Asst. Commissioner of Income Tax, Hyderabad V. M/s. Reliance Medicare Limited, Hyderabad

ITA 1193/HYD/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98480 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 07-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 07-08-2013
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA BANDI
• Keywords: Business income
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER I.T.A. NO. 1193/HYD/2013 ASSESSMENT YEAR: 2009-10 ASST. COMMISSIONER OF INCOME TAX, CIRCLE-15(1), HYDERABAD VS M/S. RELIANCE MEDICARE LIMITED, SAIFABAD, HYDERABAD [PAN: AABCR8588C] ( APPELLANT ) (RESPONDENT) FOR REVENUE : SHRI RAMA KRISHNA, BANDI, DR FOR ASSESSEE : SHRI K.C. DEVDAS, AR DATE OF HEARING : 07-08-2015 DATE OF PRONOUNCEMENT : 09-09-2015 O R D E R PER SMT. P. MADHAVI DEVI, J.M. : THIS APPEAL FILED BY REVENUE IS DIRECTED AGAINST T HE ORDERS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-II, HYDERA BAD DATED 08-05-2013 FOR THE AY. 2009-10 ON THE FOLLOWING GRO UNDS: 1. THE ORDER OF THE LD.CIT(APPEAL) IS ERRONEOUS AN D PREJUDICIAL TO THE INTEREST OF THE REVENUE. 2. THE LD.CIT(APPEAL) ERRED IN UPHOLDING THAT TDS PROVISIONS OF SECTION 194J ARE ATTRACTED INSTEAD OF PROVISION OF SECTION 192. THE EMPLOYER AND EMPLOYE E RELATIONSHIP EXISTS BETWEEN DEDUCTOR AND THE DEDUCT EE. THE LD.CIT(APPEAL) APPEAL HAS NOT CONSIDERED THE DE CISION I.T.A. NO. 1193/HYD/13 M/S. RELIANCE MEDICARE LIMITED :- 2 -: OF HONBLE ITAT IN THE CASE WOCKHARDT HOSPITALS IN ITA NO. 985, 986/H/11 DATED 02/07/2012. 3. ANY OTHER GROUND THAT MAY BE URGED DURING THE CO URSE OF APPELLATE PROCEEDINGS. 2. BRIEF FACT ARE, ASSESSEE IS RUNNING A HOSPITAL F OR CARE OF CHILDREN FROM NEW BORN TO PEDIATRIC AGE GROUP. THE HOSPITAL PROVIDES BOTH IN- PATIENT AND OUT-PATIENT CARE. THE CHIEF EXECUTIVE OFFICER DR. V.S.V. PRASAD AND HIS WIFE DR. V. HEMA MAILI AS WORKING DI RECTOR OVER SEE DAY TO DAY ACTIVITIES OF THE HOSPITAL. A SURVEY OPERAT ION 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 W AS FOUND THAT ASSESSEE HAD MADE A TDS OF RS. 4,20,000/- ON THE PAYMENTS MA DE TO DR. KULBHUSHAN S. DAGAR WHICH HAD NOT BEEN REMITTED IN GOVERNMENT ACCOUNT. DR. KULBHUSHAN S. DAGAR FILED A COMPLAIN T BEFORE CIT(TDS), HYDERABAD THAT HE HAS NOT BEEN SUPPLIED WITH CORREC T TDS CERTIFICATE BY DEDUCTOR/ASSESSEE. HE SUBMITTED THAT HE WAS PAID S ALARY OF RS. 5,00,000/- PER MONTH AND HAD REQUESTED THE DEDUCTOR TO MAKE TDS @ 30% ON THE ABOVE SALARY. AS A RESULT, THEY DEDUCTE D 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 CER TIFICATE, THEY DID NOT SUPPLY THE CORRECT TDS CERTIFICATE. INSTEAD OF ACTUAL TDS DEDUCTED OF RS. 18 LAKHS, HE WAS SUPPLIED TDS CERTIFICATE FOR R S. 4.20 LAKHS ONLY. 3. AFTER VERIFYING ALL THE DETAILS, THE ASSESSING O FFICER (AO) HELD THAT DR. KULBHUSHAN S. DAGAR WAS PAID SALARY OF RS. 5 LA KHS PER MONTH AND NOT PROFESSIONAL FEE FOR SERVICES RENDERED ON THE G ROUND THAT DR. KULBHUSHAN S. DAGAR WAS THE DIRECTORS OF PEDIATRIC CARDIAC PROGRAM AT