Case Number: ITA 5330/DEL/2019
Appellant: ACIT Circle-74(1), New Delhi
Respondent: Fortis Healthcare Ltd., New Delhi
Assessment Year: 2017-18
Result: Final Tribunal Order
Case Filed On: 2019-06-11
Date of Order: 2022-06-27
Pronounced On: 2022-06-27
The case involves a dispute between the Appellant, ACIT Circle-74(1), New Delhi, and the Respondent, Fortis Healthcare Ltd., New Delhi, regarding the applicability of tax deduction at source (TDS) provisions for payments made to retainer doctors under Section 194J of the Income Tax Act, 1961, instead of Section 192 for salaried doctors, for the assessment year 2017-18.
Fortis Healthcare Ltd. is engaged in providing healthcare services across various specialties, including diabetology, renal, and ophthalmology. To support its operations, the hospital employed doctors under three categories: on-roll (salaried), retainer, and consultants. The central issue in this case is the determination of whether payments made to retainer doctors should be subject to TDS under Section 194J (professional services) or Section 192 (salaried employees).
The Revenue, represented by the Appellant, contended that the terms and conditions of employment for retainer doctors exhibited significant similarities to those of salaried doctors, suggesting an employer-employee relationship. They argued that the payments should therefore be subjected to TDS under Section 192.
The Respondent, Fortis Healthcare Ltd., argued that the nature of the agreements with retainer doctors was fundamentally different from those with salaried doctors. They asserted that retainer doctors were engaged on a contractual basis with distinct terms, making Section 194J applicable for TDS purposes.
The tribunal examined the contracts and highlighted the following differences:
The tribunal also considered past judgments, such as the case of DCIT vs. Wockhardt Hospitals Ltd., which provided a precedent for distinguishing between employee and retainer doctors for TDS purposes.
The tribunal noted certain clauses in the contracts that were argued to create an employer-employee relationship:
However, the tribunal found that these clauses did not fundamentally alter the professional nature of the retainer agreements.
The tribunal referred to several judicial precedents, including:
These cases supported the view that retainer doctors should be considered under Section 194J for TDS purposes.
After analyzing the facts, contractual terms, and judicial precedents, the tribunal concluded that the payments to retainer doctors should be subjected to TDS under Section 194J and not Section 192. Therefore, Fortis Healthcare Ltd. could not be treated as an ‘assessee in default’ for not deducting tax under Section 192 for retainer doctors.
Final Judgment: The tribunal dismissed all appeals of the Revenue.
Order Pronounced in the Open Court on 27/06/2022.
Signed by:
Dr. B. R. R. Kumar, Accountant Member
Yogesh Kumar US, Judicial Member
Dated: 27/06/2022
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