ACIT, Circle-15(2), Hyderabad V. M/s. Quality Care India Ltd., Hyderabad

ITA 4/HYD/2012

• Counselvise Citation: 422514 RSA 2012
• Duration Of Justice: 2 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 02-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Recovery proceedings; Depreciation; Advance ruling; Question of law; Prejudicial to interest; Capital expenditure
• Section: 133A; 260A; 201(1); 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.1193/HYD/2009 ASSESSMENT YEAR 2008-2009 DCIT 15(2) HYDERABAD. VS. M/S. QUALITY CARE INDIA LTD., HYDERABAD. PAN HYDQ00039E (APPELLANT) (RESPONDENT) ITA.NO.04 & 05/HYD/2012 ASSESSMENT YEAR 2007-2008 & 2009-2010 ACIT 15(2) HYDERABAD. VS. M/S. QUALITY CARE INDIA LTD., HYDERABAD. PAN HYDQ00039E (APPELLANT) (RESPONDENT) FOR REVENUE : MS. K. HARITHA FOR ASSESSEE : MR. K.C. DEVDAS DATE OF HEARING : 24.03.2014 DATE OF PRONOUNCEMENT : 18.06.2014 ORDER PER SMT. ASHA VIJAYARAGHAVAN, J.M. ITA.NO.1193/HYD/2009 : THE APPEAL IS AGAINST THE ORDER OF LD. CIT(A)-II, HYDERABAD DATED 23.10.2009 FOR THE ASSESSMENT YEAR 2008-09. THE APPEAL WAS HEARD EARLIER AND ORDER WAS PASSED B Y THE TRIBUNAL BY ORDER DATED 13 TH AUGUST, 2010 WHEREIN THE TRIBUNAL AT PARA 11 HELD AS UNDER : 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THIS CASE THERE IS NO DISPUTE THE RECIPIENTS OF REMUNERATION HAS PAID THE TAX THEREON. 2 ITA.NO.1193/HYD/2009 & ITA.NO.4 & 5/HYD/2012 M/S. QUALITY CARE (INDIA) LTD., HYDERABAD THE RECOVERY OF THE TDS AMOUNT COULD NOT ONCE AGAIN BE MADE FROM THE TAX DEDUCTOR WHERE THE DEDUCTION IN ITS TA XABLE INCOME AND PAID TAXES THEREON. SINCE THERE IS NO DISPUTE W HATSOEVER, THAT THE RECIPIENTS ALREADY PAID THE TAX DUE ON THE IR INCOME, RECEIVED FROM THE ASSESSEE AND IT IS NOT RIGHT TO C OME TO CONCLUSION THAT ONCE AGAIN IT CAN BE RECOVERED FROM THE DEDUCTOR. HOWEVER, THE DEPARTMENT CAN RECOVER ONLY THAT PORTION OF INTEREST IF THERE IS ANY DEFAULT BY THE ASSESSEE. IN THIS CASE, THE ASSESSEE REQUIRE TO PAY INTEREST U/S .201(1) AND 201(1A) TILL THE DATE OF PAYMENT OF TAXES BY THE DE DUCTEE AND ASSESSEE NEED NOT PAY SHORT DEDUCTION. THE QUESTION OF DEDUCTION U/S.194J OR 192 HEREIN IS IMMATERIAL SINC E RECIPIENTS OF THE REMUNERATION HAVE ALREADY PAID THE TAX AND W E DO NOT WISH TO EXPRESS ANY FIRM VIEW ON THIS ASPECT. THIS VIEW OF OUR IS FORTIFIED BY THE JUDGMENT OF SUPREME COURT IN TH E CASE OF HINDUSTAN COCA COLA LTD. VS. CIT (293 ITR 226) (SC) . 2. BY MA.NO.207/HYD/2010 FILED BY THE ASSESSEE IN ITA.NO.1193/HYD/2009, THE ASSESSEE HAD SUBMITTED TH AT M/S. QUALITY CARE INDIA LTD., IN RESPECT OF PAYMENTS MAD E TO PROFESSIONAL DOCTORS THERE WAS NO EMPLOYER-EMPLOYEE RELATIONSHIP AND THE PAYMENTS MADE TO THE PROFESSIO NAL DOCTORS WERE IN NATURE OF THE PROFESSIONAL PAYMENTS AND ACCORDINGLY, TDS WAS DEDUCTED UNDER SECTION 194-J O F THE I.T. ACT, 1961 AND TDS CERTIFICATES WERE ALSO ISSUED IN FORM 16A. 3. LEARNED COUNSEL POINTED OUT THAT THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. YASHODA S UPER SPECIALITY HOSPITALS HELD THAT THE PROVISIONS OF SE CTION 192 WERE NOT APPLICABLE AND HAD DISMISSED THE APPEAL OF THE REVENUE. IT WAS POINTED OUT THAT NON-CONSIDERATION OF THE DECISION OF THE COORDINATE BENCH IS A MISTAKE APPAR ENT FROM RECORD AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF HONDA SIEL POWER PRODUCTS LTD., VS. CIT 295 ITR 466 . THE TRIBUNAL BY ORDER DATED 30 TH DECEMBER, 2010 RECALLED THE ORDER DATED 13.08.2010 AS MISTAKE HAS CREPT IN THE ORDER PASSED BY IT. WE NOW PROCEED TO ADJUDICATE THE RECA LLED ORDER. 3 ITA.NO.1193/HYD/2009 & ITA.NO.4 & 5/HYD/2012 M/S. QUALITY CARE (INDIA) LTD., HYDERABAD 4. BRIEFLY STATED, ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF RUNNING A SUPER-SPECIALITY HOSPITAL IN THE NAME OF' CARE HOSPITAL'. A SURVEY UNDER SEC. 133 WAS CARRIED OUT U/S. 133A OF THE INCOME TAX ACT,1961 TO ASCERTAIN T HE DEDUCTION OF TAX AT SOURCE ON THE AMOUNTS PAID TO D OCTORS ENGAGED AS CONSULTANTS BY THE HOSPITAL. THE ASSESSE E COMPANY HAS BEEN DEDUCTING TAX AT SOURCE U/S. 194J BY TREATING THEM AS PROFESSIONALS. THE LEARNED ASSESSI NG OFFICER HAS APPLIED THE PROVISIONS OF SEC.192 OF THE INCOME TAX ACT ON PAYMENTS MADE TO CONSULTANTS, AND HAS RAISED A DEMA ND FOR AN AMOUNT RS.3,02,97,463/- U/S. 201(1) AND INTEREST U/S.201(1A) AT RS.42,41,645/- VIDE ORDER DATED 12.0 5.2009. ASSESSEES SUBMISSIONS : 5. THE ASSESSEE COMPANY RESPECTFULLY SUBMITS THE FOLLOWING EXPLANATION IN SUPPORT OF THE NON APPLICA BILITY OF THE PROVISIONS OF SEC192 OF THE INCOME TAX ACT, 1961, T O THE PROFESSIONAL FEES PAID AS FIXED SUM TO THE DOCTORS. A. THE ASSESSEE COMPANY HAS ENTERED INTO SERVICE AGREEMENTS WITH CONSULTANTS AND PROFESSIONALS IN TH E HOSPITAL TO PROVIDE SERVICES IN VARIOUS FIELDS OF M EDICINE AND HEALTH CARE TO PATIENTS FOR A FEES. THE HOSPITA L DEALS IN VARIOUS FIELDS OF HEALTH