Ita/142/2013 Of Commissioner Of Income Tax (Tds) Chandigarh v. M/S Ivy Health Life Sciences (P) Ltd Mohali

ITA No.142 of 2013 (O&M) IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITA No.142 of 2013 (O&M)Date of decision: 26.8.2015 The Commissioner of Income Tax (TDS), Chandigarh ..-.--Appell M/s Ivy Health Life Sciences Pvt. Limited, Mohali,Punjab ..-.-Responde CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTALHON’BLE MR. JUSTICEK RAMENDRA JAIN 1. Whether Reporters of local papers may be allowed to see the judgment?2. To be referred to the Reporters or not?3. Whether the judgment should be reported 1n the Digest Present: Mr. Yogesh Putney, Advocate for the appellant. Mr. Pankaj Jain, Sr. Advocate with Mr.Divya Suri,Mr. Sachin Bhardwaj, Mr. Deepanshu Jain and Mr. MadhurSharma, Advocates for the respondent in ITA Nos. 142 and 143 of2013. Ms.Radhika Suri, Sr. Advocate with Ms. Rinku Dahiya, Advocatefor the respondent in ITA Nos.156, 159 and 160 of 2014. Mr. Chanchal K.Singla, Advocate for the respondent in ITANo.157 of 2014. Ajay Kumar Mittal,J. 1,This order shall dispose of a bunch of six appeals viz. ITANos.142, 143 of 2013, 156, 157, 159 and 160 of 2014 as learned counsel for the parties are agreed that the issue involved in all the appeals is identical.However, the facts are being extracted from ITA No.142 of 2013, ITA No.142 of 2013 (O&M) ? ITA No.142 of 2013 has been preferred by the revenue underSection 260A of the income Tax Act, 1961 (in short, “the Act’) against theorder dated 16.10.2012, Annexure A.3 passed by the Income Tax AppellateTribunal, Chandigarh Bench ‘A’, Chandigarh (in short, “the Tribunal’) inITA No.731/CHD/2012 for the assessment year 2009-10. This appeal wasadmitted on 22.1.2014 by this Court to consider following substantialquestions of law:- 1) Whether on the facts and in the circumstances of the case,the learned ITAT has erred in treating chargeability of paymentsmade to doctors who are regular employees of the hospital asper the provisions of Section 194J of the Income Tax Act, 1961instead of Section 192 of the Income Tax Act, 1961?the learned ITAT has erred in treating chargeability of paymentsmade to doctors who are regular employees of the hospital asper the provisions of Section 194J of the Income Tax Act, 1961instead of Section 192 of the Income Tax Act, 1961? 11) Whether on the facts and in the circumstances of the case,the learned ITAT 1s right in law in holding that there does notexist an employer/employee relationship between the doctorsand the hospital and the assessee is not lable to makededuction of tax at source under section 192 of the Income Taxthe learned ITAT 1s right in law in holding that there does notexist an employer/employee relationship between the doctorsand the hospital and the assessee is not lable to makededuction of tax at source under section 192 of the Income Tax Act? 111) Whether on the facts and in the circumstances of the case,the findings recorded by the learned ITAT are perverse andcontrary to the material available on record and sustainable inthe eyes of law?”the findings recorded by the learned ITAT are perverse andcontrary to the material available on record and sustainable inthe eyes of law?” 3A few facts relevant for the decision of the controversy involvedas narrated in ITA No.142 of 2013 may be noticed. The respondent assessee,a private limited company is running a hospital under the name and style ofIvy Hospital at Mohali, Punjab. A survey under Section 133A of the Act wascarried out by TDS unit of the department on 28.9.2011 and it was noticedthat the respondent hospital was running different OPDs apart from indoor patients treatment. The procedure for treating patients in OPD 1s that when a ITA No.142 of 2013 (O&M) 3A few facts relevant for the decision of the controversy involvedas narrated in ITA No.142 of 2013 may be noticed. The respondent assessee,a private limited company is running a hospital under the name and style ofIvy Hospital at Mohali, Punjab. A survey under Section 133A of the Act wascarried out by TDS unit of the department on 28.9.2011 and it was noticedthat the respondent hospital was running different OPDs apart from indoor patients treatment. The procedure for treating patients in OPD 1s that when a ITA No.142 of 2013 (O&M) patient comes for treatment, he deposits a consultation fee for a particularmedical department in which he wants to consult at the cash counter of thehospital where he is given