I.T.O.

(Tds), Muzaffarpur vs The Superintendent, Darbhanga on 6 October, 2017

Income Tax Appellate Tribunal - Panji

I.T.O.(Tds), Muzaffarpur vs The Superintendent, Darbhanga on 6 October, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
PATNA BENCH, PATNA
BEFORE SHRI J.SUDHAKAR REDDY (AM) &
SHRI SANDEEP GOSAIN (JM)

ITA No.46/Pat/2014
Assessment years: 2011-12

ITO (TDS) Vs. The Superintendent,

Muzaffarpur. Darbhanga Medical College & Hospital,
Laheriasarai, Dharbhanga.
(Appellant) (Respondent)
PAN-PTND01297C

Department by : Shri K. K. Das, DR.

Assessee by :None .

Date of hearing:-04/10/2017
Date of Pronouncement:- 06 /10/2017

ORDER

PER SANDEEP GOSAIN, JUDICIAL MEMBER:

This is an appeal by the Revenue directed against the order of the CIT (A)-Dhanbad
dated-06.01.2014.

2. The effective issue raised in grounds of appeal read as under: "1. On the facts and in the law the
Ld. CIT(A), Dhanbad has erred in treating salary u/s 192 on which payment made to professional is
taxed u/s 194J engaged on purely contractual basis under the terms and conditions of the contract
without sustaining of relation between employer and employee.

2. On the facts and in the law the Ld. CIT(A), Dhanbad has erred in deleting the TDS liability on
payment made u/s 194C on the ground that the deductees have filed their I.T. Return, for which the
deductor failed to produce any such paper before AO in remand proceeding.

3. On facts and in the law the Ld. CIT(A), Dhanbad has erred in deleting the TDS liability on
payments made u/s194C accepting the bills from the deductor without confronting to the AO in
violation of Rule 46A(3).

4. Any other grunds will be taken at the time of hearing appeal before the Hon'ble ITAT."

3. Today the case was fixed for hearing but none appeared on behalf of the assessee even in spite of
repeated calls and no adjournment application has been filed today. On the other hand, the Ld. DR
present in the court is ready for argument. In such circumstances, we have decided to proceed the
assessee ex-parte and decide the appeal after hearing Ld. DR and on the basis of records.

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 I.T.O.(Tds), Muzaffarpur vs The Superintendent, Darbhanga on 6 October, 2017

4. Although the revenue has raised several grounds before us but Ld. DR has pressed onlyn the
ground thereby challenging the order of Ld. CIT(A) in treating the payment made to professional as
salary u/s192 of the Income-tax Act.

5. We have heard the Ld. DR and perused the material placed on record as well as the orders of the
authorities below. Before we decide the merits of the case, it is necessary to evaluate and analyse the
orders passed by the Ld. CIT(A) while dealing with this ground. The Ld. CIT(A) has dealt with this
ground in para nos. 3.1 to 3.2 of its order. The same is reproduced below:

"3.1. Similarly, in the case of Nalanda Medical College and Hospital in order dated 29.10.201, it was
decided as under:

"4.4 The third component of payments included in commercial and special services is in respect of
employees hired on agreement basis. The appellant has been following system of hiring various
employees required for running the hospital and the medical college on agreement basis and fixed
remuneration per month is payable to them as under:

Sl.No. Designation Monthly Receipt Annual Receipt

1. Nurse Rs.4900X9, 7500X3 Rs.81300/-

2. OT Assistant Rs.3900X9, 6000X3 Rs.53100/-

3. Lab Technician Rs.4400X9, 6500X3 Rs.59100/-
4. Pharmacist Rs.6500/-X12 Rs.78000/-
5. Dresser Rs.4000/-X12 Rs.48000/-
6. X-Ray Technician Rs.6500/-X12 Rs.78000/-