CARE LIKE CARDIOLOGY, NEPHOROLOGY, UROLOGY, PULMONOLOGY, GASTROENTROLOGY ETC. THE REVENUE GENERATED BY THE HOSPITAL FROM THE ABOV E FIELDS WILL NOT BE UNIFORM. MOSTLY IT DEPENDS ON TH E EXPERTISE OF THE CONSULTANTS AND PROFESSIONALS AVAI LABLE ON THE PANEL OF THE HOSPITAL AND CHOICE EXERCISED BY T HE PATIENT. HENCE THERE IS A NEED TO DISTINGUISH BETWE EN THE FEES STRUCTURE OF THE CONSULTANTS AND PROFESSIONALS DEPENDING ON THE PATIENT INFLOW AND SERVICES RENDER ED IN THE RELEVANT FIELD BY THEM. B. FOR REPUTED PROFESSIONALS THE FEES STRUCTURE IS FIXED AS A PERCENTAGE OF THE REVENUE GENERATED AND FOR OTHER 4 ITA.NO.1193/HYD/2009 & ITA.NO.4 & 5/HYD/2012 M/S. QUALITY CARE (INDIA) LTD., HYDERABAD PROFESSIONALS INITIALLY A FIXED SUM IS ASSURED, WHI CH WILL SUBJECTED TO CONVERSION INTO A PERCENTAGE BASIS AFT ER REVIEW OF THE INFLOWS OF THE PATIENTS TO THE DOCTOR S. C. A CLEAR UNDERSTANDING OF THE ASSESSEE COMPANY'S SERVICE AGREEMENTS WITH THE PROFESSIONALS WHO ARE PAID FIXE D AMOUNT OF FEES REVEALS THE FACT THAT THERE IS NO SP ECIFIC JOB ASSIGNMENT NOR THE SUBJECTIVE JUDGMENT OF THE HOSPITAL MANAGEMENT IN THE MANNER IN WHICH THE PROFESSIONAL SHALL RENDER HIS SERVICES. D. THE AGREEMENT DOES NOT SPEAK OF THE WORKING HOUR S OF THE PROFESSIONALS AND ALSO REGARDING LEAVE ELIGIBILITY. THE PROFESSIONALS ARE NOT ELIGIBLE FOR PROVIDENT FUND, GRATUITY AND BONUS WHICH ARE STATUTORY UNDER THE RESPECTIVE ACTS IN CASE OF EMPLOYEES. E. THE PROFESSIONALS ARE NOT GOVERNED BY THE SERVIC E REGULATIONS OF THE HOSPITAL INCLUDING AMENDMENTS TH AT MAY ISSUED FROM TIME TO TIME. THE PROFESSIONALS ARE GOVERNED STRICTLY BY THE AGREEMENTS WHICH CANNOT BE AMENDED OR MODIFIED UNLESS MADE IN WRITING AND DULY EXECUTED BY ALL THE PARTIES AS PER CLAUSE 16.4 OF T HE AGREEMENT. F. NO DAY TO DAY ATTENDANCE REGISTERS ARE KEPT FOR THESE DOCTORS I PROFESSIONALS AND THESE DOCTORS ARE NOT OBLIGED TO STAY LONGER THAN WHAT WAS REQUIRED AS PER THE NE EDS OF THE PARTICULAR PATIENTS. THE AGREEMENT HAS GIVEN A RANGE OF SERVICES THAT ENCOMPASS A PARTICULAR FIELD OF ME DICINE AND THE MANNER IN WHICH THE SERVICE IS RENDERED TO THE PATIENT IS LEFT TO THE DISCRETION OF THE PROFESSION AL. G. THE PROFESSIONALS ARE NOT SUBJECTED TO ADMINISTR ATIVE RESPONSIBILITIES EXCEPT THAT OF BEING MEMBERS OF CE RTAIN STANDING COMMITTEES LIKE CAPEXI OPEX COMMITTEE FOR SELECTION OF EQUIPMENTS DRUGS AND DISPOSABLES AS AN D WHEN REQUESTED BY THE BOARD OF DIRECTORS. H. THE AGREEMENT DOES NOT SPECIFY ANYWHERE THAT DUR ING THE COURSE OF HIS ENGAGEMENT HE SHOULD SEEK DIRECTIONS FROM ANY OTHER PERSON WORKING IN THE COMPANY. THE AGREEM ENT ONLY SPEAKS OF THE SCOPE OF THE AREAS EXPECTED TO B E COVERED UNDER CONTRACTUAL AGREEMENT LIKE OP CONSULTATIONS, IP CONSULTATIONS, ICU - ADMISSIONS, TREATMENT ,DIAGNOSTIC STUDIES ETC. THE WORK OF THE PROFESSIONAL IS NOT REVIEWED BY ANY OTHER AUTHORITY IN THE HOSPITAL. I. THE PROFESSIONAL IS EXPECTED TO UPDATE HIMSELF O F ALL THE LATEST DEVELOPMENTS IN THE FIELD OF MEDICINE AND HE ALTH CARE AND PROVIDE LATEST AND MOST EFFICIENT M ETHODS OF 5 ITA.NO.1193/HYD/2009 & ITA.NO.4 & 5/HYD/2012 M/S. QUALITY CARE (INDIA) LTD., HYDERABAD TREATMENT TO THE PATIENTS AS HE MAY CONSIDER NECESS ARY DURING THE COURSE OF CONTRACT. J. THE HOSPITAL PROVIDES WITH THE INFRASTRUCTURE AN D ALSO MEETS THE EXPENDITURE ON SEMINARS, WORKSHOPS ETC TO UPGRADE THEIR SKILLS. K. THE AGREEMENT DOES NOT PREVENT THE PROFESSIONAL FROM RENDERING SERVICES TO ANY OTHER CORPORATE BODY I INDIVIDUAL DURING HIS SPARE TIME. THIS IS SUBSTANTI ATED BY THE REPRESENTATION AND WARRANTIES CLAUSE UNDER WHIC H THE PROFESSIONAL REPRESENTS THAT 'THE EXECUTION OF THE AGREEMENT WITH THE COMPANY DOES NOT VIOLATE OR CONT RAVENE THE PROVISIONS OF OR CONSTITUTE A DEFAULT UNDER ANY DOCUMENTS, CONTRACTS, AGREEMENTS OR ANY OTHER INSTR UMENTS TO WHICH HE IS PARTY OR WHICH ARE APPLICABLE TO THE PROFESSIONAL. HOWEVER THE HOSPITAL HAS ONLY TAKEN DUE PRECAUTIONS TO RESTRICT THE PROFESSIONAL FROM DIVER TING THE PATIENTS FROM THE HOSPITAL FOR PERSONAL GAINS VIDE PARA 5.5 OF THE AGREEMENT, WHICH IS A LAWFUL INSTRUCTION/PRO VISION TO PROTECT THE INTEREST OF THE COMPANY AND PATIENTS/PROFESSIONALS AT LARGE. ACCORDING TO PARA. 5.5 OF THE AGREEMENT A PROFESSIONAL DURING THE COURSE OF H IS CONTRACT FOR SERVICE IS PREVENTED FROM SOLICITING A NY PATIENT OF THE COMPANY EXCEPT ON BEHALF OF THE COMP ANY, OR TO PERSUADE ANY PERSON, FIRM OR ENTITY WHICH IS A PATIENT, PRESENT OR FUTURE, OF THE COMPANY, TO CEAS E ITS ASSOCIATION WITH THE COMPANY. L. THE PROFESSIONAL IS ALSO LIABLE TO INDEMNIFY THE COMPANY FROM AND AGAINST ANY LOSS AND DAMAGE OR LIABILITY S UFFERED BY THE COMPANY RESULTING IN BREACH OF THE AGREEMENT , DEFAULT IN PROVIDING SERVICES, BREACH IN RESPECT OF ANY SUCCESSFUL CLAIM BY ANY THIRD PARTY FOR ANY MATTERS ARISING OUT OF SERVICES RENDERED BY