a receipt for it and then he consults the doctor towhom he wants to consult. The concerned doctor prescribes the treatment onthe Hospital's letter pad. If the patient is to be admitted in the hospital forindoor treatment, then he is admitted for treatment. The working days andhours of the doctors in OPD of the hospital are fixed as per contract betweenthese doctors and the hospital. They are not allowed to do their ownpractice or work with another hospital during the period for which they areengaged with the hospital. Apart from these doctors, there are some doctorswho attend the hospital on call. Thus the respondent has employed theseprofessional doctors as their employees to provide full time services to thepatients as per contract for service entered with them. The respondentcompany deducted tax under Section 194J of the Act from the paymentsmade to them treating the payments as professional fees instead of salaries.The Assessing Officer concluded that there existed an employer andemployee relationship between the respondent company and the doctors andheld that tax should have been deducted under section 192 of the Act andnot under Section 194J of the Act. He accordingly created a demand fordifferential tax and also charged interest under Section 201(1A) of the Actvide order dated 13.1.2012, Annexure A.1. The differential amount came to<a16,30,770/- as tax and a7,40,121/- as interest. Aggrieved by the order,the assessee filed appeal before the Commissioner of Income Tax (Appeals)[CIT(A)]. Vide order dated 30.4.2012, Annexure A.2, the appeal wasallowed holding that the doctors enjoy complete professional freedom; they ITA No.142 of 2013 (O&M) define working protocol; have free hand 1n treatment of patients and there 1sno control of the hospital by way of any direction to them on the treatmentof patients. There exists no employer employee relationship. The departmentwent in appeal before the Tribunal. Vide order dated 16.10.2012, AnnexureA.3, the Tribunal dismissed the appeal. Hence the instant appeal by therevenue. 4. We have heard learned counsel for the parties, 4 Learned counsel for the revenue submitted that it 1s the nature ofreceipt in the hands of the doctors and whether relationship of employer andemployee existed was required to be seen in order to determine thecontroversy involved. It was urged that the payment made to the doctorswas in the nature of salary and was governed by the provisions of Section192 of the Act. The claim made by the assessee that the amount which waspaid fell under Section 194J of the Act being professional charges and tax atsource was to be deducted at the rate provided thereunder, was erroneous.Support was drawn from judgments in |CIT vs. Dr. (Mrs.) Usha Verma andothers,(2002) 254 ITR 404 (P&H), |Ram Prashad vs. CIT,(1972) 86 ITR122(SC) and Karnataka High Court inCIT vs. M.S.P. Rajes, (1993) 202ITR 647. It was urged that control test and supervisory test would beapplicable in the case of doctors as was noticed by the Bombay High CourtinCIT vs. Grant Medical Foundation High Court ofbombay,(2015) 116DTR Judgments 45. Workmen of Nilgirt Coop.Mkt. Society Limited vs.State of Tamil Nadu and others,2004(2) RSJ 466 (SC) was cited toenumerate the essential conditions to be seen for determining the employer-employee relationship. 6.Learned counsel for the assessee on the other hand controvertedthe submissions made by the learned counsel for the revenue. Reference wasalso made to Explanation to Section 194J of the Act to urge that there wasdistinction between contract of service and contract for service. Reliancewas placed on judgments 1n Dharangadhra Chemical Works Limited vs.State of Saurashtra and others,AIR 1957 SC 264, |Commissioner ofIncome lax Bombay City vs. Mrs. Durga Khote,(1952) 21 ITR 23 (Bom.),CIT vs. Grant Medical Foundation (Ruwi Hall Clinic),(2015) 375 ITR 49(Bom. ),CIT vs. Apollo Hospitals International Limited,(2013) 359 ITR 78)(Guj.),CIT vs. Yashoda Super Specialty Hospital,(2014) 365 ITR 356(AP),Hindustan Coca Cola Beverage Pyt. Limited vs. CIT,(2007) 203 ITR226 (SC) andCIT vs. Rishikesh Apartment Cooperative Housing SocietyLimited,(2002) 253 ITR 310 (Guj.). Support was also gathered frompronouncement of Apex Court 1nGestetner Duplicators (P) Limited vs.CIT, (1979) 117 ITR 1 (SC), this Court inCIT vs. Deep Nursing Homeand Children Hospital, Ludhiana, ITA No.169 of 2007 decided on4.10.2007, Calcutta High Court in.ITO vs. Calcutta Medical Research)2001(75) ITD 484 (Cal.) and Delhi High Court in-CIT vs. Maruti UdyogLimited,(2012) 66 DTR 201. TiIt would be expedient to reproduce relevant statutoryprovisions 1.e. Sections 192(1) and 194J of the Act, which read thus:- 19)|(1) Any person responsible for paying any incomechargeable under the head "Salaries" shall, at the time ofpayment, deduct income-tax on the amount payable at theaverage rate of income-tax computed on the basis of the ratesin force for the financial year in which the payment is made, on the estimated income of the assessee under this head forthat financial year. 194.)