The Delhi bench of the Income Tax Appellate Tribunal (ITAT) ruled that payments to consultant and retainer doctors are exempt from Tax Deducted at Source (TDS) under Section 192B of the Income Tax Act, 1961.
The assessee, a leading integrated healthcare provider in India, operates hospitals, diagnostics, and speciality daycare facilities. Based in Gurugram, Haryana, with headquarters in Sector-41, the company has numerous hospitals across the country.
To ensure compliance with TDS provisions under Sections 201(1)/201(1A) of the Income Tax Act, a TDS survey was conducted at M/s. Fortis Group premises in the case of the assessee under Section 133A(2A) of the Income Tax Act.
The Assessing Officer (AO) concluded that payments to consultant and retainer doctors should be categorized as “salary,” imposing the responsibility on the assessee to deduct TDS from these payments, akin to on-roll doctors, at the applicable salary rate.
With a liability of Rs. 2,91,71,684/- under Section 192B of the Income Tax Act, and the assessee having deducted Rs. 1,10,06,561/- at the source, the company was deemed an ‘assessee in default’ for not deducting Rs. 1,81,65,123/- in tax, as determined by the Assistant Commissioner of Income Tax (ACIT) Circle 74(1), New Delhi under Sections 201(1)/201(1A) of the Income Tax Act.
However, the two-member bench, comprising BRR Kumar (Accountant member) and Astha Chandra (Judicial member), determined that Section 194J of the Income Tax Act, instead of Section 192B, applies to retainer doctors. This decision was based on their observation of differences in the agreements governing salaried doctors versus those appointed on a retainer basis.
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Specific clauses within the retainer contracts misled the Assessing Officer (AO) into assuming the establishment of an employer-employee relationship. However, the assessee clarified that these clauses do not establish such a relationship. Consequently, the revenue’s appeal was dismissed.
| Case Title | M/S Fortis Hospital Ltd |
| Citation | ITA No. 241/Del/2023 |
| Date | 06.11.2023 |
| Appellant by | Shri R.M. Mehta |
| Respondent by | Shri Vivek Kumar Upadhyay |
| Delhi High Court | Read Order |