LOTUS CHILDRENS HOSPITAL TO WHOM SALARY OF RS. 5 L AKHS PER MONTH WAS BEING PAID UP TO 13-05-2009 IRRESPECTIVE OF THE AVE RAGE NUMBER OF I.T.A. NO. 1193/HYD/13 M/S. RELIANCE MEDICARE LIMITED :- 3 -: OPERATIONS PERFORMED PER MONTH, AND THAT VARIOUS MA TERIALS AND ANCILLARY EQUIPMENT FOR CARDIAC OPERATION THEATRES AND ICUS WERE BEING PROCURED BY HIM AND HE WAS INCHARGE OF SURGEONS AND OTHER MEDICAL AND NURSING STAFF OPERATING FROM THE UNIT. MOREOVER, O THER ADMINISTRATIVE AND DISCRETIONARY POWERS EXERCISED BY HIM ARE NOT E NJOYED BY A DOCTOR WHO IS JUST RENDERING PROFESSIONAL CONSULTANCY SERV ICES TO A HOSPITAL AND IS NOT A FULL TIME EMPLOYEE. THE AO DIRECTED THE A SSESSEE TO REMIT TDS OF RS. 13,07,400/- ON SALARY PAID TO DR. KULBHUSHAN S. DAGAR INTO GOVERNMENT ACCOUNT ALONG WITH INTEREST OF RS. 2,60, 154/- U/S. 201(1A) OF THE ACT. AGGRIEVED BY THE ABOVE ORDER, THE ASSE SSEE FILED THE APPEAL BEFORE THE LD.CIT(A) BY RAISING THE FOLLOWING GROUN DS: A) DR. KULBHUSHAN S. DAGAR WAS TAKEN IN AS A CONSU LTANT. IN FACT HE JOINED THE HOSPITAL DURING FEB '08 BASED ON A ORAL UNDERSTANDING BETWEEN THE TWO THAT HE WOULD BE PAID RS.5,00,000/- PER MONTH AND THERE WAS 11&VER ANY WR ITTEN AGREEMENT. SUBSEQUENTLY, WHEN THE SAME WAS REVISED TO RS.3, 50, 000/- PER MONTH W.E.F. APRIL 2008, THE HOSPITAL HAS SENT A LETTER CONFIRMING THE CONSULTANCY FEE OF RS. 3,50,0 00/- PER MONTH. B) NO APPOINTMENT LETTER CONFIRMING THE EMPLOYMENT OF DR. KULBHUSHAN S. DAGAR WAS EVER ISSUED AND ALL THE DOC UMENTS CLEARLY SUGGEST THAT DR. DAGAR WAS ONLY A CONSULTAN T. C) NORMALLY AN EMPLOYEE CANNOT COMMENCE WORKING FOR ANY ORGANIZATION WITHOUT HAVING A FORMAL APPOINTMENT LE TTER. THE FACT THAT DR. KULBHUSHAN S. DAGAR WAS ASSOCIATED WITH TH E HOSPITAL FOR ABOUT FIFTEEN MONTHS WITHOUT A FORMAL APPOINTME NT LETTER CLEARLY SHOWS THAT HE WAS TAKEN IN AS A CONSULTANT ONLY. LETTER ISSUED BY THE HOSPITAL REDUCING HIS CONSULTANCY FEE S FROM RS. 5,00,000/- TO RS. 3,50,000/- PER MONTH WAS ISSUED A FTER HE SERVED THE ORGANIZATION FOR ABOUT TWO MONTHS AND AS SUCH THERE WAS 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 SER VANT RELATIONSHIP BETWEEN THE DOCTORS AND THE HOSPITAL. A MASTER IS ONE WHO NOT ONLY DIRECTS WHAT AND WHEN A THING IS T O BE DONE BUT I.T.A. NO. 1193/HYD/13 M/S. RELIANCE MEDICARE LIMITED :- 4 -: ALSO HOW IT IS TO BE DONE, AND THE SERVANT IS THE O NE WHO IS BOUND TO CARRY OUT THE INSTRUCTION GIVEN TO HIM BY THE MA STER. THE SERVANT HAS NO DISCRETION OF HIS OWN IN CARRYING OU T THE INSTRUCTION EXCEPT SUCH MINOR DISCRETION AS MAY BE LEFT TO HIM BY HIS MASTER. IT IS THE DOCTOR WHO DECIDES THE MODE O F 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. DAGA R IS NOT GOVERNED BY THE TERMS OF EMPLOYMENT, LEAVE, TERMINA L BENEFITS AND MORE IMPORTANTLY TIMINGS. IF HE WERE TO BE A RE GULAR EMPLOYEE, NORMAL DEDUCTION ON ACCOUNT OF PROFESSION AL TAX PROVIDENT FUND SHOULD HAVE BEEN DEDUCTED WHICH WAS NOT DONE IN THE INSTANT CASE CONFIRMING THE STAND OF THE ASS ESSEE THAT