(1) Any person, not being an individual or a Hinduundivided family, who 1s responsible for paying to a residentany sum by way of— +6) fees for professional services, or +b) fees for technical services, or +ba) any remuneration or fees or commission by whatevername called, other than those on which tax 1s deductible undersection 192, to a director of a company, or +C) royalty, or +d) any sum referred to 1n clause (Vd) ofsection 28) Shall, at the time of credit of such sum to the account of thepayee or at the time of payment thereof 1n cash or by issue ofa cheque or draft or by any other mode, whichever 1s earlier,deduct an amount equal to ten per cent of such sum asincome-tax on income comprised therein : Providedthat no deduction shall be made under this section! I +A) from any sums as aforesaid credited or paid before the Istday of July, 1995; or +B) where the amount of such sum or, as the case may be, theageregate of the amounts of such sums credited or paid orlikely to be credited or paid during the financial year by theaforesaid person to the account of, or to, the payee, does notex ceed +7) thirty thousand rupees, in the case of fees for professionalservices referred to in clause (O), Or +7]) thirty thousand rupees, in the case of fees for technicalservices referred to in clause (b), Or +II) thirty thousand rupees, in the case of royalty referred to inclause (C), or +Iv) thirty thousand rupees, in the case of sum referred to inclause (d): S| Provided further that an individual or a Hindu undividedfamily, whose total sales, gross receipts or turnover from thebusiness or profession carried on by him exceed the monetarylimits specified under clause (O) or clause (b) ofsection 44ABduring the financial year immediately preceding the financialyear 1n which such sum by way of fees for professionalservices or technical services 1s credited or paid, shall belable to deduct income-tax under this section : Providedalso.that no individual or a Hindu undivided familyreferred to in the second proviso shall be liable to deductincome-tax on the sum by way of fees for professionalservices in case such sum 1s credited or paid exclusively forpersonal purposes of such individual or any member of Hinduundivided family, Explanation.—For the purposes of this section,— Providedalso.that no individual or a Hindu undivided familyreferred to in the second proviso shall be liable to deductincome-tax on the sum by way of fees for professionalservices in case such sum 1s credited or paid exclusively forpersonal purposes of such individual or any member of Hinduundivided family, Explanation.—For the purposes of this section,— +6) “professional services" means services rendered by aperson in the course of carrying on legal, medical,engineering or architectural profession or the profession ofaccountancy or technical consultancy or interior decoration oradvertising or such other profession as is notified by theBoard for the purposes ofsection 44AAor of this section; +b) "fees for technical services" shall have the same meaningas 1n|Explanation 2to clause (|VII) of sub-section (1) of|section *A +ba) "royalty" shall have the same meaning as 1nExplanation>?to clause (VI) of sub-section (1) ofsection 9A>?to clause (VI) of sub-section (1) ofsection 9A +C) where any sum referred to 1n sub-section (1) 1s credited toany account, whether called "suspense account" or by anyother name, in the books of account of the person liable to paysuch sum, such crediting shall be deemed to be credit of suchsum to the account of the payee and the provisions of thissection shall apply accordingly. A plain reading of the above provisions shows that section 192 of the Act provides for deduction of income tax on the amount payable assalary at the average rate of income tax computed on the basis of the ratesin force for the financial year in which the payment is made. Under Section194J