TaxTMI 
TaxTMI 
2014 (6) TMI 608
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....n be recovered from the deductor. However, the department can recover only that portion of interest if there is any default by the assessee. In this case, the assessee require to pay interest u/s.201(1) and 201(1A) till the date of payment of taxes by the deductee and assessee need not pay short deduction. The question of deduction u/s.194J or 192 herein is immaterial since recipients of the remuneration have already paid the tax and we do not wish to express any firm view on this aspect. This view of our is fortified by the judgment of Supreme Court in the case of Hindustan Coca Cola Ltd. Vs. CIT (293 ITR 226) (SC)." 2. By MA.No.207/Hyd/2010 filed by the assessee in ITA.No.1193/Hyd/2009, the assessee had submitted that M/s. Quality Care India Ltd., in respect of payments made to professional Doctors there was no employer-employee relationship and the payments made to the professional doctors were in nature of the professional payments and accordingly, TDS was deducted under section 194-J of the I.T. Act, 1961 and TDS certificates were also issued in Form 16A. 3. Learned Counsel pointed out that the Coordinate Bench of the Tribunal in the case of M/s. Yashoda Super Speciality Hos....
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....ercentage basis after review of the inflows of the Patients to the Doctors. c. A clear understanding of the Assessee Company's Service Agreements with the Professionals who are paid fixed amount of Fees reveals the fact that there is no specific Job Assignment nor the subjective judgment of the Hospital Management in the manner in which the Professional shall render his services. d. The Agreement does not speak of the Working Hours of the Professionals and also regarding leave eligibility. The Professionals are not eligible for Provident Fund, Gratuity and Bonus which are statutory under the respective Acts in case of Employees. e. The Professionals are not governed by the Service Regulations of the Hospital including amendments that may issued from time to time. The Professionals are governed strictly by the Agreements which cannot be amended or modified unless made in writing and duly executed by all the parties as per Clause 16.4 of the Agreement. f. No day to day attendance Registers are kept for these Doctors I Professionals and these Doctors are not obliged to stay longer than what was required as per the needs of the particular Patients. The Agreement has given a....
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..... l. The Professional is also liable to indemnify the Company from and against any loss and damage or liability suffered by the Company resulting in breach of the Agreement, default in providing services, breach in respect of any successful claim by any third party for any matters arising out of services rendered by the professional. m. The Company has provided an Insurance coverage to the professional against claims for injuries to persons or damage to property which may arise in the course of performance of services. The Company is liable to pay Interest to the Professional at the rate of 10% per annum for the period commencing from the date when the payment is due up to the date of actual payment of the Fees. The Agreement is valid for a period of 2 years which may extended with the mutual consent of both the parties. n. The Company can terminate the Agreement with the Professional, only upon happening of events like Professional Breach of Terms of the Agreement, conviction of the Professional of any serious crime, committing of any act which injures the reputation of the Company. o. The Professional can terminate the Agreement by giving 60 days notice in the event of th....
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....payment is the normal rule. Parallel proceedings both against the deductor and the payee for the default in respect of such payment, where either of the person has paid the tax, cannot be justified on grounds of equity apart from the inference implicit in the statutory provisions. In the case of the Asssessee Company majority of the Payees have already filed their Return of Income by taking into account the payments made by the Assessee Company, the details of which were also furnished to the Assessing Officer pertaining to majority of the Payees. 6. The Learned DR on the other hand, relied on the orders of the ITAT Hyderabad Coordinate Bench in the case of DCIT, Hyderabad vs. Wockhardt Hospitals Ltd. 24 taxmann.com 190 (Hyd.) wherein the facts are as follows ; "The assessee company was running hospital with branches. It had engaged services of some doctors and was deducting TDS from payments made to them under section 194J. According to the assessee, the doctors were appointed as consultants whose remuneration was liable for TDS under section 194J and there was no employer and employee relationship. The A.O. However, treated the relationship between th....
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....mber of patients treated by them or the amount charged to the assessee. 26. As regards the treatment given by the assessee as well as by the doctors to the remuneration paid in their respective books of account, we are of the opinion that the same is not conclusive to decide the nature of the said remuneration which, as already observed by us on the basis of relation between the assessee and the doctors and not on any other basis. As per the well known cannon of construction of document, the intention generally prevails over the word used and that such a construction placed on the word in a deed as is most agreeable to the intention of the grantor. If there are grounds appearing from the face of the instrument affording proof of the real intention of the parties, then that intention would prevail against the obvious and ordinary meaning of the words used. In our opinion, the real intention of the parties herein as already discussed with reference to the terms of the appointment letter issued to the doctors in the light of service regulations of the assessee hospital was to have an employer and employee relationship between them and it was not a case of appointme....
