DY CIT (OSD) (TDS)-2(2), MUMBAI V. M/S HURKISONDAS HOSPITAL & RESEARCH CENTRE, MUMBAI

ITA 7297/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1060 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 28-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T S KHALSA L D
• Assessee Lawyers: NIMESH VORA LD
• Keywords: TDS
• Section: 201(1); 192; 194J

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE JUSTICE SHRI P. P. BHATT, PRESIDENT AND SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO.7297/MUM/2019 ( / ASSESSMENT YEAR: 2011-12) D CIT (OSD)(TDS) - 2(2) 706, SMT. K.G.M. AYURVEDIC HOSPITAL BDG. CHARNI ROAD (WEST) MUMBAI-400 002 / VS. SIR HURKISONDAS NURROTUMDAS HOSPITAL & RESEARCH CENTRE H.N. HOSPITAL, PRARTHANA SAMAJ RAJA RAMMOHAN ROY ROAD GIRGAON, MUMBAI-400 004 PAN / TAN :: AABTS-7800-D / MUMS-48115-C ( /APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : SHRI NIMESH VORA-LD. AR REVENUE BY : SHRI T.S. KHALSA-LD.SR. DR / DATE OF HEARING : 29/06/2021 / DATE OF PRONOUNCEMENT : 12/07/2021 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR (AY) 2011-12 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-60, MUMBAI {CIT(A)} DATED 26/09/2019 ON FOLLOWING GROUN DS OF APPEAL: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN NOT TREATING THE HOSPITAL B ASED CONSULTANTS (HBCS) AS EMPLOYEES AND THEREFORE HOLDING THAT PROVISIONS OF SECTION 192 OF THE INCOME TAX ACT, 1961 WERE NOT APPLICABLE? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT PAYMENT MADE T O EMPLOYEES OF M/S. SIR HURKISONDAS NURROTUMDAS HOSPITAL & RESEARCH CENTRE WHO HAD WORKED WITH THE RESPONDENT FOR RENDERING VARIOUS SERVICES TO BE TRE ATED AS REIMBURSEMENT AND NOT 2 AS PAYMENT TOWARDS PROFESSIONALS FEE REQUIRING TDS TO BE DEDUCTED U/S 194J OF THE ACT? 3. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT TDS ON PAYMENT S MADE TO EMPLOYEES OF M/S. SIR HURKISONDAS NURROTUMDAS HOSPITAL & RESEARCH CENTRE, TDS WAS REQUIRED TO BE DEDUCTED U/S 194J AND NOT U/S 192 OF THE ACT WITHOU T APPRECIATING THE FACT THAT PAYMENT MADE TO THE EMPLOYEES ON MONTHLY BASIS WERE ESSENTIALLY IN NATURE OF SALARIES?' AS EVIDENT, THE REVENUE IS AGGRIEVED BY FINDINGS OF LD. CIT(A) THAT THE PAYMENT MADE BY ASSESSEE HOSPITAL TO CERTAIN CONSUL TANT DOCTORS WOULD REQUIRE DEDUCTION OF TAX AT SOURCE U/S 194J AS APPL ICABLE TO PROFESSIONAL PAYMENTS AND NOT U/S 192 AS APPLICABLE TO SALARIED EMPLOYEES. 