of the Act, any person not being an individual or a Hindu undividedfamily who is responsible for paying to a resident any sum by way of feesfor professional or technical services shall deduct an amount equal to tenpercent of such sum as income tax on the income comprised therein.QTo resolve the controversy raised in these appeals, necessarily,it will be required to be seen whether the agreement between the assesseeand the concerned doctors was a ‘contract for service’ or a ‘contract ofservice’. In case, it 1s ‘contract for service’, the income of the doctors wouldfall under the head ‘income from business or profession’ whereas under‘contract of service, 1t would partake the character of salary which 1sdependent upon master-servant relationship. It 1s always a vexed question todetermine whether employer-employee relationship exists between theparties or not. There is no strait jacket formula prescribed under any statuteor by any pronouncement on the basis of which it could be said that in agiven eventuality, it would be characterized as employer-employeerelationship. It 1s dependent upon several factors taken together whichwould result into such relationship. Besides the control/supervisory test andthe organization test, the Apex Court in |Workmen of Nilgiri Coop.Marketing Soctety Limited'scase (supra), observed that the questionwhether the relationship between the parties is one of the employer andemployee is a pure question of fact. It was also noticed that control test andthe organization test are not the only factors whereas several other factors ITA No.142 of 2013 (O&M) such as (a) who 1s the appointing authority; (b) who 1s pay master; (c) whocan dismiss; (d) how long alternative service lasts; (e) the extent of controland supervision; (f) the nature of the job e.g. whether it 1s professional orskilled work; (g) nature of establishment; (h) the right to reject, are alsorequired to be scanned before arriving at the conclusion of employer-employee relationship. 10.)We now proceed to examine the judicial precedents on thesubject. In Dharangadhra Chemical Works Limited ys. State ofSaurashtra and others,AIR 1957 SC 264, while discussing employer-employee relationship, the Apex Court observed thus:- ITA No.142 of 2013 (O&M) such as (a) who 1s the appointing authority; (b) who 1s pay master; (c) whocan dismiss; (d) how long alternative service lasts; (e) the extent of controland supervision; (f) the nature of the job e.g. whether it 1s professional orskilled work; (g) nature of establishment; (h) the right to reject, are alsorequired to be scanned before arriving at the conclusion of employer-employee relationship. 10.)We now proceed to examine the judicial precedents on thesubject. In Dharangadhra Chemical Works Limited ys. State ofSaurashtra and others,AIR 1957 SC 264, while discussing employer-employee relationship, the Apex Court observed thus:- “9. The principles according to which the relationship asbetween employer and employee or master and servant hasgot to be determined are well settled. The test which 1suniformly applied in order to determine the relationship 1sthe existence of a right of control in respect of the manner inwhich the work 1s to be done. A distinction is also drawnbetween a contract for services and a contract of service andthat distinction 1s put in this way: " In the one case themaster can order or require what is to be done while 1n theother case he can not only order or require what is to bedone but how itself it shall be done." (Per Hilbery, J. inCollins v. Hertfordshire County Council).” 11.The issue before the Bombay High Court 1n-Commissioner of Income Tax, Bombay City vs. Mrs. Durga Khote, (1952) 21 ITR 23, waswhether the income of assessee, a film actress should be computed underSection 7 or Section 10 of Indian Income Tax Act, 1922. It was held thatthe assessee's income arose out of the practice of her profession of a filmactress and must therefore be computed under Section 10 and not under ITA No.142 of 2013 (O&M) Section 7 of the said Act. 12)In|Commissioner of Income Tax (IDS) vs. Grant MedicalFoundation (Ruby Hall Clinic), (2015) 375 ITR 49 (Bom), again theBombay High Court observed that in case of doctors with fixed pay andtenure, the amount paid to them constituted salaries. In relation to thesecond category of doctors drawing fixed plus variable pay with writtencontracts, after noticing the terms and conditions, the conclusion of theTribunal was upheld that