TaxTMI 
TaxTMI 
2025 (8) TMI 369
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....(TDS), Kochi conducted survey proceedings in the business premises of the respondent-assessee in order to verify the compliance with the TDS provisions. During the course of the survey proceedings, the TDS Officer found that the respondent-assessee had deducted tax at source in respect of the remuneration paid to Doctors U/s. 194J of the Income Tax Act, 1961 (in short "the Act") instead of 192 of the Act taking into consideration the terms of the Agreement entered into by the respondent-assessee company with the Doctors. The relevant terms of the agreement were extracted by the TDS Officer vide pages 3 & 4 of the order passed by him. The substance of the case of the TDS Officer is that the respondent-assessee company was paying fixed pay out to the consultant Doctors and also working as full time consultants and the variable pay to the Doctors was treated as incentive and also the Doctors were applying for leave of absence to the Chief of Medical Service or Head of Department and the respondent-assessee company had an administrative control over the Doctors as they are bound to follow the roles and responsibility regularly as framed by the respondent-assessee company and most of th....
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....er 1.3,which states that "the Consultant shall be entitled to a share of revenue generated by the company by him/her in the manner as set forth in part B of Schedule 1 of the agreement" whereas in the case of the Specialist doctors clause number 1.3 states that "in consideration for the satisfactory fulfilment of the Role and Responsibilities, the specialist shall be entitled to a retainer fee. In the part B of the Schedule 1, the retainer fee is a consolidated amount. e. For specialist doctors fixed retainer fees is paid per month. The payment is in the nature of consolidated payment mentioned in Part B of Schedule 1 of the agreement. f. The doctors shall follow the practice of referring patients within deductor hospital for all procedures, cross consultation, investigations, diagnostics or treatments where the facility for the same exists within the hospital. g. There is a termination clause No.3.2 which states that either party may terminate the agreement by giving 90 days notice in writing. However, the deductor shall be entitled to terminate this agreement with immediate effect upon occurrence of an event of default. The default includes unauthorized....
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.... and the consultant Doctors accordingly in holding that the respondent-assessee company was liable to conduct tax at source only under the provisions of section 194J and not U/s. 192 of the Act. In order to decide this question, it is important to decide whether there exists relationship of employer - employee relationship between the respondent-assessee company and the consultant Doctors and the assessee company having regard to the terms of agreement entered into between the respondent-assessee company and the Doctors. To decide the relationship of employer - employee relationship, we have to examine whether the contract entered into between the parties is a "contract for service" or "contract of service". The Hon'ble Karnataka High Court in the case of CIT vs. Manipal Health Systems (P.) Ltd, 375 ITR 509 (Kar.) has held as under: "13. To decide the relationship of employer and employee we have to examine whether the contract entered into between the parties is a 'contract for service' or a 'contract of service'. There are multi-factor tests to decide this question. Independence test, control test, intention test are some of the tests normally adopted....
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....professional services as visiting doctors in different hospitals. Imposing a condition of bar to private practice is to make use of the expertise, skill of a doctor exclusively to the assessee-company i.e., to get the attention and focus of the professional skill and expertise only to the patients of the assessee-company and to discourage doctors from transferring patients to their own clinics or any other hospital. This condition imposed by the assessee-company would not alter the nature of professional service rendered by the doctors. Tribunal also held that none of the doctors are entitled to gratuity, PF, LTA and other terminal benefits. Considering all these aspects at length a detailed, well reasoned order is passed by the Tribunal on this issue which we may not find fault with. 17. It is also pertinent to note that the doctors have filed their return of income for the relevant assessment years showing the income received from the assesseee- Company as professional income and the same is said to have been accepted by the department. This Court has held that the multi-factor tests would be available to examine whether the contract entered into between the par....