DR. DAGAR WAS ONLY A CONSULTANT. F) UNLIKE REGULAR EMPLOYEES, DR. KULBHUSHAN S. DAGA R IS NOT REQUIRED TO RECORD THE TIME OF COMING INTO AND GOIN G OUT OF THE HOSPITAL. SIMILARLY, PARTICULARS AS REGARDS LEAVE A RE NOT RECORDED AS HE IS FREE TO COME DEPENDING ON THE EXIGENCY OJ THE SITUATION AND ALSO THE PATIENT. THE HOSPITAL HOUSE KEEPING RE CORDS CONFIRM THE SAME. G) THERE ARE NO SPECIFIC JOB ASSIGNMENTS GIVEN TO T HE PROFESSIONALS IN THE MANNER IN WHICH THE PROFESSION AL SHALL RENDER THE SERVICE. H) UNLIKE REGULAR EMPLOYEES, DR. KHULBHUSH S. DAGAR DOES NOT HAVE ANY RESTRICTIONS ON TAKING ANY OTHER ASSIGNMEN T. . I) TERMINATION NOTICE PERIOD/NOTICE PAY ARE APPL ICABLE IN RESPECT OF EMPLOYEES WHERE AS NO SUCH THING IS THERE FOR TH E CONSULTANT DOCTORS. J) SOME OF THE OTHER DOCTORS WHO WERE ASSOCIATED WI TH THE HOSPITAL AND WHO WERE PAID CONSULTANCY FEES, HAVE B EEN FILING THE RETURN WITH THE DEPARTMENT SHOWING THE AMOUNT R ECEIVED FROM THE HOSPITAL AS CONSULTANCY FEES. 4. AFTER CONSIDERING THE CONTENTIONS OF ASSESSEE AN D ASSESSMENT ORDER, THE LD. CIT(A) ALLOWED ASSESSEES APPEAL WIT H THE FOLLOWING FINDINGS: I.T.A. NO. 1193/HYD/13 M/S. RELIANCE MEDICARE LIMITED :- 5 -: 1) DR DAGAR HAS COMPLAINED AGAINST THE ASSESSEE COM PANY REGARDING NON SUPPLY OF TDS CERTIFICATES CLAIMING T HAT TDS WAS DEDUCTED AT 10% IN THE FIRST MONTH I.E. FEBRUARY 20 08 AND WHEN HE WROTE TO DEDUCT TAX AT SOURCE @ 30% THEY HAVE DEDUC TED RS.1 ,50,000/- AS TAX AND PAID THE BALANCE AMOUNT OF RS. 3.5 LAKHS PER MONTH. AT THE END OF THE FINANCIAL YEAR HE WAS GIVE N A TDS CERTIFICATE AND THE RETURN WAS FILED ACCORDINGLY. O N PERUSAL OF THE TDS CERTIFICATE, IT IS NOTED THAT THE NATURE OF PAY MENT WAS MENTIONED AS 'FEE FOR PROFESSIONAL OR TECHNICAL SER VICES' U] S.194J OF IT ACT. THE ASSESSEE'S AR DURING THE COURSE OF PROC EEDINGS HAS FILED A COPY OF THE RETURN SUPPOSEDLY FILED BY DR.DAGAR W HICH SHOWN INCOME FROM SALARIES OF RS.33,45,455/- AND FEES FOR PROFESSIONAL OR TECHNICAL SERVICES OF RS.10 LAKHS AND FROM THIS THE EXPENSES WERE CLAIMED TO THE EXTENT OF RS.2,02,083/- THEREBY SHOW ING A BUSINESS INCOME OF RS.7,97,917/- & INTEREST INCOME OF RS.3,9 5,134/-. IT MAY BE NOTED THAT DR DAGAR HAS WORKED WITH THE A SSESSEE COMPANY FOR 15 MONTHS STARTING FROM FEBRUARY 2008 T O MAY 2009 AND PRIOR TO JOINING THE ASSESSEE COMPANY DR DAGAR WAS EMPLOYED ELSEWHERE AND RECEIVED SALARY OF RS. 40,03,455/- OU T OF THAT HE CLAIMED DEDUCTIONS ON ACCOUNT OF GRATUITY, CONVEYAN CE ALLOWANCE AND EARNED LEAVE AMOUNTING TO RS.6,58,000/- WHEREAS FOR THE PERIOD FOR FEBRUARY & MARCH 2008 HE CLAIMED FEES FO R 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 SAL ARIES, CONSUMABLES, CONVEYANCE, TELEPHONE, TRAVELING EXPEN SES, SEMINAR EXPENSES BOOKS & PERIODICALS AND OTHER MISC. EXPENS ES WERE CLAIMED. THIS CLEAR CLASSIFICATION OF HIS INCOME IS CLEARLY REFLECTED IN THE RETURN FILED BY HIM WITH RANGE. 