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....urs, rules and regulation and they should be on the roll for PF as employees. They shall be given leave as per statutory provisions besides gratuity. These factual aspects which are essential to treat the doctors as employees are absent in the case before us, therefore in our opinion the doctors engaged by the assessed are to be treated as consultants for rendering professional services." 8.1. The Hon'ble A.P. High Court has confirmed the Order of the Tribunal in the case of CIT vs. M/s Yashoda Super Speciality Hospital, Hyderabad in I.T.T.A. No. 196 of 2013 by order dated 04.07.2013 and has held as follows: "This appeal is sought to be preferred against the judgment and order of the learned Tribunal dated 30.06.2010 in relation to the assessment year 2008-2009, on the following suggested questions of law: Whether on the facts and in the circumstances of the case/ the Appellate Tribunal is justified in setting aside the order passed against the assessee under Secs.201 and 201 (A) of the Income Tax Act? Whether on the facts and in the circumstances of the case/ the finding of the Appellate Tribunal that there existed no re....
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....fee agreements of various hospitals and comparable view of the clauses pertaining to various hospitals. We have perused the same. In the case of M/s. Quality care India Ltd., (in short "QCIL") the present assessee herein certain clauses which are as follows have to be taken into account for arriving at a conclusion whether there is employer/employee relationship which is as follows : 1. The employee doctors/resident doctors are governed by staff regulations of the company. There are no such clause for consultant doctors. They are governed by Medial Staff regulations. 2. The employee doctors are not entitled for any other full time employment. The Consultant doctors are free to do any job and there are no restrictions. 3. There is incentive scheme applicable for FGCs over and above guaranteed amount based on the service rendered. 4. There is an insurance cover for consultants to indemnify for any loss or damage to the property. 5. There are no timings specified in the agreement. 10. We also find that the Chandigarh Bench in the case of IVY Health Life Sciences P. ....
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....Assessee Company. The learned Assessing officer has also referred to the case of Max Mueller Bhavan case (2004) 189 CTR (AAR) 450. It is also to be noted that although the Max Mueller Bhavan case was in favour of the Revenue as the facts are with reference to appointment of part time teachers. 10.3. The Authority for Advance Rulings has in the case of Max Mueller Bhavan case (2004) 189 CTR (AAR) 450 drawn a clear distinction between a 'Contract of Service' and a 'Contract for Service'. It was stated that - In a 'Contract of Service' the relationship is that of a Master and Servant whereas in a 'Contract for Service' such relationship would not be present. In the case of a 'Contract for Service' the employer not only orders requires what is to be done but also directs as to how it shall be done, whereas in a 'Contract for Service', the master can only require as to what is to be done. The test which is often applied to determine existence of such a relationship is whether the Master has the authority to order or require what is to be done but also how it should be done. An independent Contractor is one who undertakes to produce a giv....
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....ces rendered by a person in the course of carrying on legal, medical,.....". Normally the services rendered by a Doctor should be considered as a professional service unless the contracts of service categorically states and the conditions are clearly and indubitably that of employment. In the circumstances on the perusal of the terms of contract for services entered into with the Doctors, we hold that the services rendered by the Doctors are more appropriately classifiable as professional services and therefore Assessee had correctly deducted tax at source from payment to Doctors u/s 196J. 10.7. The relationship between the assessee-deductor and the Doctors is not that of employer and employee. We are of the view that the doctors or professional consultants working under contract for rendering professional services and the payments made by the assessee company to the professional doctors does not constitute salary and hence, the assessee would not be responsible for deducting tax at source on the said payments treating them as (salaries) in terms of section 192(1) of the I.T. Act. We also understand that the terms of the agreement with the consultants/professionals that there is n....
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....es as were made in the case of appellant for the A.Y. 2008-09, decided by my predecessor in ITA.No.0060/CIT(A)-II/09-10, dated 23.10.2009. The relevant portion of the above said decision is reproduced as under : "As seen from the above, on the facts and in the circumstances of the appellant's case the relationship between the professionals and the appellant is not that of employee and employer relationship but that of clearly professional consultants working under contract for rendering professional services. In this view of the matter, the payments made by the appellant company to the professional doctors do not constitute salary as discussed above. Accordingly, the appellant would not be responsible for deducting tax at source on the said payments treating them as 'salaries' in terms of section 192(1) of the I.T. Act, 1961. Further, the appellant has fairly established that all the payees are income tax assessees' having permanent account numbers and that they have accounted the payment in question in their books of accounts or gross receipts or gross income. Follo9wing the decision of the Apex Court in Hindustan Coca Cola Beverages P. ....