Curiously, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) passed a ruling for the doctor and hospitals on Tuesday that the payment that is made by the assessee hospital to the consultant doctors shall be the subject of professional payments and Tax Deducted at the source shall be applicable in the aforesaid case as per section 194 J of the Income Tax Act 1961 and not section 192 that is applicable to salaried employees.
Interestingly, recalling history in a hurry, The assessee hospital has paid a total amount of Rs 11.17 crores to the full-time consultant doctors under the title salary to regular employees. And so, from a tax perspective, the hospital considered it as a salary of regular employees. However, as per TDS Officer, such payments are the subject of professional fees and no employer-employee relationship and as a result section 194J of the Income Tax Act, 1961 is applicable not section 192 of the Income Tax Act 1961.
The bench that was presided by Justice PP Bhatt had observed that terms of the arrangement with the consultant doctors were different from that of employee-doctors arrangement.
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“The consultant doctors were paid based on the services rendered by them and on the basis of doctors’ fees collected by the hospital from the patients. The same is evident from the fact that the payment made to these doctors vary significantly each month. This was so because fees payable to them were linked to services rendered and patients attended to by them during the relevant period. Further, the consultant doctors were not entitled to any fixed remuneration.”
“While Upholding order, Justice PP Bhatt and the Accountant member Manoj Kumar Aggarwal held that It is also a fact that there was no specific timing and attendance record maintained by hospital with respect to such doctors and this category of doctors was not be eligible for any leave, provident fund, gratuity, bonus etc. and were not subject to admission or retirement from services. They were not entitled to several benefits as allowed to regular employees such as medical reimbursement. Insurance, leave encashment etc.”
“All these facts and features would bolster assessee’s claim that there was no employer-employee relationship between the assessee and consultant doctors. Therefore, the tax was rightfully deducted under section 194J
Know about section 194J under TDS for technical and professional services fees. Also, check amendments of TDS section 194J due to finance bill 2020 with general queries. read more. Pertinently, the coordinate bench of this Tribunal has also decided this issue in the assessee’s favor for AY 2008-09 which has already been taken note of in the impugned order. No distinction in facts could be brought on record. Therefore, we find no reason to interfere in the impugned order.”
