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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 ..... ied that the payments made by the assessee company was not salary and the same was remuneration/consultation fee paid to the highly experienced technocrats/consultants which could not be engaged on full time basis as regular employees due to high remuneration and temporary requirement of the assessee company. We cannot ignore this fact that all technocrats and consultants are more than 60 years of age and are in post retirement/superannuation life cycle and we cannot expect them to work as regular employees unless there is an exceptional case. We may further note that the AO has not demolished this contention of the assessee that the said consultant/technocrat had filed their income tax return with the department which were also submitted before the AO and they have paid tax thereon, therefore, respectfully following the ratio laid down by the Hon’ble Supreme Court in the case of Hindustan Coca Cola (2007 (8) TMI 12 - SUPREME COURT OF INDIA ), there was no need of expecting the assessee deductee to again pay the tax on the said payment on account of short deduction of TDS, specially when the TDS deducted by the assessee company u/s 194J of the Act was on the higher side as dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The CIT(A) granted relief for the assessee and directed the AO to delete the impugned demand for both the FYs. Now, the aggrieved revenue is before this Tribunal in these appeals with the similarly worded grounds as reproduced hereinabove. 3. Ld. DR supported the action of the AO and submitted that the relationship between the company and these consultants of the assessee company was more of an employer employee and therefore, the remuneration paid to them was chargeable to tax under the head of salaries and the said payments thus are subject to deduction of tax as per provisions of section 192 of the Act and not as per provisions of section 194J of the Act. Ld. DR submitted that the CIT(A) granted relief for the assessee on incorrect premise and without any justified reasoning, therefore, the impugned order may be set aside by restoring that of the AO. 4. Replying to the above, ld. Counsel of the assessee strenuously supported the impugned order of the first appellate authority and submitted that there was no relation of employer and employee between the consultant and the assessee company and therefore, the assessee company rightly deducted TDS u/s 194J of the Act which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion:- I have perused the assessment order, written submissions of the AR and discussed the matter with them very carefully. From the list of age of consultants, it is observed that all the consultant are above 60 years of age. It appears that they take up this assignment after their retirement from Govt/PSU/Private Sector Job. We are in F.Y. 2007-08 2008-09. Applying the case of Hindustan Coca Cola Beverages (P) Ltd., 293 ITR 226 (Se), it will be found that over all taxes have been paid by deductees in their personal income returns, but they do not want to disclose their income. The ARs replied that they cannot force old consultants to disclose their income/ITRs, but they need the services of consultants anyhow the AO(TDS) can ask for PAN of such deductees and verify their return status from ITD application. Hence the liability of deductor u/s 201 (1) ceases after 4 years of end of F. Y. 2007-08 and 2008-09. As per the average rate of TDS to total till disbursement analysis, it again appears that the deductor company had deducted more TDS than suggested by AO (TDS) treating all consultants as employees. The A.O. (TDS) calculates tax rate @30% without giving effect of slabs a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the AO wherein the AO alleged that the assessee company should have deducted TDS from these payments u/s 192 of the Act. At the same time, we further note that from the analysis submitted by the assessee, it is also clear that the payee consultants/technocrats have already paid taxes on the income, then even if there was a short deduction of tax at source, further recovery of tax cannot be made once again from the tax deductor. 7. Now, we proceed to consider the ratio relied by the CIT(A) while granting relief for the assessee in the case of Hindustan Coca Cola Beverage (P) Ltd. vs CIT (supra) wherein their lordships speaking for the apex court on this issue held as under:- 7. The Tribunal upon rehearing the appeal held that though the appellant-assessee was rightly held to be an assessee in default , there could be no recovery of the tax alleged to be in default once again from the appellant considering that Pradeep Oil Corporation had already paid taxes on the amount received from the appellant. It is required to note that the Department conceded before the Tribunal that the recovery could not once again be made from the tax deductor where the payee included the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular is applicable to the facts situation on hand. 8. When we consider the ratio laid down by ITAT Chandigarh in the case of DCIT(TDS), Chandigarh vs Ivy Health Life Sciences (P) Ltd. (supra), we note that the coordinate Bench of this Tribunal in the case of payment of consultants by a hospital held as under:- 4. Lakshminarayan Ram Gopal and Son Ltd. v.Government of Hyderabad|1954| 25 ITR 449-(SC) The distinction between a servant and an agent is thus indicated in Powell's Law of Agency, at page (a) Generally a master can tell his servant what to do and how-to do it. (b) Generally a principal cannot tell his agent how to carry out his instructions. (c) A servant is under more complete control than an agent, and also at page 20 :- (a) Generally, a servant is a person who not only receives instructions from his master but is subject to his master's right to control the manner in which he carries out those instructions. An agent receives his principal's instructions but is generally free to carryout those instructions according to his own discretion. (b) Generally, a servant, qua servant, has no authority to make contracts on behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... patients' treatment. The procedure of treating patients in OPD is that when a patient comes for the treatment in Hospital's OPD, he deposits a consultation fee for the particular Medical Department in which he wants to consult, at the cash; counter of the hospital and he is given a receipt for it and then he consults the Doctor to whom he wants to consult. The concerned Doctor prescribes the treatment on the hospital's letter pad. If the patient is to be admitted in the hospital for indoor treatment, then he is admitted under his treatment. The working days and hours of the doctors working in OPD of the hospital, are fixed and as per the contract between these doctors and the hospital they are not allowed to do their own practice or work with another hospital during the period for which they are engaged attended the hospital on call. However, during the course of TDS inspection, it was noticed that the assessee deductor was deducting the tax at source of the both types of doctors u/s 194J as professional charges, whereas the payments made to doctors who are regularly attached with hospital, are required to be treated as salary and tax is also required to be deducted u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business. 8. 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- -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 CI T(Appeals) are upheld. 9. When we consider the facts and circumstances of the present case, we are inclined to hold that the AO re-characterised the relation between the assessee company and the consultant/technocrat and relation of employer and employee but we are unable to see any basis or allegation supporting this recharacterisation and action of the AO to treat the payments by the assessee company to these consultants/technocrats as salary instead of remuneration/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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