Section 192 read with section 201 of the Income-tax Act,

High Court of Punjab and Haryana Commissioner of Income-tax v. Deep Nursing Home & Children Hospital M.M. KUMAR AND AJAY KUMAR MITTAL, JJ. IT APPEAL NO. 169 OF 2007 October 4, 2007 Section 192 read with section 201 of the Income-tax Act, 1961 - Deduction of tax at source - Salary - Assessment year 2004-05 - Assessee - Hospital paid certain sum under head professional expenses to various doctors who were called for treatment of patients - Assessing Officer held that in absence of any bill submitted by doctors for payment and non-maintenance of details of work done by such doctors, it had to be assumed that they were part-time employees of assessee and, therefore, assessee was required to deduct tax at source from payments under section 192(1) - However, Commissioner (Appeals) as well as Tribunal reversed order of Assessing Officer holding that since there was no employer - employee relationship between visiting doctors and assessee, Assessing Officer was not justified in treating professional income earned by doctors as income constituting salary - Whether since doctors were visiting assessee on call and revenue was not able to produce any evidence to show that there was employer-employee relationship, provisions of Act concerning TDS and interest would not be attracted - Held, yes FACTS The assessee-hospital paid certain sum under head ‘Professional expenses’ to various doctors who were called for treatment for indoor as well as outdoor patients. The case of the assessee was that there was no employer employee relationship and the payments made to such doctors were not assessable under section 15 under the head ‘Salary’. However, the Assessing Officer disagreed with the assessee’s plea and held that in the absence of any bill submitted by the doctors for payment and non-maintenance of details for work done by such doctors, it had to be assumed that they were part time employees of the assessee. The Assessing Officer further held that the payments were their salary and the assessee was required to deduct TDS from the payment under section 192(1). Accordingly, a demand was raised under section 201 and 201(1A). On appeal, the Commissioner (Appeals) reversed the order of the Assessing Officer holding that employer-employee relationship could not be established by the revenue and the payments made to the doctors could not be considered as salary. It was further held that the doctors’ visit was not confined to one hospital only and they might be visiting various hospitals by remaining ‘on call’. Therefore, the assessee was not liable for TDS under section 201 and no interest could have been charged under section 201(1A). On revenue’s appeal, the Tribunal upheld the order of the Commissioner (Appeals) holding that the Assessing Officer was not justified in treating the professional income earned by the doctors as income constituting salary. On appeal under section 260A: HELD The question with regard to employer-employee relationship is necessarily a question of fact. There were categorical findings that the doctors were visiting the assessee and were on call. In other words, they were not in the service of the hospital in their capacity as employee and such doctors were free to attend other hospitals as and when required. The revenue was not able to produce any evidence to show that there was employer-employee relationship. Those were necessarily questions of facts and, accordingly, the provisions concerning TDS and interest under section 201(1A) would not be attracted. Thus, the appeal failed and the same was to be dismissed. [Para 5]