Case Number: ITA 5323/DEL/2019
Appellant: ACIT Circle-74(1), Delhi
Respondent: Fortis Hospitals Ltd., Delhi
Assessment Year: 2016-17
Case Filed on: 2019-06-11
Order Type: Final Tribunal Order
Date of Order: 2022-06-27
Pronounced on: 2022-06-27
The case involves a dispute over the applicability of Tax Deducted at Source (TDS) under Section 194J versus Section 192 of the Income Tax Act, 1961 on payments made by Fortis Hospitals Ltd., Delhi to doctors engaged in various capacities. The appellant, ACIT Circle-74(1), Delhi, contested the categorization of payments made to doctors and the resulting TDS obligations.
Fortis Hospitals Ltd. is engaged in providing healthcare services, including diabetics, renal care, and ophthalmology. For these services, the hospital engages doctors in three categories: on-roll, retainer, and consultants.
The primary issue was whether the payments made to doctors categorized as retainers and consultants should be subjected to TDS under Section 194J (professional fees) or Section 192 (salaried employees) of the Income Tax Act, 1961.
The appellant argued that the terms and conditions of engagement for retainer doctors were similar to those of full-time employee doctors, thus establishing an employer-employee relationship. This would necessitate TDS under Section 192, not Section 194J.
The respondent, Fortis Hospitals Ltd., contended that the nature of the engagement with retainer and consultant doctors did not constitute an employer-employee relationship. They argued that payments to these doctors were professional fees, thus attracting TDS under Section 194J.
The tribunal examined the distinctions between the categories of doctors:
The tribunal referenced several judgements, including DCIT vs. Wockhardt Hospitals Ltd. and Escorts Heart Institute & Research Centre Ltd., where similar issues were adjudicated, favoring the application of Section 194J.
The tribunal concluded that the engagements with retainer and consultant doctors did not establish an employer-employee relationship. Therefore, TDS under Section 194J was applicable, not Section 192. The tribunal dismissed all appeals filed by the Revenue.
This ruling reinforces the distinction between different categories of professional engagements in the healthcare sector and the corresponding TDS obligations. It underscores the importance of accurately categorizing professional relationships to ensure compliance with the Income Tax Act.
Final Judgment: In favor of Fortis Hospitals Ltd., Delhi, applying TDS under Section 194J.
Order Pronounced in the Open Court on: 27/06/2022
Judicial Members: Dr. B. R. R. Kumar, Accountant Member, and Yogesh Kumar US, Judicial Member
ACIT Circle-74(1), Delhi vs Fortis Hospitals Ltd., Delhi: TDS Dispute for Assessment Year 2016-17
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