TaxTMI 
TaxTMI 
2025 (9) TMI 1038
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.... in relation to A.Y. 2008-09; Income Tax Appeal No. 2612 of 2018 is in relation to A.Y. 2009-10; Income Tax Appeal No. 2448 of 2018 is in relation to A.Y. 2010-11; Income Tax Appeal No. 2166 of 2018 is in relation to A.Y. 2011-12; and Income Tax Appeal No. 605 of 2020 is in relation to A.Y. 2012-13. According to the Revenue, the impugned order of the ITAT in the Appeals which relate to A.Y. 2007-08 to A.Y. 2010-11 [Income Tax Appeal Nos. 2758, 2451, 2612, & 2488, all of 2018], give rise to three Substantial Questions of Law which read thus:- "(A). Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was justified in holding that there does not exist employer-employee relationship between the assessee and full-time consultant doctors and the payments made to them by the assessee come under the purview of section 194J, whereas as per the terms and conditions of the contract, there exists employer-employee relationship and such payments come within the purview of section 192 of the Act in accordance of the definition of salary given in the Act? (B) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT....
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....the Assessee and the payment made to them was in the nature of "salary", and therefore TDS ought to have been deducted under Section 192 of the IT Act, instead of Section 194J. Accordingly, the Assessing Officer held the Assessee in default under Section 201(1) and 201(1A) of the IT Act and raised a demand of tax and interest. 6. Apart from the aforesaid, the Assessing Officer also observed that the Assessee was paying Annual Maintenance Contract ("AMCs") charges in respect of the maintenance of various medical equipments like XRay machines, HD Dialog dialysis machine, CT Scanners, Olympus endoscopes, MRI scanners, Magnetom Symp/Somantom Sense, Axiomoarties FC, etc. However, whilst making payment under the AMCs, the Assessee deducted TDS under Section 194C of the IT Act. According to the Assessing Officer, these services required human intervention and superior technical skills. Accordingly, after a detailed analysis of the nature of services provided, the Assessing Officer held that the services rendered are "technical services", and therefore, whilst making payment under the AMCs, tax should have been deducted under Section 194J, instead of Section 194C. To come to this conclu....
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....d by us above. 9. Since, according to the Revenue, the Appeals relating to A.Y. 2007-08 to A.Y. 2010-11 give rise to basically 3 Substantial Questions of Law, we will deal with these appeals first. At the outset, we must state that really speaking, the Substantial Questions of Law, if any, would be question (A) and question (B) reproduced above, and depending on the answer to these two questions, question (C) would be decided. In other words, really speaking, question (C) is consequential to question (A) and/or question (B). 10. Question (A) is whether the ITAT was justified in holding that there exists an employer-employee relationship between the Assessee and the consultant/honorary doctors, and that the payments made to them by the Assessee would come under the purview of Section 194J of the IT Act. To put it differently, according to the Revenue, the remuneration paid to these consultant/honorary doctors is nothing but a "salary", and hence, TDS ought to have been deducted under Section 192 instead of Section 194J of the IT Act. 11. As far as payment to these doctors is concerned, the CIT(A) noted that the Assessee mainly employs two types of doctors i.e. (a) full time....
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....o the same discipline, timings, rules and regulations applicable to regular employees; is Provident Fund / ESIC deducted from his payment etc. According to the Assessee, all these were conspicuously absent in the facts of the present case, and therefore, the Assessing Officer could never have come to the conclusion that the consultant/honorary doctors are the employees of the Assessee. 12. The CIT(A), after hearing the submissions of the Assessee as well as the Assessing Officer, summarized that the honorary doctors are appointed by the Assessee on the basis of their qualification and expertise in their area of specialization. Further, payment is made to them on the basis of their visits and treatments carried out in respect of the patients. The Hospital retains a part of the payment made by the patients in this regard. The CIT(A) also noted that no fixed monthly remuneration is paid to the said honorary doctors by the Appellant, and that these doctors are also free to practice independently in other Hospitals, and their own Clinics / Hospitals (other than the Assessee). The CIT(A) further noted that the Appellant does not provide any PF/ ESIC facilities to these doctors and nei....
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....ctors and brought out differences to hold that the independent professional doctors are employees. The ITAT however held that in doing so, the Assessing Officer overlooked the similarities in the two, which is necessary to draw the point that both are professionals. The ITAT held that the Assessing Officer ignored the Assessee's submission on the comparison between the Assessee's employees entitled to PF, different categories of leave, gratuity, HRA etc., which the independent doctors were not entitled to. On this factual situation, the ITAT held that the real intention of the parties in the present case was the appointment of consultants and not to create any employer-employee relationship. It, therefore, held that TDS was correctly deducted under Section 194J and not under Section 192 of the IT Act. To support these findings, the ITAT also relied upon the judgment of this Court in the case of Commissioner of Income Tax (TDS) Vs. Grant Medical Foundation (2015) 375 ITR 49 (Bom.) where, in almost identical facts, this Court took a view that doctors of this nature cannot be termed as employees of the Hospital. 14. Having carefully gone through the order of the ITAT as well as tha....
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....he AMCs were in fact payments for "technical services", and therefore, before making these payments, TDS ought to have been deducted under Section 194J, instead of 194C. For A.Y. 2011-12 [on this issue of payments made under the AMCs], neither the Revenue nor the Assessee have filed any appeal before the ITAT. 16. As far as the issue of AMCs is concerned, the Assessing Officer inter alia held that the Assessee was paying AMC charges in respect of various sophisticated medical equipments X-ray machines, HD Dialog dialysis machine, CT Scanner, Olympus endoscopes, MRI Scanner etc. According to the Assessing Officer, these services required human intervention with superior technical skills. Accordingly, the Assessing Officer held that the services provided under the AMCs are "technical services" and TDS should have been deducted under Section 194J instead of Section 194C of the IT Act. In other words, payments made under the AMCs were not in the strict sense as payments to contractors as contemplated under Section 194C, but were fees for "technical services", and therefore, Section 194J was attracted for the purposes of deduction of TDS. As mentioned earlier, being aggrieved by the ....
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....yments made under the AMCs were for "technical services", another CIT (A), by his order dated 26th November 2013, came to the conclusion that the AMCs entered into with (i) Philips Medical Systems (I) Pvt Ltd for high tech Equipment, C. T. Scan etc; (ii) Care and Cure Diagnostic Centre for pathology tests; and (iii) Renetech Lab for TLD services; were in the nature of providing "technical and professional services" and TDS ought to have been deducted under Section 194J instead of Section 194C of the I.T. Act. In other words, for A.Y. 2011-12, after analysing six AMCs, the CIT (A) held that the three AMCs were of a routine nature and TDS was rightly deducted under Section 194C, whereas the balance three AMCs were of a specialized nature which required deduction of TDS under Section 194J. 18. As mentioned earlier, being aggrieved by the decision of the CIT(A) on this issue, for A.Y. 2007-08 to 2010-11, the Revenue approached the ITAT. The ITAT, for A.Y. 2007-08 to 2010-2011, confirmed the view of the CIT(A) and held in favour of the Assessee. Since the Revenue partly succeeded on the issue of AMCs for A.Y. 2011-12, this issue did not arise in A.Y. 2011-12. Also, the Revenue or the....