2014 (6) TMI 638 - AT - Income Tax

Stay application Applicability of seciton 194J or section 192 of the Act - Payment made by hospital/trust to the Doctors Held that - Prima facie the assessee has brought out a good argueable case on the point that the provisions of section 192 are not applicable as the arrangement between the assessee and the Doctors are on professional basis and not employer and employees - when the payees have already discharged the liability of tax on the amount received from the assesee, the stay of demand is allowed in respect of the four years before us for a period of 180 days or till disposal of appeal whichever is earlier Decided in favour of Assesee.

Summary

Issues: Stay application against demand under sections 201 and 201A of the Income Tax Act for A.Ys. 2008-09 to 2011-12 by a Public Charitable Trust regarding tax deduction from payments made to doctors under sections 194J or 192.

Analysis:
1. Nature of the Assessee: The assessee is a Public Charitable Trust engaged in running a charitable hospital. It is registered under various Acts and granted exemptions under the Income Tax Act, including section 12A and 10(23C) (via). The dispute arose from the Assessing Officer's view on the tax deduction from payments made to doctors, considering it as short deduction under sections 201 and 201A.

2. Contentions of the Assessee: The authorized representative argued that the dispute revolves around the applicability of sections 194J or 192 for tax deduction from payments to doctors. It was emphasized that the doctors are tax-assessed individuals, absolving the assessee from being an assessee in default under section 201. Referring to relevant case law and circulars, it was contended that when the recipients have paid tax, the assessee cannot be held liable for short deduction. Additionally, it was argued that the payments to doctors were as professional and consultancy fees, not salaries, making section 192 inapplicable.

3. Revenue's Stand: The Departmental Representative supported the lower authorities' orders, asserting that the payments to doctors were akin to salaries, thus falling under section 192. Even if the tax liability was met by the recipients, the assessee was liable for interest under section 201A for the intervening period.

4. Decision and Rationale: The Tribunal refrained from delving into the merits of the case, acknowledging the need for a detailed examination during the appeals process. However, prima facie, it found merit in the assessee's argument that section 192 might not be applicable due to the professional nature of the payments. Considering the nature of the dispute and the recipients' tax compliance, the Tribunal granted a stay on the demand for 180 days or until appeal disposal. To safeguard revenue interests, an expedited hearing was scheduled. The stay application of the assessee was allowed, with the order pronounced in open court.

This judgment highlights the importance of analyzing the nature of payments and the applicability of tax deduction provisions in cases involving charitable trusts and professional fee payments. The Tribunal's decision to grant a stay reflects a balanced approach, ensuring a fair hearing while safeguarding revenue concerns.