Income Tax Appellate Tribunal - Kolkata
Acit (Tds), Cir-I, Kolkata, Kolkata vs M/S Apollo Gleneagles Hospitals Ltd., ... on 6 September, 2017
1
ITA No.813/Kol/2015
Apollo Gleneagles Hospitals Ltd., AY 2012-13
आयकर अपील
य अधीकरण, यायपीठ - "C" कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH: KOLKATA
(सम )Before ी ऐ. ट . वक
, यायीक सद य एवं/and ी एम .बालागणेश, लेखा सद य)
[Before Shri A. T. Varkey, JM & Shri M. Balaganesh, AM]
I.T.A. No. 813/Kol/2015
Assessment Year: 2012-13
Assistant Commissioner of Income-tax, Vs. M/s. Apollo Gleneagles Hospitals Ltd.
(TDS), Circle-1, Kolkata. (PAN: AAECA5407E)
Appellant Respondent
Date of Hearing 17.08.2017
Date of Pronouncement 06.09.2017
For the Appellant ShriGoulean Hangshing, CIT, DR
For the Respondent Ms. Vandana Bhandari, AR
ORDER
Per Shri A.T.Varkey, JM
This is an appeal filed by the revenue against the order of Ld. CIT(A)-24, Kolkata dated 02.02.2015 for AY 2012-13.
2. The sole ground of appeal of revenue is that whether in respect of consultant doctors, there exists an employer-employee relationship so that their payments are salary so as to bring into effect of section 192 of the Income-tax Act, 1961 (hereinafter referred to as the "Act") instead of section 194J of the Act.
3. Brief facts of the case are that the assessee is a domestic company, engaged in providing health care services, operates a hospital viz., Apollo Gleneagles Hospital at Kolkata. During the course of assessment proceedings the AO noticed that 116 doctors were engaged by the assessee in its hospital in the capacity of consultants and an aggregate of Rs.52,97,98,732/- was paid to these doctors as professional fees which was subjected to TDS u/s. 194J of the Act. Thereafter, at the time of hearing the AO asked the Ld. AR to 2 ITA No.813/Kol/2015 Apollo Gleneagles Hospitals Ltd., AY 2012-13 show cause as to why assessee should not be treated as an assessee in default for short deduction of tax as the doctors were on the payroll of the hospital as salaried employees and the payments made to them should have been taxed u/s. 192 of the Act. According to Ld. AR, the AO has not appreciated the fact that there is no existence of employer-employee relationship between the assessee hospital and the consultant doctor. The AO ignored the arrangement and the assessee's contention in respect to the resultant relationship with consultant doctors and the AO considered them as employees of the assessee and held that the payments made to the doctors should have been taxed u/s. 192 of the Act. Aggrieved, assessee preferred an appeal before the Ld. CIT(A), who after hearing both the parties vide para 4.2 of his order has held as under:
"4.2. I have examined the assessment order, the remand report as well as various submissions of the AR of the appellant. I find that the facts and circumstances of the instant case for AY 2012-13 are similar to that of AY 2011-12 which has already been adjudicated by CIT(A)-1, Kolkata, as discussed earlier. I, therefore, endorse the view of CIT(A)_1, Kolkata that the consultant doctors do not enjoy an employee-employer relationship with the appellant and therefore the AO cannot hold payments made to consultant doctors as salary payment within the meaning of the section 192 of the I. T. Act."
Aggrieved, revenue is now in appeal before us.
