The case ITA No. 5318/DEL/2019 involves the appellant ACIT, Circle-74(1), New Delhi, contesting an order in favor of the respondent Escorts Heart Institute & Research Centre Ltd., New Delhi. The appeal was filed on June 11, 2019, against the order passed by the Commissioner of Income Tax (Appeals)-41, New Delhi, dated March 29, 2019, relating to the assessment year 2011-12.
The ACIT, Circle-74(1), New Delhi, filed the appeal to contest the decision of the CIT(A) that held that the payments made to doctors engaged as retainers and consultants by the respondent should be subjected to tax deduction at source (TDS) under Section 194J of the Income Tax Act, 1961, and not under Section 192.
The appeal was heard by the Income Tax Appellate Tribunal (ITAT) Delhi Bench ‘B’, New Delhi, through video conferencing. The bench was presided over by Vice President Sh. A.D. Jain and Accountant Member Dr. B.R.R. Kumar. The hearing took place on May 10, 2022, and the order was pronounced on June 27, 2022.
The appellant, ACIT, Circle-74(1), argued that the relationship between the doctors and Escorts Heart Institute & Research Centre Ltd. was that of employer and employee, thereby making the provisions of Section 192 applicable for TDS deduction. The ACIT contended that the agreements with the doctors had clauses that indicated an employer-employee relationship, such as the right to select, appoint, terminate, and control the manner and method of work.
The respondent, Escorts Heart Institute & Research Centre Ltd., represented by CA Sh. R.M. Mehta, argued that the doctors were engaged on retainership and consultancy basis, and therefore, the payments made to them should be subjected to TDS under Section 194J as professional fees. The respondent emphasized that the terms of the agreements with the retainers and consultants clearly established an independent professional relationship.
The ITAT reviewed the submissions made by both parties and observed that the issue of TDS deduction for doctors engaged on retainership and consultancy basis had been a contentious issue in the past but was now settled through various judicial pronouncements.
The following details were crucial in the tribunal’s decision:
The ITAT upheld the decision of the CIT(A) that the payments made to doctors engaged as retainers and consultants by Escorts Heart Institute & Research Centre Ltd. should be subjected to TDS under Section 194J and not under Section 192. The tribunal noted that the terms of the agreements with the retainers and consultants did not create an employer-employee relationship. Consequently, the appeal filed by ACIT, Circle-74(1), New Delhi, was dismissed. The order was pronounced in the open court on June 27, 2022.
Escorts Heart Institute vs. ACIT Circle-74: Appeal on TDS Deduction
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