AI Drafter 
TaxTMI 
TaxTMI 
2014 (7) TMI 339
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.... the assessee as 'assessee in default' in terms of section 201(1)/201(1A) of the Income-tax Act, 1961. (c) The learned CIT(A)-II, Hyderabad erred in holding that the relationship between the assessee-deductor and the doctors is not that of an employer and employee. (d) The learned CIT(A)-II, Hyderabad failed to appreciate the fact that there is no material on record to show that the doctors in question have failed their returns of income admitting the amounts in question for the year under consideration. (e) The learned CIT(A)-II, Hyderabad, failed to appreciate the fact that the Supreme Court's decision in the case of Hindustan Coca Cola Beverages Pvt. Ltd. (293 ITR 226) would not apply to the assessee's case in view of the fact that the assessee has not been deducting tax at source under section 192 continuously for all the years. 3. The facts of the case, in brief, are that the assessee is a company engaged in providing health care services, specializing in cardiac related health care services. During the course of a survey u/s 133A conducted at the assessee's premises on 25-3-2008, it was found that the assessee engaged the services of certain do....
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....per Speciality Hospital for the Asst. Year 2008-09, the Hon'ble ITAT, Hyderabad, BBench in its order in ITA No. 212/Hyd/2010 dated 30-6-2010 observed that the assessee has engaged the services of the doctors on the basis of the agreement. There is no time frame for working of the doctors. The doctors are given their choice of time to come to the hospital and treat the patients. Moreover, they are not on the roll of PF as employees of the assessee. From the order of the CIT(A) it appears the assessee collects the fees from the patients and after deducting Rs. 2500 per month for utilizing the infrastructure facilities and 15% of the surgery fees, the remaining amount was paid to the doctors. The doctors are not entitled to take any gratuity, bonus etc. They will only be paid fees for the services rendered by them, through a structured agreement. As already discussed, no specific working hours are prescribed to the professionals. For the purpose of treating the doctors as employees, they should be given specific assignment. There should be specific working hours, rules and regulations and they should be on the roll for PF as employees. They shall be given leave as per statutory pr....
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.... hospital to fix the amount of consultancy charges on mutual agreeable terms, irrespective of the number of patients they treat every day. Mere payment of an assured minimum consultancy charges to the consultants cannot create an employer-employee relation between the hospital and the consultant doctors. It is very much essential to have medical consultants at least for a reasonable period continuously to provide better service to the patients in general and cardiac patients in particular. The decease is progressive in nature. A continuous monitoring is required for the patient. Hence the patients keep on visiting the hospital very frequently. The hospital prefers to have the same medical consultants to have better services to the patients. This is the reason as to why the hospital usually specifies a minimum consultancy period of 2 years for all the consultants at the time of their joining. Kindly appreciate the reason of the said 2 years minimum period, and it will no way create employer and employee relationship between the hospital and the consultants. Though the doctors work on consultancy basis for the hospital, they are subject to some regulations of the hospital for the bet....
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....ich is as under: "The hospital accords the privilege for the consulting doctors for treating the patients who come to the hospital. The professional services received [tom the consulting doctors come under the category of 'medical services. which are covered under section 194J of the Incometax Act, 1961. Accordingly, the hospital is deducting 10% of such professional payments made to the consulting doctors, as per the provisions of section 194J. In the Circular No. 8/2009/dtd 24.11.2009, it was made very clear that when the deducteeassessee had offered the incomes for taxes, demand arising u/s. 201(1) in this situation cannot be enforced for the proposed A.Ys. 2007-08 and 2009-10. Please note that we have already submitted the CA Certificates/Copies of IT Returns of the consulting doctors to, substantiate that the consultancy amount paid by the hospital to the said doctors was offered as the income under the head 'Income from Business or Profession' by the respective doctors. In respect of some consulting doctor, who have left the hospital, we are unable to locate them and hence could not arrange the CA Certificate/Copy of IT return for their consultancy income....
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....e doctor was that of an employer and employee and the remuneration paid to them in terms of the said appointment order was salary which attracted the provisions of section 192 of the Act. 25. Before us the learned AR relied on various caselaw in support his contention to show that there was no employer and employee relationship between the assessee and the doctors and the remuneration paid by the assessee to the said doctor was not "salary" attracting the provisions of section 192. In our opinion, the various case law relied on by the assessee's counsel are on the facts of those cases and on consideration of facts of the present case, in our opinion, those case-law cannot be applied to the case of the assessee. More so, in the present case the doctors are governed by the service rules of the assessee and it was specifically mentioned in the appointment order that it was a contract for employment and the doctors are liable for retirement on attaining the age of 58 years and the monthly payment is not relating to the number 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 r....
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....pinion, this exclusion cannot be considered to be an agreement to treat the doctors as employee. There is no prohibition in law to engage the services of a professional exclusively for a particular hospital. Merely because the doctors were engaged for two years, it does not mean that they are employees of the assessed hospital. As pointed out the by the CIT (A) the other factor such as PF, Job assignments, working hours, direction and supervision are all the relevant factors to consider the existence of employer and employee relationship. In our opinion, the agreement between the assessed and doctors are 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 u/s. 194J as fee for professional services and not as salary. For the purpose of treating the doctors as employees they should be given specific assignment. There should be specific working hours, 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....
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.... cannot be made under Sec.192 of the Income Tax Act. We are of the view that the application of law depends upon the appreciation of facts. This court in exercise of the jurisdiction under Sec. 260A of the Income Tax Act, cannot re-appreciate the facts or substitute its own appreciation when depreciation of facts of both the authorities below was found to be rational and possible on given fact. The appreciation reached by both the authorities below has to be accepted by this court. On the given facts, this court can only examine whether the law has been applied properly or not. On careful reading of the impugned judgment and order, we are of the view that the law has been correctly applied. Therefore, we do not find any question of law involved in this matter. The Appeal is accordingly dismissed. No order as to costs". 14. We also find that the Chandigarh Bench in the case of IVY Health Life Sciences P. Ltd. vs. Department of Income Tax has elaborately discussed and at para 8 states as follows : "A bare perusal of the case law, relied upon by the appellant and submissions made in the synopsis reveals that there does not exist employer/employee relationship between the asse....
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....uthority 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 given result but in the actual execution of the work he is not under the order or control of the person for whom he does it, and may use his own discretion in things not specified beforehand. The Assessee Company is different from that of the Max Mueller Case on which the Assessing officer has relied upon. ....