neither of the doctors was entitled to providentfund or any terminal benefits. Both were free to carry on their privatepractice at their own clinic or outside hospitals but beyond the hospitaltimings. In such circumstances, they were not employees but independentprofessionals. The amounts paid to them did not amount to salary,Similarly, in relation to other doctors where the remuneration was variableand there was a written contract or no written contract, 1t was recorded thatthe amounts paid to them did not amount to salary. It was observed that itwill depend upon facts and circumstances of each case after looking to theconditions of engagement whether there is master-servant or employer-employee relationship or not and it cannot be laid down as absolute rule orprinciple of general application. 13,InCommissioner of Income Tax (IDS) vs. Apollo Hospitals International Limited, (2013) 359 ITR 78 (Guj.), while concurring with thefindings recorded by the Tribunal, the Gujarat High Court recorded asunder:- “5.1. In the impugned order, the Tribunal has elaboratelyconsidered the aspect whether the agreement between theassessee and 15 doctors was a contract of service or 1t was a contract for service. The Tribunal observed as under: 6. ...Undisputed fact is that there are two types ofjAgreements. One of the covenant is stated to be in the natureof employer/employee agreement and the other 1s stated to beFixed Salary & Guarantee Money to Consultants (in shortFGCs) contract. Before us the terms & conditions of both theagreements were recited. Evidently there 1s a distinction. Thedistinction as pointed before us can be stream lined 1n shortas under: International Limited, (2013) 359 ITR 78 (Guj.), while concurring with thefindings recorded by the Tribunal, the Gujarat High Court recorded asunder:- “5.1. In the impugned order, the Tribunal has elaboratelyconsidered the aspect whether the agreement between theassessee and 15 doctors was a contract of service or 1t was a contract for service. The Tribunal observed as under: 6. ...Undisputed fact is that there are two types ofjAgreements. One of the covenant is stated to be in the natureof employer/employee agreement and the other 1s stated to beFixed Salary & Guarantee Money to Consultants (in shortFGCs) contract. Before us the terms & conditions of both theagreements were recited. Evidently there 1s a distinction. Thedistinction as pointed before us can be stream lined 1n shortas under: (a) In case of employee doctors’ there 1s a list of allowancessuch as Basic, HRA, Trans. Allw. Edu. Allw. B&P Allw. Tel,Allw. Other Allw. On the other hand, in case of consultantdoctors’ there is a clause of lump-sum monthly payment. Theconsultant doctors, however, are not paid any _ suchallowance. (b) In the case of employee doctors’ there 1s a clause ofentitlement of leave prescribed for a _ specific periohowever, there 1s no such condition mentioned in case ofagreement with the consultant doctors’. (c) An employee doctor’ is entitled for Medical Benefit andPersonal Accident Benefit provided by the assessee as per thepolicy of the hospital. Contrary to this there is no such benefit granted to the“Consultant Doctors’. (d) There 1s a specific mention of General Service Rules &Regulation to govern the service matters, but in theagreement of FGCs they are not governed by such Rules andRegulations, rather they were confined within the terms ofthe agreement, (e) For Employee Doctors' the employment is full-timeemployment and they are not entitled for any other full timeemployment or private practice.On the other hand consultantdoctors are free to do any other job. (1) In case of Consultant Doctors, there 1s a clause of fixed"GuaranteeMoney" per month, but alongwith this amountthere 1s a clause of sharing of receipts with the hospital. Thisclause of agreement states that the arrangement 1s "fee forservice’ and the hospital 1s entitled to collect the amount tobe shared between the two. However, there 1s no such clausefor regularly employed doctors. (g) The Consultant Doctors were required to takeProfessional Indemnity Insurance on their own. (h) The Consultant Doctors were not employed by ServiceRules and Regulations but they were expected to follow theCode of Conduct and Ethics of Doctors. It was further observed: "To determine whether an amount received by a person 1s inthe nature of salary or not, 1t 1s necessary to examine over allcircumstances and primarily the terms and conditions of