The Commissioner of Income Tax, TDS and Others vs Teleradiology Solutions Pvt. Ltd.

Jayant M. Patel, J.—1. As in both the appeals, common questions arise for consideration, they are being considered simultaneously.

The Revenue has preferred the present appeals by raising the following substantial question of law:

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the amounts paid to the doctors is not in the nature of "salary" and liable for deduction of tax at source as required under section 194J as "Professional fees" even when assessee engaged the doctors as consultants and as per the agreements, these consultants would be governed by the rules and regulations of service, conduct rules, discipline etc., which proved that there existed an employee-employer relationship?"

It appears after the order of Assessment Officer when the matter was carried before the Commissioner of Income-Tax (Appeals) at paragraph-5, after considering the earlier decision of the Tribunal in case of M/s. Elbit Diagnostics Ltd., the following comparative chart in tabular form is reflected on para-5.1 which reads as under:

Thereafter Commissioner of Income Tax (Appeals) found that the said matter is covered by the decision of the Tribunal in case of M/s. Elbit Medical Diagnostics Ltd., and further confirmed by this Court, the appeal was allowed.

When the matter was carried before the Tribunal by the Revenue, the Tribunal at para-7 has observed thus:

"7. Dr. Vinod P. Joseph''s appointment order reveals that the appointment is only contractual for a period of three years. It also mentions the relationship between the company and the doctor are governed by the terms of contract entered into between the assessee company and skilled persons including Doctors as indicated above. The consultancy fees is fixed at Rs. 40,000/- per month subject to deduction of tax at source. The applicant will not be entitled to statutory benefits like PF, ESI, Gratuity, Bonus, and leave encashment etc., the doctor is free to render services to other concerns at such time which is not in conflict with the terms of contract, 20 days leave allowed per year. Basically, the issue is with regards to deduction of tax at source in respect of eleven doctors in-house doctors who are appointed on contractual basis on consolidated gross payment per month as stated above. Whether they should be treated as employee and there exists employee-employer relationship to attract deduction u/s. 192 on the payments made to them and treating the same as salary. The fundamental aspect for deciding the employee-employer relationship depends on fact, whether there exist the contract of service or contract for service. In contract for service the master can order only what is to be done, whereas in contract of service master decides not only what has to be done but also how it has to be done. The following variables not only decide employee-employer relationship but these are also the main ingredients for contract of service and master servant relationship. The above mentioned skilled persons are engaged by the assessee company, but they conduct the skilled work at the strength of their specialised knowledge on subject. The assessee company simply follow the conclusion arrived by them on the basis of data/material brought to their knowledge. It is difficult to lay down any one test to distinguish the relationship of master servant from that of an employer and independent contractor. In many cases, the test laid down is that in case of master servant relation, master can order or require what is to be done and how it has to be done. But incase of independent contractor an employer can only suggest that what is to be done but not how it shall be done. Hon''ble Supreme Court in case of Piyare Lal Adishwar Lal Vs. CIT reported in , (1960) 40 ITR 17 (SC) relying on Dharangadhara Vs. State of Saurashtra , (1957) SCR 152 held that in all cases the correct method of approach is whether having regard to the nature of work there was due control and supervision by the employer. The receipt of remuneration for holding an office does not necessarily gives rise to relationship of master and servant between the holder of office and the person who pays the remuneration. Whether a person is a servant or an agent would be determined by the duties of employee, the nature of business, terms of his employment/engagement and kind of supervisory control over his work. A person who is engaged to manage the business may be servant or agent, according to the nature of his service and authority of his employment. The profession involves occupation required purely intellectual or manual skill, as held by the Hon''ble Supreme Court in the case of CIT Vs. Mohandas , (1966) 59 ITR 699 (SC). The profession in general term involves the idea of an occupation requiring either purely intellectual skill, or if any material skill, as in painting and sculpture or surgery, controlled by intellectual skill of operator, as distinguished from an occupation which is substantially production or sale or arrangement for production or sale, of commodities. A profession will imply any vocation carried on by an individual or group of individual requiring the predominantly intellectual skills, depending on individual characteristics of persons pursuing that vocation, requiring specialized advance education or expertise. The ''professional service'', which are termed as ''independent personal service'' in the phraseology employed in tax treaties are, however, not defined in text treaties or even official commentaries on UN and OED model conventions. The meaning of this term is illustrated by some examples of typical liberal professions, and this enumeration of professions has only an explanatory character. The ''law lexicon'' edited by Y.V. Chandrachud (1997 edition) defines ''profession'' inter-alia as involving ''the idea of an occupation requiring either purely intellectual skill or, if any, manual skill, as in painting and sculpture or surgery, skill controlled by intellectual skill of operator, as distinguished from occupation which is substantially the production or sale or arrangement for the production or sale, of commodities''. Black''s Law Dictionary (5th edition) defines profession as a vocation or occupation requiring special, usually advanced, education and skill e.g. in law and medicine and observes that the labour and skill involved in a profession is predominantly mental or intellectual rather than physical or manual;"

It is an undisputed position that the earlier decision of the Tribunal in case of M/s. Elbit Medical Diagnostics Ltd., (supra) was carried before this Court in case of The Commissioner of Income Tax Vs. M/s. Elbit Medical Diagnostics Ltd., in ITA Nos. 168/2009 and 170/2009 decided on 04.02.2010 and this Court did not interfere with the order of the Tribunal and the appeals preferred by the Revenue were dismissed.

An attempt was made by the learned Counsel for the appellants to contend that if the terms and conditions of the appointment are considered, it is uncomparable with the decision of the Tribunal and further decision of this Court in case of M/s. Elbit Medical Diagnostics Ltd., and it was submitted that therefore, a different view may be taken than was taken by this Court in above referred decision in case of M/s. Elbit Medical Diagnostics Ltd.

In our view, when the complete exhaustive chart is prepared and considered by the Commissioner of Income Tax (Appeals) and further the Tribunal on factual aspects has also not differed, we do not find that a different view deserves to be taken than was taken in case of M/s. Elbit Medical Diagnostics Ltd. (supra).

Under the circumstances, no substantial questions of law would arise for consideration.

Hence the present appeals are dismissed.