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TMI Blog2019 (12) TMI 1182X X X X Extracts X X X X X X X X Extracts X X X X ..... deduct taxes at source on the fees / remuneration paid to its consultant-doctors under Section 192 of the Income-tax Act, 1961 ("the Act" for short), as against under Section 194J of the Act, as was done by the Appellant. 3. That the CIT(A) erred in upholding the AO's order treating the Appellant as an assessee in default. 4. That the CIT(A) grossly erred in concluding that there was an employer-employee relationship between the Appellant and its consultant doctors and that the remuneration paid to them by the Appellant was chargeable to tax under the head 'Salaries' necessitating deduction of tax at source under Section 192 of the Act. 5. That the CIT(A) completely failed to appreciate the significant terms on which the consultant-doctors performed their obligations and duties in the proper perspective inasmuch as they were not under the control and/or supervision of the Appellant while discharging their professional duties so much so that they were given a free hand in treating patients, fixing their own OPD hours depending on their other professional commitments elsewhere, so long as they were available on call in case of emergencies. 6. That the CIT(A) alto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he consultant-doctors were entitled to a fixed remuneration irrespective of the number of patients / operations and also further erred in placing undue reliance on such an erroneous observation 15. That the CIT(A) erred in upholding the levy of interest under Section 201(1A) of the Act. 16. That, therefore, the CIT(A) erred in holding that there was no infirmity in order of the AO under Sections 201(1) and 201(1A) of the Act. 17. That the order of the CIT(A) is otherwise unsustainable in law and on facts and is thus liable to be set aside by this Hon'ble Tribunal. The Appellant craves leave to add to or alter, by deletion, substitution or otherwise, the above grounds of appeal, at any time before or during the hearing of the appeal. The Appellant further submits that the above grounds are independent of and without prejudice to one another. PRAYER The Appellant most humbly prays that this Hon'ble Tribunal be pleased to allow the above appeal and set aside the order of CIT(A) dated 23.03.2017, in the interests of justice and equity. ITA No.1263/B/2017(2013-14) 1. That the order of the Commissioner of Income-tax (Appeals) - 13, Bangalore ("CIT(A)" for short), i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment which would clearly go to show that there was no employer-employee relationship between the two. 9. That the CIT(A) erred in wholly failing to appreciate the clear distinction between a 'Contract for Service' and 'Contract of Service' with the contract between the Appellant* and the consultant-doctors clearly and unmistakably falling within the ambit of the former. 10. That, without prejudice to the above and in any event, since the consultant-doctors have indisputably admitted and remitted the entire tax payable by them for the relevant assessment years in their assessments under the Act, the Appellant cannot be treated as an assessee in default under Section 201 of the Act. 11. That, furthermore, the observation that the practice of the Appellant in deducting taxes at source under Section 194J of the Act is mutually beneficially to the Appellant and the consultant-doctors is unjustified. 12. That the inferences drawn from and the conclusions arrived at from the appointment letters of consultant-doctors and from the statement recorded from the consultant-doctors are erroneous and misplaced. 13. That the reliance placed by the CIT(A) on the decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -in-default for the alleged failure to deduct tax at source under Section 192 of the Act when making payments during the relevant year to the consultant doctors as against under Section 194J of the Act is pending adjudication before this Hon'ble Tribunal. 5. That the initiation of penalty proceedings by the AO when the orders levying tax is yet to attain finality is wholly premature. 6.That in any event, the application of Section 192 to the facts of the Appellant being debatable, and the Appellant having shown reasonable cause for not deducting tax in terms of the said provision, penalty under Section 271C ought not to have been levied. The Appellant submits that the above grounds are independent of and without prejudice to one another. The Appellant craves leave to add to or alter, by deletion, substitution or otherwise, the above grounds of appeal. at any time before or during the hearing of the appeal. Relief The Appellant prays that this Hon'ble Tribunal be pleased to allow the appeal and set aside the impugned order dated 22.07.2019 and allow the appeal by quashing the order dated 23.10.2017 passed under Section 271C of the Act by the Respondent, in the int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se