THE PROFESSIONAL. M. THE COMPANY HAS PROVIDED AN INSURANCE COVERAGE TO T HE PROFESSIONAL AGAINST CLAIMS FOR INJURIES TO PERSONS OR DAMAGE TO PROPERTY WHICH MAY ARISE IN THE COURSE OF PERFORMANCE OF SERVICES. THE COMPANY IS LIABLE TO P AY INTEREST TO THE PROFESSIONAL AT THE RATE OF 10% PER ANNUM FOR THE PERIOD COMMENCING FROM THE DATE WHEN THE PAYMENT IS DUE UP TO THE DATE OF ACTUAL PAYMENT OF THE FEES. THE AGREEMENT IS VALID FOR A PERIOD OF 2 YEAR S WHICH MAY EXTENDED WITH THE MUTUAL CONSENT OF BOTH THE PA RTIES. N. THE COMPANY CAN TERMINATE THE AGREEMENT WITH THE PROFESSIONAL, ONLY UPON HAPPENING OF EVENTS LIKE PROFESSIONAL BREACH OF TERMS OF THE AGREEMENT, CONV ICTION OF THE PROFESSIONAL OF ANY SERIOUS CRIME, COMMITTIN G OF ANY 6 ITA.NO.1193/HYD/2009 & ITA.NO.4 & 5/HYD/2012 M/S. QUALITY CARE (INDIA) LTD., HYDERABAD ACT WHICH INJURES THE REPUTATION OF THE COMPANY. O. THE PROFESSIONAL CAN TERMINATE THE AGREEMENT BY GIVING 60 DAYS NOTICE IN THE EVENT OF THE COMPANY COMMITTING BREACH OF ANY OF THE TERMS OF THE AGREEMENT OTHER T HAN FAILURE TO PAY FEES AS STIPULATED IN THE AGREEMENT. IF ANY DISPUTE ARISES BETWEEN THE PARTIES TO THE AGREEMENT THE MATTER SHALL BE REFERRED TO ARBITRATION, PROCEEDING S OF WHICH SHALL BE HELD IN HYDERABAD. IN VIEW OF THE AB OVE TERMS OF THE SERVICE CONTRACTS, PROFESSIONAL FEES P AID BY QCIL CANNOT BE TERMED AS SALARY ALTHOUGH THE AMOUNT OF FEES IS STRUCTURED AS A FIXED SUM INITIALLY. P. FURTHER THE ASSESSEE COMPANY SUBMITS THAT ACCORD ING TO SEC.192(1) OF THE INCOME TAX ACT,1961, ANY PERSON RESPONSIBLE FOR PAYING ANY INCOME CHARGEABLE UNDER THE HEAD 'SALARIES' SHALL, AT THE TIME OF PAYMENT, DEDUCT INCOME TAX ON THE AMOUNT PAYABLE AT THE AVERAGE RAT E OF INCOME TAX COMPUTED ON THE BASIS OF THE RATES IN FORCE FOR THE FINANCIAL YEAR IN WHICH THE PAYMENT IS MADE, ON THE ESTIMATED INCOME OF THE ASSESSEE UNDER THIS HEAD FOR THAT FINANCIAL YEAR. ACCORDING TO SEC.15 OF THE INCOME TAX ACT,1961, THE FOLLOWING INCOME SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD 'SALARIES'- (A) ANY SALARY DUE FROM AN EMPLOYER OR A FORMER EMPLOYER TO AN ASSESSEE IN THE PREVIOUS YEAR WHETHER PAID OR NOT; (B) ANY SALARY PAID OR ALLOWED TO HIM IN THE PREVIO US YEAR BY OR NO BEHALF OF AN EMPLOYER OR A FORMER EMPLOYER THOUGH NOT DUE FOR BEFORE IT BECAME DUE TO HIM; (C) ANY ARREARS OF SALARY PAID OR ALLOWED TO HIM IN THE PREVIOUS YEAR BY OR NO BEHALF OF AN EMPLOYER OR A FORMER EMPLOYER, IF NOT CHARGED TO INCOME TAX FOR ANY EARL IER PREVIOUS YEAR. Q. FURTHER WITHOUT PREJUDICE TO THE SUBMISSIONS MAD E EARLIER, THE ASSESSEE FURTHER PLEADS YOUR GOOD OFFI CES TO CONSIDER THE FACT THAT ACCORDING TO EXPLANATION TO SEC.191 OF THE INCOME TAX ACT 1961, THE LIABILITY UNDER SEC .201 (1) CEASES ONCE THE FACT IS ESTABLISHED THAT THE PAYEES ARE PROVED TO BE INCOME TAX ASSESSEE'S WITH PAN NUMBERS AND ALSO THAT THEY HAVE ACCOUNTED FOR THE PAYMENTS IN QUESTION, MADE TO THEM BY THE COMPANY, IN THEIR BOO KS OF ACCOUNTS OR GROSS RECEIPTS OR GROSS INCOME. ACCORDI NG TO EXPLANATION INSERTED BY THE FINANCE ACT 2003, TAX T HAT HAS BEEN PAID DIRECTLY BY THE ASSESSEE COULD NOT TH EREAFTER 7 ITA.NO.1193/HYD/2009 & ITA.NO.4 & 5/HYD/2012 M/S. QUALITY CARE (INDIA) LTD., HYDERABAD BE SUBJECT TO DEDUCTION. AS A RESULT OF THE EXPLANA TION, THE LIABILITY TO DEDUCT TAX GETS ABATED THE MOMENT THER E IS A DIRECT PAYMENT. FURTHER IT IS RESPECTFULLY SUBMITTE D THAT TAX DEDUCTION AT SOURCE IS ONLY AN ALTERNATE MODE O F RECOVERY OF TAX, WHILE DIRECT PAYMENT IS THE NORMAL RULE. PARALLEL PROCEEDINGS BOTH AGAINST THE DEDUCTOR AND THE PAYEE FOR THE DEFAULT IN RESPECT OF SUCH PAYMENT, W HERE EITHER OF THE PERSON HAS PAID THE TAX, CANNOT BE JU STIFIED ON GROUNDS OF EQUITY APART FROM THE INFERENCE IMPLI CIT IN THE STATUTORY PROVISIONS. IN THE CASE OF THE ASSSES SEE COMPANY MAJORITY OF THE PAYEES HAVE ALREADY FILED T HEIR RETURN OF INCOME BY TAKING INTO ACCOUNT THE PAYMENT S MADE BY THE ASSESSEE COMPANY, THE DETAILS OF WHICH WERE ALSO FURNISHED TO THE ASSESSING OFFICER PERTAINING TO MAJORITY OF THE PAYEES. 6. THE LEARNED DR ON THE OTHER HAND, RELIED O N THE ORDERS OF THE ITAT HYDERABAD COORDINATE BENCH IN TH E CASE OF DCIT, HYDERABAD VS. WOCKHARDT HOSPITALS LTD. 24 TAXMANN.COM 190 (HYD.) WHEREIN THE FACTS ARE AS FOL LOWS ; THE ASSESSEE COMPANY WAS RUNNING HOSPITAL WITH BRANCHES. IT HAD ENGAGED SERVICES OF SOME DOCTORS A ND WAS DEDUCTING TDS FROM PAYMENTS MADE TO THEM UNDER SECTION 194J. ACCORDING TO THE ASSESSEE, THE DOCTOR S WERE APPOINTED AS CONSULTANTS WHOSE REMUNERATION WAS LIA BLE FOR TDS UNDER SECTION 194J AND THERE WAS NO EMPLOYE R AND EMPLOYEE RELATIONSHIP. THE A.O. HOWEVER, TREAT ED THE RELATIONSHIP BETWEEN THE DOCTORS AND THE ASSESS EE AS ONE OF EMPLOYER AND EMPLOYEE AND HELD THAT SAID PAYMENTS WERE LIABLE TO TDS UNDER SECTION 192. THE COMMISSIONER (APPEALS) ALLOWED