12 ON 31.07.200 8 UNDER ACKNOWLEDGMENT NUMBER 1270041793-BUNDLE NO. 836. F ORM 16A DATED 12.05.2008 SHOWS THE TDS WAS MADE @ RS. 50,00 0/- FOR THE MONTH OF FEB. AND RS. 1,50,000/- FOR THE MONTH OF M ARCH 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 PRODU CE THE ATTENDANCE REGISTER OF THE LOTUS HOSPITAL FROM FEBR UARY '08 TO MAY '09 IN ORDER TO VERIFY WHETHER DR DAGAR WAS ON ROLL S OR NOT. THE AO IN THE REMAND REPORT STATED THAT THE ATTENDANCE REG ISTER OF THE ASSESSEE COMPANY WAS REQUISITIONED FOR HIS VERIFICA TION THOUGH HE HAS NOT GIVEN ANY COMMENTS ON THE SAME. I.T.A. NO. 1193/HYD/13 M/S. RELIANCE MEDICARE LIMITED :- 6 -: 5.1 FROM ALL THESE, IT APPEARS THAT THERE IS A DISP UTE BETWEEN THE ASSESSEE HOSPITAL AND DR DAGAR AND DR DAGAR HAS USED THE DEPARTMENT TO SETTLE SCORES WITH THE HOSPITAL. WHEN HE MADE A COMPLAINT WITH THE DEPARTMENT AND WHEN THE DEPARTME NT WANTS TO VERIFY AND ADDRESS HIS GRIEVANCE, IT IS NOT UNDERST OOD WHY HE DID NOT COME FORWARD AND SUBSTANTIATE HIS CLAIM. IT MAY ALSO BE NOTED THAT THE FORM 16-A SHOWING THE REMUNERATION AS PROF ESSIONAL AND CONSULTANCY CHARGES HAS BEEN ACCEPTED BY THE DR DAG AR AND FILED THE RETURN OF INCOME FOR THE RELEVANT YEAR ENCLOSIN G THE SAID CERTIFICATE WHICH REFLECTED THE AMOUNT RECEIVED FRO M THE ASSESSEE COMPANY AS CONSULTANCY CHARGES. THE CONTENTION OF T HE ADDL. CIT THAT THE PAYMENT BEING FIXED IN NATURE LEADS TO THE CONCLUSION THAT IT IS SALARY IS ALSO NOT CONVINCING BECAUSE THE CHARAC TERISTIC OF SALARY IS NOT JUST FIXED REMUNERATION, IT SHOULD ALSO HAVE OTHER ELEMENTS SUCH AS EMPLOYER AND EMPLOYEE RELATIONSHIP TERMS AN D CONDITIONS OF THE EMPLOYMENT AND DEDUCTIONS ON ACCOUNT OF GRAT UITY AND PF AND ALSO FIXED WORK HOURS AND OTHER LEAVE MATTERS E TC. THE AO HAS CONCENTRATED ONLY ON THE COMPLAINT FILED BY DR. DAG AR AND PROCEEDED ACCORDINGLY WITHOUT GOING INTO THE RELATI ONSHIP BETWEEN THE ASSESSEE COMPANY AND DR. DAGAR. IT IS SURPRISIN G TO NOTE THAT EVEN DURING THE SURVEY THERE WERE NO OTHER DISCREPA NCIES NOTICED AND IT WAS ONLY IN RESPECT OF DR. DAGAR, THERE HAS BEEN CONTROVERSY/DISPUTE. 5.2 IT MAY ALSO BE NOTED THAT THE LETTERS/CORRESPON DENCE FILED BY BOTH THE PARTIES ARE SELF SERVING DOCUMENTS AND NEITHER OF THEM HAS BEEN CONFIRMED/ACKNOWLEDGED BY EITHER PARTY. I N VIEW OF THE FACT THAT THE AO HAS NOT COMMENTED ON THE ATTENDANC E REGISTER WHICH HE REQUISITIONED TO VERIFY WHETHER DR. DAGAR WAS ON THE ROLLS OF THE ASSESSEE COMPANY, THE RETURN OF INCOME FILED BY DR. DAGAR SHOWING SALARY AND PROFESSIONAL SERVICES SEPARATELY COUPLED WITH THE FACT THAT DESPITE BEING GIVEN OPPORTUNITIES THA T DR. DAGAR WHO WOULD BE A BENEFICIARY IF HE COULD ESTABLISH THAT H E WAS AN EMPLOYEE OF THE ASSESSEE COMPANY HAS NOT RESPONDED TO THE NOTICES ISSUED TO HIM TO VERIFY HIS CLAIM, LEADS TO THE INF ERENCE THAT THERE IS NO TRUTH IN WHAT HE ALLEGED AND THEREFORE THE ALLEG ATIONS 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 GR ATUITY, PROVIDENT FUND AND EARNED LEAVE IN RESPECT OF THE R EMUNERATION 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 A PPEARS TO HAVE SOME MERIT. AFTER TAKING ALL THE OTHER FACTORS AND THE CONDUCT OF DR. I.T.A. NO. 1193/HYD/13 M/S. RELIANCE MEDICARE LIMITED :- 7 -: DAGAR AND THE EVIDENCES AVAILABLE ON RECORD INTO CO NSIDERATION, IT IS HELD THAT DR. DAGAR WAS A CONSULTANT WITH THE ASSES SEE COMPANY AND TAX WAS DEDUCTED AT SOURCE CORRECTLY U/S.194J O F I.T. ACT, 1961 FOR THE YEAR UNDER CONSIDERATION. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE PR EFERRED 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, EV EN THOUGH EMPLOYER AND EMPLOYEE RELATIONSHIP WAS EXISTING BETWEEN THE DEDUCTOR AND THE DEDUCTEE AND FURTHER THAT THE LD. CIT(A) HAS NOT CO NSIDERED THE DECISION OF THE HONBLE ITAT IN THE CASE OF WOCKHARDT HOSPIT ALS IN ITA NO. 985 & 986/H/2011 DT. 02-07-2012. 6. WE HAVE HEARD THE ARGUMENTS OF LD. DR AND LD. C OUNSEL FOR ASSESSEE. LD. DR SUBMITS THAT ASSESSEE-COMPANY HAS APPOINTED DR. KULBHUSHAN S. DAGAR AS AN EMPLOYEE AND ASSESSEE WAS TO PAY AN AMOUNT OF RS. 5 LAKHS AS SALARY AND FROM THE NATURE OF DUTIES PERFORMED BY DR. KULBHUSHAN S. DAGAR, DIRECTOR OF P EDIATRIC CARDIAC PROGRAM AT LOTUS CHILDRENS HOSPITAL, IT IS CLEAR T HAT HE WAS INCHARGE OF SURGEONS AND OTHER MEDICAL AND NURSING STAFF OPERAT ING FROM THE UNIT AND SUCH ADMINISTRATIVE AND DISCRETIONARY POWERS WI LL NOT BE ENJOYED BY DR. KULBHUSHAN S. DAGAR, IF HE WAS JUST RENDERING P ROFESSIONAL CONSULTANCY SERVICES TO A HOSPITAL. HE ARGUED FURT HER THAT FOR THE MONTH OF FEBRUARY, 2008, HE WAS PAID FOR AN AMOUNT OF RS. 3,50,000/- AFTER THE ASSESSEE ACTUALLY MADE TDS AT 30% ON THE SALARY (RS . 5,00,000/-) PAID TO HIM. HE SUBMITTED THAT THEREAFTER, THE ASSESSEE PAID AN AMOUNT OF RS. 3,50,000/- P.M. FROM MARCH, 2008 ONWARDS AND MA DE TDS AT 10% ON RS. 3,50,000/-. HE ARGUED THAT DR. KULBHUSHAN S . DAGAR ALSO FILED A COMPLAINT BEFORE CIT(TDS) THAT HE WAS PAID SALARY O F RS. 5,00,000/- PER MONTH AND THAT HE HAD REQUESTED THE ASSESSEE TO MAK E TDS @ 30% ON HIS SALARY OF RS. 5,00,000/-. ACCORDINGLY, THE DED UCTOR DEDUCTED AN I.T.A. NO. 1193/HYD/13 M/S. RELIANCE MEDICARE LIMITED :- 8 -: AMOUNT OF RS. 1,50,000/- TAX OF EVERY MONTH AND PAI D TO HIM A MONTHLY SALARY OF RS. 3,50,000/- THEREFORE, THERE WAS AN E XISTENCE OF EMPLOYER AND EMPLOYEE RELATIONSHIP BETWEEN THE ASSESSEE AND DR. KULBHUSHAN S. DAGAR AND THUS, THE DEDUCTOR HAD TO DEDUCT THE TDS AS PER THE PROVISIONS OF SECTION 192 BUT NOT U/S. 194J OF THE ACT. 7. PER CONTRA, THE LD. AR FILED HIS WRITTEN SUBMISS IONS AND ALSO SUBMITTED THAT THE AO HAS NO BASIS AT ALL TO COME T O THE CONCLUSION THAT THE ASSESSEE HAS PAID RS. 5,00,000/- AS A SALARY TO DR. KULBHUSHAN S. DAGAR AND HAS DEDUCTED TDS @ 30%. HE SUBMITTED THA T THERE IS NO IOTA OF EVIDENCE BEFORE AO, EXCEPT THE COMPLAINT FILED B Y DR. KULBHUSHAN S. DAGAR BEFORE CIT(TDS). HE FURTHER SUBMITS THAT THE RE WAS NO WRITTEN AGREEMENT BETWEEN THE ASSESSEE AND DR. KULBHUSHAN S . DAGAR TO SAY THAT IT IS A SALARY AND NOT CONSULTANCY FEE. HE AR GUED FURTHER THAT THERE IS NO EMPLOYER AND EMPLOYEE RELATIONSHIP BETWEEN TH E DEDUCTOR