I.T.O.(TDS), Muzaffarpur V. The Superintendent, Darbhanga

ITA 46/PAT/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7771 (ITAT-PATNA)
• Duration Of Justice: 3 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 09-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K DAS
• Section: 194C; 145; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH, PATNA BEFORE SHRI J.SUDHAKAR REDDY (AM) & SHRI SAND E EP GOSAIN (JM) I T A NO. 46 / PAT /20 1 4 ASSESSMENT YEAR S : 20 11 - 12 IT O (TDS) VS. THE SUPERINTENDENT , MUZAFFARPUR. DARBHANGA MEDICAL COLLEGE & HOSPITAL, LAHERIASARAI, DHARBHANGA. ( APPELLANT) (RESPONDENT) PAN - PTND01297C DEPARTMENT BY : S HRI K . K. DAS , DR . ASSESSEE BY : NONE . DATE OF HEARING: - 0 4 /1 0 /201 7 DATE OF PRONOUNCEMENT: - 0 6 / 1 0 /201 7 ORDER PER SANDEEP GOSAIN, JUDICIAL MEMBER: THIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE CIT (A) - DHANBAD DATED - 0 6.0 1 .201 4. 2. THE EFFECTIVE ISSUE RAISED IN GROUND S OF APPEAL READ AS UNDER: 1. ON THE FACTS AND IN THE LAW TH E LD. CIT(A), DHANBAD HAS ERRED IN TREATING SALARY U/S 192 ON WHICH PAYMENT MADE TO PROFESSIONAL IS TAXED U/S 194J ENGAGED ON PURELY CONTRACTUAL BASIS UNDER THE TERMS AND CONDITIONS OF THE CONTRACT WITHOUT SUSTAINING OF RELATION BETWEEN EMPLOYER AND EMPLOY EE. 2. ON THE FACTS AND IN THE LAW THE LD. CIT(A), DHANBAD HAS ERRED IN DELETING THE TDS LIABILITY ON PAYMENT MADE U/S 194C ON THE GROUND THAT THE DEDUCTEES HAVE FILED THEIR I.T. RETURN, FOR WHICH THE DEDUCTOR FAILED TO PRODUCE ANY SUCH PAPER BEFORE AO I N REMAND PROCEEDING. I TA NO. - 46 / PA T /20 1 4 2 3. ON FACTS AND IN THE LAW THE LD. CIT(A), DHANBAD HAS ERRED IN DELETING THE TDS LIABILITY ON PAYMENTS MADE U/S194C ACCEPTING THE BILLS FROM THE DEDUCTOR WITHOUT CONFRONTING TO THE AO IN VIOLATION OF RULE 46A(3). 4. ANY OTHER GRUNDS WILL BE TAKEN AT THE TIME OF HEARING APPEAL BEFORE THE HONBLE ITAT. 3. TODAY THE CASE WAS FIXED FOR HEARING BUT NONE APPEARED ON BEHALF OF THE ASSESSEE EVEN IN SPITE OF REPEATED CALLS AND NO ADJOURNMENT APPLICATION HAS BEEN FILED TODAY. ON THE OTHER HAN D, THE LD. DR PRESENT IN THE COURT IS READY FOR ARGUMENT. IN SUCH CIRCUMSTANCES, WE HAVE DECIDED TO PROCEED THE ASSESSEE EX - PARTE AND DECIDE THE APPEAL AFTER HEARING LD. DR AND ON THE BASIS OF RECORDS. 4 . ALTHOUGH THE REVENUE HAS R AISED SEVERAL GROUNDS BEFORE US BUT LD. DR HAS PRESSED ONLYN THE GROUND THEREBY CHALLENGING THE ORDER OF LD. CIT(A) IN TREATING THE PAYMENT MADE TO PROFESSIONAL AS SALARY U/S192 OF THE INCOME - TAX ACT. 5 . WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS OF THE AUTHORITIES BELOW. BEFORE WE DECID E THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE AND ANALYSE THE ORDERS PASSED BY THE LD. CIT(A) WHILE DEALING WITH THIS GROUND. THE LD. CIT(A) HAS DEALT WITH THIS GROUND IN PARA NOS. 3 .1 TO 3.2 OF ITS ORDER. THE SAME IS REPRODUCED BELOW: 3.1. SIMILARLY, IN THE CASE OF NALANDA MEDICAL COLLEGE AND HOSPITAL IN ORDER DATED 29.10.2 01, IT WAS DECIDED AS UNDER: 4.4 THE THIRD COMPONENT OF PAYMENTS INCLUDED IN COMMERCIAL AND SPECIAL SERVICES IS IN R ESPECT OF EMPLOYEES HIRED ON AGREEMENT BASIS. THE APPELLANT HAS BEEN FOLLOWING SYSTEM OF HIRING VARIOUS EMPLOYEES REQUIRED FOR RUNNING THE HOSPITAL AND THE MEDICAL COLLEGE ON AGREEMENT BASIS AND FIXED REMUNERATION PER MONTH IS PAYABLE TO THEM AS UNDER: SL .NO. DESIGNATION MONTHLY RECEIPT ANNUAL RECEIPT I TA NO. - 46 / PA T /20 1 4 3 1. NURSE RS.4900X9, 7500X3 RS.81300/ - 2. OT ASSISTANT RS.3900X9, 6000X3 RS.53100/ - 3. LAB TECHNICIAN RS.4400X9, 6500X3 RS.59100/ - 4. PHARMACIST RS.6500/ - X12 RS.78000/ - 5. DRESSER RS.4000/ - X12 RS .48000/ - 6. X - RAY TECHNICIAN RS.6500/ - X12 RS.78000/ - 4.5 THE APPELLANT HAS TREATED THE SAME AS SALARY AND SINCE PAYMENTS WERE BELOW THE EXEMPTION LIMIT, NO TAX AT SOURCE HAS BEEN DEDUCTED. THE ASSESSING OFFICER HAS TREATED THE SAME AS CONTRACTUAL PAYMEN T IN ASSESSMENT YEAR 2007 - 08 LAIBLE FOR DEDUCTION OF TAX UNDER SECTION 194C OF THE INCOME TAX ACT, 1961 AND FEES FOR TECHNICAL AND PROFESSIONAL SERVICES LAIBLE FOR DEDUCTION OF TAX UNDER SECTION194J OF THE INCOME TAX ACT, 1961 IN REST OF THE ASSESSMENT YEA RS. THE SUBMISSION OF THE APPELLANT IS THAT THE ABOVE PERSONS ARE ALSO EMPLYEES OF THE APPELLANT ON AGREEMENT BASIS AND FIXED MONTHLY REMUNERATION IS PAYABLE TO THEM. SUCH SYSTEM IS BEING FOLLOWED SO THAT THESE PERSONS DO NOT CLAIM THE STATUS OF PERMANENT GOVERNMENT EMPLOYEES. IN SUCH APPOINTMENTS, DUE RESERVATION TO VARIOUS CATEGORIES AS PER RULES IS ALSO BEING GIVEN. FURTHER RELIANCE HAS BEEN PLACED ON THE DECISION OF THE ITAT DELHI IN THE CASE OF ST. STEPHENS HOSPITAL VS. DCIT REPORTED IN (2006) 006 SOT 0060 WHEREIN, IT HAS BEEN HELD THAT THERE CAN BE VARIOUS CATEGORIES OF EMPLOYESS AND SO LONG AS EMPLOYER - EMPLOYEE RELATIONSHIP EXISTS, PAYMENTS MADE TO THEM ARE TO BE TREATED AS PAYMENT OF SALARY SUBJECT TO DEDUCTION UNDER SECTION 192 OF THE IT ACT, 1961 AND THAT OF DCIT VS. WOCKHARDT HOSPITALS LIMITED REPORTED IN (2012) 24 TAXMANN.COM 190 OF ITAT (HYDERABAD) WHEREIN, IT HAS BEEN HELD THAT WERE DOCTORS WERE EMPLOYED ON AGREEMENT BASIS AND FIXED MONTHLY REMUNERATION WAS PAID TO THEM, TAX WAS DEDUCTI B LE UNDE R SECTION 192 AND NOT UNDER SECTION 194J OF THE INCOME - TAX ACT, 1961. IN THE CASE UNDER CONSIDERATION ALSO, FIXED REMUNERATION IS PAID TO SUCH