“Consultant Doctors’ Fees Not Salary: Bombay HC Rules in Nanavati Hospital TDS Dispute”

 

Appellant: Commissioner of Income Tax, TDS-1, Mumbai

Respondent: Dr. Balabhai Nanavati Hospital

Appeals: ITXA Nos. 2166/2018, 2448/2018, 2451/2018, 2612/2018, 2758/2018, and 605/2020

Facts:

1.  The assessee is Dr. Balabhai Nanavati Hospital, a charitable trust running a hospital. Survey u/s 133A conducted on 4 Oct 2010 revealed discrepancies in TDS deduction and filing.

2.  Hospital deducted TDS u/s 194J (professional fees) on payments to them. AO held that these doctors were under hospital’s control (attendance, accountability, leave rules) → hence “employees” → TDS u/s 192 (salary) should apply.

3.  AO treated hospital as assessee-in-default u/s 201(1) & 201(1A).

Hon Bombay HC held as below:

1.  These doctors are appointed firstly on a probation basis, taking into consideration their qualification and expertise in the area of their specialization.

2.  Most importantly, they do not receive any fixed monthly remuneration, and it depends upon the work they do. In fact, a part of the remuneration paid by the patients towards these doctors is retained by the Hospital.

3.  Further, these doctors are also free to practice independently in other Hospitals, other than the Assessee Hospital.

4.  No PF or ESIC facilities are extended to these doctors and neither are any perquisites given to them.

5.  These doctors attend to their duties on the basis of the needs of the patients and they are not bound by any fixed schedule for attending the Hospital.

6.  Another factor which is also important to note is that these very doctors filed their Income Tax Return under the head “Income from Business or Profession”.

7.  These are Professional fees and not salaries. Revenue’s ground rejected.

The copy of the order is as under:

The-Commissioner-of-Income-Tax-TDS-1-Mumbai-vs.-Dr.-Balabhai-Nanavati-Hospital