2. THE UNDISPUTED POSITION THAT EMERGES IS THAT LD. CIT(A) HAS PRIMARILY FOLLOWED THE ORDER OF TRIBUNAL IN ASSESSE ES OWN CASE FOR AY 2008-09, ITA NO.2681/MUM/2015 ORDER DATED 26/08/201 6 WHILE RENDERING HIS ADJUDICATION. NOTHING HAS BEEN SHOWN TO US THAT THE AFORESAID ORDER HAS EVER BEEN REVERSED BY ANY HIGHE R JUDICIAL AUTHORITY. NO FACTUAL DISTINCTION COULD BE POINT OUT BEFORE US . IN THE SAID BACKGROUND, OUR ADJUDICATION TO THE SUBJECT MATTER OF APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 3.1 THE MATERIAL FACTS ARE THAT AN ORDER WAS PASSED BY LD. TDS OFFICER (AO) U/S 201(1) / 201(1A) ON 22/03/2013 WHEREIN IT TRANSPIRED THAT THE ASSESSEE HOSPITAL PAID AGGREGATE AMOUNT OF RS.11.17 CRORES TO FULL TIME DOCTORS / CONSULTANTS (REFERRED TO AS CONSULTANT DO CTORS) AS PROFESSIONAL FEE AFTER DEDUCTION OF APPLICABLE TAX AT SOURCE IN TERMS OF REQUIREMENTS OF SEC.194J. THIS WAS ON THE PREMISE THAT THERE WAS NO EMPLOYER- EMPLOYEE RELATIONSHIP BETWEEN THE ASSESSEE AND FULL -TIME CONSULTANT DOCTORS. THE CONSULTANT DOCTORS WERE GIVEN RETAINER SHIP-FEE FOR THE PERFORMANCE OF DUTIES ASSIGNED TO THEM. THEIR TERMS OF ARRANGEMENT WOULD NOT INDICATE THAT THEY WERE EMPLOYED BY THE A SSESSEE HOSPITAL. IT 3 WAS EXPLAINED THAT THE ASSESSEE HOSPITAL ENGAGES VA RIOUS MEDICAL PROFESSIONAL COMPRISING DIFFERENT SPECIALISTS FOR P ROVIDING MEDICAL TREATMENT TO THE PATIENTS BY USING THE INFRASTRUCTU RAL FACILITIES SET UP BY THE HOSPITAL. SOME OF THESE PROFESSIONALS WERE FULL -TIME EMPLOYEES WHEREAS SOME SPECIALIST DOCTORS WERE ENGAGED AS CON SULTANTS TO WHOM POSSESSIONAL FEES WAS PAID. THE HOSPITAL WOULD CHA RGE THEIR PATIENTS UNDER VARIOUS HEADS LIKE ROOM CHARGES, OPERATION TH EATER CHARGES, MEDICINE AND DOCTORS FEES. THE DOCTORS FEES SO COL LECTED WOULD BE PAID TO THE CONSULTANT DOCTORS AFTER DEDUCTION OF TAX AT SOURCE (TDS) U/S 194J. THERE WAS NO SPECIFIC TIMING AND ATTENDANCE RECORDS MAINTAINED BY THE HOSPITAL WITH RESPECT TO CONSULTANT DOCTORS. THE DO CTORS WOULD NOT COME TO THE HOSPITAL IT THERE WAS NO PATIENTS RELATED TO THEIR SPECIALTY / ADMITTED UNDER THEM. THERSE PROFESSIONALS WOULD NOT WORK EXC LUSIVELY FOR THE ASSESSEE HOSPITAL RATHER THEY RENDER SIMILAR SERVIC ES DIRECTLY OR INDIRECTLY TO OTHER ENTITIES AS WELL AS AT THEIR PRIVATE CLINI C SINCE THERE WERE NO SUCH RESTRICTION MENTIONED IN THE LETTER ISSUED TO THEM. 3.2 HOWEVER, THE AO BASED ON SURVEY FINDINGS U/S.13 3A CONDUCTED ON ASSESSEE ON 30/10/2010 OPINED THAT SERVICES OF THE DOCTORS WERE UTILIZED ONLY FOR THE PURPOSE OF PATIENTS COMING TO THE ASSE SSEE HOSPITAL. THESE DOCTORS WERE EXPECTED TO SERVE THE PATIENTS ON ALL DAYS AT THE HOSPITAL. THE DOCTORS WERE EXPECTED TO WORK AS PER THE RULES AND REGULATION OF THE HOSPITAL AND WERE BARRED FROM WORKING IN ANY OTHER HOSPITAL OR CONDUCT PRIVATE PRACTICE. THE SAME WOULD BE POSSIBLE ONLY I F THERE WAS EMPLOYER- EMPLOYEE RELATIONSHIP. THEREFORE, THE ASSESSEE WAS LIABLE TO DEDUCT TAX U/S 192 AS APPLICABLE TO SALARY PAYMENTS. SINCE THE RE WAS SHORT- DEDUCTION OF TAX, THE ASSESSEE WAS TREATED AS ASSES SEE-IN-DEFAULT. FINALLY, THE SHORTFALL WAS COMPUTED AT RS.83.80 LAC S, AS DETAILED IN PARA- 4 3.4 OF THE ORDER. THE INTEREST U/S 201(1A) ON SHORT FALL WAS COMPUTED AT RS.29.33 LACS AND AGGREGATE DEMAND OF RS.113.14 LAC S WAS RAISED AGAINST THE ASSESSEE. 