DCIT Vs Agilus Diagnostics Ltd (ITAT Delhi)
The ITAT Delhi dismissed the Revenue’s appeal and upheld the CIT(A)’s order deleting the demand raised u/s 201(1)/(1A), holding that payments made to consultant doctors were rightly subjected to TDS u/s 194J and not u/s 192.
The Tribunal held that the AO misdirected himself by confusing a “contract for service” with a “contract of service”. On a detailed examination of the consultancy agreements, it was evident that the doctors were engaged as independent professionals on a principal-to-principal basis, for a fixed tenure and against consultancy fees, without creation of any employer–employee relationship.
The fact that consultant doctors were required to follow hospital timings, report to authorities, apply for leave, or comply with administrative discipline was held to be purely regulatory in nature, intended to ensure quality, accountability and patient care. Such administrative supervision does not metamorphose a professional consultancy arrangement into employment.
The Tribunal concurred with the CIT(A) that:
- consultants exercised independent professional discretion,
- there was no control over the manner of rendering medical services,
- agreements clearly negated employer–employee relationship, and
- supervision for discipline or compliance cannot be equated with employment control.
Importantly, the ITAT also noted that the consultant doctors had already offered the professional receipts to tax in their own returns, and therefore, in any event, the assessee could not be treated as an “assessee in default” in view of the proviso to section 201, following Hindustan Coca Cola Beverage Pvt. Ltd.
Relying on settled precedents including Apollo Hospitals International Ltd. and Fortis Hospital Ltd., the Tribunal held that TDS u/s 194J was correctly deducted, the demand u/s 201 was unsustainable, and the Revenue’s appeal was devoid of merit.
Accordingly, the Revenue appeal was dismissed in toto
FULL TEXT OF THE ORDER OF ITAT DELHI
