TaxTMI 
TaxTMI 
2015 (9) TMI 1236
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....Brief fact are, assessee is running a hospital for care of children from new born to pediatric age group. The hospital provides both inpatient and out-patient care. The Chief Executive Officer Dr. V.S.V. Prasad and his wife Dr. V. Hema Maili as working Director over see day to day activities of the hospital. A survey operation U/s. 133A of the Income Tax Act, 1961 [herein after referred as 'Act'] was conducted on 19-01-2010 to verify the compliance to various TDS provisions of the Act. During the course of survey proceedings, it was found that assessee had made a TDS of Rs. 4,20,000/- on the payments made to Dr. Kulbhushan S. Dagar which had not been remitted in government account. Dr. Kulbhushan S. Dagar filed a complaint before CIT(TDS), Hyderabad that he has not been supplied with correct TDS certificate by deductor/assessee. He submitted that he was paid salary of Rs. 5,00,000/- per month and had requested the deductor to make TDS @ 30% on the above salary. As a result, they deducted Rs. 1.50 Lakhs as tax every month and paid him a monthly salary of Rs. 3.50 Lakhs. However, when he requested his employer for TDS certificate, they did not supply the correct TDS certifica....
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.... no formal agreement between the two at the time of his joining the hospital. d) The relationship of employer and employee should be of master and servant. However, there is no master servant relationship between the doctors and the hospital. A master is one who not only directs what and when a thing is to be done but also how it is to be done, and the servant is the one who is bound to carry out the instruction given to him by the master. The servant has no discretion of his own in carrying out the instruction except such minor discretion as may be left to him by his master. It is the doctor who decides the mode of treatment to a patient and the Hospital has no say in it nor can they influence the doctor to provide any specific treatment to the patient. e) Unlike regular employees, Dr. Kulbhushan S. Dagar is not governed by the terms of employment, leave, terminal benefits and more importantly timings. If he were to be a regular employee, normal deduction on account of Professional tax Provident fund should have been deducted which was not done in the instant case confirming the stand of the assessee that Dr. Dagar was only a consultant. f) Unlike regula....
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....ance allowance and earned leave amounting to Rs. 6,58,000/- whereas for the period for February & March 2008 he claimed fees for professional or technical services and the deductions which are associated with employment as a regular employee such as gratuity, PF and earned leave etc., were not claimed in fact various other expenses which are allowable under professional income such as salaries, consumables, conveyance, telephone, traveling expenses, Seminar expenses books & periodicals and other misc. expenses were claimed. This clear classification of his income is clearly reflected in the return filed by him with Range. 12 on 31.07.2008 under acknowledgment number 1270041793-Bundle No. 836. Form 16A dated 12.05.2008 shows the TDS was made @ Rs. 50,000/- for the month of Feb. and Rs. 1,50,000/- for the month of March '08. This corroborates the contention of the assessee company that they have deducted taxes at 30% at his instance in the month of March". 3) In the order sheet noting dated 12.10.2011, the AO has clearly stated that the assessee was asked to produce the attendance register of the Lotus Hospital from February '08 to May '09 in order to verify whet....
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....e alleged and therefore the allegations that he was paid Rs. 3.5 lakhs after deducting 30% from his remuneration of Rs. 5 lakhs are held not substantiated. 5.3 Since there were no deductions on account of gratuity, provident fund and earned leave in respect of the remuneration received from the assessee hospital, the assessee's contention that the relationship between them and Dr. Dagar was not of employment and it is only a contract for services appears to have some merit. After taking all the other factors and the conduct of Dr. Dagar and the evidences available on record into consideration, it is held that Dr. Dagar was a consultant with the assessee company and tax was deducted at source correctly u/s.194J of I.T. Act, 1961 for the year under consideration". 5. Aggrieved by the order of CIT(A), the Revenue preferred this appeal before the Tribunal and the main contentions of the Revenue are that the Ld. CIT(A) erred in holding that the provisions of Section 194J are applicable instead of provisions of Section 192, even though employer and employee relationship was existing between the deductor and the deductee and further that the Ld. CIT(A) has not considered t....
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.... are only consulting doctors and that the AO has not brought on record any evidence what-so-ever to establish that there is an employer and employee relationship between the respondent-hospital and Dr. Kulbhushan S. Dagar as there is no appointment letter confirming the appointment of Dr. Kulbhushan S. Dagar. Further, Dr. Kulbhushan S. Dagar was taken in as a consultant even for which there was no written agreement or appointment letter. He further submits that when the consultation fee was revised from Rs. 5 Lakhs per month to Rs. 3.5 Lakhs per month w.e.f. April, 2008, the assessee-hospital has sent letter to Dr. Kulbhushan S. Dagar confirming the consultancy fee of Rs. 3.5 Lakhs per month. Therefore, the question of payment of Rs. 5 Lakhs as salary does not arise and the payment from April, 2008 onwards was only Rs. 3.5 Lakhs. He further submits that as per the hospital records, Dr. Kulbhushan S. Dagar is not covered by the terms of employment. He further submits that from the payments made to Dr. Kulbhushan S. Dagar, no deduction is made towards 'professional tax and PF' etc., and that Dr. Kulbhushan S. Dagar did not have any restriction on taking any assignment with ot....
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....and also there is no prescribed leave in the case of consultant doctors and also they are not governed by the general service rules and regulations. Therefore, after considering the above said facts and circumstances, we have no hesitation to come to a conclusion that consultant doctors are not akin to the salaried employees and do not have employer and employee relationship. In the present case also Dr. Kulbhushan S. Dagar is only a consultant doctor. 11. The Ld. DR relied on the decision of the Hon'ble ITAT in the case of Wockhardt Hospitals in ITA No. 985 & 986/H/2011 (supra). We have perused the said judgment. In that judgment, the co-ordinate bench of ITAT, Hyderabad made the following observations: "24. A careful perusal of the appointment order issued to the doctor shows that a fixed monthly amount was paid by the assessee as remuneration and it is no way concerned with the fees received from the patients treated by them. The appointment letter was issued to the concerned doctor on the basis of their application. The doctors are governed by the service rules of the assessee. Their leave entitlement is also in accordance with the assessee's rules. The doct....