are as under: Assessee is running hospital in the name of "SPARSH" having two branches, one at Bommanahalli and other at No.146, Infantry Road Bangalore. A survey under section 133A of the Act was conducted in one of the case of assessee and it was found that assessee deducted TDS under section 194J in respect of remuneration paid to a few consulting doctors. Ld.AO carried out scrutiny of certain appointment letters/confirmation letters, and he was of opinion that, they are employed with assessee on monthly remuneration/consultation fee mutually agreed, and therefore, remuneration paid to them was chargeable to tax under the head salary, and tax was to be deducted at source as per provisions of section 192 of the Act. Ld.AO accordingly issued show cause letter to assessee calling upon explanation as to why company should not be treated as assessee in default, in accordance with provisions of section 201 (1) read with section 201 (1A) of the Act, for short deduction of tax at average rate of tax on remuneration paid to such consultant doctors under section 192 of the Act. 2.1 Assessee in response to notice vide letter dated 15/01/13 submitted detailed discussions. The sum and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er: 1.That assessee has rightfully deducted TDS under section 194J of the Act, as alleged nine doctors were consultant with assessee and not regular employee doctors who were eligible for various statutory benefits. 2. Alternatively, Ld.AR submitted that, even if it is construed that there exists employee employer relationship between assessee and these alleged nine doctors, assessee cannot be treated as assessee in default, as TDS provisions has been strictly followed by assessee. It was submitted that alleged nine doctors have paid taxes on amount received from assessee as professional fees. Ld.AR tendered application for admission of additional evidence under Rule 29 seeking admission of documents being form 26A along with affidavit of respective doctors. 3.1 Ld.AR submitted that in the event assessee succeeds on first proposition, there is no need to proceed with second proposition. Accordingly, he started his arguments to establish his case under first proposition and submitted as under: Ld.AR submitted that doctors were not regular doctors as terms and conditions entered into by nine doctors, were very much different from regular doctors, who were appointed on full-time b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re available to render services to assessee only. He thus, supported the addition made by the Ld.AO. 4.1 We have perused submissions advanced by both sides in the light of records placed before us. It is observed that assessee is a private limited company administering and managing orthopaedic hospital. The areas of specialisation include trauma care, joint replacement, paediatric orthopaedics, sports medicine, lender reconstruction, bone tumour surgery, hand surgery, granny oh facial surgery, cosmetic/body contouring surgery, reconstructive surgery, Maxilio-facial surgery and congenital anomaly correction. Assessee deducted tax at source under section 194J of the Act, on remuneration paid to following nine doctors which are the subject matter of dispute. 1. Dr. Sharan Patil 2. Dr.Yohanan John 3. Dr.Ashok Raj Kaul 4. Dr.Prashant Tejamani 5. Dr.Prabhudev Basappa 6. Dr.Sharanu Patil 7. Dr.Sushil Nahar 8. Dr.Jayanth Sampath 9. Dr.S.Ravinarayan It is a case of assessee that remuneration drawn by these doctors are variable pay without any written contract whereas regular employee doctors drawing fixed salaries and are eligible for various service benefits and emoluments. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aper book, wherein designation, Department to which doctor would be working and doctor to whom such doctor would report is clearly indicated. 4.4 We are therefore, of opinion that inference drawn by Ld. CIT (A)are on the basis of verification and documents of doctors, who do not form part of alleged list of contract doctors is not correct. In fact, entire finding of authorities below are on the basis of statement recorded and documents of doctors who are not part of list of doctors. 4.5 In the decision relied upon by Ld.AR in case of ITO (TDS) vs M/s.Teleradiology Solutions Pvt.Ltd, (supra), it is observed that facts are different, as it is a case of Diagnostic Centre and this Tribunal analysed appointments of doctors who issue various reports giving pathology findings. In present fats of case contracts placed at relevant pages in paper book are blank contracts, and therefore, we are unable to draw any inference in present facts, as there is nothing placed on record to analyse actual appointment letter issued by assessee to alleged nine doctors in order to decipher nature of services provided by them. Though, on face of it, sample blank appointment letter at page 241 seems to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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