Case Law Details
DCIT Vs Kovai Medical Centre and Hospital Limited (ITAT Chennai)
Section 194J applicable on payments to ‘consultant’ doctors; Section 192 inapplicable absent employee-employer relationship.
Chennai ITAT dismisses Revenue’s appeal, holds that payment made to consultant doctors by the Assessee hospital are liable for tax deduction at source under Section 194J and not 192, absent employer-employee relationship, accordingly, deletes addition on account of short deduction of tax at source; Holds that the confidentiality agreement of consultant doctors with the Assessee clearly stipulates that consultant doctors were not entitled to PF or any terminal benefits and were free to carry on their own private practices as an independent professional, remarks that merely because certain attributes like fixed remuneration, leaves, rules, fixed timings were applicable to doctors, they cannot be considered as employees in absence of master-servant relationship; Pursuant to survey under Section 133A and on the basis of statement recorded of a consultant under Section 131, Assessee-Hospital was subjected to Section 201(1) proceedings whereby it was held that payment to consultant doctors was liable for deduction of tax at source under Section 192 whereas Assessee deducted tax under Section 192, resulting in short deduction of tax at source; CIT(A) allowed Assessee’s appeal and held that payment made to consultant doctors does not fall under the ambit of Section 192 in absence of employer-employee relationship; ITAT observes that the consultant doctors are permitted to do private practice subject to certain conditions which clearly give indication of independence of doctors and absence of employer and employee relationship, states that although the consultant doctors are governed by incremental pay and are allowed to avail leave with the prior permission of Assessee, it cannot be said that the doctors are governed by applicable leave laws for leave encashment; Observes that Revenue failed to examine the joining report of the consultant doctor wherein it was mentioned as ‘consultant critical care medicine’ and based on the said report it is clear that said doctor is a consultant but not employee; Rejects Revenue’s contention on fixed working hours to consultant doctors thereby establishing employer-employee relationship and observes that the conditions on working hours decided by the Assessee was to make sure that consultant doctors are available for the benefit of patients and cannot be said to be governed by laws applicable to other employees; Relies on jurisdictional High Court ruling in Dr Mathew Cherian and other in WP 12692 & 14810 of 2022 dated 01.09.2022, and plethora of other rulings wherein it was held that relationship between professional doctor consultant and the hospital cannot be treated as employer-employee relationship, unless there exist the specific rules and provisions in the contract of appointment between the consultant and hospital; Accordingly, dismisses Revenue’s appeal; With regard to alleged short deduction of tax at source on payment to AMC provider, ITAT relies on Bombay High Court ruling in CIT v. Saifee Hospital reported in 262 Taxman 343 (Bom.) wherein it was held that payment for services rendered towards maintenance of medical equipment is a payment for work contract covered under Section 194C and does not involve any technical services which would require deduction of tax at source under Section 194J and observes that payment made to AMC provider shall be covered under Section 194C as against Section 194J in absence of technical service; Accordingly, dismisses Revenue’s appeal. [In favour of assessee] (Related Assessment year : 2015-16) – [DCIT(TDS), Coimbatore v. Kovai Medical Centre and Hospital Ltd. (CHNY)] – Date of Judgement : 12.04.2023
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the revenue is directed against the order of the Commissioner of Income tax (Appeal), National Faceless Appeal Centre (NFAC), Delhi dated 30.09.2022 and pertains to assessment year 20 15-16.
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