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TMI Blog2014 (7) TMI 339X X X X Extracts X X X X X X X X Extracts X X X X ..... was not a case of appointment of consultants - there was an employer and employee relationship between the assessee and the doctors - the remuneration paid to them was chargeable to tax under the head 'salaries' and liable for deduction of tax u/s 192 of the Act and not under the provisions of section 194J of the Act - wherever the assessee issued appointment letter and the doctor’s appointment is governed by the service rules of the assessee hospital, it is to be considered that the relationship between the doctors and the assessee is as employee-employer relationship and the assessee is liable to deduct TDS u/s. 192 of the Act. Relying upon Deputy Commissioner of Income-tax Versus Yashoda Super Speciality Hospital [2010 (6) TMI 642 - ITAT HYDERABAD] - terms of appointment clearly indicate appointment of professionals for providing consulting services and not appointment of employee - The Doctors are not precluded from pursuing the professional pursuits elsewhere as long as there is no conflict of interest - Once the Doctors achieve some seniority and standing, their remuneration is a percentage of fees collected from patients consulting him - the services rendered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciate the fact that the Supreme Court's decision in the case of Hindustan Coca Cola Beverages Pvt. Ltd. (293 ITR 226) would not apply to the assessee's case in view of the fact that the assessee has not been deducting tax at source under section 192 continuously for all the years. 3. The facts of the case, in brief, are that the assessee is a company engaged in providing health care services, specializing in cardiac related health care services. During the course of a survey u/s 133A conducted at the assessee's premises on 25-3-2008, it was found that the assessee engaged the services of certain doctors and had been making TDS u/s 194J by treating them as consultants instead of u/s 192. Copies of consultancy agreements entered into by the hospital with the doctors, obtained during the course of survey, contained certain clauses which read as follows: (a) The doctors are being paid a minimum assured amount (b) The period of Agreement is usually 2 years. (c) The doctors are bound by the guidelines, instructions and orders issued by hospital and shall prevail in the event of conflict between the terms of the Agreement. (d) The working timings for the doct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th for utilizing the infrastructure facilities and 15% of the surgery fees, the remaining amount was paid to the doctors. The doctors are not entitled to take any gratuity, bonus etc. They will only be paid fees for the services rendered by them, through a structured agreement. As already discussed, no specific working hours are prescribed to the professionals. For the purpose of treating the doctors as employees, they should be given specific assignment. There should be specific working hours, rules and regulations and they should be on the roll for PF as employees. They shall be given leave as per statutory provisions besides gratuity etc. These factual aspects which are essential to treat the doctor as employee are absent in the case before us, therefore in our opinion, the doctors engaged by the assessee are to be treated as consultants, only for rendering professional services. The matter would be entirely different in case the doctors are re-employed as medical officers to work for fixed hours and they are given the facility of leave, PF, gratuity, bonus etc. Since such facilities are not given and what was paid to the doctors is only through a structured arrangement for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. Hence the patients keep on visiting the hospital very frequently. The hospital prefers to have the same medical consultants to have better services to the patients. This is the reason as to why the hospital usually specifies a minimum consultancy period of 2 years for all the consultants at the time of their joining. Kindly appreciate the reason of the said 2 years minimum period, and it will no way create employer and employee relationship between the hospital and the consultants. Though the doctors work on consultancy basis for the hospital, they are subject to some regulations of the hospital for the better services, confidentiality, quality and assured services, etc. In this regard we humbly submit that setting some regulations and guidelines for better management and services do not confer to have the relationship of employer and the employee between the consultants and the hospital. It is quite common that any consultant is expected to complete his/her job till the work on hand is exhausted i.e. till the last waiting patient is attended for medical advice. Certainly this type of consultancy can never establish an employer and the employee relationship. 8. The AR furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for taxes, demand arising u/s. 201(1) in this situation cannot be enforced for the proposed A.Ys. 2007-08 and 2009-10. Please note that we have already submitted the CA Certificates/Copies of IT Returns of the consulting doctors to, substantiate that the consultancy amount paid by the hospital to the said doctors was offered as the income under the head 'Income from Business or Profession' by the respective doctors. In respect of some consulting doctor, who have left the hospital, we are unable to locate them and hence could not arrange the CA Certificate/Copy of IT return for their consultancy income earned from the hospital for the A.Ys. 2007-08 and 2009-10. However, we are submitting complete addresses and PAN particulars of the said individuals for your ready information. We request to please ascertain the facts from the Income Tax Departments data bank, whether the said doctors (who could not be located by the hospital) had filed their Return of income and the consultancy fee received from the hospital was reflected in their total income. 10. The Learned DR on the other hand, relied on the orders of the ITAT Hyderabad Coordinate Bench in the case of DCIT, Hyderab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of those cases and on consideration of facts of the present case, in our opinion, those case-law cannot be applied to the case of the assessee. More so, in the present case the doctors are governed by the service rules of the assessee and it was specifically mentioned in the appointment order that it was a contract for employment and the doctors are liable for retirement on attaining the age of 58 years and the monthly payment is not relating to the number of patients treated by them or the amount charged to the assessee. 26. As regards the treatment given by the assessee as well as by the doctors to the remuneration paid in their respective books of account, we are of the opinion that the same is not conclusive to decide the nature of the said remuneration which, as already observed by us on the basis of relation between the assessee and the doctors and not on any other basis. As per the well known cannon of construction of document, the intention generally prevails over the word used and that such a construction placed on the word in a deed as is most agreeable to the intention of the grantor. If there are grounds appearing from the face of the instrument affording proof of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ween the assessed and doctors are one for providing professional services, and there is no element of employer and employee relationship existing. Therefore in our opinion tax has to be deducted u/s. 194J as fee for professional services and not as salary. For the purpose of treating the doctors as employees they should be given specific assignment. There should be specific working hours, rules and regulation and they should be on the roll for PF as employees. They shall be given leave as per statutory provisions besides gratuity. These factual aspects which are essential to treat the doctors as employees are absent in the case before us, therefore in our opinion the doctors engaged by the assessed are to be treated as consultants for rendering professional services. 13. Subsequently, the Hon ble A.P. High Court has confirmed the Order of the Tribunal in the case of CIT vs. M/s Yashoda Super Speciality Hospital, Hyderabad in I.T.T.A. No. 196 of 2013 by order dated 04.07.2013 and has held as follows: This appeal is sought to be preferred against the judgment and order of the learned Tribunal dated 30.06.2010 in relation to the assessment year 200882009, on the following s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot. On careful reading of the impugned judgment and order, we are of the view that the law has been correctly applied. Therefore, we do not find any question of law involved in this matter. The Appeal is accordingly dismissed. No order as to costs . 14. We also find that the Chandigarh Bench in the case of IVY Health Life Sciences P. Ltd. vs. Department of Income Tax has elaborately discussed and at para 8 states as follows : A bare perusal of the case law, relied upon by the appellant and submissions made in the synopsis reveals that there does not exist employer/employee relationship between the assessee/appellant and the persons providing professional services. On consideration of the agreement in its entirety vis-a-vis the case law relied upon by the assessee/appellant, it is evident that it is not a case of employer/employee relationship between the assessee/appellant and the doctors. Therefore, having regard to the detailed analysis and findings of the CIT(Appeals) on the issue in question, it cannot be said that findings of the ld. CIT(Appeals) suffer from any infirmity. In view of this, findings of the CIT(Appeals) are upheld. 15. Having gone through the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;, the master can only require as to what is to be done. The test which is often applied to determine existence of such a relationship is whether the Master has the authority to order or require what is to be done but also how it should be done. An independent Contractor is one who undertakes to produce a given result but in the actual execution of the work he is not under the order or control of the person for whom he does it, and may use his own discretion in things not specified beforehand. The Assessee Company is different from that of the Max Mueller Case on which the Assessing officer has relied upon. 19. Further in the case of Chandi Prasad Singh vs State of UP AIR 1956 SC 149, reference has been made to Halsbury's Laws of England which distinguishes between a Servant and Agent: A servant acts under the direct control and supervision of the master, and is bound to conform to all reasonable orders given to him in the course of his work. An agent though bound to exercise his authority in accordance with all lawful instructions which may be given to him from time to time by his principal, is not subject in its exercise to the direct control or supervision of the pri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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