Relationship between a hospital and employee depend on terms of contract between them to determine 192 or 194J applicability

CA Prarthana Jalan

On perusal of the order passed by the Tribunal in case of DCIT Vs. M/s Wockhardt Hospitals Ltd., (supra) it is to be seen that service agreement entered in case of M/s Wockhardt Hospitals Ltd., clearly establishes an employer and employee relationship since Doctors are governed by the service rules of the hospital and the Doctors are liable for retirement on attaining the age of 58 years.

Further, monthly payment is not relating to the number of patients treated by them whereas in case of the assessee before us neither there is any age of retirement for the full time consultant Doctors nor they are governed by any specific service rules of the hospital. In the aforesaid factual position, decision of the coordinate bench in case of DCIT Vs. M/s Wockhardt Hospitals Ltd.,(supra) will not be applicable to the assessee’s case. On the other hand, the view expressed by the Tribunal in case of Yashoda Super Speciality Hospital (supra), upheld by the jurisdictional High Court in ITTA No. 196 of 2013 vide judgment dated 04/07/2013 clearly applies to the facts of the present case. In consideration of the aforesaid facts, we are of the view that there is no employer and employee relationship between the hospital and the consultant Doctors, at least the facts on record do not establish any such relationship, it cannot be said that fees paid to full time consultant Doctors are in the nature of salary, therefore, subject to deduction of tax at source as per the provisions of section 192 of the Act. Accordingly, we set aside the order of the CIT(A) and direct the Assessing Officer to delete the demand. Grounds raised are allowed.