theemployment. We have already scrutinized the terms andconditions and thereupon made certain distinctions as listedhereinabove. On the basis of those distinctions, we herebyhold that the terms and conditions 1n respect of the 1mpugneddoctors who are under FGCs are not akin to the salariedemployees. Their relationship with the hospital, thus, cannotbe said to be an employer-employee relationship. For thisreason the deduction of tax at source ought to have been made as per the provisions of Sec.194J of the Act." 6. Another important aspect was that the consultant doctors hadfiled their individual returns of their income showing professionalfees received from the assessee and on that they had paid tax. Theassessing officer directed for payment of interest under section 201(1A) of the Act. On the issue of charging of interest the fact thatthose consultant doctors were independently assessed was ofsignifying relevance inasmuch as since they were paying tax, therewas no loss to the Revenue. In such facts and circumstances, theTribunal correctly concluded that charging interest was not justified| made as per the provisions of Sec.194J of the Act." 6. Another important aspect was that the consultant doctors hadfiled their individual returns of their income showing professionalfees received from the assessee and on that they had paid tax. Theassessing officer directed for payment of interest under section 201(1A) of the Act. On the issue of charging of interest the fact thatthose consultant doctors were independently assessed was ofsignifying relevance inasmuch as since they were paying tax, therewas no loss to the Revenue. In such facts and circumstances, theTribunal correctly concluded that charging interest was not justified| 6.1. As discussed above, the Tribunal took into account all therelevant aspects from the material on record to arrive at aconclusion that the consultant doctors were not getting salary, butthe payment to them was in nature of professional fees. Thecontract with them by the assessee was one of contract for service’and not of service’. Therefore, tax was being rightly deducted atsource under section 194J and section 192 of the Act had noapplication. The findings and conclusions of the Tribunal areproper, There is no error of appreciation. We are in agreement with thesame. No substantial question of law arises for consideration.” 14.Adverting to the judgments relied upon by the learned counsel for the revenue, inRam Prashad'scase (supra), 1t was held by the ApexCourt that a Managing Director who has to exercise powers within theterms and limitations prescribed under articles of association and subject tocontrol and supervision of the Board of Directors of the company 1semployed as a servant of the company and remuneration payable to him 1ssalary. Similar issue was adjudicated by the Karnataka High Court inM.S.P. Rajes'case (supra). In.Dr. Mrs. Usha Verma'scase (supra), theHigh Court was examining whether the income from the paying clinicshould be taxed under the head ‘Profit or gains of profession’ or under thehead ‘salary’. The assessee-doctors were employed by the GovernmentMedical College. Doctors working in Government hospitals used toexamine patients at their residence. To stop this practice, a scheme of payingclinic was introduced within the official premises. The para-medical andother staff was provided by the employer. This Court had held that thedoctors were serving in the Government Medical College and it was by ITA No.142 of 2013 (O&M) virtue of their employment with the Government that they were permitted bythe Government to work in the paying clinics run in the College on sharingof fees. It was also held to be falling under Section 17(1) (av) of the Act. Itwas concluded on the basis of factual matrix therein that the share of feesgiven to the doctors in accordance with the terms laid down by the employerwould fall under salary. Thus, it could not be treated as income fromprofession. Such is not the position in the present case. The legal principlesenunciated in these pronouncements are unexceptionable but keeping inview the facts of the case in hand noticed in succeeding para, they do notadvance the case of the revenue. ITA No.142 of 2013 (O&M) virtue of their employment with the Government that they were permitted bythe Government to work in the paying clinics run in the College on sharingof fees. It was also held to be falling under Section 17(1) (av) of the Act. Itwas concluded on the basis of factual matrix therein that the share of feesgiven to the doctors in accordance with the terms laid down by the employerwould fall under salary. Thus, it could not be treated as income fromprofession. Such is not the position in the present case. The legal principlesenunciated in these pronouncements are unexceptionable but keeping inview the facts of the case in hand noticed in succeeding para, they do notadvance the case of the revenue. 