INCOME TAX OFFICER Vs. CALCUTTA MEDICAL RESEARCH INSTITUTE

JUDGEMENT

(1.) This is an appeal filed by the department against the Commissioner (Appeals) order dated 30-8-1996 for the assessment year 1990-91 where the Commissioner (Appeals) has deleted the penalty imposed by the assessing officer under sections 201(1) and 201 (1A) of the Income Tax Act.

(2.) The brief facts of the case are that the assessee is running a Hospital-Cum-Nursing Home in Calcutta. The assessee has two types of Doctors engaged in the institute. The first category of the Doctors are the regular employees of the institute and their service conditions are governed by the appointment order and instructions as mentioned at pages 67 and 68 of the paper book. Another category of Doctors are called visiting Doctors and they are specialists in their fields and have their own practice/engagement. These Doctors applied and were selected after interview. Their appointment is governed by a separate order mentioned at pages 14 and 15 of the paper book for a period of one year. Accordingly, they are called as Honorary visiting Doctors and were entitled for the honorarium collected from the patients. As per order No. 83 each Doctor will have to attend the institute at least two days in a week and should be ready to attend the institute as and when necessary too. The institute is collecting the fee from the patients for providing the service by the Doctors. After deducting 10 per cent fee, so collected is transmitted to the concerning Doctors after having the receipts (pages 18 to 50 of the paper book).

(3.) The institute transmitted the fee only after deducting 10 per cent as an administrative charges but without deducting any tax at source. During the assessment year under consideration, the assessee has distributed Rs. 1,33,68,152 without TDS as required under section 192 of the Act. For not fulfilling the obligation, the assessing officer imposed the penalty about 50 per cent on the institute. In first appeal, the Commissioner (Appeals) has deleted the same by writing a lengthy order and also observing that there is no relationship of employer and employees, between the institute and the Doctors. So, the concept of TDS is not applicable in the instant case. Being aggrieved, the department is in appeal before the Tribunal.