THE ASSESSEES APPEA L. ON THE REVENUES APPEAL : 24. A CAREFUL PERUSAL OF THE APPOINTMENT ORDER ISSU ED TO THE DOCTOR SHOWS THAT A FIXED MONTHLY AMOUNT WAS PA ID 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 AS SESSEE. THEIR LEAVE ENTITLEMENT IS ALSO IN ACCORDANCE WITH THE ASSESSEE'S RULES. THE DOCTORS WERE UNDER PROBATION 8 ITA.NO.1193/HYD/2009 & ITA.NO.4 & 5/HYD/2012 M/S. QUALITY CARE (INDIA) LTD., HYDERABAD PERIOD. DURING THE EMPLOYMENT OF DOCTORS THE ASSESS EE HAS DISCRETION TO TERMINATE THE SAME. DURING THE EMPLOYMENT THE DOCTORS SHALL DEVOTE THEIR WHOLE TIM E ATTENTION TO THEIR EMPLOYMENT. THE DOCTORS ARE LIAB LE FOR RETIREMENT ON ATTAINING THE AGE OF 58 YEARS. DURING THE PERIOD OF EMPLOYMENT EITHER SIDE WILL BE ABLE TO T ERMINATE THE EMPLOYMENT BY GIVING TWO MONTHS NOTICE IN WRIT ING OR BY PAYMENT OF TWO MONTHS' SALARY IN LIEU OF SUCH NO TICE TO EACH OTHER. AS SEEN FROM THE APPOINTMENT ORDER IT CAN BE EASILY SAID THAT THE DOCTORS ARE EMPLOYEES OF THE A SSESSEE AND BEING SO, THE RELATION BETWEEN THE ASSESSEE AND THE DOCTOR WAS THAT OF AN EMPLOYER AND EMPLOYEE AND THE REMUNERATION PAID TO THEM IN TERMS OF THE SAID APPOINTMENT ORDER WAS SALARY WHICH ATTRACTED THE PROVISIONS OF SECTION 192 OF THE ACT. 25. BEFORE US THE LEARNED AR RELIED ON VARIOUS CASE -LAW IN SUPPORT HIS CONTENTION TO SHOW THAT THERE WAS NO EMPLOYER AND EMPLOYEE RELATIONSHIP BETWEEN THE ASSESSEE AND THE DOCTORS AND THE REMUNERATION PAID BY THE ASSESSEE TO THE SAID DOCTOR WAS NOT 'SALARY' AT TRACTING THE PROVISIONS OF SECTION 192. IN OUR OPINION, THE VARIOUS CASE LAW RELIED ON BY THE ASSESSEE'S COUNSEL ARE ON THE FACTS OF THOSE CASES AND ON CONSIDERATION OF FACTS OF THE PRESENT CASE, IN OUR OPINION, THOSE CASE-LAW CANNOT BE APPLIED TO THE CASE OF THE ASSESSEE. MORE SO, IN TH E PRESENT CASE THE DOCTORS ARE GOVERNED BY THE SERVIC E RULES OF THE ASSESSEE AND IT WAS SPECIFICALLY MENTIONED I N THE APPOINTMENT ORDER THAT IT WAS A CONTRACT FOR EMPLOY MENT AND THE DOCTORS ARE LIABLE FOR RETIREMENT ON ATTAIN ING THE AGE OF 58 YEARS AND THE MONTHLY PAYMENT IS NOT RELA TING TO THE NUMBER OF PATIENTS TREATED BY THEM OR THE A MOUNT CHARGED TO THE ASSESSEE. 26. AS REGARDS THE TREATMENT GIVEN BY THE ASSESSEE AS WELL AS BY THE DOCTORS TO THE REMUNERATION PAID IN THEIR RESPECTIVE BOOKS OF ACCOUNT, WE ARE OF THE OPINION THAT THE SAME IS NOT CONCLUSIVE TO DECIDE THE NATURE OF THE SAID REMUNERATION WHICH, AS ALREADY OBSERVED BY US ON TH E BASIS OF RELATION BETWEEN THE ASSESSEE AND THE DOCT ORS AND NOT ON ANY OTHER BASIS. AS PER THE WELL KNOWN CANNON OF CONSTRUCTION OF DOCUMENT, THE INTENTION GENERALLY PREVAILS OVER THE WORD USED AND THAT SUCH A CONSTRUCTION PLACED ON THE WORD IN A DEED AS IS MO ST AGREEABLE TO THE INTENTION OF THE GRANTOR. IF THERE ARE 9 ITA.NO.1193/HYD/2009 & ITA.NO.4 & 5/HYD/2012 M/S. QUALITY CARE (INDIA) LTD., HYDERABAD GROUNDS APPEARING FROM THE FACE OF THE INSTRUMENT AFFORDING PROOF OF THE REAL INTENTION OF THE PARTIE S, THEN THAT INTENTION WOULD PREVAIL AGAINST THE OBVIOUS AN D ORDINARY MEANING OF THE WORDS USED. IN OUR OPINION, THE REAL INTENTION OF THE PARTIES HEREIN AS ALREADY DIS CUSSED WITH REFERENCE TO THE TERMS OF THE APPOINTMENT LETT ER ISSUED TO THE DOCTORS IN THE LIGHT OF SERVICE REGUL ATIONS OF THE ASSESSEE HOSPITAL WAS TO HAVE AN EMPLOYER AND EMPLOYEE RELATIONSHIP BETWEEN THEM AND IT WAS NOT A CASE OF APPOINTMENT OF CONSULTANTS. IN VIEW OF THIS , IN OUR OPINION, THERE WAS AN EMPLOYER AND EMPLOYEE RELATIONSHIP BETWEEN THE ASSESSEE AND THE DOCTORS. CONSEQUENTLY, THE REMUNERATION PAID TO THEM WAS CHARGEABLE TO TAX UNDER THE HEAD 'SALARIES' AND LIA BLE FOR DEDUCTION OF TAX U/S. 192 OF THE ACT AND NOT UNDER THE PROVISIONS OF SECTION 194J OF THE ACT. HOWEVER, WE MAKE IT CLEAR THAT WHEREVER THE ASSESSEE ISSUED APPOINTMEN T LETTER IN THE MANNER PRESCRIBED ABOVE AND THE DOCTO RS APPOINTMENT IS GOVERNED BY THE SERVICE RULES OF THE ASSESSEE HOSPITAL, IT IS TO BE CONSIDERED THAT THE RELATIONSHIP BETWEEN THE DOCTORS AND THE ASSESSEE IS AS EMPLOYEE-EMPLOYER RELATIONSHIP AND THE ASSESSEE IS LIABLE TO DEDUCT TDS U/S. 192 OF THE ACT. 7. THE LEARNED DR ALSO RELIED ON THE DECISION OF S T. STEPHENS HOSPITALS VS. DCIT 6 SOT 60 (DEL.). 