ACIT (TDS), CIR-I, KOLKATA, Kolkata V. M/s Apollo Gleneagles Hospitals Ltd., Kolkata

ITA 813/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1499 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 05-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIGOULEAN HANGSHING

Judgement Text

1 ITA NO.813/KOL/2015 APOLLO GLENEAGLES HOSPITALS LTD., AY 2012-13 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE .., /AND . , ) [BEFORE SHRI A. T. VARKEY, JM & SHRI M. BALAGANESH , AM] I.T.A. NO. 813/KOL/2015 ASSESSMENT YEAR: 2012-13 ASSISTANT COMMISSIONER OF INCOME-TAX, (TDS), CIRCLE-1, KOLKATA. VS. M/S. APOLLO GLENEAGLES HOSPITALS LTD. (PAN: AAECA5407E) APPELLANT RESPONDENT DATE OF HEARING 17.08.2017 DATE OF PRONOUNCEMENT 06.09.2017 FOR THE APPELLANT SHRIGOULEAN HANGSHING, CIT, DR FOR THE RESPONDENT MS. VANDANA BHANDARI, AR ORDER PER SHRI A.T.VARKEY, JM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-24, KOLKATA DATED 02.02.2015 FOR AY 2012-13. 2. THE SOLE GROUND OF APPEAL OF REVENUE IS THAT WHE THER IN RESPECT OF CONSULTANT DOCTORS, THERE EXISTS AN EMPLOYER-EMPLOYEE RELATIONSHIP SO T HAT THEIR PAYMENTS ARE SALARY SO AS TO BRING INTO EFFECT OF SECTION 192 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) INSTEAD OF SECTION 194J OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A DOMESTIC COMPANY, ENGAGED IN PROVIDING HEALTH CARE SERVICES, OPERATES A HOSPITAL VIZ., APOLLO GLENEAGLES HOSPITAL AT KOLKATA. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS THE AO NOTICED THAT 116 DOCTORS WERE ENGAGED BY THE ASSESSEE IN ITS HOSPITAL IN THE CAPACITY OF CONSULTANTS AND AN AGGREGATE OF RS.52,97,98,732/- WAS PAID TO THESE DOCTORS AS P ROFESSIONAL FEES WHICH WAS SUBJECTED TO TDS U/S. 194J OF THE ACT. THEREAFTER, AT THE TIME OF HEARING THE AO ASKED THE LD. AR TO 2 ITA NO.813/KOL/2015 APOLLO GLENEAGLES HOSPITALS LTD., AY 2012-13 SHOW CAUSE AS TO WHY ASSESSEE SHOULD NOT BE TREATED AS AN ASSESSEE IN DEFAULT FOR SHORT DEDUCTION OF TAX AS THE DOCTORS WERE ON THE PAYROLL OF THE HOSPITAL AS SALARIED EMPLOYEES AND THE PAYMENTS MADE TO THEM SHOULD HAVE BEEN TAXED U/ S. 192 OF THE ACT. ACCORDING TO LD. AR, THE AO HAS NOT APPRECIATED THE FACT THAT THERE IS NO EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE ASSESSEE HOSPITAL AND THE CONSULTANT DOCTOR. THE AO IGNORED THE ARRANGEMENT AND THE ASSESSEES CONTENTION IN RESPEC T TO THE RESULTANT RELATIONSHIP WITH CONSULTANT DOCTORS AND THE AO CONSIDERED THEM AS EM PLOYEES OF THE ASSESSEE AND HELD THAT THE PAYMENTS MADE TO THE DOCTORS SHOULD HAVE BEEN T AXED U/S. 192 OF THE ACT. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO AFTER HEARING BOTH THE PARTIES VIDE PARA 4.2 OF HIS ORDER HAS HELD AS UNDER: 4.2. I HAVE EXAMINED THE ASSESSMENT ORDER, THE RE MAND REPORT AS WELL AS VARIOUS SUBMISSIONS OF THE AR OF THE APPELLANT. I FIND THA T THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE FOR AY 2012-13 ARE SIMILAR TO THAT OF AY 2011-12 WHICH HAS ALREADY BEEN ADJUDICATED BY CIT(A)-1, KOLKATA, AS DISCUSSED EARL IER. I, THEREFORE, ENDORSE THE VIEW OF CIT(A)_1, KOLKATA THAT THE CONSULTANT DOCTORS DO NO T ENJOY AN EMPLOYEE-EMPLOYER RELATIONSHIP WITH THE APPELLANT AND THEREFORE THE A O CANNOT HOLD PAYMENTS MADE TO CONSULTANT DOCTORS AS SALARY PAYMENT WITHIN THE MEA NING OF THE SECTION 192 OF THE I. T. ACT. AGGRIEVED, REVENUE IS NOW IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE CAREFULLY. WE NOTE THAT THE AT THE TIME OF HE ARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAV OUR OF THE ASSESSEE BY THE COORDINATE BENCH DECISION IN ASSESSEES OWN CASE IN ITA NO.145 6/KOL/2014 FOR AY 2011-12 DATED 14.03.2017. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. WE FIND THAT THE AO NOTICED THAT 116 DOCTORS WERE ENG AGED BY THE ASSESSEE IN ITS HOSPITAL IN THE CAPACITY OF CONSULTANTS AND AN AGGREGATE OF RS.52,9 7,98,732/- WAS PAID TO THESE DOCTORS AS PROFESSIONAL FEES WHICH WAS SUBJECTED TO TDS U/S. 1 94J OF THE ACT. THEREAFTER, AT THE TIME OF HEARING THE AO ASKED THE LD. AR TO SHOW CAUSE AS TO WHY ASSESSEE SHOULD NOT BE TREATED AS AN ASSESSEE IN DEFAULT FOR SHORT DEDUCTION OF TA X AS, ACCORDING TO HIM, THE DOCTORS WERE ON THE PAYROLL OF THE HOSPITAL AS SALARIED EMPLOYEES A ND THE PAYMENTS MADE TO THEM SHOULD HAVE BEEN SUBJECTED TO TAX U/S. 192 OF THE ACT INST EAD OF SEC. 194J OF THE ACT. ACCORDING TO 3 ITA NO.813/KOL/2015 APOLLO GLENEAGLES HOSPITALS LTD., AY 2012-13 LD. AR, THE AO HAS NOT APPRECIATED THE FACT THAT TH ERE IS NO EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE ASSESSEE HOSPITAL AND THE CONSULTANT DOCTOR. THUS, THE AO DID NOT AGREE TO THE CONTENTION OF THE ASSESSEE IN RESPECT TO THE ARRANGEMENT AND RESULTANT RELATIONSHIP WITH CONSULTANT DOCTORS AND HE HELD TH EM AS EMPLOYEES OF THE ASSESSEE AND SO WAS OF THE VIEW THAT THE PAYMENTS MADE TO THE DOCTO RS SHOULD HAVE BEEN TAXED U/S. 192 OF THE ACT. WE FIND THAT THE ISSUE INVOLVED IN THIS A PPEAL OF THE REVENUE IS AS TO WHETHER THE PAYMENTS MADE TO CONSULTANT DOCTORS ATTACHED TO THE HOSPITAL ARE SALARY SO AS TO BRING INTO EFFECT OF SECTION 192 OF THE ACT INSTEAD OF SECTION 194J OF THE ACT IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THIS TRIB UNAL IN ASSESSEES OWN CASE IN ITA NO. 1456/KOL/2014 FOR AY 2011-12 VIDE ORDER DATED 14.03 .2017, WHEREIN THE TRIBUNAL HAS HELD AS UNDER: 7. WE HAVE PERUSED .THE CASE RECORDS, HEARD RIVAL CONTENTIONS AND PERUSED THE JUDICIAL PRONOUNCEMENTS WHICH WERE BROUGHT TO OUR NOTICE. AT THE VERY OUTSET, WE OBSERVED FROM THE PAPER BOOK FILED BY THE ASSESSEE THAT THERE WAS AN OBJECTION RAISED BY THE LD. DR THAT CERTAIN RESTRICTIONS WERE THERE ON THE CONSULTANT DOCTORS, HOWEVER, WE FIND THAT THE RESTRICTIONS IMPOSED IS THAT THEY ARE NOT ELIGIBLE TO PRACTICE I N ANY HOSPITAL OTHER THAN THE HOSPITAL OF THE ASSESSEE WHICH CLEARLY SIGNIFIES. IT IS FOR THE BES T BUSINESS INTEREST OF THE ASSESSEE AND WHICH