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TMI Blog2010 (12) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... g to service”. According to us, the terms and conditions do not indicate that the said contract with the Consultant Doctors was “owning to service” or “belonging to their service”. - Next is the proposition “FOR” and the same is defined in the dictionary as, with respect to, in favour of, on account of, in the place of or by reason of. If we apply these meanings, then the terminology as applied in section 194J of the I.T. Act can be read as fees on account of professional services. Therefore, it can also be read that fees with respect to technical / professional services. Likewise, in respect of the contract in question, it can be read as “contract in respect of service” or “contract by reason of service”. Therefore, the distinction as per the meaning assigned in the dictionary in respect of these two propositions are pertinent and, therefore, the language of section 194J of the I.T. Act is more close to the language used in the Agreement, hence, required to be applied to resolve the issue. When there is a specific clause provided in the Agreement for payment as “fee for services”, then there is no reason to read the said clause as “fees of services” and then there should not be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to remain present in the hospital on all working days as per the time fixed by the hospital. (b) Such doctors are not allowed to have an attachment with any other hospital nor are they allowed to practice without prior permission of the hospital authorities. (c) The hospital has to pay minimum monthly amount to the FGC doctors. (d) In some of the cases, the hospital has also undertaken to provide residential accommodation to the doctors. (e) In the some of cases photocopies of letter were obtained during the course of survey. These letters are very specifically supporting the view that FGCs are in fact, in the nature of employment with the hospital. (f) That the FGCs are not paid any extra fee for rendering management and administration related services. These are the typical characteristics of an employee-employer relationship and it outlines clearly that in what manner the work is to be done depends upon the employer i.e. the Managements. (g) It is further noticed that in the case of Dr. Vivek Arya, Dr. Dipal Shah, Dr. Neha Shah, Dr. Sandip Shah, Dr. Hiren Trivedi, Dr. M.K. Khoda, Dr. Anagha Zope, Dr. Vinod Kaneria who are FGCs; as per the terms of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant and they have paid tax on the said income and they have filed returns of income. As the payees in these cases have directly paid taxes to the Government, the payer i.e. the appellant should not be treated as an assessee in default in view of amendment to section 191 of the Act w.e.f 1-06-2003 by substituting amended explanation. In case of the consultants where the professional receipts exceed Rs. 10 lakhs, their accounts have been subjected to tax audit u/s.44AB of the Act. For example, in the case of Shri Sandeep Ratilal Shah the receipts are of Rs. 12.49 lakhs and he has filed tax audit report alongwith return of income, in the case of Dr. Jyotinder Hardayalsingh Kaur, the receipts are of Rs. 12.41 lakhs and she is also subject to tax audit. Similarly, Dr. Vivek Arya has got consultancy fees of Rs.9.16 lakhs. Copies of returns of income and audit reports have been filed in respect of these persons as specimens. I have gone through the terms and conditions for employment of three employee doctors i.e. Dr. Jyotsna Bhatavdekar, Dr. Runoo Ghosh and Dr. Meenal Jain and letters of engagement of consultants Dr. Sandip Ratilal Shah and Dr. T. Ayyappan. It is noticed that the emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mployee doctors and the other with the consultant doctors. As per his arguments the distinction between the two agreements is very obvious. In all, there are 53 full time doctors who are employed with the hospital and therefore their salary is subject to tax deduction u/s 192 of the Act. Their salary is also subject to P.F., E.S.I and Professional Tax deduction. Mr. S.N.Soparkar,.Ld. AR has also raised a legal argument that there was no default in payment of tax because those doctors are independently subject to tax and therefore paid taxes in their respective hands, hence there is no question of short payment of tax for which interest could be charged from the assessee. In support, reliance was placed on the decision of Hon ble Apex Court in the case of Hindustan Coca Cola Beverage (P) Ltd. v. CIT reported at [2007]293 ITR 226(SC) and on the decision of Hon ble Jurisdictional High Court in the case of CIT v. Rishikesh Apartments Co-op.Housing Society Ltd. reported at [2002] 253 ITR 310 (Guj.). 6. Both the sides were heard at length. The controversy is that whether as per the terms of the agreement with the doctors in question the deduction of tax was to be made as pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cussion, now we have to see whether the conditions of employment can be said to be within the parameters of section 192 or section 194-J of the I.T. Act, 1961. Section 192 prescribes that any person responsible for paying any income chargeable under the head Salaries shall at the time of payment deduct income tax on the amount payable. As against that section 194-J prescribes that any person who is responsible for paying to a resident any sum by way of (a) fees for professional services, (b) fees for technical services, (c) Royalty and (d) any sum referred to in clause (va) of section 28 of the I.T. Act shall at the time of credit of such sum to the account of payee deduct an amount equal to 10% of such sum as income-tax. The term Salary is defined in section 17 of the I.T. Act which is an inclusive definition. However, this definition says that wages, gratuity, annuity, pension, any fees in addition to salary are inclusive in the definition of salary. Thus in our understanding a Fees is part of the Salary if it is received in addition to the Salary, but not a part of the salary if received independently. To determine whether an amount received by a person is in the nature of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was fees for professional services, on the other hand, the Assessing Officer s view was that it was fees of services. That is why the Assessing Officer has proceeded with the finding that FGCs are in the nature of Contract of Services . But the assessee has tried to demonstrate that one of the clauses in the Agreement has specifically mentioned that a consultant doctor is entitled for fee for service. Therefore, the assessee s vehement contention is that the arrangement with the consultant doctor was contract for services . On reading the various clauses of the Agreements in question, it is very much clear that the contract between the two parties cannot be said to be in the nature of a service contract but a contract for medical service for which there was a specific condition of sharing of medical fees. Because of this reason, we are unable to spell out that the relationship can be said to be a employer-employee relationship. When there is a specific clause provided in the Agreement for payment as fee for services , then there is no reason to read the said clause as fees of services and then there should not be any reason to treat the said payment by the assessee as paym ..... X X X X Extracts X X X X X X X X Extracts X X X X
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