8. WE HAVE HEARD BOTH THE PARTIES. WE FIND THAT I N THE CASE OF YASHODA SUPER SPECIALITY HOSPITAL VS DC IT CIRCLE 15(1) , HYDERABAD ITA NO0212/HYD 12010 ASST YEAR 20 08-09, ORDER DATED 30.6.2010, ON SIMILAR FACTS THE HONB'LE ITAT HAS HELD THAT TAX HAS TO BE DEDUCTED U/S194 J IN THE CA SE OF PROFESSIONALS WORKING AS DOCTORS IN THE HOSPITAL. T HE HONBLE ITAT IN THIS CASE HAS OBSERVED AS FOLLOWS :- 11. ONE OF THE POINTS WHICH WAS HIGHLIGHTED BY THE AO IS THAT THE DOCTOR HAS TO WORK FOR THE ASSSESSEE AN D CANNOT DO ANY PRIVATE PRACTICE. IN OUR OPINION , THIS EXCLUSION CANNOT BE CONSIDERED TO BE AN AGREEMENT TO TREAT THE DOCTO RS AS EMPLOYEE. THERE IS NO PROHIBITION IN LAW TO ENGAGE THE 10 ITA.NO.1193/HYD/2009 & ITA.NO.4 & 5/HYD/2012 M/S. QUALITY CARE (INDIA) LTD., HYDERABAD SERVICES OF A PROFESSIONAL EXCLUSIVELY FOR A PARTICULAR HOSPITAL. MERELY BECAUSE THE DOCTORS WERE ENGAGED F OR TWO YEARS, IT DOES NOT MEAN THAT THEY ARE EMPLOYEES OF THE ASSESSED HOSPITAL. AS POINTED OUT THE BY THE CIT (A ) THE OTHER FACTOR SUCH AS PF, JOB ASSIGNMENTS, WORKING H OURS, DIRECTION AND SUPERVISION ARE ALL THE RELEVANT FACT ORS TO CONSIDER THE EXISTENCE OF EMPLOYER AND EMPLOYEE RELATIONSHIP. IN OUR OPINION, THE AGREEMENT BETWEEN THE ASSESSED AND DOCTORS ARE ONE FOR PROVIDING PROFESSIONAL SERVICES , AND THERE IS NO ELEMENT OF EMPLOYER AND EMPLOYEE RELATIONSHIP EXISTING. THEREFORE IN OUR OPINION TAX HAS TO BE DE DUCTED U/S.194J AS FEE FOR PROFESSIONAL SERVICES AND NOT A S SALARY. FOR THE PURPOSE OF TREATING THE DOCTORS AS EMPLOYEE S THEY SHOULD BE GIVEN SPECIFIC ASSIGNMENT. THERE SHOULD B E SPECIFIC WORKING HOURS, RULES AND REGULATION AND TH EY SHOULD BE ON THE ROLL FOR PF AS EMPLOYEES. THEY SHALL BE G IVEN LEAVE AS PER STATUTORY PROVISIONS BESIDES GRATUITY. THESE FACTUAL ASPECTS WHICH ARE ESSENTIAL TO TREAT THE DOCTORS AS EMPLOYEES ARE ABSENT IN THE CASE BEFORE US, THEREFORE IN OUR OPINION THE DOCTORS ENGAGED BY THE ASSESSED ARE TO BE TREATED AS CONSULTANTS FOR RENDERING PROFESSIONAL SERVICES.' 8.1. THE HONBLE A.P. HIGH COURT HAS CONFIRMED THE ORDER OF THE TRIBUNAL IN THE CASE OF CIT VS. M/S YA SHODA SUPER SPECIALITY HOSPITAL, HYDERABAD IN I.T.T.A. NO . 196 OF 2013 BY ORDER DATED 04.07.2013 AND HAS HELD AS FOLL OWS: THIS APPEAL IS SOUGHT TO BE PREFERRED AGAINST THE JUDGMENT AND ORDER OF THE LEARNED TRIBUNAL DATED 30.06.2010 IN RELATION TO THE ASSESSMENT YEAR 200882009, ON THE F OLLOWING SUGGESTED QUESTIONS OF LAW: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE/ THE APPELLATE TRIBUNAL IS JUSTIFIED IN SETTING ASID E THE ORDER PASSED AGAINST THE ASSESSEE UNDER SECS.201 AND 201 (A) OF THE INCOME TAX ACT? WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE/ THE FINDING OF THE APPELLATE TRIBUNAL THAT THERE EX ISTED NO RELATIONSHIP OF EMPLOYER AND EMPLOYEE BETWEEN THE A SSESSEE 11 ITA.NO.1193/HYD/2009 & ITA.NO.4 & 5/HYD/2012 M/S. QUALITY CARE (INDIA) LTD., HYDERABAD AND CONSULTANT DOCTORS/ EMPLOYED IN THE HOSPITAL/ C AN BE SAID TO BE BASED ON MATERIAL ON RECORD? THE WHOLE ISSUE INVOLVED IN THIS MATTER IS WHETHER THE DOCTORS ARE EMPLOYEES OF THE ASSESSEE OR NOT, IF SO , PAYMENT MADE TO THE DOCTORS ARE TREATED TO BE SALARIES SO A S TO ATTRACT THE PROVISIONS OF SEC. 192 OF THE INCOME TAX ACT. LEARNED TRIBUNAL AS WELL AS THE COMMISSIONER OF INC OME TAX (APPEALS), ON FACT AND ON EXAMINING THE DOCUMENT - AGREEMENT OF ENGAGEMENT OF THE CONSULTANT DOCTORS B Y THE ASSESSEE, FOUND THAT THERE IS NO RELATIONSHIP OF EM PLOYER AND EMPLOYEE. AFTER EXAMINING THE AGREEMENT AND VARIOUS TERMS AND CONDITIONS, IT WAS FOUND THAT THE DOCTORS ARE N OT ADMINISTRATIVELY CONTROLLED OR MANAGED BY THE ASSES SEE AND THEY ARE FREE TO COME AT ANY POINT OF TIME AS FAR A S THEIR ATTENDANCE IS CONCERNED AND TREAT THE PATIENTS. IN THE AGREEMENT, THERE IS NO PROVISION FOR PAYMENT OF ANY PROVIDENT FUND AND GRATUITY. THE ONLY CLAUSE IN THE AGREEMENT IS THAT THE DOCTORS CANNOT TAKE UP ANY OTHER ASSIGNMENT. RE ADING THE AGREEMENT AS A WHOLE, BOTH THE AUTHORITIES BELO W OBSERVED THAT THE EXISTENCE OF ONE PROHIBITORY CLAU SE, AS STATED ABOVE, DOES NOT CHANGE THE BASIC CHARACTER O F THE RELATIONSHIP BETWEEN THE ASSESSEE AND THE DOCTORS CONCERNED. ON FACT, THE TRIBUNAL FOUND THAT THERE I S NO EMPLOYER AND EMPLOYEE RELATIONSHIP AND THEIR PAYMEN T CANNOT BE TREATED TO BE SALARIES AND, AS SUCH, DEDU CTION CANNOT BE MADE UNDER SEC.192 OF THE INCOME TAX ACT. WE ARE OF THE VIEW THAT THE APPLICATION OF LAW DEPENDS UPO N THE APPRECIATION OF FACTS. THIS COURT IN EXERCISE OF TH E JURISDICTION UNDER SEC. 260A OF THE INCOME TAX ACT, CANNOT RE-AP PRECIATE THE FACTS OR SUBSTITUTE ITS OWN APPRECIATION WHEN DEPRECIATION OF FACTS OF BOTH THE AUTHORITIES BELOW WAS FOUND TO BE RATIONAL AND POSSIBLE ON GIVEN FACT. THE APPR ECIATION REACHED BY BOTH THE AUTHORITIES BELOW HAS TO BE ACC EPTED BY THIS COURT. ON THE GIVEN FACTS, THIS COURT CAN ONLY EXAMINE WHETHER THE LAW HAS BEEN APPLIED PROPERLY OR NOT. O N CAREFUL READING OF THE IMPUGNED JUDGMENT AND ORDER, WE ARE OF THE VIEW THAT THE LAW HAS BEEN CORRECTLY APPLIED. THERE FORE, WE DO NOT FIND ANY QUESTION OF LAW INVOLVED IN THIS MA TTER. THE APPEAL IS ACCORDINGLY DISMISSED. NO ORDER AS TO COSTS. 