4-2001. 2. Scope : These rules shall be applicable to all the employees of the St. Stephen's Hospital, Delhi. If any conditions agreed upon in any Contract/appointment letter of an employee are differen....
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....ct period is renewed with mutual consent either on the same or on different conditions. These employees will, however, be entitled to only such benefits as are specified in their respective agreements or appointment letters besides those required by statutes. 4(vi) 'Part-time employee' is one who is employed to do work for less period than that of normal working hours. A part-time employee will not be entitled to any other service benefits excepting those specifically incorporated in his appointment letter and those required by statutes. 8. Commencement of employment : Every appointment shall commence from the date of commencement as specified in the appointment letter or the date of reporting for duty, whichever is later." 13. The position which emerges from the combined reading of the terms of appointment of the consultant doctors and the relevant service regulations can be summarized as follows :- (1) Applications in writing were invariably made by the consultant doctors to the assessee for appointment in its hospital and such appointments were generally made with reference to such applications. (2) Working hours of the consultant doctors were fixed and in addition to....
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.... employees as defined in the Service Rules. 14. Keeping in view the aforesaid position arising from the terms of appointment of consultant doctors as well as the Service Rules governing the employees of the assessee's hospital, it can reasonably be concluded that all the consultant doctors were employees of the assessee and even if there was a distinction between the terms of employment of the permanent employees and the terms of employment of consultant doctors, the fact remains to be seen is that they were the employees of the assessee falling in the category of fixed period/contract employee and/or part-time employee. It, therefore, follows that the relationship between the assessee and the consultant doctors was purely that of employer and employee and remuneration paid to them in terms of the said relationship was salary which attracted the provisions of section 192. 15. Before us, the learned counsel for the assessee has relied on various case laws in support of his contention that there was no employer-employee relationship between the assessee and the consultant doctors and the remuneration paid by the assessee to the said doctors was not 'salary' attracting the provision....
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....ed on the basis of relationship between the assessee and the consultant doctors. In this regard, the decision of Hon'ble Supreme Court in the case of Petron Engg. Construction (P.) Ltd. v. CBDT [1989] 175 ITR 523 relied upon by the learned counsel for the assessee involved an altogether different issue and the ratio of the said decision, in our humble opinion, cannot be applied to the facts of the present case involving a different issue. Even the decision of Hon'ble Delhi High Court in the case of A.R.J. Security Printers (supra) cited by the learned counsel for the assessee cannot be applied in the present case because the issue relating to deduction under section 80-I involved in the said case was decided by the Tribunal in favour of the assessee in other years and since the orders of the Tribunal for those years had attained finality, it was held by the Hon'ble Delhi High Court that earlier decisions on the same question should not be reopened unless some fresh facts are found in a subsequent year. In the present case, the stand of the assessee taken in the earlier years as well as subsequent years on the similar issue has been accepted without any examination even by the Asses....