15.In the present case, it has been categorically recorded by theCIT(A) that the contract for service implies a contract whereby one partyundertakes to render services 1.e. professional or technical services whereascontract of service implies relationship of master and servant and involvesan obligation to obey orders in the work to be performed and also as to itsmode and manner of performance. The professional doctors are not entitledfor LTC, concession in medical treatment of relatives, PF, leave encashmentand retirement benefits like gratuity. They are required to follow somedefined procedure to maintain uniformity in action and some administrativediscipline but this does not mean that they have become employees of thehospital. Further, the department had not taxed the payments received byany of the doctors from the assessee under the head ‘income from salary’.Concurring with the findings recorded by the CIT(A), it has been held bythe Tribunal that there does not exist employer-employee relationship}between the assessee and the persons providing professional services. It has been further recorded that on consideration of the agreement in its entiretyvis a vis the case law relied upon by the assessee, it 1s evident that it is not acase of employer-employee relationship between the assessee and thedoctors. It was noticed thus:- *“We have heard the rival submissions, facts of the case and threlevant records. The brief facts of the case are that theappellant company 1s running a hospital, known as Ivy Hospitalat Mohah. The Department conducted a TDS inspection undersection 133A of the Act, at the business premises of theassessee appellant on 28.9.2011. During the course of suchInspection and assessment proceedings under section 201(1)/201(1A) of the Act, 1t was noticed by the ACIT(TDS) that thehospital is running different OPDs, apart from indoor patients’treatment. The procedure of treating patients in OPD 1s thatwhen a patient comes for the treatment 1n Hospital's OPD, hedeposits a consultation fee for the particular MedicalDepartment in which he wants to consult, at the cash counter ofthe hospital and he 1s given a receipt for it and then he consultsthe doctor to whom he wants to consult. The concerned doctorprescribes the treatment on the hospital's letter pad. If thepatient is to be admitted in the hospital for indoor treatment,then he is admitted under his treatment. The working days andhours of the doctors working in OPD of the hospital, are fixedand as per the contract between these doctors and the hospitalthey are not allowed to do their own practice or work withanother hospital during the period for which they are engagedattended the hospital on call. However, during the course ofTDS inspection,it was noticed that the assessee deductor wasdeducting the tax at source of the both types doctors undersection 194J as professional charges, whereas the paymentsmade to doctors who are regularly attached with the hospital,are required to be treated as salary and tax 1s also required to be deducted under section 192 of the Act. The AO was of the viewthat payments made to doctors were regularly attached with thehospital, were required to be treated as salary and taxes arerequired to be deducted under section 192 of the Act.Consequently, AO issued a show cause notice to treat theperson responsible (hereinafter referred to as PR) as assessee indefault under section 201(1) of the Act for short deduction oftax at source from the payments made to the consultant doctorsand charged interest under section 201(1A) of the Act. Onappreciation of the written submissions filed by the appellantbefore the AO, it was concluded by him that there existedemployer-employee relationship in the hospital. Consequently,the AO concluded the issue as ‘During the financial year 2008-09, the assessee had deducted tax of=a11,67,399.40 undersection 194J of the Act, whereas the tax of v2/,98,169.69under section 192 of the Act was required to be conducted.Therefore, the assessee is liable to pay a difference of |=16,30,770/- as tax of|“a7,40,121/- under section 201(1A) of theAct as per calculation enclosed as Annexure | to this order.Accordingly, total payable tax demand comes to=a23,/0,891/-for the assessment year 2009-10." 