4.1 DURING APPELLATE PROCEEDINGS, THE ASSESSEE REIT ERATED THAT WHEREVER DOCTORS WERE EMPLOYED ON FULL TIME BASIS, TAX WAS DEDUCTED U/S 192 WHEREAS WHERE DOCTORS WERE NOT EMPLOYED BY THE ASSESSEE, TAX WAS DEDUCTED U/S 194J AS APPLICABLE TO PROFESSIONAL PAYMENTS. THE ATTENTION WAS DRAWN TO THE FACT THAT CONSULTANT DOC TORS WERE VISITING DOCTORS AND THEIR TERMS OF APPOINTMENT WERE DIFFERE NT FROM EMPLOYEE DOCTORS. TO SUPPORT THE SAME, THE ATTENTION WAS DRA WN TO THE STATEMENT SHOWING MONTHLY FEES PAID TO VISITING DOCTORS WHERE IN IT COULD BE NOTED THAT FEE PAID TO EACH DOCTOR WAS DIFFERENT IN EACH MONTH. THIS WAS SO BECAUSE FEES PAYABLE TO THEM WAS LINKED TO SERVICES RENDERED AND PATIENTS ATTENDED TO BY THEM DURING THE RELEVANT PE RIOD. THE BASIS OF PAYMENT WAS PATIENTS ATTENDED TO BY THEM DURING THE MONTH. THE CONSULTANT DOCTORS WERE NOT ENTITLED TO ANY FIX REM UNERATION. IN CASE OF WEAKER / INDIGENT PATIENTS, THE VISITING DOCTOR WOU LD GET NO FEE OR LESS FEE DEPENDING UPON THE FEE COLLECTED FROM SUCH PATIENTS . IT WAS ALSO REITERATED THAT THE HOSPITAL CHARGED THEIR PATIENTS UNDER VARIOUS HEADS LIKE ROOM CHARGES, OPERATION THEATRE CHARGES, MEDIC INES, DOCTORS FEE ETC. IN CASE OF VISITING DOCTORS, FEES COLLECTED FR OM PATIENTS WAS PAID TO THEM AFTER RETAINING HOSPITALS SHARE IN THE FEE. T HERE WAS NO SPECIFIC TIMING AND ATTENDANCE RECORD MAINTAINED BY HOSPITAL WITH RESPECT TO SUCH DOCTORS. FURTHER, THE CONSULTANT DOCTORS WOULD NOT BE ELIGIBLE FOR ANY LEAVE, PROVIDENT FUND, GRATUITY, BONUS ETC. AND WER E NOT SUBJECT TO ADMISSION OR RETIREMENT FROM SERVICES. THEY WERE NO T ENTITLED TO SEVERAL BENEFITS AS ALLOWED TO REGULAR EMPLOYEES SUCH AS ME DICAL 5 REIMBURSEMENT. INSURANCE, LEAVE ENCASHMENT ETC. THU S, THERE WAS NO EMPLOYER-EMPLOYEE RELATIONSHIP AND THEREFORE, TAX W AS RIGHTFULLY DEDUCTED U/S 194J. 4.2 RELIANCE WAS PLACED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF LAXMI NARAYAN RAM GOPAL & SON LTD. VS. GOVT. OF HYDERABAD (25 ITR 449 SC) AND ALSO ON RAM PRASHAD VS. CIT {1972; 86 ITR 122 SC} WHEREIN IT WAS HELD THAT THE DISTINGUISHING FACTOR S WOULD BE CONTROL AND SUPERVISION. AS PER CONTRACTUAL TERM S OF ASSESSEE WITH THESE CONSULTANT DOCTORS, THERE WAS NO CONTROL ON T HE DOCTORS AS TO HOW WORK ASSIGNED TO THEM WAS TO BE CARRIED OUT. THEY W ERE WORKING AS INDEPENDENT PROFESSIONALS AND ALSO THERE WAS NO SUP ERVISION BY WAY OF INSTRUCTIONS TO TELL THE DOCTORS WHAT TO DO AND HOW TO DO THEIR WORK. 4.3 ANOTHER SUBMISSION WAS THAT TRIBUNAL IN ASSESSE ES OWN CASE FOR AY 2008-09 VIDE ITA NO.2681/MUM/2015 ORDER DATED 26 /08/2016 ALLOWED SIMILAR ISSUE IN ASSESSEES FAVOR RELYING M AINLY ON THE DECISION OF HON'BLE BOMBAY HIGH COURT IN CIT VS. GRANT MEDICAL FOUNDATION (ITA NO.140 OF 2013 DATED 22/01/2015). 