ACIT, New Delhi V. M/s. Rockland Hospital Ltd., New Delhi

ITA 5007/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86787 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 20-11-2014
• Assessment Year: misc
• Appeal Filed On: 21-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M B REDDY
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI N.K. SAINI AND SHRI I.C. SUDHIR ITA NO S . 5007 & 5008 /DEL/2012 ASSESSMENT YEAR S : 200 9 - 1 0 & 2010 - 11 ASSISTANT CIT, VS. ROCKLAND HOSPITAL LTD., CIRCLE 51(1), B - 33 - 34, QUTAB INSTITUTIONAL NEW DELHI. AREA, KATWARIA SARAI, NEW DELHI (PAN: A ACCR4709E ) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI MB REDDY , CIT( DR ) RESPONDE NT BY: S/SHRI P.C. YADAV . & RAJESH JAIN, CA ORDER PER BENCH: IN B OTH THE APPEALS PREFERRED BY THE REVENUE , THE ISSUE INVOLVED IS AS TO WHETHER PROVISIONS OF SECTION 192B OF THE INCOME - TAX ACT, 1961 ARE APPLICABLE IN THE CASE OF ASSESSEE OR NOT? 2. AT THE OUTSET OF HEARING, THE LEARNED AR POINTED OUT THAT THE ISSUE RAISED IN THE APPEAL IS FULLY COVERED BY THE DECISION OF HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT VS. Y AS H ODA SUPER SPECIALITY HOSPITAL 365 ITR 356 (AP) . 2 3. THE LEARNED DR ON THE OTHER HAND PLACED RELIANCE ON THE ASSESSMENT ORDER. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY IS RUNNING A HOSPITAL UNDER THE NAME AND STYLE OF ROCKLAND HOSPITAL LTD . W.E.F. 08.04.2008 AT B - 33 - 34, QUTUB INSTITUTIONAL AREA, NEW DELHI - 1100 16. IT WAS SUBJECTED TO SURVEY CONDUCTED BY INCOME - TAX DEPARTMENT. THE DOCTORS RETAINED BY THE ASSESSEE ON FULL TIME/PART TIME BASIS HAVE BEEN HELD BY THE ASSESSING OFFICER AS EMPLOY EES OF THE ASSESSEE COMPANY. THE ASSESSING OFFICER ACCORDINGLY APPLIED TDS AT FLAT RATE OF 30% TAX UNDER SEC. 192 OF THE ACT. ON THE OTHER HAND, ASSESSEE WAS DEDUCTING TDS UNDER SEC. 194J. THE OBSERVATIONS OF THE ASSESSING OFFICER ON THE AGREEMENTS WITH TH E DOCTORS, COPIES WHEREOF WERE PROVIDED BY THE ASSESSEE TO THE ASSESSING OFFICER , REMAINED THAT THE DOCTORS WERE AVAILABLE FROM MONDAY TO SATURDAY, THEY WERE RESPONSIBLE FOR ANY EMERGENCY CALL AT ANY POINT OF TIME IN ALL 365 DAYS IN A YEAR; THEY WERE GETT ING FIXED SALARY/MONTHLY FEE/FIXED CHARGES AND INCENTIVES AS PER TERMS OF THE AGREEMENT AND FOR TERMINATION ONE MONTH S NOTICE WAS REQUIRED. THE ASSESSING OFFICER ACCORDINGLY HELD THAT RELATIONSHIP OF MASTER AND SERVANT WAS THERE. THE LEARNED CIT(APPEALS) HAS, HOWEVER, ACCEPTED THE CASE OF THE ASSESSEE, HENCE, THE DEPARTMENT IS IN APPEAL BEFORE THE ITAT. 3 4. THE MAIN DISPUTE BETWEEN THE ASSESSING OFFICER(TDS) AND ASSESSEE IS ON TAXABILITY OF PAYMENTS MADE TO CONTRACTUAL DOCTORS UNDER SEC. 192 OR SECTION 19 4J OF THE INCOME - TAX ACT, 1961 AS WAS DONE BY THE ASSESSEE. 5. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW, MATERIAL AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON BY THE PARTIES, WE FIND THAT THE ISSUE IS SQUARELY COVERED BY THE RATIOS L AID DOWN BY THE HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT VS. YAS H ODA SUPER SPECIALITY HOSPITAL (SUPRA) WHEREIN UNDER THE SIMILAR FACTS OF THE CASE, IT HAS BEEN HELD THAT THERE WAS NO EMPLOYER AND EMPLOYEES RELATIONSHIP BETWEEN THE DOCTORS AND T HE ASSESSEE HOSPITAL AND THEIR PAYMENTS COULD NOT BE TREATED TO BE SALARIES AND AS SUCH DEDUCTION OF TAX AT SOURCE DID NOT N EE D TO BE MADE UNDER SECTION 192 OF THE INCOME - TAX ACT, 1961. THE LEARNED CIT(APPEALS) HAD PLACED RELIANCE ON THE DECISION OF HYDERA BAD BENCH OF THE ITAT IN THE CASE OF DCIT VS. YAS H ODA SUPER SPECIALTY HOSPITAL (2011) 44 SOT 87 (HYDERABAD), WITH THIS FINDING THAT TAX HAS TO BE DEDUCTED UNDER SEC. 19 4 J AND NOT UNDER SEC. 192 OF THE INCOME - TAX ACT, 1961. IN THAT CASE ALSO, THE ASSESSEE FIRM WAS RUNNING A HOSPITAL. IT HAD ENGAGED SERVICES OF DOCTORS FOR PROVIDING TREATMENT TO THE PATIENTS . THE CLAIM OF THE ASSESSEE WAS THAT WHAT WAS PAID BY IT TO DOCTORS WAS ONLY PROFESSIONAL CHARG ES AND, THEREFORE, TAX 4 HAD TO BE DEDUCTED UNDER SEC. 194J . ASSESSING OFFICER OPINED THAT THERE WAS EMPLOYEES AND EMPLOYER RELATIONSHIP BETWEEN THE ASSESSEE AND DOCTORS AND, THEREFORE, ASSESSEE HAD TO DEDUCT TAX UNDER SEC. 192 OF THE ACT. THE LEARNED CIT(APPEALS), HOWEVER, ALLOWED ASSESSEE S CLAIM. ON APPEAL BEFO RE THE ITAT, IT WAS NOTED THAT DOCTORS WERE NOT ON ROLL AS EMPLOYEES OF THE ASSESSEE. IT WAS NOTED THAT AGREEMENT ENTERED INTO BETWEEN ASSESSEE AND DOCTORS DID NOT PROVIDE FOR ANY SUPERVISION OR CONTROL OVER DOCTORS. BESIDES DOCTORS WERE NOT GIVEN FACILITY OF LEAVE, PF, GRATUITY AND BONUS ETC. HENCE, THERE WAS NO EMPLOYER AND EMPLOYEES RELATIONSHIP - EXISTING BETWEEN ASSESSEE - HOSPITAL AND DOCTORS. THIS DECISION OF THE ITAT HAS BEEN APPROVED BY THE HON'BLE ANDHRA PRADESH HIGH COURT ON THE APPEAL PREFERRED BY THE REVENUE. 6. FOLLOWING THE ABOVE DECISION OF THE ITAT IN THE CASE OF YAS H ODA SUPER SPECIALTY HOSPITAL (SUPRA) APPROVED BY THE HON'BLE ANDHRA PRADESH HIGH COURT, THE LEARNED CIT(APPEALS), IN OUR VIEW, HAS RIGHTLY DECIDED THE ISSUE IN FAVOUR OF THE ASSE SSEE. FOR A READY REFERENCE, THE FINDINGS OF THE LEARNED CIT(APPEALS) IS REFERRED HEREUNDER: I HAVE GONE THROUGH THE ASSESSMENT ORDER CONSIDERED THE WRITTEN SUBMISSIONS OF THE APPELLANT, AND THE CASE LAWS RELIED UPON BY THE A.O. AS WELL AS ASSESSEE. 