TaxTMI 
TaxTMI 
2010 (6) TMI 642
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....earned Departmental Representative submitted that the assessee is a partnership firm engaging the services of doctors and treated them as consultants for the purpose of TDS under section 194J of the Income-tax Act, 1961 (the Act). According to the learned Departmental Representative as per the agreement between the assessee and the doctors, they have to work for the hospital exclusively as a full-time consultant. They are also prohibited from being (engaged in) similar services either directly or indirectly to any other hospital. The agreement was for a minimum period of two years subject to renewal after mutual discussion. Referring to the order passed by the Assessing Officer under section 201(1) of the Act, the learned Departmental Repre....
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....doctors engaged by the assessee were not bound by the rules and regulations, if any, framed by the assessee. The professional doctors have to maintain professional ethics in accordance with the rules framed by their professional bodies. Moreover, the doctors are not employees for the purpose of provident fund and other statutory rules. There are no fixed hours of working for the doctors. The doctors are free to select their own period of working in the manner in which they like. Therefore, there was no control or direction by the assessee to the consultant doctors. In view of the above, according to the learned counsel there was no employer and employee relationship. Therefore, the doctor has to be treated as consultant for professional ser....
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....nd employee relationship between the assessee and the doctors. Therefore, the assessee has to deduct tax under section 192 of the Act. The Assessing Officer had also relied upon the decision of the Authority for Advance Rulings in the case of Max Mueller Bhavan, In re [2004] 268 ITR 31 (AAR - New Delhi). 5. We have carefully gone through the decision of the Delhi Bench of the Tribunal in St. Stephen's Hospital's case (supra). The Delhi Bench of the Tribunal after examining the agreement of the assessee with the doctors found that there was an employer-employee relationship between the assessee and the consultant doctor. Therefore, tax has to be deducted under section 192 of the Act. We find that another decision of the Delhi Bench of the....
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....also placed its reliance on the judgment in the case of the Apex Court in the case of Ram Prashad v. CIT [1972] 86 ITR 122 (SC). In view of these decisions of the AAR, it is obvious that certain employee acts under direct control and supervision of the master. However, an agent or a professional exercises his discretion in carrying out the work and is not under the direct control or supervision of the employer though he is bound by the terms of employment from time to time. 7. Let us examine the present case in the light of the case law and discussion made by the AAR doctors. Both the Assessing Officer as well as the CIT(A) extracted the relevant clause of the agreement entered into by the assessee and the doctors. One of the points whic....
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....e as a corporate hospital. This expectation of the assessee to maintain the image and reputation as a corporate hospital cannot be considered to be exercising control and supervision over the doctors in their professional activity. In our opinion, the agreement between the assessee and the doctors is one for providing professional services, and there is no element of employer and employee relationship existing. Therefore, in our opinion, tax has to.be deducted under section 194J as fee for professional services and not as salary. 8. We have also carefully gone through the judgment of the Apex Court in the case of Ram Prashad (supra). In the case before the Apex Court, the assessee paid remuneration and a percentage of gross profits in ad....