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TMI Blog2015 (9) TMI 1236X X X X Extracts X X X X X X X X Extracts X X X X ..... ma Krishna, Bandi, DR For the Respondent : Shri K C Devdas, AR ORDER Per Smt. P. Madhavi Devi, JM. This appeal filed by Revenue is directed against the orders of the Ld. Commissioner of Income Tax (Appeals)-II, Hyderabad dated 08-05-2013 for the AY. 2009-10 on the following Grounds: 1. The order of the Ld.CIT(Appeal) is erroneous and prejudicial to the interest of the Revenue. 2. The Ld.CIT(Appeal) erred in upholding that TDS provisions of section 194J are attracted instead of provision of section 192. The employer and employee relationship exists between deductor and the deductee. The Ld.CIT(Appeal) appeal has not considered the decision of Hon'ble ITAT in the case Wockhardt Hospitals in ITA No. 985, 986/H/11 dated 02/07/2012. 3. Any other ground that may be urged during the course of appellate proceedings . 2. Brief fact are, assessee is running a hospital for care of children from new born to pediatric age group. The hospital provides both inpatient and out-patient care. The Chief Executive Officer Dr. V.S.V. Prasad and his wife Dr. V. Hema Maili as working Director over see day to day activities of the hospital. A survey operation U/s. 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here was 11 ver any written agreement. Subsequently, when the same was revised to ₹ 3, 50, 000/- per month w.e.f. April 2008, the Hospital has sent a letter confirming the consultancy fee of ₹ 3,50,000/- per month. b) No appointment letter confirming the employment of Dr. Kulbhushan S. Dagar was ever issued and all the documents clearly suggest that Dr. Dagar was only a consultant. c) Normally an employee cannot commence working for any organization without having a formal appointment letter. The fact that Dr. Kulbhushan S. Dagar was associated with the Hospital for about fifteen months without a formal appointment letter clearly shows that he was taken in as a consultant only. Letter issued by the Hospital reducing his consultancy fees from ₹ 5,00,000/- to ₹ 3,50,000/- per month was issued after he served the organization for about two months and as such there was no formal agreement between the two at the time of his joining the hospital. d) The relationship of employer and employee should be of master and servant. However, there is no master servant relationship between the doctors and the hospital. A master is one who not only directs what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was filed accordingly. On perusal of the TDS certificate, it is noted that the nature of payment was mentioned as 'fee for professional or technical services' u] s.194J of IT Act. The assessee's AR during the course of proceedings has filed a copy of the return supposedly filed by Dr.Dagar which shown income from salaries of ₹ 33,45,455/- and fees for professional or technical services of ₹ 10 lakhs and from this the expenses were claimed to the extent of ₹ 2,02,083/- thereby showing a business income of ₹ 7,97,917/- interest income of ₹ 3,95,134/-. It may be noted that Dr Dagar has worked with the assessee company for 15 months starting from February 2008 to May 2009 and prior to joining the assessee company Dr Dagar was employed elsewhere and received salary of ₹ 40,03,455/- out of that he claimed deductions on account of gratuity, conveyance allowance and earned leave amounting to ₹ 6,58,000/- whereas for the period for February March 2008 he claimed fees for professional or technical services and the deductions which are associated with employment as a regular employee such as gratuity, PF and earned leave etc., wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urprising to note that even during the survey there were no other discrepancies noticed and it was only in respect of Dr. Dagar, there has been controversy/dispute. 5.2 It may also be noted that the letters/correspondence filed by both the parties are self serving documents and neither of them has been confirmed/acknowledged by either party. In view of the fact that the AO has not commented on the attendance register which he requisitioned to verify whether Dr. Dagar was on the rolls of the assessee company, the return of income filed by Dr. Dagar showing salary and professional services separately coupled with the fact that despite being given opportunities that Dr. Dagar who would be a beneficiary if he could establish that he was an employee of the assessee company has not responded to the notices issued to him to verify his claim, leads to the inference that there is no truth in what he alleged and therefore the allegations that he was paid ₹ 3.5 lakhs after deducting 30% from his remuneration of ₹ 5 lakhs are held not substantiated. 5.3 Since there were no deductions on account of gratuity, provident fund and earned leave in respect of the remuneration re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was an existence of employer and employee relationship between the assessee and Dr. Kulbhushan S. Dagar and thus, the deductor had to deduct the TDS as per the provisions of Section 192 but not U/s. 194J of the Act. 7. Per contra, the Ld. AR filed his written submissions and also submitted that the AO has no basis at all to come to the conclusion that the assessee has paid ₹ 5,00,000/- as a salary to Dr. Kulbhushan S. Dagar and has deducted TDS @ 30%. He submitted that there is no iota of evidence before AO, except the complaint filed by Dr. Kulbhushan S. Dagar before CIT(TDS). He further submits that there was no written agreement between the assessee and Dr. Kulbhushan S. Dagar to say that it is a salary and not consultancy fee. He argued further that there is no employer and employee relationship between the deductor and deductee, all the doctors including Dr. Kulbhushan S. Dagar, who were working in the assessee-hospital are only consulting doctors and that the AO has not brought on record any evidence what-so-ever to establish that there is an employer and employee relationship between the respondent-hospital and Dr. Kulbhushan S. Dagar as there is no appointment let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts original shape and status. In the present case, admittedly, the assessee produced the attendance register of the hospital but there is no comment by the AO on the attendance register which he questioned to verify whether Dr. Kulbhushan S. Dagar was on the rolls of the assessee-hospital. Therefore, it clearly indicates that there was no fixed timings and also there was no control of the employer. Admittedly, there was no deduction of professional tax or provident fund from the salary of Dr. Kulbhushan S. Dagar and also there was no evidence of terminal benefits and leave encashment benefits. Therefore, we are of the firm view that there was no master and servant relationship between the assessee and Dr. Kulbhushan S. Dagar. 10. Apart from this, the doctors are rendering their professional services as visiting doctors in different hospitals. Consultant doctors were not getting salary but are paid lump-sum monthly payment and no allowance and also there is no prescribed leave in the case of consultant doctors and also they are not governed by the general service rules and regulations. Therefore, after considering the above said facts and circumstances, we have no hesitation to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered in the month of February 2008 and March 2008 (Rs. 5 Lakhs p.m.). Dr. Kulbhushan S. Dagar has filed his return of income for the AY. 2008-09 showing the said amount of ₹ 10 Lakhs as 'income from profession'. Therefore, it clearly indicates that Dr. Kulbhushan S. Dagar received consultation fee from the assessee. Moreover, the Ld. Counsel for the assessee relied on the decision in the case of Quality Care India Ltd., and he submits that this issue is squarely covered in favour of assessee. We have perused the said order, the ratio laid down in the said order is as follows: 10.7 The relationship between the assessee-deductor and the Doctor is not that of employer and employee. We are of the view that the doctors or professional consultants working under contract for rendering professional services and the payments made by the assessee company to the professional doctors does not constitute salary and hence, the assessee would not be responsible for deducting tax at source on the said payments treating them as (salaries) in terms of section 192(1) of the I.T. Act. We also understand that the terms of the agreement with the consultants/professionals that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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