AND DEDUCTEE, ALL THE DOCTORS INCLUDING DR. KULBHUSHAN S. DAGAR, WHO WERE WORKING IN THE ASSESSEE-HOSPITAL ARE ONLY CONSULTIN G 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 AP POINTMENT LETTER. HE FURTHER SUBMITS THAT WHEN THE CONSULTATION FEE W AS 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. T HEREFORE, 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. H E FURTHER SUBMITS THAT AS PER THE HOSPITAL RECORDS, DR. KULBHUSHAN S. DAGAR IS NOT COVERED I.T.A. NO. 1193/HYD/13 M/S. RELIANCE MEDICARE LIMITED :- 9 -: BY THE TERMS OF EMPLOYMENT. HE FURTHER SUBMITS THA T FROM THE PAYMENTS MADE TO DR. KULBHUSHAN S. DAGAR, NO DEDUCT ION IS MADE TOWARDS PROFESSIONAL TAX AND PF ETC., AND THAT DR . KULBHUSHAN S. DAGAR DID NOT HAVE ANY RESTRICTION ON TAKING ANY AS SIGNMENT WITH OTHER DOCTORS/HOSPITALS WHILE WORKING FOR THE RESPONDENT- HOSPITAL. HE FURTHER ARGUED THAT THE DECISION OF HONBLE ITAT IN THE CAS E OF WOCKHARDT HOSPITALS IN ITA NO. 985 & 986/H/2011 (SUPRA) WHICH WAS RELIED ON BY THE DEPARTMENT IS NOT AT ALL APPLICABLE TO THE FACT S OF THE CASE OF ASSESSEE SINCE IT IS DISTINGUISHABLE ON FACTS. THEREFORE, H E RELIED ON THE ORDER OF THE CIT(A). 8. NOW, QUESTION BEFORE US IS WHETHER THERE WAS ANY RELATIONSHIP OF EMPLOYER AND EMPLOYEE BETWEEN THE ASSESSEE AND DR. KULBHUSHAN S. DAGAR. ADMITTEDLY, THERE WAS NO WRITTEN AGREEMENT BETWEEN THE ASSESSEE AND DR. KULBHUSHAN S. DAGAR. TO DECIDE TH E RELATIONSHIP OF EMPLOYER AND EMPLOYEE, WE HAVE TO EXAMINE WHETHER T HE CONTRACT ENTERED INTO BETWEEN THE PARTIES IS A CONTRACT FOR SERVICE OR A CONTRACT OF SERVICE. IN ORDER TO ASCERTAIN SUCH RELATIONSHIP, WE HAVE TO EXAMINE THE FOLLOWING ASPECTS: I. PAYMENT OF REMUNERATION; II. EMPLOYERS CONTROL AND SUPERVISION, SERVICES RULES OF THE COMPANY; III. RELATIONSHIP OF MASTER AND SERVANT. 9. ABOVE ARE SOME OF THE TESTS NORMALLY ADOPTED FOR TESTING THE NATURE OF CONTRACT I.E., CONTRACT FOR SERVICE AND C ONTRACT OF SERVICE. I.T.A. NO. 1193/HYD/13 M/S. RELIANCE MEDICARE LIMITED :- 10 - : FINALLY, IT DEPENDS ON THE PROVISIONS OF THE CONTRA CT. BUT IN THE CASE ON HAND, THERE IS NO WRITTEN CONTRACT. THEREFORE, INT ENTION ALSO PLAYS A ROLE IN DECIDING THE NATURE OF CONTRACT. THE INTENTION OF THE PARTIES CAN ALSO DETERMINE OR ALTER A CONTRACT FROM ITS ORIGINAL SHA PE AND STATUS. IN THE PRESENT CASE, ADMITTEDLY, THE ASSESSEE PRODUCED THE ATTENDANCE REGISTER OF THE HOSPITAL BUT THERE IS NO COMMENT BY THE AO O N THE ATTENDANCE REGISTER WHICH HE QUESTIONED TO VERIFY WHETHER DR. KULBHUSHAN S. DAGAR WAS ON THE ROLLS OF THE ASSESSEE-HOSPITAL. THEREFO RE, IT CLEARLY INDICATES THAT THERE WAS NO FIXED TIMINGS AND ALSO THERE WAS NO CONTROL OF THE EMPLOYER. ADMITTEDLY, THERE WAS NO DEDUCTION OF PROFESSIONAL TAX OR PROVIDENT FUND FROM THE SALARY OF DR. KULBHUSHAN S. DAGAR AND ALSO THERE WAS NO EVIDENCE OF TERMINAL BENEFITS AND LEAV E ENCASHMENT BENEFITS. THEREFORE, WE ARE OF THE FIRM VIEW THAT THERE WAS NO MASTER AND SERVANT RELATIONSHIP BETWEEN THE ASSESSEE AND DR. K ULBHUSHAN S. DAGAR. 