4. We have heard rival submissions and gone through the facts and circumstances of the case carefully. We note that the at the time of hearing, the Ld. Counsel for the assessee submitted that the issue is squarely covered in favour of the assessee by the Coordinate Bench decision in assessee's own case in ITA No.1456/Kol/2014 for AY 2011-12 dated 14.03.2017. On the other hand, the Ld. DR relied on the orders of the lower authorities. We find that the AO noticed that 116 doctors were engaged by the assessee in its hospital in the capacity of consultants and an aggregate of Rs.52,97,98,732/- was paid to these doctors as professional fees which was subjected to TDS u/s. 194J of the Act. Thereafter, at the time of hearing the AO asked the Ld. AR to show cause as to why assessee should not be treated as an assessee in default for short deduction of tax as, according to him, the doctors were on the payroll of the hospital as salaried employees and the payments made to them should have been subjected to tax u/s. 192 of the Act instead of Sec. 194J of the Act. According to 3 ITA No.813/Kol/2015 Apollo Gleneagles Hospitals Ltd., AY 2012-13 Ld. AR, the AO has not appreciated the fact that there is no existence of employer-employee relationship between the assessee hospital and the consultant doctor. Thus, the AO did not agree to the contention of the assessee in respect to the arrangement and resultant relationship with consultant doctors and he held them as employees of the assessee and so was of the view that the payments made to the doctors should have been taxed u/s. 192 of the Act. We find that the issue involved in this appeal of the revenue is as to whether the payments made to consultant doctors attached to the hospital are salary so as to bring into effect of section 192 of the Act instead of section 194J of the Act is squarely covered in favour of the assessee by the decision of this Tribunal in assessee's own case in ITA No. 1456/Kol/2014 for AY 2011-12 vide order dated 14.03.2017, wherein the Tribunal has held as under:
"7. We have perused .the case records, heard rival contentions and perused the judicial pronouncements which were brought to our notice. At the very outset, we observed from the paper book filed by the assessee that there was an objection raised by the Ld. DR that certain restrictions were there on the consultant doctors, however, we find that the restrictions imposed is that they are not eligible to practice in any hospital other than the hospital of the assessee which clearly signifies. It is for the best business interest of the assessee and which does not in any way signifies the service patterns of these consulting doctors. That the facts on record shows that the application of the test of direct control and supervision is not absolute. These "Consulting Doctors" are generally well skilled and knowledgeable in their area of specialization and hence, attract patients on their own strength and goodwill and do not depend upon the hospitals for a continuous flow of patients. Further the Consulting Doctors are free to treat and manage their patients as they feel fit and in the course of the treatment, the Consulting Doctors use the infrastructure of the hospital to which they are attached. In return for being permitted to use the infrastructure of the hospital, the Consulting Doctors pay a certain percentage of their fees towards costs. The fee to be charged to the patient is determined after mutual consultation understanding between Hospital and Doctor. However, for the administrative, commercial and accounting ease, the hospital collects the fees from the patients and remits the same to the Consulting Doctor after retaining its share as agreed upon. These Doctors merely use the infrastructure and facilities of the hospital and pay for the usage out of the fees collected from the patients. Since the Consulting Doctors retain their independent status, they take their own professional indemnity insurance, which means in the event of any negligence, they are accountable to compensate the patients. These aspects are sufficient to prove that the consultant doctors are very much different from the regular employees doctor of the assessee. We arrived at our considered view that based on the findings of Ld.CIT(A) and the judicial pronouncements as discussed hereinabove, we find no infirmity with the findings of Ld. CIT(A) and, therefore, we hold that the payments made to the consultants doctors are not salary, and, therefore, tax is not deductible u/s.192 of the Act. Hence, the relief granted to the assessee is sustained. Ground Nos.a & b of the revenue are dismissed."4 ITA No.813/Kol/2015
Apollo Gleneagles Hospitals Ltd., AY 2012-13
5. As the issue involved in the present appeal as well as the material facts are similar to the case cited supra and in view of no controverting material has been brought on record by the revenue, we respectfully following the decision of the Tribunal cited supra sustain the relief granted to the assessee and, therefore, the grounds of appeal of revenue are dismissed.
6. In the result, appeal of revenue is dismissed.
Order is pronounced in the open court on 06.09.2017
Sd/- Sd/-
(M. Balaganesh) (Aby. T. Varkey)
Accountant Member Judicial Member
Dated :6th September, 2017
Jd.(Sr.P.S.)
Copy of the order forwarded to:
1. Appellant - ACIT (TDS), Circle-1, Kolkata
2 Respondent - M/s. Apollo Gleneagles Hospitals Ltd., 58, Canal Circular
Road, E.M. By Pass, Kolkata-700 054.
3. The CIT(A), Kolkata
4. CIT , Kolkata
5. DR, Kolkata Benches, Kolkata
/True Copy, By order,
Sr. Pvt. Secretary