The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that no Tax Deducted at Source (TDS) under Section 192B of the Income Tax Act, 1961 on payments made to consultant doctors and retainer doctors.
The assessee is a hospital, a leading integrated healthcare delivery service provider in India. The healthcare verticals of the company primarily comprise hospitals, diagnostics, and day care specialty facilities. The company operates from its headquarters office situated at Sector-41, Gurugram, Haryana, and has many of its hospitals in different regions across the country.
In the case of the assessee TDS survey under Section 133A(2A) of the Income Tax Act was conducted at the premises of M/s. Fortis Group for verification of compliance with the TDS provision under Section 201(1)/201(1A) of the Income Tax Act.
The Assessing Officer (AO) held that the payment to the consultant doctors and retainer doctors fall under the head “salary” and the assessee was liable to deduct TDS from the payment to consultant doctors and retainer-doctors as well along with the on-roll doctors at the rate applicable in the case of salary.
Since there was liability of Rs. 2,91,71,684/- under Section 192B of the Income Tax Act and the assessee had deducted tax at source of Rs. 1,10,06,561/-, the assessee company was held to be an ‘assessee in default’ for failure to deduct tax at source of Rs. 1,81,65,123/- passed by the Assistant Commissioner of Income Tax (ACIT) Circle 74(1), New Delhi under Section 201(1)/ 201(1A) of the Income Tax Act.
The Two-member bench comprising of BRR Kumar (Accountant member) and Astha Chandra (Judicial member) held that the provisions of Section 194J of the Income Tax Act apply to the retainer-doctors and not those of Section 192B of the Income Tax Act after noting differences between the two types of agreements i.e. salaried doctors and doctors appointed on a retainer ship basis.
Certain clauses in the contract with retainers gave the erroneous impression to the AO that creating an employer-employee relationship has been explained by the assessee that they do not create such a relationship. Thus, the appeal of the revenue was rejected.
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