12 ITA.NO.1193/HYD/2009 & ITA.NO.4 & 5/HYD/2012 M/S. QUALITY CARE (INDIA) LTD., HYDERABAD 9. FURTHER, ASSESSEE HAD FILED THE PROFESSIONAL FE E AGREEMENTS OF VARIOUS HOSPITALS AND COMPARABLE VIEW OF THE CLAUSES PERTAINING TO VARIOUS HOSPITALS. WE HAVE PE RUSED THE SAME. IN THE CASE OF M/S. QUALITY CARE INDIA LTD., (IN SHORT QCIL) THE PRESENT ASSESSEE HEREIN CERTAIN CLAUSES WHICH ARE AS FOLLOWS HAVE TO BE TAKEN INTO ACCOUNT FOR ARRIVI NG AT A CONCLUSION WHETHER THERE IS EMPLOYER/EMPLOYEE RELAT IONSHIP WHICH IS AS FOLLOWS : 1. THE EMPLOYEE DOCTORS/RESIDENT DOCTORS ARE GOVERNED BY STAFF REGULATIONS OF THE COMPANY. THERE ARE NO SUCH CLAUSE FOR CONSULTANT DOCTORS. THEY ARE GOVERNED BY MEDIAL STAFF REGULATIONS. 2. THE EMPLOYEE DOCTORS ARE NOT ENTITLED FOR ANY OTHER FULL TIME EMPLOYMENT. THE CONSULTANT DOCTORS ARE FREE TO DO ANY JOB AND THERE ARE NO RESTRICTIONS. 3. THERE IS INCENTIVE SCHEME APPLICABLE FOR FGCS OVER AND ABOVE GUARANTEED AMOUNT BASED ON THE SERVICE RENDER ED. 4. THERE IS AN INSURANCE COVER FOR CONSULTANTS TO INDE MNIFY FOR ANY LOSS OR DAMAGE TO THE PROPERTY. 5. THERE ARE NO TIMINGS SPECIFIED IN THE AGREEMENT. 10. WE ALSO FIND THAT THE CHANDIGARH BENCH IN THE CASE OF IVY HEALTH LIFE SCIENCES P. LTD. VS. DEPART MENT OF INCOME TAX HAS ELABORATELY DISCUSSED AND AT PARA 8 STATES AS FOLLOWS : A BARE PERUSAL OF THE CASE LAW, RELIED UPON BY THE APPELLANT AND SUBMISSIONS MADE IN THE SYNOPSIS REVE ALS THAT THERE DOES NOT EXIST EMPLOYER/EMPLOYEE RELATIO NSHIP BETWEEN THE ASSESSEE/APPELLANT AND THE PERSONS PROVIDING PROFESSIONAL SERVICES. ON CONSIDERATION O F THE AGREEMENT IN ITS ENTIRETY VIS-A-VIS THE CASE LAW RE LIED UPON BY THE ASSESSEE/APPELLANT, IT IS EVIDENT THAT IT IS NOT A CASE OF EMPLOYER/EMPLOYEE RELATIONSHIP BETWEEN THE ASSESSEE/APPELLANT AND THE DOCTORS. THEREFORE, HAVI NG REGARD TO THE DETAILED ANALYSIS AND FINDINGS OF THE CIT(APPEALS) ON THE ISSUE IN QUESTION, IT CANNOT BE SAID 13 ITA.NO.1193/HYD/2009 & ITA.NO.4 & 5/HYD/2012 M/S. QUALITY CARE (INDIA) LTD., HYDERABAD THAT FINDINGS OF THE LD. CIT(APPEALS) SUFFER FROM A NY INFIRMITY. IN VIEW OF THIS, FINDINGS OF THE CIT(APP EALS) ARE UPHELD. 10.1. HAVING GONE THROUGH THE FACTS OF THE CASE AND AFTER HAVING STUDIED THE CASE LAW ON THE SUBJECT, O UR OPINION IS AS FOLLOWS : THE PROVISIONS OF SECTION 15 IMPOSE A TAX ON T HE REMUNERATION OF AN EMPLOYEE ARISING OUT OF EMPLOYME NT. IT PRESUPPOSES THE EXISTENCE OF THE RELATIONSHIP OF EM PLOYEE AND EMPLOYER. THE WORD EMPLOYMENT CONNOTES THE EXISTENC E OF A PLURAL/DUAL RELATIONSHIP OF MASTER AND SERVANT BETW EEN THE EMPLOYER AND THE EMPLOYEE. IN OTHER WORDS IT INVOLV ES THE CONCEPT OF EMPLOYMENT UNDER A 'CONTRACT OF SERVICE' . THE LEARNED ASSESSING OFFICER IN HIS ORDER WHILE TRYING TO DENY THE CLAIM OF THE ASSESSEE THAT THERE DOES NOT EXIST A E MPLOYER AND EMPLOYEE RELATIONSHIP BETWEEN THE CONSULTANTS AND T HE HOSPITAL HAS RELIED ON THE CASE OF ST.STEPHENS HOSP ITAL VS DCIT [ IT AT, F BENCH, DELHI] ( 2006) 6 SOT 60(DEL) UNDER PARA 7(K) TO JUSTIFY THAT THE RELATIONSHIP BETWEEN THE H OSPITAL AND CONSULTANT DOCTORS WAS THAT OF ' EMPLOYER AND EMPLO YEE'. IN THIS REGARD THE WE FIND THAT THE HONB'LE ITAT DECIS ION IN THE CASE OF ST.STEPHENS HOSPITAL VS DEPUTY COMMISSIONER OF INCOME TAX ( 2006) 6 SOT 60(DEL) CANNOT BE APPLIED TO QCIL AS THE FACTS OF THE CASE ARE DIFFERENT FROM THAT OF TH E ASSESSEE COMPANY. 10.2. IN THE ST.STEPHENS HOSPITAL CASE THE DECISIO N OF THE HON'BLE ITAT WAS GUIDED BY RELIANCE ON THE APPO INTMENT LETTERS OF THE CONSULTANTS WHO WERE BEING PAID A FI XED AMOUNT AS FEES. THE TERMS OF APPOINTMENT OF THE CONSULTANT S AT 14 ITA.NO.1193/HYD/2009 & ITA.NO.4 & 5/HYD/2012 M/S. QUALITY CARE (INDIA) LTD., HYDERABAD ST.STEPHENS HOSPITAL ARE TO BE DISTINGUISHED FROM T HE TERMS OF SERVICE CONTRACT OF THE ASSESSEE COMPANY. THE LEARN ED ASSESSING OFFICER HAS ALSO REFERRED TO THE CASE OF MAX MUELLER BHAVAN CASE (2004) 189 CTR ( AAR) 450. IT IS ALSO TO BE NOTED THAT ALTHOUGH THE MAX MUELLER BHAVAN CASE WAS IN FA VOUR OF THE REVENUE AS THE FACTS ARE WITH REFERENCE TO APPO INTMENT OF PART TIME TEACHERS. 10.3. THE AUTHORITY FOR ADVANCE RULINGS HAS IN THE CASE OF MAX MUELLER BHAVAN CASE (2004) 189 CTR (AAR) 450 DRAWN A CLEAR DISTINCTION BETWEEN A 'CONTRACT OF SERVICE' AND A 'CONTRACT FOR SERVICE'. IT WAS STATED THAT - IN A 'CONTRACT OF SERVICE' THE RELATIONSHIP IS THAT OF A MASTER AND SERVANT WHEREAS IN A 'CONTRACT FOR SERVICE' SUC H RELATIONSHIP WOULD NOT BE PRESENT. IN THE CASE OF A 'CONTRACT FOR SERVICE' THE EMPLOYER NOT ONLY ORDERS REQUIRES WHAT IS TO BE DONE BUT ALSO DIRECTS AS TO HOW IT SHALL BE DONE, W HEREAS IN A 'CONTRACT FOR SERVICE', THE MASTER CAN ONLY REQUIRE AS TO WHAT IS TO BE DONE. THE TEST WHICH IS OFTEN APPLIED TO DETE RMINE EXISTENCE OF SUCH A RELATIONSHIP IS WHETHER THE MAS TER HAS THE AUTHORITY TO ORDER OR REQUIRE WHAT IS TO BE DONE BU T ALSO HOW IT SHOULD BE DONE. AN INDEPENDENT CONTRACTOR IS ONE WH O UNDERTAKES TO PRODUCE A GIVEN RESULT BUT IN THE ACT UAL EXECUTION OF THE WORK HE IS NOT UNDER THE ORDER OR CONTROL OF THE PERSON FOR WHOM HE DOES IT, AND MAY USE HIS OWN DISCRETION IN THINGS NOT SPECIFIED