TaxTMI 
TaxTMI 
2010 (12) TMI 212
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....nt doctors, on the other hand, assessee's claim was that there was no short deduction of tax as the TDS was deducted as per provisions of Sec. 194J of the Act. Bare minimum Facts essential to decide this appeal were that a survey u/s 133A(1)(b) was carried out on 7.9.2007. It was found that in respect of 15 doctors the assessee was deducting the tax u/s 194J of IT Act. The payments to these doctors were treated as a "Professional Fees" on the ground that the payment was in the nature of 'Fixed Salary & Guarantee money to Consultants/ Doctors'. An abbreviation was used for this term by the A.O. as FGCs; to be mentioned hereafter. Those contract agreements were examined by the A.O. and then it was held that the TDS was not correctly deducted. For the F.Y. 2006-07 total payment to those Doctors was stated to be at Rs. 1,27,64,050/-.claimed as payment of Professional Fees. On the other hand the A.O. was of the view that there was employer and employee relationship between the said doctors and the Hospital (i.e. assessee) hence the deduction should have been done as per the provisions of Sec. 192 of the Act. Reasons assigned by the A.O. were that - "(a) As per terms of this relations....
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....ollowing reasons :- "3.2. I have considered the submissions of the A.R. carefully as also the observations of the A. O. in the impugned order. The main dispute is whether the payments to the doctors and consultants should be considered as professional fees or salary. It has been contended by the appellant that there is no employer and employee relationship between the appellant and the above 15 doctors and no Provident Fund, professional tax or ESI had been deducted, therefore, the provisions of section 192 are not applicable to the above FGC doctors. Apart from the above 15 doctors, which has been considered by the A.O., the hospital has got 53 full time resident doctors who are employees for whom tax has been deducted at source u/s. 192 of the I.T. Act and tax has been deducted regularly and paid to the Government account and in case of the 53 doctors, P.F. and professional tax have also been deducted from their salary whereas in the case of above 15 doctors for which the A.O. has concluded that there is a shortfall of TDS, they have been not treated as employees. It has also been submitted that these professional consultants have filed their individual returns of income showi....
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....ed." 3. Being aggrieved now the Revenue has challenged the above verdict. 4. From the side of the Revenue Mr. Rohit Mehra, Sr.DR has placed vehement reliance on the findings of the A.O. He has reiterated that as per the terms of the employment, the doctors are not allowed to join any other hospital without prior permission. The assessee hospital was supposed to pay a fixed minimum monthly amount. The hospital has also undertaken the responsibility to provide residential accommodation to such doctors. By referring the terms and conditions it was argued that the relationship between the assessee and those doctors was in the nature of an employer and employee therefore the deduction of tax should be made u/s 192 of the Act instead of u/s 194, as wrongly deducted by the assessee, hence rightly held as assessee in default by the A.O. Ld.DR Mr.Rohit Mehra has thus pleaded that the order of the A.O. deserves to be affirmed. 5. From the side of the respondent-assessee Mr.S.N.Soparkar appeared and supported the order of Ld.CIT(A). His main plank of the argument was that the A.O. has wrongly interpreted the terms and conditions of the agreement. He has explained that the assessee ha....
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....ntrary to this there is no such benefit granted to the 'Consultant Doctors'. (d) There is a specific mention of General Service Rules & Regulation to govern the service matters, but in the agreement of FGCs they are not governed by such Rules and Regulations, rather they were confined within the terms of the agreement. (e) For 'Employee Doctors' the employment is full-time employment and they are not entitled for any other full time employment or private practice. On the other hand consultant doctors are free to do any other job. (f) In case of Consultant Doctors, there is a clause of fixed "Guarantee Money" per month, but alongwith this amount there is a clause of sharing of receipts with the hospital. This clause of agreement states that the arrangement is "fee for service" and the hospital is entitled to collect the amount to be shared between the two. However, there is no such clause for regularly employed doctors. (g) The Consultant Doctors were required to take Professional Indemnity Insurance on their own. (h) The Consultant Doctors were not employed by Service Rules and Regulations but they were expected to follow the Code of Conduct and Ethics....
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....ing to us, the terms and conditions do not indicate that the said contract with the Consultant Doctors was "owning to service" or "belonging to their service". Next is the proposition "FOR" and the same is defined in the dictionary as, with respect to, in favour of, on account of, in the place of or by reason of. If we apply these meanings, then the terminology as applied in section 194J of the I.T. Act can be read as fees on account of professional services. Therefore, it can also be read that fees with respect to technical / professional services. Likewise, in respect of the contract in question, it can be read as "contract in respect of service" or "contract by reason of service". Therefore, the distinction as per the meaning assigned in the dictionary in respect of these two propositions are pertinent and, therefore, the language of section 194J of the I.T. Act is more close to the language used in the Agreement, hence, required to be applied to resolve the issue. 8. There is one more reason to arrive at the conclusion that the doctors in question were covered by the provisions of section 194-J of the I.T. Act is that the section is applicable in respect of fees for professi....