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2015 (6) TMI 61 - AT - Income TaxAssessee in default to deduct tds - short deduction of tax - payment made by the assessee to Doctors was in the nature of Salary and therefore the Assessee ought to have deducted tax at a higher rate than what the Assessee had deducted treating the payment as fees for professional or technical services - Held that - As these doctors/experts are at liberty to do the works other than the assessee s contractual engagements but without contradicting the terms and conditions of contract entered between the assessee company and the said doctors/specialists as mentioned above. In view of the above, there is no employer- employee relationship between the assessee and eleven doctors discussed above. So, the provision of TDS u/s 192 and interest u/s 201 and 201(IA) of IT Act is not attracted. Accordingly, the appeal filed by the revenue are dismissed - Decided in favour of assesse.
Issues Involved:
1. Nature of payments made to doctors - whether "Salary" or "Fees for Professional or Technical Services". 2. Liability of the assessee to deduct tax at source under Section 192 or Section 194J of the Income Tax Act. 3. Applicability of the decision in the case of Elbit Diagnostics Ltd. to the present case. 4. Treatment of the assessee as "assessee in default" under Section 201(1) & 201(1A) of the Income Tax Act. Detailed Analysis: 1. Nature of Payments Made to Doctors: The primary issue revolves around whether the payments made by the assessee to the doctors should be classified as "Salary" or as "Fees for Professional or Technical Services." The assessee, a company providing teleradiology services, engaged doctors under a contract for services. The doctors provided their expertise independently, without the assessee controlling how they performed their tasks. The assessee argued that the relationship was not that of a master and servant, and thus, the payments should not be considered as "Salary." 2. Liability to Deduct Tax at Source: The Revenue contended that the payments were in the nature of "Salary," necessitating tax deduction under Section 192, which typically involves a higher rate. The assessee, however, deducted tax under Section 194J, treating the payments as "Fees for Professional or Technical Services." This led to the Revenue's assertion of a shortfall in tax deduction. 3. Applicability of the Elbit Diagnostics Ltd. Case: The CIT(Appeals) referenced the Tribunal's decision in the case of Elbit Diagnostics Ltd., where similar circumstances were adjudicated. The Tribunal had determined that payments to doctors were not "fees for technical services" but rather professional fees. This decision was upheld by the Karnataka High Court. The CIT(A) found the facts in the present case to be identical to those in Elbit Diagnostics Ltd., thereby concluding that the assessee could not be treated as in default. 4. Treatment as "Assessee in Default": The Tribunal examined whether the assessee should be treated as an "assessee in default" under Sections 201(1) & 201(1A). Given the similarity of facts with the Elbit Diagnostics Ltd. case, the Tribunal concluded that the assessee had correctly deducted tax under Section 194J. Consequently, the order passed by the Assessing Officer under Section 201(1) & 201(1A) was cancelled. Conclusion: The Tribunal found that the contractual terms between the assessee and the doctors indicated a professional relationship rather than an employer-employee relationship. The doctors were engaged for their specialized skills, and the assessee did not control the manner of their work. The Tribunal upheld the CIT(A)'s decision, confirming that the payments were professional fees and not salary. Therefore, the assessee was not liable for tax deduction under Section 192 but under Section 194J. The appeal by the Revenue was dismissed, and the cross-objection by the assessee was deemed unnecessary for adjudication. Judgment: The appeal by the Revenue and the cross-objection by the assessee were both dismissed. The Tribunal's decision was pronounced in open court on March 27, 2015.
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