BEFOREHAND. THE ASSESSEE COMPANY IS DIFFERENT FROM THAT OF THE MAX MUELLER C ASE ON WHICH THE ASSESSING OFFICER HAS RELIED UPON. 15 ITA.NO.1193/HYD/2009 & ITA.NO.4 & 5/HYD/2012 M/S. QUALITY CARE (INDIA) LTD., HYDERABAD 10.4. FURTHER IN THE CASE OF CHANDI PRASAD SINGH V S STATE OF UP AIR 1956 SC 149, REFERENCE HAS BEEN MAD E TO HALSBURY'S LAWS OF ENGLAND WHICH DISTINGUISHES BETW EEN A SERVANT AND AGENT . ' A SERVANT ACTS UNDER THE DIRECT CONTROL AND SUPERVISI ON OF THE MASTER, AND IS BOUND TO CONFORM TO ALL REASONABLE ORDERS GIVEN TO HIM IN THE COURSE OF HIS WORK. AN AGENT TH OUGH BOUND TO EXERCISE HIS AUTHORITY IN ACCORDANCE WITH ALL LAWFUL INSTRUCTIONS WHICH MAY BE GIVEN TO HIM FROM TIME TO TIME BY HIS PRINCIPAL, IS NOT SUBJECT IN ITS EXERCISE TO TH E DIRECT CONTROL OR SUPERVISION OF THE PRINCIPAL. 10.5. IN THE CASE OF CIT VS DEEP NURSING HOME & CHILDREN HOSPITAL (2008) 214 CTR (P&H) 144, IT WAS HELD BY THE HONB'LE HIGH COURT OF PUNJAB AND HARYANA THAT D OCTORS WHO WERE VISITING THE ASSESSEE HOSPITAL FOR TREATME NT OF PATIENTS WERE ON CALL AND THERE WAS NO EMPLOYER - E MPLOYEE RELATIONSHIP AND THEREFORE PROVISIONS OF TDS UNDER SEC 192 ARE NOT ATTRACTED TO THE PAYMENT OF PROFESSIONAL CHARGE S BY THE ASSESSEE. 10.6. HENCE, WE ARE OF THE OPINION THAT THE RATIO LAID DOWN IN THE CASE OF IVY LIFE SCIENCES P. LTD. CHAND IGARH BENCH AND ALSO THE JURISDICTIONAL HIGH COURT DECISI ON IN THE CASE OF YASHODA SUPER SPECIALITY HOSPITALS ARE MORE APPROPRIATE TO THE FACTS OF THIS CASE AND THE RATIO OF THESE DECISIONS IS TO BE FOLLOWED IN PREFERENCE TO THE OT HER DECISIONS RELIED ON BY THE REVENUE. IN THE CASES RELIED ON BY THE REVENUE THE TERMS OF APPOINTMENT OF DOCTORS ARE DIFFERENT F ROM THOSE OF THIS CASE. IN THE PRESENT CASE THE TERMS OF APPOINT MENT CLEARLY INDICATE APPOINTMENT OF PROFESSIONALS FOR PROVIDING CONSULTING SERVICES AND NOT APPOINTMENT OF EMPLOYEE. THE DOCTO RS ARE NOT 16 ITA.NO.1193/HYD/2009 & ITA.NO.4 & 5/HYD/2012 M/S. QUALITY CARE (INDIA) LTD., HYDERABAD PRECLUDED FROM PURSUING THE PROFESSIONAL PURSUITS E LSEWHERE AS LONG AS THERE IS NO CONFLICT OF INTEREST. ONCE T HE DOCTORS ACHIEVE SOME SENIORITY AND STANDING, THEIR REMUNERA TION IS A PERCENTAGE OF FEES COLLECTED FROM PATIENTS CONSULTI NG HIM. THESE ARE CLEARLY INDICATIVE OF A CONTRACT FOR SERV ICE AND NOT CONTRACT OF SERVICE. EXPLANATION (A) TO SEC 194J DE FINES PROFESSIONAL SERVICES TO MEAN SERVICES RENDERED BY A PERSON IN THE COURSE OF CARRYING ON LEGAL, MEDICAL,... NORM ALLY THE SERVICES RENDERED BY A DOCTOR SHOULD BE CONSIDERED AS A PROFESSIONAL SERVICE UNLESS THE CONTRACT S OF SERVICE CATEGORICALLY STATES AND THE CONDITIONS ARE CLEARLY AND INDUBITABLY THAT OF EMPLOYMENT. IN THE CIRCUMSTANC ES ON THE PERUSAL OF THE TERMS OF CONTRACT FOR SERVICES ENTER ED INTO WITH THE DOCTORS , WE HOLD THAT THE SERVICES RENDERED BY THE DOCTORS ARE MORE APPROPRIATELY CLASSIFIABLE AS PROFESSIONAL SERVICES AND THEREFORE ASSESSEE HAD CORRECTLY DEDUCTED TAX AT SO URCE FROM PAYMENT TO DOCTORS U/S 196J. 10.7. THE RELATIONSHIP BETWEEN THE ASSESSEE-DEDUCT OR AND THE DOCTORS IS NOT THAT OF EMPLOYER AND EMPLOYE E. WE ARE OF THE VIEW THAT THE DOCTORS OR PROFESSIONAL CONSUL TANTS WORKING UNDER CONTRACT FOR RENDERING PROFESSIONAL S ERVICES AND THE PAYMENTS MADE BY THE ASSESSEE COMPANY TO THE PROFESSIONAL DOCTORS DOES NOT CONSTITUTE SALARY AND HENCE, THE ASSESSEE WOULD NOT BE RESPONSIBLE FOR DEDUCTING TAX AT SOURCE ON THE SAID PAYMENTS TREATING THEM AS (SALARIES) IN TERMS OF SECTION 192(1) OF THE I.T. ACT. WE ALSO UNDERSTAND THAT THE TERMS OF THE AGREEMENT WITH THE CONSULTANTS/PROFESS IONALS THAT THERE IS NO MASTER AND SERVANT RELATIONSHIP BE TWEEN THE CONSULTANTS/PROFESSIONALS AND THAT OF THE ASSESSEE AND HENCE, 17 ITA.NO.1193/HYD/2009 & ITA.NO.4 & 5/HYD/2012 M/S. QUALITY CARE (INDIA) LTD., HYDERABAD THE AGREEMENTS ENTERED INTO BY THE ASSESSEE WITH TH E PROFESSIONALS AS ONE OF CONTRACT FOR SERVICES. T HE CONSULTANT DOCTORS DO NOT TAKE DIRECTIONS FROM THE ASSESSEE ON HOW A PATIENT IS TO BE TREATED AND CLEARLY THERE IS NO EM PLOYER- EMPLOYEE RELATIONSHIP BETWEEN THE ASSESSEE AND THE PROFESSIONALS. IN SHORT, FOLLOWING THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE YASHODA SUPER SPECIALITIES H OSPITALS, IN THE CIRCUMSTANCES WE AGREE AND CONFIRM THE DECIS ION OF THE LEARNED CIT(APPEALS) IN HOLDING THAT THE ASSESSEE W AS NOT AN ASSESSEE IN DEFAULT (IN TERMS OF SECTION 201(1)/2 01(1A) OF THE I.T. ACT, 1961). WE DISMISS THE GROUND NOS. 1 TO 5 OF THE REVENUE IN ITA.NO.1193/HYD/2009 FOR THE A.Y. 2008-0 9. 11. IN THE RESULT, ITA.NO.1193/HYD/.2009 OF THE REVENUE IS DISMISSED. I.T.A.NO.04/HYD/2012 ASSESSMENT YEAR 2007-2008 & I.T.A.NO.05/HYD/2012 ASSESSMENT YEAR 2009-2010 : 12. THE GROUNDS OF APPEAL RAISED BY THE REVENUE FOR BOTH THE YEARS ABOVE ARE IDENTICAL AND ARE AS FOLLO WS : 1. THE LEARNED CIT(A)-II, HYDERABAD ERRED ON FACTS AND IN LAW IN ALLOWING THE APPEAL. 