6. Similarly, for the assessment 2010-11, the AP worked out thetotal payable tax demand atv75,60,672/- (difference net taxdeducted at.=a62,50,560/- and interest of|Lv12,50,112/- undersection 201(1A) of the Act, 7. Learned CIT(Appeals) on appreciation of the factual matrixof the Act and case laws cited by the appellant, adjudicated theissue in favour of the assessee appellant, as per followingfinding:- '5. I have considered the submission field by the learnedcounsel. I have also gone through the MOUs between theappellant company and professional doctors. The variousclauses of the MOUs need to be examined in the light of thecriteria laid down by the courts to determine whether the doctors attached to the appellant hospital are employees of thehospital. The test which is uniformly applied in order todetermine whether a particular relationship amounts toemployer-employee relationship 1s the existence of a right ofcontrol in respect of the manner in which work 1s to be done bythe person employed. The nature and extent of control which 1srequisite to establish the relationship of employee andemployer varies from business to business.’ S.A bare perusal of the case law relied upon by theappellant and submissions made in the synopsis reveals thatthere does not exist employer employee relationship betweenthe assessee appellant and the persons providing professionalservices. On consideration of the agreement in its entirety vis avis the case law relied upon by the assessee appellant, it 1sevident that it is not a case of employer employee relationshipbetween the assessee appellant and the doctors. Therefore,having regard to the detailed analysis and findings of the CIT(Appeals) on the issue in question, 1t cannot be said thatfindings of the learned CIT(Appeals) suffer from any infirmity.In view of this, findings of the CIT(Appeals) are upheld.” 16)Additionally, we may notice the terms of the agreement on thebasis of which the Assessing Officer had issued show cause notice to theassessee which read thus:- 1) The second party shall be associated exclusively with M/sIVY Hospital as full-time consultant and shall not associatehimself with any other hospital, 11) the second party shall be paid professional charges forservices rendered by him in IVY Hospital as under with aminimum guarantee of Rs...per month subject to TDSdeductions as per Act, the minimum guarantee amount shall bepaid to the second party for a period of 12 months from thedate of joining. The same shall be revised at the end of 12 months. a) 70% of the OPD charges b) Visiting charges in ward/private room as mutually settledbetween the two parties. c) 15% of the investigation done of IVY Hospital. 1) The second party shall be associated exclusively with M/sIVY Hospital as full-time consultant and shall not associatehimself with any other hospital, 11) the second party shall be paid professional charges forservices rendered by him in IVY Hospital as under with aminimum guarantee of Rs...per month subject to TDSdeductions as per Act, the minimum guarantee amount shall bepaid to the second party for a period of 12 months from thedate of joining. The same shall be revised at the end of 12 months. a) 70% of the OPD charges b) Visiting charges in ward/private room as mutually settledbetween the two parties. c) 15% of the investigation done of IVY Hospital. 111) the second party shall not do practice at any other place andwould be associated exclusively with IVY hospital. The secondparty shall not operate or admit patient in any other hospitalexcept at IVY Hospital.” In our opinion, the Assessing Officer was not right in concluding on thecombined reading of the above stipulations that the income of the doctorswas Salary. It nowhere suggests that there exists relationship of employer-employee between the assessee and the said doctors, rather it 1s a pointer tothe contrary. 17.Learned counsel for the revenue has not been able to show anyillegality or perversity 1n the findings recorded by the CIT(A) as well as theTribunal. Consequently, the substantial questions of law are answeredagainst the revenue and in favour of the assessee. The appeals standdismissed. (Ajay Kumar Mittal)Judge August 26, 2015>1%> (Ramendra Jain)Judge