Wednesday, October 12, 2011

TDS u/s 192

(2010) 34 (II) ITCL 546 (Bang `A'-Trib)

TRO v. Sagar Apollo Hospital


All these appeals pertain to same assessee on similar point of TDS under section 192, so these are being disposed of by a common order for the sake of convenience and brevity.

2. The facts of the case are that the assessee, a hospital in the name and style of M/s Sagar Apollo Hospitals, and is a division of the Trust M/s Mahatma Gandhi Vidya Peetha Trust. The TDS wing of the Income-tax department conducted verification on 21-8-2007 in the hospital to check the compliance with the TDS provisions. The hospital paid professional charges to various categories of doctors like duty doctors, visiting consultants and consultant doctors on retainership basis. For all the category of doctors tax has been deducted at source regularly as per the provisions of sec.194J applicable to professional payments and duly paid to the credit of the central government. However, the assessing officer while completing the assessment under section 201(1) held that there exists employee - employer relationship between the duty doctor and the assessee and hence the provisions of sec.192 should have been applied while deducting the tax at source from the doctor's payments. The assessing officer observed that as per the provisions of sec.17 of the Income Tax Act, salary is defined as ;

(1) Salary includes

(i) Wages

(ii) Any annuity or pension

(iii) Any gratuity

3. The assessing officer concluded that for few of the doctors under the category of duty doctors, tax should have been deducted at source as per the provisions of sec.192 which is applicable to salary payments. Accordingly, the assessing officer has made demands of Rs.131,398/- Rs.496,113/- and Rs.4,70,253/- being the shortfall in the tax deducted at source by the hospital. Further, levied interest of Rs.85,127/- Rs.247,474/- & Rs.1,83,705/- under section 201(1A) for the assessment years 2003-04, 2004-05 & 2005-06 respectively. The same was deleted by the Commissioner (Appeals), which has been opposed before us by the revenue. On the other hand, learned AR supported the order of the Commissioner (Appeals) on the issue.

4. After going through the rival submissions and material on record, we find that the question before us is whether the doctors are paid professional fees or salary by the assessee hospital. The question whether it is a contract of service or contract for services. This issue can be decided from the nature and extent of control to establish the relationship of employer and employee. The nature of relationship varies from business to business and it is difficult to define with precise nature of control required to establish the relationship of employer and employee. There are set of procedure and rules. Depending on case to case basis the doctors have to decide how to treat patient. Hence, there is no employer employee relationship. The doctors are discharging only professional services as and when the patients require particular specialized treatment. Taking over all view of the situation, the Commissioner (Appeals) was justified in holding that there exists no employer-employee relationship between duty doctors and assessee. The action of the assessing officer in treating only 20 doctors out of 288 doctors as employees and demanding TDS under section 192 was not based on cogent reasoning. The assessee has rightly treated the payments made to duty doctors as professional fees and deducted tax under section 194J which is upheld. Similar issues arise in other two appeals as well. Facts being same, so following the same reasoning, the order of Commissioner (Appeals) in al cases are upheld.

5. In the result, all these appeals filed by the revenue are dismissed.


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