DOES NOT IN ANY WAY SIGNIFIES THE SERVICE PATTERNS OF THESE CONSULTING DOCTORS. THAT THE FACTS ON RECORD SHOWS THAT THE APPLICATION OF THE TEST OF DI RECT CONTROL AND SUPERVISION IS NOT ABSOLUTE. THESE 'CONSULTING DOCTORS' ARE GENERALLY WELL SKILL ED AND KNOWLEDGEABLE IN THEIR AREA OF SPECIALIZATION AND HENCE, ATTRACT PATIENTS ON THEIR OWN STRENGTH AND GOODWILL AND DO NOT DEPEND UPON THE HOSPITALS FOR A CONTINUOUS FLOW OF PATIENTS. FURTHER THE CONSULTING DOCTORS ARE FREE TO TREAT AND MANAGE THEIR PATIENTS AS THEY FEEL FIT AND IN THE COURSE OF THE TREATMENT, THE CONSULTING DOCTORS USE THE INFRASTRUCTURE OF TH E HOSPITAL TO WHICH THEY ARE ATTACHED. IN RETURN FOR BEING PERMITTED TO USE THE INFRASTRUCTUR E OF THE HOSPITAL, THE CONSULTING DOCTORS PAY A CERTAIN PERCENTAGE OF THEIR FEES TOWARDS COSTS. THE FEE TO BE CHARGED TO THE PATIENT IS DETERMINED AFTER MUTUAL CONSULTATION UNDERSTANDING BETWEEN HOSPITAL AND DOCTOR. HOWEVER, FOR THE ADMINISTRATIVE, COMMERCIAL AND ACCOUNTING E ASE, THE HOSPITAL COLLECTS THE FEES FROM THE PATIENTS AND REMITS THE SAME TO THE CONSULTING DOCT OR AFTER RETAINING ITS SHARE AS AGREED UPON. THESE DOCTORS MERELY USE THE INFRASTRUCTURE A ND FACILITIES OF THE HOSPITAL AND PAY FOR THE USAGE OUT OF THE FEES COLLECTED FROM THE PATIENTS. SINCE THE CONSULTING DOCTORS RETAIN THEIR INDEPENDENT STATUS, THEY TAKE THEIR OWN PROFESSIONA L INDEMNITY INSURANCE, WHICH MEANS IN THE EVENT OF ANY NEGLIGENCE, THEY ARE ACCOUNTABLE TO CO MPENSATE THE PATIENTS. THESE ASPECTS ARE SUFFICIENT TO PROVE THAT THE CONSULTANT DOCTORS ARE VERY MUCH DIFFERENT FROM THE REGULAR EMPLOYEES DOCTOR OF THE ASSESSEE. WE ARRIVED AT OUR CONSIDERED VIEW THAT BASED ON THE FINDINGS OF LD.CIT(A) AND THE JUDICIAL PRONOUNCEME NTS AS DISCUSSED HEREINABOVE, WE FIND NO INFIRMITY WITH THE FINDINGS OF LD. CIT(A) AND, THER EFORE, WE HOLD THAT THE PAYMENTS MADE TO THE CONSULTANTS DOCTORS ARE NOT SALARY, AND, THEREFORE, TAX IS NOT DEDUCTIBLE U/S.192 OF THE ACT. HENCE, THE RELIEF GRANTED TO THE ASSESSEE IS SUSTAI NED. GROUND NOS.A & B OF THE REVENUE ARE DISMISSED. 4 ITA NO.813/KOL/2015 APOLLO GLENEAGLES HOSPITALS LTD., AY 2012-13 5. AS THE ISSUE INVOLVED IN THE PRESENT APPEAL AS W ELL AS THE MATERIAL FACTS ARE SIMILAR TO THE CASE CITED SUPRA AND IN VIEW OF NO C ONTROVERTING MATERIAL HAS BEEN BROUGHT ON RECORD BY THE REVENUE, WE RESPECTFULLY F OLLOWING THE DECISION OF THE TRIBUNAL CITED SUPRA SUSTAIN THE RELIEF GRANTED TO THE ASSESSEE AND, THEREFORE, THE GROUNDS OF APPEAL OF REVENUE ARE DISMISSED. 6. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 06.09.20 17 SD/- SD/- (M. BALAGANESH) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :6TH SEPTEMBER, 2017 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT ACIT (TDS), CIRCLE-1, KOLKATA 2 RESPONDENT M/S. APOLLO GLENEAGLES HOSPITALS LTD., 58, CANAL CIRCULAR ROAD, E.M. BY PASS, KOLKATA-700 054. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SR. PVT. SECRETARY