4.4 THE LD. CIT(A), IN THE LIGHT OF ASSESSEES SUBM ISSIONS, CONCURRED THAT THE ISSUE STOOD COVERED IN ASSESSEES FAVOR BY THE DECISION OF TRIBUNAL IN AY 2008-09 WHEREIN IT WAS HELD THAT THE DOCTORS WERE INDEPENDENT PROFESSIONALS AND WERE DISCHARGING ONLY PROFESSIONAL SERVICES. THERE WAS NO EMPLOYER-EMPLOYEE RELATIONSH IP BETWEEN THE ASSESSEE AND CONSULTANT DOCTORS. THE RATIO OF DECIS ION OF MUMBAI TRIBUNAL IN THE CASE OF JASLOK HOSPITAL & RESEARCH CENTRE (ITA NO. 4043/MUM/2015) TAKING THE SAME VIEW, WAS ALSO NOTED. 6 4.5 FINALLY, IT WAS CONCLUDED THAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX U/S 192 OF THE ACT AND IT WAS NOT TO BE TREATED AS ASSESSEE-IN-DEFAULT. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. OUR FINDINGS AND ADJUDICATIONS 5. GOING BY THE FACTUAL MATRIX AS ENUMERATED IN THE PRECEDING PARAGRAPHS, IT COULD BE NOTED THAT THE TERMS OF ARR ANGEMENT WITH CONSULTANT DOCTORS WAS DIFFERENT FROM EMPLOYEE-DOCT ORS. THE CONSULTANT DOCTORS WERE PAID BASED ON THE SERVICES RENDERED BY THEM AND ON THE BASIS OF DOCTORS FEES COLLECTED BY THE HOSPITAL FR OM THE PATIENTS. THE SAME IS EVIDENT FROM THE FACT THAT THE PAYMENT MADE TO THESE DOCTORS VARY SIGNIFICANTLY IN EACH MONTH. THIS WAS SO BECAU SE FEES PAYABLE TO THEM WAS LINKED TO SERVICES RENDERED AND PATIENTS A TTENDED TO BY THEM DURING THE RELEVANT PERIOD. FURTHER, THE CONSULTANT DOCTORS WERE NOT ENTITLED TO ANY FIX REMUNERATION. IT IS ALSO A FACT THAT THERE WAS NO SPECIFIC TIMING AND ATTENDANCE RECORD MAINTAINED BY HOSPITAL WITH RESPECT TO SUCH DOCTORS AND THIS CATEGORY OF DOCTORS WAS NOT BE ELI GIBLE FOR ANY LEAVE, PROVIDENT FUND, GRATUITY, BONUS ETC. AND WERE NOT S UBJECT TO ADMISSION OR RETIREMENT FROM SERVICES. THEY WERE NOT ENTITLED TO SEVERAL BENEFITS AS ALLOWED TO REGULAR EMPLOYEES SUCH AS MEDICAL REIMBU RSEMENT. INSURANCE, LEAVE ENCASHMENT ETC. ALL THESE FACTS AN D FEATURES WOULD BOLSTER ASSESSEES CLAIM THAT THERE WAS NO EMPLOYER -EMPLOYEE RELATIONSHIP BETWEEN THE ASSESSEE AND CONSULTANT DO CTORS. THEREFORE, THE TAX WAS RIGHTFULLY DEDUCTED U/S 194J. PERTINENT LY, THE COORDINATE BENCH OF THIS TRIBUNAL HAS ALSO DECIDED THIS ISSUE IN ASSESSEES FAVOR FOR AY 2008-09 WHICH HAS ALREADY BEEN TAKEN NOTE OF IN THE IMPUGNED ORDER. NO DISTINCTION IN FACTS COULD BE BROUGHT ON RECORD. THEREFORE, WE FIND NO REASON TO INTERFERE IN THE IMPUGNED ORDER. 7 6. THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED ON 12 TH JULY, 2021. SD/- SD/- (JUSTICE P.P. BHATT) (MANOJ KU MAR AGGARWAL) PRESIDENT ACCOUNTANT MEMBER MUMBAI; DATED : 12/07/2021 SR.PS, JAISY VARGHESE / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. !' , ' , / DR, ITAT, MUMBAI 6. ! #$% / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.