2. THE LEARNED CIT(A)-II, HYDERABAD ERRED IN HOLDING THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN TREATING THE ASSESSEE AS ASSESSEE IN DEFAULT IN TERMS OF SECTION 201(1) / 201(1A) OF THE INCOME TA X ACT, 1961. 3. THE LEARNED CIT(A)-II, HYDERABAD ERRED IN HOLDING THAT THE RELATIONSHIP BETWEEN THE ASSESSEE- DEDUCTOR AND THE DOCTORS IS NOT THAT OF AN EMPLOYER AND EMPLOYEE. 4. THE LEARNED CIT(A)-II, HYDERABAD, FAILED TO APPRECIATE THE FACT THAT THERE IS NO MATERIAL ON RECORD TO SHOW THAT THE DOCTORS IN QUESTION HAVE 18 ITA.NO.1193/HYD/2009 & ITA.NO.4 & 5/HYD/2012 M/S. QUALITY CARE (INDIA) LTD., HYDERABAD FILED THEIR RETURNS OF INCOME ADMITTING THE AMOUNTS IN QUESTION FOR THE YEAR UNDER CONSIDERATION. 5. THE LEARNED CIT(A)-II, HYDERABAD, FAILED TO APPRECIATE THE FACT THAT THE SUPREME COURTS DECISION IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES P. LTD. (293 ITR 226) WOULD NOT APPLY TO THE ASSESSEES CASE IN VIEW OF THE FACT THAT THE ASSESSEE HAS NOT BEEN DEDUCTING TAX AT SOURCE UNDER SECTION 192 CONTINUOUSLY FOR ALL THE YEARS. 13. THE CIT(A) HAS HELD IN HIS ORDER FOR THE A.Y. 2007 - 08 AND 2009-10 AS FOLLOWS : 3. THE ISSUES IN THIS APPEAL ARE IDENTICAL TO THE ISSU ES AS WERE MADE IN THE CASE OF APPELLANT FOR THE A.Y. 2008- 09, DECIDED BY MY PREDECESSOR IN ITA.NO.0060/CIT(A )- II/09-10, DATED 23.10.2009. THE RELEVANT PORTION OF THE ABOVE SAID DECISION IS REPRODUCED AS UNDER : AS SEEN FROM THE ABOVE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANTS CASE THE RELATION SHIP BETWEEN THE PROFESSIONALS AND THE APPELLANT IS NOT THAT OF EMPLOYEE AND EMPLOYER RELATIONSHIP BUT THAT OF CLEA RLY PROFESSIONAL CONSULTANTS WORKING UNDER CONTRACT FOR RENDERING PROFESSIONAL SERVICES. IN THIS VIEW OF TH E MATTER, THE PAYMENTS MADE BY THE APPELLANT COMPANY TO THE PROFESSIONAL DOCTORS DO NOT CONSTITUTE SALARY AS DI SCUSSED ABOVE. ACCORDINGLY, THE APPELLANT WOULD NOT BE RESPONSIBLE FOR DEDUCTING TAX AT SOURCE ON THE SAI D PAYMENTS TREATING THEM AS SALARIES IN TERMS OF SE CTION 192(1) OF THE I.T. ACT, 1961. FURTHER, THE APPELLAN T HAS FAIRLY ESTABLISHED THAT ALL THE PAYEES ARE INCOME T AX ASSESSEES HAVING PERMANENT ACCOUNT NUMBERS AND THA T THEY HAVE ACCOUNTED THE PAYMENT IN QUESTION IN THEI R 19 ITA.NO.1193/HYD/2009 & ITA.NO.4 & 5/HYD/2012 M/S. QUALITY CARE (INDIA) LTD., HYDERABAD BOOKS OF ACCOUNTS OR GROSS RECEIPTS OR GROSS INCOME . FOLLO9WING THE DECISION OF THE APEX COURT IN HINDUS TAN COCA COLA BEVERAGES P. LTD. VS. CIT (293 ITR 226), THE ASSESSING OFFICER IS NOT JUSTIFIED IN RECOVERING TH E TAX FROM THE APPELLANT. THUS, ON THE TOTALITY OF THE FACTS A ND CIRCUMSTANCES OF THE CASE AND APPLYING THE PROVISIO NS OF CHAPTER XVII-B OF THE I.T. ACT, 1961, THERE IS NO JUSTIFICATION FOR THE A.O. TO TREAT THE APPELLANT A S ASSESSEE IN DEFAULT IN TERMS OF SECTION 201(1) AN D THEREAFTER LEVYING OF INTEREST U/S. 201(1A) OF THE I.T. ACT, 1961. 14. IN OUR OPINION, AS OBSERVED BY THE CIT(A) THE ISSUES FOR THESE ASSESSMENT YEARS I.E., 2007-08 AND 2009-10 ARE IDENTICAL TO THAT IN A.Y. 2008-09. IN THE PRECE DING PARAGRAPHS AT PARA NO. 8 TO 10, WE HAVE DISCUSSED A ND CONFIRMED THE ORDER OF THE CIT(A) AND DISMISSED THE REVENUE APPEAL. THE SAME CONCLUSION SHALL HOLD GOOD FOR THE .Y. 2007- 08 AND 2009-10 ALSO. HENCE, GROUND NOS. 1 TO 3 ARE DISMISSED. 15. WITH RESPECT TO GROUND NOS. 4 AND 5, WE FIND THAT THE CIT(A) HAS RIGHTLY OBSERVED THAT ALL THE PAYEES ARE INCOME TAX ASSESSEES HAVING PERMANENT ACCOUNT NUMBERS AND HAVE ACCOUNTED THE PAYMENT IN QUESTION IN THEIR BOOKS OF ACCOUNT ARE GROSS RECEIPTS OR GROSS INCOME AND FOLLOWING TH E DECISION OF APEX COURT IN HINDUSTAN COCA COLA BEVERAGES P. LTD. VS. CIT 293 ITR 226, THE ORDER OF THE A.O. IS NOT JUSTIFIED IN RECOVERING THE TAX FROM THE ASSESSEE. WE ARE IN CONFIRMITY WIT H THE ORDER OF THE CIT(A) AND HOLD THAT THERE IS NO JUSTIFICATI ON FOR THE A.O. TO TREAT THE ASSESSEE AS AN ASSESSEE IN DEFAULT IN TERMS OF 20 ITA.NO.1193/HYD/2009 & ITA.NO.4 & 5/HYD/2012 M/S. QUALITY CARE (INDIA) LTD., HYDERABAD SECTION 201(1) AND THEREAFTER LEVYING OF INTEREST U NDER SECTION 201(1A) OF THE I.T. ACT IS ALSO IMPROPER. 16. IN THE RESULT, THE REVENUE APPEAL IN ITA.NO.4 & 5/HYD/2012 -FOR A.Y. 2007-08 AND 2009-10 ARE DISMIS SED. 17. TO SUM-UP, REVENUE APPEALS FOR A.YS. 2007-08, 2008-09 AND 2009-10 ARE DISMISSED. ORDER WAS PRONOUNCED IN THE COURT ON 18.06 .2014. SD/- SD/- (B.RAMAKOTAIAH) (ASHA VIJAYARAGHAVAN ) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 18 TH JUNE, 2014. VBP/- COPY TO 1. DCIT, 15(2), ROOM NO.444, D BLOCK, 4 TH FLOOR, I T TOWERS, A.C. GUARDS, HYDERABAD. 2. M/S. QUALITY CARE INDIA LTD., 8-2-595/2/B, ROAD NO.10, BANJARA HILLS, HYDERABAD 500 034. 3. CIT(A)-II, HYDERABAD 4. CIT (TDS), HYDERABAD. 5. D.R. ITAT, A BENCH, HYDERABAD.