T.R.O., Bangalore V. M/s Sagar Apollo Hospital, Bangalore

ITA 926/BANG/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8515 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2010
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 10-03-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 16-09-2009
• Court: TRIBUNAL
• Department Lawyers: JACINTA ZIMIK VASHAI
• Assessee Lawyers: HARISH RAO
• Keywords: TDS
• Section: 201(1); 192; 194J

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE A BENCH, BANGALORE BEFORE DR. O.K.NARAYANAN, VICE PRESIDENT AND SHRI SHAILENDRA KUMAR YADAV, JM ITA NOS.926,927 & 928(BNG.)/2009 (ASSESSMENT YEARS : 2003-04, 2004-05 & 2005-06) THE TAX RECOVERY OFFICER, RANGE-16, BANGALORE APPELLANT VS M/S SAGAR APOLLO HOSPITAL, DIVISION OF MGVP TRUST, NO.44/54, 30 TH CROSS, TILAKNAGAR, JAYANAGAR EXTENSION, BANGALORE RESPONDENT REVENUE BY : SMT. JACINTA ZIMIK VASHAI, ADDL.CIT ASSESSEE BY : SHRI HARISH RAO, CA O R D E R PER SHAILENDRA KUMAR YADAV, JM : ALL THESE APPEALS PERTAIN TO SAME ASSESSEE ON SIMI LAR POINT OF TDS U/S 192, SO THESE ARE BEING DISPOSED OF BY A CO MMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE, A H OSPITAL IN THE NAME AND STYLE OF M/S SAGAR APOLLO HOSPITALS, AND I S A DIVISION OF THE TRUST M/S MAHATMA GANDHI VIDYA PEETHA TRUST. THE TD S WING OF THE INCOME-TAX DEPARTMENT CONDUCTED VERIFICATION ON 21 8-2007 IN THE ITA NOS.926,927 & 928(B)/09 2 HOSPITAL TO CHECK THE COMPLIANCE WITH THE TDS PROVI SIONS. THE HOSPITAL PAID PROFESSIONAL CHARGES TO VARIOUS CATEG ORIES OF DOCTORS LIKE DUTY DOCTORS, VISITING CONSULTANTS AND CONSULTANT D OCTORS ON RETAINER SHIP BASIS. FOR ALL THE CATEGORY OF DOCTORS TAX HA S BEEN DEDUCTED AT SOURCE REGULARLY AS PER THE PROVISIONS OF SEC.194J APPLICABLE TO PROFESSIONAL PAYMENTS AND DUTY PAID TO THE CREDIT O F THE CENTRAL GOVERNMENT. HOWEVER, THE AO WHILE COMPLETING THE A SSESSMENT U/S 201(1) HELD THAT THERE EXIST EMPLOYEE EMPLOYER RE LATIONSHIP BETWEEN THE DUTY DOCTOR AND THE ASSESSEE AND HENCE THE PROV ISIONS OF SEC.192 SHOULD HAVE BEEN APPLIED WHILE DEDUCTING THE TAX AT SOURCE FROM THE DOCTORS PAYMENTS. THE AO OBSERVED THAT AS PER THE PROVISIONS OF SEC.17 OF THE IT ACT, SALARY IS DEFINED AS ; 1) SALARY INCLUDES I) WAGES II) ANY ANNUITY OR PENSION III) ANY GRATUITY 3. THE AO CONCLUDED THAT FOR FEW OF THE DOCTORS UN DER THE CATEGORY OF DUTY DOCTORS, TAX SHOULD HAVE BEEN DEDU CTED AT SOURCE AS PER THE PROVISIONS OF SEC.192 WHICH IS APPLICABLE T O SALARY PAYMENTS. ACCORDINGLY, THE AO HAS MADE DEMANDS OF RS.131,398/ - RS.496,113/- AND RS.4,70,253/- BEING THE SHORTFALL IN THE TAX DE DUCTED AT SOURCE BY THE HOSPITAL. FURTHER, LEVIED INTEREST OF RS.85,127 /- RS.247,474/- & RS.1,83,705/- U/S 201(1A) FOR THE ASSESSMENT YEARS 2003-04, 2004-05 ITA NOS.926,927 & 928(B)/09 3 & 2005-06 RESPECTIVELY. THE SAME WAS DELETED BY TH E CIT(A), WHICH HAS BEEN OPPOSED BEFORE US BY THE REVENUE. ON THE O THER HAND, LEARNED AR SUPPORTED THE ORDER OF THE CIT(A) ON THE ISSUE. 4. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT THE QUESTION BEFORE US IS WHET HER THE DOCTORS ARE PAID PROFESSIONAL FEES OR SALARY BY THE ASSESSEE HO SPITAL. THE QUESTION WHETHER IT IS A CONTRACT OF SERVICE OR CONTRACT FOR SERVICES. THIS ISSUE CAN BE DECIDED FROM THE NATURE AND EXTENT OF CONTRO L TO ESTABLISH THE RELATIONSHIP OF EMPLOYER AND EMPLOYEE. THE NATURE O F RELATIONSHIP VARIES FROM BUSINESS TO BUSINESS AND IT IS DIFFICUL T TO DEFINE WITH PRECISE NATURE OF CONTROL REQUIRED TO ESTABLISH THE RELATIONSHIP OF EMPLOYER AND EMPLOYEE. THERE ARE SET OF PROCEDURE A ND RULES. DEPENDING ON CASE TO CASE BASIS THE DOCTORS HAVE TO DECIDE HOW TO TREAT PATIENT. HENCE, THERE IS NO EMPLOYER EMPLOYEE RELATIONSHIP. THE DOCTORS ARE DISCHARGING ONLY PROFESSIONAL SERVICES AS AND WHEN THE PATIENTS REQUIRE PARTICULAR SPECIALIZED TREATMENT. TAKING OVER ALL VIEW OF THE SITUATION, THE CIT(A) WAS JUSTIFIED IN HOLDI NG THAT THERE EXISTS NO EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN DUTY DOCTORS AND ASSESSEE. THE ACTION OF THE AO IN TREATING ONLY 20 DOCTORS OU T OF 288 DOCTORS AS EMPLOYEES AND DEMANDING TDS U/S 192 WAS NOT BASED O N COGENT REASONING. THE ASSESSEE HAS RIGHTLY TREATED THE PA YMENTS MADE TO DUTY DOCTORS AS PROFESSIONAL FEES AND DEDUCTED TAX U/S 194J WHICH IS UPHELD. SIMILAR ISSUES ARISE IN OTHER TWO APPEALS AS WELL. FACTS BEING ITA NOS.926,927 & 928(B)/09 4 SAME, SO FOLLOWING THE SAME REASONING, THE ORDER OF CIT(A) IN ALL CASES ARE UPHELD. 5. IN THE RESULT, ALL THESE APPEALS FILED BY THE RE VENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE OF 3 103-2010 (DR. O.K.NARAYANAN) (SHAILENDRA KUMAR YA DAV) VICE PRESIDENT JUDIC IAL MEMBER PLACE: BANGALORE DATED: 31-03-2010 AM* COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3. CIT(A) 4. CIT 5. DR 6. GF(BLORE) 7. GF(DELHI) BY ORDER AR, ITAT, BANGALORE