10. APART FROM THIS, THE DOCTORS ARE RENDERING THEI R PROFESSIONAL SERVICES AS VISITING DOCTORS IN DIFFERENT HOSPITALS . CONSULTANT DOCTORS WERE NOT GETTING SALARY BUT ARE PAID LUMP-SUM MONTH LY PAYMENT AND NO ALLOWANCE AND ALSO THERE IS NO PRESCRIBED LEAVE IN THE CASE OF CONSULTANT DOCTORS AND ALSO THEY ARE NOT GOVERNED BY THE GENER AL SERVICE RULES AND REGULATIONS. THEREFORE, AFTER CONSIDERING THE ABOV E SAID FACTS AND CIRCUMSTANCES, WE HAVE NO HESITATION TO COME TO A C ONCLUSION THAT CONSULTANT DOCTORS ARE NOT AKIN TO THE SALARIED EMP LOYEES AND DO NOT HAVE EMPLOYER AND EMPLOYEE RELATIONSHIP. IN THE PR ESENT CASE ALSO DR. KULBHUSHAN S. DAGAR IS ONLY A CONSULTANT DOCTOR. 11. THE LD. DR RELIED ON THE DECISION OF THE HONBL E ITAT IN THE CASE OF WOCKHARDT HOSPITALS IN ITA NO. 985 & 986/H/2011 (SU PRA). WE HAVE I.T.A. NO. 1193/HYD/13 M/S. RELIANCE MEDICARE LIMITED :- 11 - : PERUSED THE SAID JUDGMENT. IN THAT JUDGMENT, THE C O-ORDINATE BENCH OF ITAT, HYDERABAD MADE THE FOLLOWING OBSERVATIONS: 24. A CAREFUL PERUSAL OF THE APPOINTMENT ORDER ISS UED TO THE DOCTOR SHOWS THAT A FIXED MONTHLY AMOUNT WAS PAID B Y THE ASSESSEE AS REMUNERATION AND IT IS NO WAY CONCERNED WITH THE FEES RECEIVED FROM THE PATIENTS TREATED BY THEM. THE AP POINTMENT LETTER WAS ISSUED TO THE CONCERNED DOCTOR ON THE BASIS OF THEIR APPLICATION. THE DOCTORS ARE GOVERNED BY THE SERVICE RULES OF TH E ASSESSEE. THEIR LEAVE ENTITLEMENT IS ALSO IN ACCORDANCE WITH THE AS SESSEE'S RULES. THE DOCTORS WERE UNDER PROBATION PERIOD. DURING TH E EMPLOYMENT OF DOCTORS THE ASSESSEE HAS DISCRETION TO TERMINATE TH E SAME. DURING THE EMPLOYMENT THE DOCTORS SHALL DEVOTE THEIR WHOLE TIME ATTENTION TO THEIR EMPLOYMENT. THE DOCTORS ARE LIABLE FOR RE TIREMENT ON ATTAINING THE AGE OF 58 YEARS. DURING THE PERIOD O F EMPLOYMENT EITHER SIDE WILL BE ABLE TO TERMINATE THE EMPLOYMEN T BY GIVING TWO MONTHS NOTICE IN WRITING OR BY PAYMENT OF TWO MONTH S' SALARY IN LIEU OF SUCH NOTICE TO EACH OTHER. AS SEEN FROM THE APP OINTMENT ORDER IT CAN BE EASILY SAID THAT THE DOCTORS ARE EMPLOYEES O F THE ASSESSEE AND BEING SO, THE RELATION BETWEEN THE ASSESSEE AND THE DOCTOR WAS THAT OF AN EMPLOYER AND EMPLOYEE AND THE REMUNERATI ON PAID TO THEM IN TERMS OF THE SAID APPOINTMENT ORDER WAS SAL ARY WHICH ATTRACTED THE PROVISIONS OF SECTION 192 OF THE ACT . 12. UPON PERUSAL OF THE ABOVE SAID JUDGMENT IN THE CASE OF WOCKHARDT HOSPITALS (SUPRA), THE DOCTORS THEREIN WERE GOVERNE D BY THE SERVICE RULES AND LEAVE ENTITLEMENT. MOREOVER, THEY WERE UNDER P ROBATION PERIOD AND ALSO THEY ARE LIABLE FOR RETIREMENT ON ATTAINING TH E AGE OF 58 YEARS. ADMITTEDLY, THESE TERMS AND CONDITIONS ARE NOT APPL ICABLE TO DR. KULBHUSHAN S. DAGAR. HENCE, WE HAVE NO HESITATION TO COME TO A CONCLUSION THAT THE FACTS OF WOCKHARDT HOSPITALS (S UPRA) ARE NOT APPLICABLE TO THE PRESENT CASE ON HAND. APART FROM THIS, DR. KULBHUSHAN S. DAGAR WAS PAID AN AMOUNT OF RS. 10 LA KHS FOR HIS SERVICES RENDERED IN THE MONTH OF FEBRUARY 2008 AND MARCH 2008 (RS. 5 LAKHS P.M.). DR. KULBHUSHAN S. DAGAR HAS FILED HIS RETURN OF INCOME FOR THE AY. 2008-09 SHOWING THE SAID AMOUNT OF RS. 10 L AKHS AS INCOME I.T.A. NO. 1193/HYD/13 M/S. RELIANCE MEDICARE LIMITED :- 12 - : FROM PROFESSION. THEREFORE, IT CLEARLY INDICATES THAT DR. KULBHUSHAN S. DAGAR RECEIVED CONSULTATION FEE FROM THE ASSESSEE. MOREOVER, THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION IN THE CASE OF QUALITY CARE INDIA LTD., AND HE SUBMITS THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF ASSESSEE. WE HAVE PERUSED THE SAID ORDER , THE RATIO LAID DOWN IN THE SAID ORDER IS AS FOLLOWS: 10.7 THE RELATIONSHIP BETWEEN THE ASSESSEE-DEDUCTO R AND THE DOCTOR IS NOT THAT OF EMPLOYER AND EMPLOYEE. W E ARE OF THE VIEW THAT THE DOCTORS OR PROFESSIONAL CONSULTANTS WORKIN G UNDER CONTRACT FOR RENDERING PROFESSIONAL SERVICES AND THE PAYMENT S MADE BY THE ASSESSEE COMPANY TO THE PROFESSIONAL DOCTORS DOES N OT CONSTITUTE SALARY AND HENCE, THE ASSESSEE WOULD NOT BE RESPONS IBLE FOR DEDUCTING TAX AT SOURCE ON THE SAID PAYMENTS TREATI NG THEM AS (SALARIES) IN TERMS OF SECTION 192(1) OF THE I.T. A CT. WE ALSO UNDERSTAND THAT THE TERMS OF THE AGREEMENT WITH THE CONSULTANTS/PROFESSIONALS THAT THERE IS NO MASTER A ND SERVANT RELATIONSHIP BETWEEN THE CONSULTANTS/PROFESSIONALS AND THAT OF THE ASSESSEE AND HENCE, THE AGREEMENTS ENTERED INTO BY THE ASSESSEE WITH THE PROFESSIONALS AS ONE OF CONTRACT FOR SERV ICES. THE CONSULTANT DOCTORS DO NOT TAKE DIRECTIONS FROM THE ASSESSEE ON HOW A PATIENT IS TO BE TREATED AND CLEARLY THERE IS NO EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE ASSESSEE AND THE PROFESSIO NALS. THE CO-ORDINATE BENCH OF HYDERABAD TRIBUNAL HAS ALS O FOLLOWED THE ABOVE SAID DECISION IN THE CASE OF ACIT VS. M/S. US HA MULLAPUDI CARDIAC CENTRE IN ITA NO. 1677/HYD/2011. 13. THE FACTS AND CIRCUMSTANCES OF THE ABOVE TWO CA SES ARE SIMILAR TO THE FACTS OF THIS PRESENT CASE. THEREFORE, AS PER THE ABOVE DETAILED DISCUSSION AND RATIO LAID DOWN IN THE ABOVE SAID JU DGMENTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDERS PASSED BY THE LD. CIT(A) HOLDING THAT DR. KULBHUSHAN S. DAGAR WAS A CONSULTANT WITH ASSESSEE- HOSPITAL AND TAX I.T.A. NO. 1193/HYD/13 M/S. RELIANCE MEDICARE LIMITED :- 13 - : WAS DEDUCTED AT SOURCE U/S. 194J OF THE ACT FOR THE YEAR UNDER CONSIDERATION. THEREFORE, THIS APPEAL IS LIABLE TO BE DISMISSED. 14. IN THE RESULT APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 9 TH SEPTEMBER, 2015 SD/- SD/- (INTURI RAMA RAO) (P. MADHAVI DE VI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 9 TH SEPTEMBER, 2015 TNMM COPY TO : 1. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-15(1), HYDERABAD./ 2. DY. COMMISSIONER OF INCOME TAX, CIRCLE-15(1), RO OM NO. 442, 4 TH FLOOR, D BLOCK, I.T. TOWERS, HYDERABAD. 3. M/S. RELIANCE MEDICARE LIMITED (LOTUS CHILDREN H OSPITAL), F-102, SAIFABAD, HYDERABAD. 3. CIT (APPEALS)-II, HYDERABAD. 4. CIT(TDS), HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.