5 I HAVE FOUND THAT ASSESSEE HAS FURNISHED COMPLETE DETAILS OF DOCTORS WHOSE TDS HAS BEEN DEDUCTED BY THE ASSESSEE U/S. 194J AS PER THE CONTRACT WITH THEM. ON PAGE 4 PARA 4 OF THE ASSESSMENT ORDER, THE A.O. HAS MENTIONED THAT DURING THE ASSESSMENT PROCEEDIN GS THE ASSESSEE HAS SUBMITTED A LIST OF 79 DOCTORS. A COPY OF THE SAME IS ALSO PLACED BEFORE ME DURING THE APPELLATE PROCEEDINGS. ON PERUSAL OF THE LIST IT IS REVEALED THAT IT CONTAINS PAN NO. OF ALL THE 79 DOCTORS. BESIDES IT HAS BEEN MENTIONED BY THE AR THAT IF THE PROVISIONS OF SEC.192 ARE APPLIED, MANY DOCTORS ARE BELOW THE TAXABLE LIMITS AND NO TDS IS TO BE DEDUCTED THERE FROM. FURTHER NUMBERS OF DOCTORS ARE ON TRAINING AND GETTING STIPEND ONLY AND AGAIN NO TDS IS TO BE DEDUCTED THERE FROM. IT HAS ALSO BEEN ARGUED BY THE AR THAT PAN OF ALL THE DOCTORS HAS BEEN PROVIDED HOWEVER THE A.O. HAS FAILED TO CROSS VERIFY THE ARGUMENTS OF THE AR THAT THE DOCTORS ARE CONSULTANTS PROFESSIONALS AND FILING THEIR ITR S ACCORDINGLY. HAVING GONE THROUGH THE COMPL ETE RECORDS AND ARGUMENTS, IT IS FOUND THAT THE ACTION OF THE A.O. OF APPLYING PROVISIONS OF SEC. 192B IS NOT CORRECT. THE FACTS OF THE CASE ARE IDENTICAL WITH THE CASE OF DCIT VS. YASHODA SUPER SPECIALTY HOSPITAL [2011] 44 SOT 87 (HYD.) (URO) AND SQUARELY COVERED THE CASE OF THE ASSESSEE. 6 THUS IN MY CONSIDERED OPINION AND FOLLOWING THE DECISION OF DCIT V. YASHODA SUPER SPECIALITY HOSPITAL SUPRA, THE PROVISIONS OF SEC. 192B ARE NOT APPLICABLE AND THE ASSESSEE HAS RIGHTLY DEDUCTED TDS APPLYING PROVISIONS O F SEC. 194J. HENCE, THIS GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE. 7. WE FIND THAT WHILE DECIDING THE ISSUE, THE LEARNED CIT(APPEALS) HAS ALREADY DISTINGUISHED THE DECISIONS RELIED UPON BY THE ASSESSING OFFICER TO WHICH WE FULLY AGREE WITH. 8. IN VIEW OF THE ABOVE RATIO LAID DOWN BY THE HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF YAS HO DA SUPER SPECIALTY HOSPITAL (SUPRA), WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FIRST APPELLATE ORDER ON THE ISSUE. THE SAME IS UPHELD. THE RELATED GROUND S ARE ACCORDINGLY REJECTED. 9. IN RESULT, BOTH THE APPEALS ARE DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 17 .02.2015 SD/ - SD/ - ( N.K. SAINI ) ( I.C. SUDHIR ) ACCOUNTANT M EMBER JUDICIAL MEMBER DATED: 17 /02/2015 MOHAN LAL 7 COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR