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TMI Blog2015 (8) TMI 361X X X X Extracts X X X X X X X X Extracts X X X X ..... th the sides and carefully perused the relevant material placed on record. Ld. DR elaborating the functional profile of the assessee company submitted that the assessee is engaged in providing technical and professional consultancy for engineering project. Ld. DR further submitted that on 21.1.2011, a survey was carried out by the department for verification of compliance of TDS provisions wherein it was observed that the assessee had a large number of employees who were termed as consultants and tax on their remuneration was deducted u/s 194J instead of section 192 of the Act. The AO after detailed discussion with the assessee's representative recharacterised the consultant arrangement into employer-employee relationship and held that the assessee is an assessee in default u/s 201(1)/201(1A) for deducting tax u/s 194J and not u/s 192 of the Act. Finally, the AO raised a demand of Rs. 2,05,94,240 u/s 201(1)/201(1A) for both the financial years namely FY 2007-08 and 2008-09, being the difference in tax deductible u/s 192 and 194J on payments made to consultants. The assessee carried the matter to the CIT(A) challenging the re-characterisation of the arrangement between the company a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis with one company, therefore, the assessee company had to engage and tap the experience and knowledge of such technocrats as consultants on part time and temporary basis. Ld. Counsel further placed reliance on the decision of Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverage (P) Ltd. Vs CIT (2007) 293 ITR 226(SC) and submitted that where the payee has already paid taxes due on the payments received by it from the assessee, then recovery of tax cannot be made once again for the tax deductor. Ld. Counsel also placed reliance on the decision of ITAT Chandigarh 'A' Bench in the case of DCIT(TDS) Chandigarh vs Ivy Health Life Sciences (P) Ltd. and submitted that where the assessee hospital under an agreement was availing services of doctors who fixed their own OPD hours and there was no control of hospital by way of direction to doctors on treatment of patients, it could be said that doctors were working in their professional capacity and there was no employer and employee relationship between hospital and professional doctors and therefore, TDS was to be deducted u/s 194J of the Act and not u/s 192 of the Act. 5. On careful consideration of above submissions and fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income filed by the consultants on sample basis for both the FYs which clearly shows that the amount of TDS deducted by the assessee company u/s 194J of the Act is on the higher side in comparison to TDS deductible u/s 192 of the Act at average rates. We further observe that as per details of consultants/technocrats submitted by the assessee before the authorities below, it is vivid that the age of all consultants/technocrats is more than 60 years and in a number of cases, the age is 70 and 80 plus which clearly shows that these persons are highly experienced and knowledgeable technocrats who are rendering their service to the assessee company as a specialist technocrat and not as an employee. Although from the order of the AO we note that the AO dismissed submissions and contentions of the assessee and recharacterised the transaction between the assessee company and the said consultants/technocrats as employer or employee relationship but this recharacterisation cannot be held as justified under the facts and circumstances of the present case. We further note that the amount of TDS deducted by the assessee company u/s 194J of the Act shows that the assessee was cautious about the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t came to the conclusion that the Tribunal could not have reopened the matter for any further hearing. 9. We have already noticed that the order passed by the Tribunal to reopen the matter for further hearing as regards ground No.7 has attained its finality. In the circumstances, the High Court could not have interfered with the final order passed by the Income-tax Appellate Tribunal. 10. Be that as it may, Circular No. 275/201/95-IT(B) dated January 29, 1997, issued by the Central Board of Direct Taxes, in our considered opinion, should put an end to the controversy. The circular declares "no demand visualized under section 201(1) of the Income- tax Act should be enforced after the tax deductor has satisfied the officer-in-charge of TDS, that taxes due have been paid by the deductee-assessee. However, this will not alter the liability to charge interest under section 201(1A) of the Act till the date of payment of taxes by the deductee-assessee or the liability for penalty under section 271C of the Income-tax Act". 11. In the instant case, the appellant had paid the interest under section 201(1A) of the Act and there is no dispute that the tax due had been paid by the deducte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is bound to conform to all reasonable orders given him in the course of his work ; an independent contractor, on the other hand, is entirely independent of any control or interference and merely undertakes to produce a specified result, employing his own means to produce that result. 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 principal. An agent as such is not a servant, but a servant is generally for some purposes his master's implied agent, the extent of the agency depending upon the duties or position of the servant. " 5. We have heard the rival submissions, facts of the case and the relevant records. The brief facts of the case are that the appellant company is running a hospital, known as Ivy Hospital at Mohali. The Department conducted a TDS inspection u/s 133A of the Act, at the business premises of the assessee appellant on 28.09.2011. During the course of such inspection and assessment proceedings u/s 201(1)/201(1A) of the Act, it was noticed by the ACIT (TDS) that the hospital is ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 91/- for the assessment year 2009-10." 6. Similarly, for the assessment year 2010-11, the AO worked out the total payable tax demand at Rs. 75,60,672/- (difference net tax deducted at Rs. 62,50,560/- and interest of Rs. 12,50,112/- u/s 201(1A) of the Act. 7. Ld CI T(Appeals), on appreciation of the factual matrix of the Act and case laws cited by the appellant, adjudicated the issue in favour of the assessee appellant, as per following finding : "5. I have considered the submission filed by the Ld. Counsels. I have also gone through the MOUs between the appellant company and professional doctors. The various clauses of the MOUs need to be examined in the light of the criteria laid down by the Courts to determine whether the doctors attached to the appellant hospital are employees of the hospital. The test which is uniformly applied in order to determine whether a particular relationship amounts to employer-employee relationship is the existence of a right of control in respect of the manner in which work is to be done by the person employed. The nature and extent of control which is requisite to establish the relationship of employee and employer varies from business to busin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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