4.5 The appellant has treated the same as salary and since payments were below the
exemption limit, no tax at source has been deducted. The assessing Officer has
treated the same as contractual payment in assessment year 2007-08 laible for
deduction of tax under Section 194C of the Income Tax Act, 1961 and fees for
technical and professional services laible for deduction of tax under Section194J of
the Income tax Act, 1961 in rest of the assessment years. The submission of the
appellant is that the above persons are also emplyees of the appellant on agreement
basis and fixed monthly remuneration is payable to them. Such system is being
followed so that these persons do not claim the status of permanent government
employees. In such appointments, due reservation to various categories as per rules
is also being given. Further reliance has been placed on the decision of the ITAT
Delhi in the case of St. Stephen's Hospital Vs. DCIT reported in (2006) 006 SOT
0060 wherein, it has been held that there can be various categories of employess and
so long as employer-employee relationship exists, payments made to them are to be
treated as payment of salary subject to deduction under Section 192 of the IT Act,
1961 and that of DCIT Vs. Wockhardt Hospitals Limited reported in (2012) 24
taxmann.com 190 of ITAT (Hyderabad) wherein, it has been held that were doctors

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 I.T.O.(Tds), Muzaffarpur vs The Superintendent, Darbhanga on 6 October, 2017

were employed on agreement basis and fixed monthly remuneration was paid to
them, tax was deductible under section 192 and not under section 194J of the
Income-tax Act, 1961. In the case under consideration also, fixed remuneration is
paid to such employees. The above arrangement is clearly with a view to avoid calim
of regular government service. Such persons are not providing any professional or
technical services within its definition as per Section 9 of the Income Tax Act, 1961.
Accordingly, it is held that payments to such persons are subject to deduction of tax
at source under Section 192 of the Income Tax Act, 1961."

3.2 Accordingly, it is held that the above payments are in the nature of salary on which tax is
chargeable under section 192 of the Income Tax Act, 1961.

6. After having gone through the orders of the authorities below and having heard Ld.DR at length,
we find that as per the facts of the present case, assessee is an organisation of health services, State
Government Bihar at Dharbhanga. In order to provide better services to the patients, the assessee
organisation has some permanent employees (Doctors, ANMS and ors.) and had also contractual
doctors, ANMS and others staff etc. who gets fixed monthly remuneration. The Ld. CIT(A) after
considering the facts of the present case and while relying upon the orders passed by the co-ordinate
benches of Hon'ble ITAT had rightly concluded that the payment made by the assessee to the
professional are in the nature of salary in which deduction of facts is required u/s.192 of the
Income-tax Act 1961.

7. On the contrary nothing has been brought on record by the AO to prove that the doctors and other
employees are not the employees or employer relation ship does not exist. Therefore, in these
circumstances the Ld. CIT(A) after correctly appreciating the facts had rightly concluded that the
payments made by the assessee are not in the nature of salary on which deduction of tax is required
u/s192 of the Income-tax Act.

8. So in these circumstances, we are unable to find any illegality or irregularity in the findings of the
Ld. CIT(A). We therefore, find that there are no ground to interfrere with the findings of the Ld.
CIT(A). Hence, the ground raised by the Revenue is dismissed and the order passed by the
Ld.CIT(A) is uphled.

9. In the result, the appeal filed by the revenue is dismissed. Order is pronounced in the open court
on 06th October, 2017.

Sd/- Sd/-

(J. Sudhakar Reddy) (Sandeep Gosain)

Accountant Member Judicial Member

Date of order: 06th October, 2017.

S.Sinha(PS)

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 I.T.O.(Tds), Muzaffarpur vs The Superintendent, Darbhanga on 6 October, 2017

Copy of the Order forwarded to :

1. The Appellant.
2. The Respondent.:
3. The CIT(A)-Patna
4. CIT , Patna
5. Income Tax Appellate Tribunal,Patna
6. Guard file.
//True Copy// BY ORDER

PRIVATE SECRETARY

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