TDS: Salary: S/s. 192 and 201 of I. T. Act, 1961: A. Y. 2008-09: Consultant doctors employed by hospital: No administrative control: Doctors free to come at any time and treat patients: No provision for payment of provident fund and gratuity: No employer and employee relationship: Payment to doctors is not salary: Section 192 for TDS is not applicable:

For the A. Y. 2008-09, orders u/ss. 201 and 201(1A) were passed treating the assessee hospital as an assessee in default for non deduction of tax at source u/s. 192 of the Income-tax Act, 1961 holding that the payments made by the assessee to the consultant doctors was salary. The Tribunal held that there was no employer employee relationship between the assessee and the consultant doctors and accordingly such payments did not constitute salary paid by the assessee. The Tribunal therefore set aside the said orders.

On appeal by the Revenue, the Andhra Pradesh High Court upheld the decision of the Tribunal and held as under:

“i) O n the facts and on examining the agreement between the consultant doctors and the assessee hospital under which the services of the doctors were engaged, the appellate authorities found that there was no relationship of employer and employee between the doctors and the hospital. The doctors were not administratively controlled and managed by the assessee and they were free to come at any point of time as far as their attendance was concerned and treat the patients. There was no provision for payment of provident fund and gratuity to them.

ii) T he only clause in the agreement was that the doctors could not take up any other assignment. The existence of one prohibitory clause did not change the basic character of the relationship between the assessee and the doctors concerned. There was no employer and employee relationship. And their payments could not be treated to be salaries and, as such, deduction of tax at source did not need to be made u/s. 192.

iii) O n a careful reading of the impugned judgment and order of the Tribunal, we are of the view that the law has been correctly applied. Therefore, we do not find any question of law involved in the matter. The appeal is accordingly dismissed.”