Commissioner Of Income Tax-Tds, Jaipur v. M/S Mewar Hospital Pvt. Ltd., Priyadarshini Nagar, Bedla Road,Udaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN ATJODHPUR 1. D.B. Income Tax Appeal No. 25/2019 Commissioner Of Income Tax-TDS, Jaipur ----Appellant Versus M/s Mewar Hospital Pvt. Ltd., Priyadarshini Nagar, Bedla Road,Udaipur. ----Respondent 2. D.B. Income Tax Appeal No. 27/2019 Commissioner Of Income Tax-TDS, Jaipur ----Appellant Versus M/s Mewar Hospital Pvt. Ltd., Priyadarshini Nagar, Bedla Road,Udaipur. ----Respondent 3. D.B. Income Tax Appeal No. 28/2019 Commissioner Of Income Tax-TDS, Jaipur ----Appellant Versus M/s Mewar Hospital Pvt. Ltd., Priyadarshini Nagar, BedlaRoad, Udaipur. ----Respondent For Appellant(s): Mr. Kamal Kishore Bissa Advocate.For Respondent(s): Mr. Anjay Kothari Advocate. HON'BLE MRS. JUSTICE SABINA HON'BLE MR. JUSTICE VINIT KUMAR MATHUR Order 29/07/2021 Defects pointed by the office are waived. Appellants have filed the appeals raising following substantial questions of law: “(i) Whether ld. ITAT is justified in holding that thepayment to doctors engaged on regular and full timebasis was in the nature of professional fees u/s 194J andnot salary u/s 192 of Income Tax Act, 1961? (ii) Whether ld. ITAT is justified in holding that employer-employee relationship does not exist between theassessee company and doctors providing regular &services? (iii) Whether ld. ITAT is justified in not appreciating thefacts that it is not necessary that an employer shallmade restrictions on professional practice of itsemployee even as per Section 17(2) Explanation-3 ofIncome Tax Act, 1961 one or more employer are possiblein a single person’s case?” Learned counsel for the respondent has submitted that theissue involved in the present cases is no longer res-integra. Theappeals are liable to be dismissed in view of the decision given byDivision Bench of this Court at Jaipur Bench in Escorts HeartInstitute & Research Centre LTD. Vs. Deputy Commissioner of Income Tax (D.B. Income Tax Appeal Nos.8 and 9 of2014 decided on 13.09.2017). Operative part of the order dated 13.09.2017 reads as under:- “13. Before proceeding with the matter, it will not be outof place to mention that the assessee is running ahospital within State of Rajasthan and they have enteredagreement with three different doctors. The questionwhich came up for our consideration is whether benefitof 194J and 192 is to be given where TDS is required todeducted. 14. Counsel for the appellant rightly contended that inthe agreement which was entered between the parties,there is no restriction of private practice whereas incase of service/appointment order, there is prohibition for grant of benefit which are required to be given underthe law and are granted to the employees whereas in thecase of retainership it is only an honorary or professionalagreement is entered between the parties which may beanalogous to the major service conditions but both thecontract are different. One is contract as an employeeand the other contract is service for honorary or expertservice not as a employee which was entered betweenthe parties. Therefore, question which came for ourconsideration is whether payment which was made tothe professional is salary or professional fees. 15. Taking into consideration the case law which hasbeen cited by both the sides, the judgment of KarnatakaHigh Court (supra) which has been relied upon by thecounsel for the appellant and after taking intoconsideration that all the judgments and the rulings citedby both the sides were considered in the said judgmentand the issue was decided as under: 15. Taking into consideration the case law which hasbeen cited by both the sides, the judgment of KarnatakaHigh Court (supra) which has been relied upon by thecounsel for the appellant and after taking intoconsideration that all the judgments and the rulings citedby both the sides were considered in the said judgmentand the issue was decided as under: “The contention of the learned counsel appearing for theassessee that CIT had issued an order under s. 10(23C)(via) of the Act, by virtue of which the assessee is notliable to deduct TDS under s. 194-I as the recipient itselfis exempted from levy of tax, is not acceptable for thereasons that the said order was issued by the CIT, Panajifor the asst. yr. 2005-06 to 2007-08 subject to thecompliance of conditions (I) to (vi) specified therein. Thesaid conditional order shall not absolve the assesseefrom the deduction of TDS liability. The compliance/non-compliance of the exemption conditions by the recipientin advance cannot be foreseen in advance by theassessee-company. Moreover, TDS liability under s. 194-I is not dependent on the tax liability/entitlement toexemption of the recipient. Irrespective of the taxexemption/tax liability of the recipient the assessee hasto discharge the TDS liability under s.194(1). Nocertificate under s. 197 of the Act is furnished by the assessee to establish that the recipient is exempted fromthe tax liability.” 16. Again same question came up for consideration inother decision of Karnataka High Court where afterconsidering the judgment in Elbit Medical DiagnosticsLtd., the Court has come to the conclusion that retainerin service are professional service and issue wasanswered in favour of the assessee. 17. Taking into consideration the evidence on record,only one view taken by the Tribunal is also contrary, ittwo views are possible, the view much which in favour ofassessee is to be taken and in view thereof in thepresent case, the issues are answered in favour of theassessee and against the Department. 18. The appeals stand allowed.” In view of the above decision, appeals are liable to bedismissed and are accordingly dismissed. (VINIT KUMAR MATHUR),J Sanjay Kumawat-9 to 11 (SABINA),J