TaxTMI 
TaxTMI 
TaxTMI 
2016 (10) TMI 432
X X X X Extracts X X X X
X X X X Extracts X X X X
....d U/S 194J of the Income Tax Act. 3. The learned CIT(A) failed to appreciate that in raising tax demand U/S 201(1) in respect of tax deductible where the respective deductee have paid due amount of taxes. The appellant submits that when the deductee pays the taxes due to the Government, no tax demand U/S 201 (1) can be raised on the tax deductor. 2. The brief facts of the case are that a survey u/s 133A of the I.T. Act, 1961 was conducted in case of assessee on 30.09.2010. On verification of books of accounts and furnishing information during the course of survey and subsequent proceedings, it was revealed that the assessee-company failed to make TDS as per provisions of Chapter XVII B of the Act. During the course of survey and post survey proceedings, the assessee was asked to explain as to why the payments should not be treated as salary and paid to the doctors on which tax is deductible u/s 192 of the Act. The assessee submitted its reply that the doctor engaged by the assessee are rendering services to the Hospital as provided u/s 194J of the Act. There is no employee-employer relationship; the doctors/consultants are retainer-ship of fees for the performance of duties as....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... played with the words that these doctors are consultant and are given retainer-ship of the performance of duties assigned to them, infact they are employee on regular basis and there is a term and condition imposed by the employer and doctors are on the pay-role and the employee of the Hospital. 5. We have seen that neither the AO nor the CIT(A) tried to classified the term and condition of engagement of doctors vis-a-vis the employee-employer relationship. The AO and the CIT(A) has not bring on record, if the doctors are subject to the payment of Provident Fund or other retiremental benefit, the AO has applied his own notion for arriving at the conclusion that there is employee-employer relationship and concluded that their existing relationship of employee-employer. The Hon'ble jurisdictional High Court in a recent decision in CIT vs. Grant Medical Foundation in ITA No. 140/2013 dated 22.01.2015 held as under: "31) In the recent decision which has been delivered by the Hon'ble Supreme Court in Employees State Insurance Corporation cum Medical Officers Association Vs. Employees State Insurance Corporation and Anr, AIR 2014 Supreme Court, 1259, in the context of question wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le the association to contend that the parliament never intended to bring such professionals and doctors who work for the welfare and well being of the patients by treating them as servants of anybody. 33) In fact, the constitutional validity of the Act and in the backdrop of this peculiar provision was the issue before the Hon'ble Supreme Court. 34) Going by the peculiar definition and the consequences which would follow if acts of negligence and attributable to doctors and medical professionals are not brought within the purview of the Act that the Hon'ble Supreme Court upheld its validity and negatived the challenge. In doing that the Hon'ble Supreme Court referred to the well settled tests which could enable a Court to distinguish between a contract of service (a master servant relationship) and contract for service being services rendered as a professional. In that context, paragraphs 41 and 42 of the decision read as under : "41. Shri Salve has urged that the relationship between a medical practitioner and the patient is of trust and confidence and, therefore, it is in the nature of a contract of personal service and the service rendered by the medical pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... master and servant between the doctor and the patient the contract between the medical practitioner and his patient cannot be treated as a contract of personal service but is a contract for services and the service rendered by the medical practitioner to his patient under such a contract is not covered by the exclusionary part of the definition of `service' contained inSection 2(1)(o) of the Act." 35) We are mindful of the fact that these observations must be treated as confined to the interpretation of the provisions of a distinct legislation. That legislation was perceived and noted as taking care of the interest of consumers and of varied categories. It is in relation to bringing services and of all categories rendered by professionals for a fee that the Hon'ble Supreme Court negatived the challenge. 36) However, we are in agreement with Mr Bajpai that the foundation or basis on which the Revenue and the Assessing Officer proceeded was whether the categories of doctors and which were before the Assessing Officer could be seen and termed as an employee or servant of the assessee. About the category of doctors and who draw fixed pay without any other benefit but lik....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the tests in paragraph 9 of the order at running page 62 and at internal page 14 in paragraph 10 the Commissioner concluded that doctors drawing fixed remuneration are full time employees.However, in relation to the second category of doctors drawing fixed plus variable pay with written contracts the terms and conditions of Dr Zirpe and Dr Phadke have been referred and the Tribunal concluded that neither of the doctors was entitled to provident fund or any terminal benefits. Both were free to carry on their private practice at their own clinic or outside Hospitals but beyond the Hospital timings. Both doctors treated their private patients from the hospital premises. All of which could be seen as indicators that they were not employees but independent professionals ( see paragraph 14). However, they were found to be sharing a overwhelming number of attributes of employees. In relation to that the contract seems to have been bifurcated or split up or read in bits and pieces by the Commissioner. The Leave Rules were held to be applicable in case of Dr Phadke and there were fixed timing and fixed remuneration. Now, it is inconceivable that merely because for a certain period of time o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of a written contract and with the above terms. Those terms have also been perused by us minutely and carefully. We do not find that any stipulations regarding working hours, academic leave or attachments would reveal that these doctors are employees of the assessee. In fact, Dr Zirpe was appointed as a Junior Consultant on three years of contract. He was paid emoluments at fixed rates for the patients seen by him in the OPD. That he would not be permitted to engage himself in any hospital or nursing home on pay or emoluments cannot be seen as an isolated term or stipulation. In case of Dr Uday Phadke, we do not find any such stipulation. In these circumstances, the only agreement between the parties being that certain private patients or fixed or specified number seen by the consultant could be admitted to the assessee hospital. That would not denote a binding relationship or a master servant arrangement. A attractive or better term to attract talented young professionals and too in a competitive world would not mean tying down the person or restricting his potential to one set up only. The arrangement must be looked in its entirety and on the touch stone of settled principles. Th....