EMPLOYEES. THE ABOVE ARRANGEMENT IS CLEARLY WITH A VIEW TO AVOID CALIM OF REGULAR GOVERNMENT SERVICE. SUCH PERSON S ARE NOT PROVIDING ANY PROFESSIONAL OR TECHNICAL SERVICES WITHIN ITS DEFINITION AS PER SECTION 9 OF THE INCOME TAX ACT, 1961. ACCORDINGLY, IT IS HELD THAT PAYMENTS TO SUCH PERSONS ARE SUBJECT TO DEDUCTION OF TAX AT SOURCE UNDER SECTION 192 OF THE INCOME T AX ACT, 1961. I TA NO. - 46 / PA T /20 1 4 4 3.2 ACCORDINGLY, IT IS HELD THAT THE ABOVE PAYMENTS ARE IN THE NATURE OF SALARY ON WHICH TAX IS CHARGEABLE UNDER SECTION 192 OF THE INCOME TAX ACT, 1961. 6 . AFTER HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND HAVING HEARD L D.DR AT LENGTH, WE FIND THAT AS PER THE FACTS OF THE PRESENT CASE, ASSESSEE IS AN ORGANISATION OF HEALTH SERVICES, STATE GOVERNMENT BIHAR AT DHARBHANGA. IN ORDER TO PROVIDE BETTER SERVICES TO THE PATIENTS, THE ASSESSEE ORGANISATION H AS SOME PERMANENT EMPLO YEES (DOCTORS, ANMS AND ORS.) AND HAD ALSO CONTRACTUAL DOCTORS, ANMS AND OTHERS STAFF ETC. WHO GETS FIXED MONTHLY REMUNERATION. THE LD. CIT(A) AFTER CONSIDERING THE FACTS OF THE PRESENT CASE AND WHILE RELYI N G UPON THE ORDERS PASSED BY THE CO - ORDINATE BENCH ES OF HONBLE ITAT HA D RIGHTLY CONCLUDED THAT THE PAYMENT MADE BY THE ASSESSEE TO THE PROFESSIONAL ARE IN THE NATURE OF SALARY IN WHICH DEDUCTION OF FACTS IS REQUIRED U/S.192 OF THE INCOME - TAX ACT 1961. 7 . ON THE CONTRARY NOTHING HAS BEEN BROUGHT ON RECOR D BY THE AO TO PROVE THAT THE DOCTORS AND OTHER EMPLOYEES ARE NOT THE EMPLOYEES OR EMPLOYER RELATION SHIP DOES NOT EXIST. THEREFORE, IN THESE CIRCUMSTANCES THE LD. CIT(A) AFTER CORRECTLY APPRECIATING THE FACTS HAD RIGHTLY CONCLUDED THAT THE PAYMENTS MADE BY THE ASSESSEE ARE NOT IN THE NATURE OF SALARY ON WHICH DEDUCTION OF TAX IS REQUIRED U/S192 OF THE INCOME - TAX ACT. I TA NO. - 46 / PA T /20 1 4 5 8 . SO IN THESE CIRCUMSTANCE S , WE ARE UNABLE TO FIND ANY ILLEGALITY OR IRREGULARITY IN THE FINDINGS OF THE LD. CIT(A). WE THEREFORE, FIND THA T THERE ARE NO GROUND TO INTERFRERE WITH THE FINDINGS OF THE LD. CIT(A) . HENCE, THE GROUND RAISED BY THE REVENUE IS DISMISSED AND THE ORDER PASSED BY THE LD.CIT(A) IS UPHLED. 9 . I N THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. O RDER IS PRONOUN CED IN THE OPEN COURT ON 06 TH OCTOBER , 201 7 . SD / - SD/ - ( J. SUDHAKAR REDDY ) ( SANDEEP GOSAIN ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE OF ORDER: 06 TH OCTOBER , 201 7 . S . S INH A (PS) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT . 2. THE RESPONDENT.: 3. THE CIT(A) - PATNA 4. CIT , PATNA 5. INCOME TAX APPELLATE TRIBUNAL,PATNA 6. GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY