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TMI Blog2015 (2) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... dent professionals. Now, it is inconceivable that merely because for a certain period of time or required number of hours the doctors have to be at Ruby Hall Clinic means they will not be entitled to visit any other hospital or attend patients at it necessarily. The anxiety appears is not to inconvenience the patients visiting and seeking treatment at the Ruby Hall Clinic. If specialized team of Doctors, Experts and Experienced in the field are part of the Assessee's Clinic, then, their availability at the clinic has to be ensured. The Doctor or Expert Medical Practitioner is then obliged to denote his time and energy to the clinic whole heartedly. If handsome remuneration, fee is prescribed in return of readymade facilities even for professionals, then, such insistence is not necessarily to treat highly qualified professionals as servants. It is a relationship of mutual trust and confidence for the larger interest of the patient being served efficiently. From this contract or any clause therein no such conclusion could have been arrived at. We do not see how there was any express bar from working at any other hospital and if the contracts would have been properly and carefully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he confirmation by the Income Tax Commissioner Appeals Pune of deduction of tax under section 201 (1) amounting to ₹ 80,81,586/and consequent interest thereon under section 201 (1A) amounting to ₹ 16,73,630/in respect of doctors drawing fixed plus variable pay with written contract treating them as employees of the hospital. The second ground raised by the assessee was whether the Commissioner erred in partially confirming short deduction of tax (TDS) under section 201 (1) amounting to ₹ 1,14,897/and consequent interest of ₹ 23489/thereon under section 201 (1A) in respect of the laboratory fees paid. The impugned order proceeds to partly allow the assessee's appeal and release the assessee from paying the interest in terms of the direction of the Commissioner, the Revenue's appeal has been dismissed. 3) The revenue had raised three grounds and namely that the Commissioner erred in coming to the conclusion that the payments made by the assessee hospital to the category of doctors drawing only variable pay with written agreements were not in the nature of salary and hence not liable for deduction of tax under section 192 of the IT Act. The second gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he payments to these doctors were in the nature of salary, the tax should have been deducted under section 192 of the IT Act. The Assessing Officer, therefore, held that the Assessee is in default for short deduction of tax on this count and liability for short deduction along with interest under section 201 (1A) of the IT Act was worked out at ₹ 5,82,65,575/. 8) Being aggrieved and dissatisfied with this order the assessee preferred an appeal before the Commissioner of the Income tax (Appeals)/ First Appellate Authority. The Commissioner passed an order on 15th March, 2010 partly allowing the appeal of the assessee. The Commissioner held that in respect of doctors employed in the hospital drawing only variable pay with the written contract, it cannot be said that they were employees of the hospital and the remuneration received by them was of the nature of salary. In respect of doctors drawing only variable pay without written contract, the Commissioner held that in the absence of attributes of an employee doctors of this description were not employees of the hospital. In respect of doctors drawing fixed plus variable pay with written contract, the Commissioner held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Escorts Heart Institute Research Centre Ltd v. Deputy Commissioner of Income tax (TDS), Jaipur reported in [2014] 147 ITD 41/42 taxmann.com 200 (Jaipur - Trib) on a difference of opinion between the Members, the Tribunal considers all the orders and earlier views rendered by it. That decision also refers to some decisions of other High Courts. In these circumstances, Mr Gupta would submit that the Assessing officer was right in the conclusion that he reached. The A.O. has categorized the doctors and has found that the assessee went to the extent of urging that there is no employer employee relationship when doctors were paid fixed remuneration. The assessee then accepted the mistake and agreed to make good the short deduction. 13) In relation to the doctors drawing fixed plus variable pay with written contract the assessing officer referred to the contracts and the terms and conditions of two doctors, one working as Director of Neuro Trauma Unit. The terms and conditions reveal that this doctor was required to spend fixed amount of time in the hospital. He was to perform teaching duties and guide post graduate students and observers for training. He was also to be at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the record. In other words, the findings of fact would bind this Court. They would have to be demonstrated to be perverse or vitiated by any error of law apparent on the face of the record. Such is not the situation inasmuch as the Commissioner and the Tribunal referred to all categories of doctors and professionals. If a reputed hospital in the city of Pune invites certain professionals for their expertise, experience and skill in the profession and requests them to be associated with the hospital, then, their engagement cannot be seen as a master servant or employeremployee relationship. The Tribunal has found that the categories of doctors dealt with are not the employees of the hospital. Such doctors are free to carry on their private practice either in the hospital premises or elsewhere. There is no prohibition or bar when they being associated with the other hospitals. There is also no restriction on the nature of the work that they perform and carry out in the hospital. The hospital does not in that sense exercise a disciplinary control. The hospital executes a contract with them and which is capable of being terminated by either parties. The contractual stipulations, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt thereof. The Incometax Officer (TDS) 1 Pune had before him the issue, namely, the verification of certain discrepancies in deduction of tax at source under various provisions of the IT Act. He issued a show cause notice on 29th December, 2008 in response to which Shri Sohrab Mehta, Controller of Accounts, appeared before him from time to time, filed replies and raised various contentions. The Assessing Officer referred to Section 192 and Section 17 of the IT Act and then the judgment of the High Court of Punjab and Haryana in the case of CIT Vs. Dr (Mrs) Usha Verma (2002) 120 Taxman, 738 and a decision of the Hon'ble Supreme Court in the case of Gestetner Duplicators Pvt Ltd Vs CIT ( 117 ITR 1) and firstly concluded that the doctors drawing fixed remuneration are nothing but employees and they cannot be but held to be servants or employees only. Therefore, the short deduction and which has been admitted in their case must be made good. We are not concerned with this category of doctors as the conceded position records. 21) We are concerned herewith doctors drawing fixed plus variable pay with written contract. They are categorized at paragraph 3B(2). In relation to them t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itten arguments and then referred to the relevant tests including emerging from a famous decision of the Hon'ble Supreme Court in the case of Dhrangadhra Chemicals Works Ltd Vs. State of Saurashtra reported in AIR 1957 264. 26) The First Appellate Authority from paragraph 9 onwards dealt with category of doctors and summarized by the Assessing Officer. From paragraph 13 the First Appellate Authority dealt with the doctors drawing fixed plus variable pay with written contracts and concluded that out of the fourteen tests, the answers which have been given by the assessee and based on the records, would reveal that two doctors whose contracts were scrutinized and verified by the assessing officer were not entitled to provident fund or any terminal benefit. Both were free to carry on their private practice outside the hospital and both the doctors treated their private patients from the hospital premises, all of which could be seen as indicators that they were not employees but independent professionals. However, despite the above position, the first appellate authority concluded that they shared a lot of attributes of employees, their appointments were in response to their app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of doctors with variable pay with written contracts and without written contracts. 31) In the recent decision which has been delivered by the Hon'ble Supreme Court in Employees State Insurance Corporation cum Medical Officers Association Vs. Employees State Insurance Corporation and Anr, AIR 2014 Supreme Court, 1259, in the context of question whether medical doctors discharging functions of medical officers treating patients in Employees Insurance Corporation dispensary /hospital are workmen within the meaning of Section 2 (s) of the Industrial Disputes Act, 1947, the Court held as under: We are of the view that a medical professional treating patients and diagnosing diseases cannot be held to be a workmen within the meaning of Section 2(s) of the ID Act. Doctors profession is a noble profession and is mainly dedicated to serve the society, which demands professionalism and accountability. Distinction between occupation and profession is of paramount importance. An occupation is a principal activity related to job, work or calling that earns regular wages for a person and a profession, on the other hand, requires extensive training, study and mastery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce being services rendered as a professional. In that context, paragraphs 41 and 42 of the decision read as under : 41. Shri Salve has urged that the relationship between a medical practitioner and the patient is of trust and confidence and, therefore, it is in the nature of a contract of personal service and the service rendered by the medical practitioner to the patient is not `service' under Section 2(1)(o) of the Act. This contention of Shri Salve ignores the well recognised distinction between a `contract of service' and a `contract for services'. [See : Halsbury's Laws of England, 4th Edn., Vol. 16, para 501; Dharangadhara Chemical Works Ltd v. State of Saurashtra, 1957 SCR 152 at p. 157]. A `contract for services' implies a contract whereby one party undertakes to render services e.g. professional or technical services, to or for another in the performance of which he is not subject to detailed direction and control but exercises professional or technical skill and uses his own knowledge and discretion. [See : Oxford Companion to Law, P. 1134]. A `contract of service' implies relationship of master and servant and involves an obligatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lenge. 36) However, we are in agreement with Mr Bajpai that the foundation or basis on which the Revenue and the Assessing Officer proceeded was whether the categories of doctors and which were before the Assessing Officer could be seen and termed as an employee or servant of the assessee. About the category of doctors and who draw fixed pay without any other benefit but like an ordinary employee entitled to medical and provident fund or retiremental benefits, there is no dispute. 37) In relation to other category of doctors there was a dispute. The Assessing Officer and the Commissioner concluded that though these categories of doctors had a fixed remuneration and variable pay but their terms and conditions of employment or service would be crucial and material. In relation to two doctors, namely, Dr Zirpe and Dr Phadke, the contracts were taken as sample and scrutinized minutely. Upon such a scrutiny the Tribunal noted that it cannot be said that these doctors were employees. If the first part of the Commissioner s order indicates as to how these persons or doctors were not treated by the assessee as regular employees for want of benefits like provident fund, retiremental b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be sharing a overwhelming number of attributes of employees. In relation to that the contract seems to have been bifurcated or split up or read in bits and pieces by the Commissioner. The Leave Rules were held to be applicable in case of Dr Phadke and there were fixed timing and fixed remuneration. Now, it is inconceivable that merely because for a certain period of time or required number of hours the doctors have to be at Ruby Hall Clinic means they will not be entitled to visit any other hospital or attend patients at it necessarily. The anxiety appears is not to inconvenience the patients visiting and seeking treatment at the Ruby Hall Clinic. If specialized team of Doctors, Experts and Experienced in the field are part of the Assessee's Clinic, then, their availability at the clinic has to be ensured. Now, the trend is to provide all facilities under one roof so that patients are not compelled to go to several clinics or Hospitals. Hence, a diagnostic center with laboratories and clinics, consultation rooms, rooms with beds for indoor treatment, critical care, treatment for kidney, lever, heart, brain, stomach ailments are facilities available at clinics and hospitals. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee hospital. That would not denote a binding relationship or a master servant arrangement. A attractive or better term to attract talented young professionals and too in a competitive world would not mean tying down the person or restricting his potential to one set up only. The arrangement must be looked in its entirety and on the touch stone of settled principles. The Tribunal was right in reversing the findings of the Assessing Officer and the Commissioner. There was a clear perversity and contradiction in the findings, particularly pointed out by us hereinabove. 39) In relation to other doctors where the remuneration was variable and there was a written contract or no written contract the Commissioner and the Tribunal did not commit any error at all. Both have referred extensively to the materials on record. We are not in agreement with Mr Gupta that the Tribunal s order is in any way incomplete or sketchy or cryptic. The settled principles and rendered in coordinate Bench decisions have been referred only to emphasize the tests which have been evolved from time to time. It is only in the light of such tests and their applicability to individual cases that matters of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and is dismissed with no order as to costs. 42) The only argument that is seriously canvassed by Mr Gupta is that confirmation of the findings rendered by the Tribunal would mean concurrence with its conclusion that professionals can never be appointed as employees or there can never be master servant relationship. This is apprehended by the Revenue because several eminent professionals are rendering full time services as medical officers, medical practitioners and teachers at Civil and Government hospitals. They are also part of hospitals, privately managed or managed in public private partnership (PPP). Our findings or the Tribunal's order being upheld does not mean that we have laid down any absolute rule or principle of general application. In such cases, depending upon the attending facts and circumstances, the terms and conditions of the engagement, a finding can be arrived at that there is a master servant or an employer employee relationship. It can be arrived at in cases where it is found by the Income Tax Authorities that though there is not a regular process of recruitment and appointment but the contract would indicate that the doctor/professional was appointed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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