IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 7^TH DAY OF OCTOBER, 2021

PRESENT

THE HON’BLE MRS.JUSTICE S.SUJATHA

AND

THE HON’BLE MR. JUSTICE RAVI V. HOSMANI

I.T.A.No.676/2016

BETWEEN :

M/s HOSMAT HOSPITAL PRIVATE LTD.,

REP. BY ITS CHAIRMAN AND

MANAGING DIRECTOR,

Dr. THOMAS A. CHANDY

NO.45, MAGRATH ROAD,

BANGALORE-560 025.

...APPELLANT

(BY SRI S.ANNAMALAI, ADV. A/W SRI M.LAVA, ADV.)

AND :

THE ASSISTANT COMMISSIONER OF

INCOME TAX (TDS), CIRCLE -18(1),

4^TH FLOOR, HMT BHAVAN,

59, BELLARY ROAD,

BANGALORE-560 032.

…RESPONDENT

(BY SRI K.V.ARAVIND, ADV.)

THIS INCOME TAX APPEAL IS FILED UNDER SECTION

260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER

DATED

11.08.2016

PASSED

IN

ITA

NOS.572,

575

&

576/BANG/2014, FOR THE ASSESSMENT YEAR 2011-2012,

2012-2013 & 2013-2014. (ANNEXURE-A). PRAYING TO 1. TO

FORMULATE THE SUBSTANTIAL QUESTION OF LAW AS STATED

ABOVE AND ANSWER THE SAME IN FAVOUR OF THE

APPELLANT. 2. TO ALLOW THE APPEAL AND SET ASIDE THE

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FINDINGS TO THE EXTENT AGAINST THE APPELLANT IN THE

ORDER PASSED BY THE ITAT, BENGALURU 'C' BENCH, IN ITA

NOS. 572, 575 & 576/BANG/2014 DATED11/08/2016 FOR THE

ASSESSMENT YEAR 2011-2012, 2012-2013 & 2013-2014.

(ANNEXURE-A).

THIS APPEAL COMING ON FOR HEARING, THIS DAY,

S. SUJATHA, J., DELIVERED THE FOLLOWING:

J U D G M E N T

This appeal is filed by the assessee under Section

260A of the Income Tax Act, 1961 (‘Act’ for short)

assailing the order dated 11.08.2016 passed in ITA

Nos.572, 575 and 576/Bang/2014 by the Income Tax

Appellate Tribunal, Bangalore “C” Bench (‘Tribunal’ for

short), relating to the assessment years 2011-12, 2012-

13 and 2013-14.

2.

The assessee is a company engaged in the

activity

of

running

and

maintaining

a

hospital.

Pursuant to the survey conducted on the premises of

the assessee - company, certain appointment letters of

the consultant doctors were collected. Based on which,

the Assessing Officer issued the show-cause notices

stating that TDS has been made on various payments

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made to consultant doctors under Section 194J of the

Act instead of making it under Section 192 of the Act

and thereby the assessee was called on to show-cause

as to why order under Sections 201 and 201(1A) of the

Act should not be passed for the assessment years

under consideration. The assessee filed reply to the said

show-cause notices along with the agreement entered by

the

assessee

with

‘in-house

consultants’

and

appointment letter issued to salaried doctors. Rejecting

the reply, the Assessing Officer passed the order under

Sections 201 and 201(1A) of the Act concluding that the

‘consultant doctors’ of M/s. Hosmat – assessee are

employees of the company and payment made to them

is ‘salary’, not ‘fees for professional services’, thereby

held the assessee as ‘assessee in default’ and raised the

demand of tax and interest as under:-

“Assessment Year 2011-12 : RS.4,55,98,910/-

Assessment Year 2012-13 : Rs.3,87,31,670/-

Assessment Year 2013-14 : Rs.3,21,80,820/-.”

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3.

Being aggrieved, the assessee preferred

appeals before the Commissioner of Income Tax

(Appeals) who confirmed the order of the Assessing

Officer in respect of ‘in-house consultant doctors’ and

had given the relief in respect of ‘visiting doctors’ vide

order dated 14.02.2014. Aggrieved by the same, the

assessee preferred appeals before the Tribunal. The

Tribunal dismissed the appeals. Hence, the present

appeals are preferred by the assessee under Section

260A of the Act raising the following substantial

questions of law which were admitted for consideration

by this Court.

1.

Whether the Tribunal was justified in law in

holding that the payments to in-house

consultant

doctors

are

subject

to

tax

deduction at source under Section 192 of the

Act and consequently passed a perverse

o