ACIT, New Delhi v. Dr. Rajan Gadiok,, New Delhi

ITA 2323/DEL/2009 | 2006-2007
Pronouncement Date: 27-07-2012 | Result: Dismissed

Appeal Details

RSA Number 232320114 RSA 2009
Assessee PAN OPAGE1104O
Bench Delhi
Appeal Number ITA 2323/DEL/2009
Duration Of Justice 3 year(s) 1 month(s) 29 day(s)
Appellant ACIT, New Delhi
Respondent Dr. Rajan Gadiok,, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 27-07-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 27-07-2012
Date Of Final Hearing 11-06-2012
Next Hearing Date 11-06-2012
Assessment Year 2006-2007
Appeal Filed On 29-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI T.S. KAPOOR ACCOUNTANT MEMBER I.T.A. NO.2323/DEL/2009 ASSESSMENT YEAR : 2006-07 ACIT DR. RAJAN GADIOK CIRCLE-37 (1) J-14 2 ND FLOOR SAKET NEW DELHI. V. NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AEUPG AEUPG AEUPG AEUPG- -- -6635 6635 6635 6635- -- -D DD D APPELLANT BY : SHRI DEVENDER SINGH CIT-DR. RESPONDENT BY : SHRI ASHWANI TANEJA ADVOCATE. ORDER PER TS KAPOOR AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORD ER OF LD CIT(A) DATED 12.3.2009. THE GROUNDS RAISED BY THE RE VENUE ARE AS UNDER:- WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LD CIT(A) WAS JUSTIFIED IN DIRECTING TO TREAT THE RECEIP TS OF ` .42 00 000/- FROM M/S FORTIES HEALTHCARE LTD. AS BUSIN ESS INCOME IGNORING THE FACT THAT THE ASSESSEE WAS WORKING AS EMPLOYEE AND NOT AS RETAINER WHICH AGREEMENT WAS SUBSEQUENTLY FORMALIZED AS EMPLOYMENT AGREEMENT WITH E FFECT FROM 1.7.2006. ITA NO2323/DEL/2009 2 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A DOC TOR AND HAS FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF ` .42 80 920/-. THE CASE WAS SELECTED FOR SCRUTINY. DURING ASSESSMENT PROCEEDIN GS THE ASSESSING OFFICER OBSERVED THAT ASSESSEE WAS HAVING REGULAR F IXED RECEIPT OF ` .3 50 000/- PER MONTH FROM FORTIES HEALTHCARE PVT. L TD. THE ASSESSING OFFICER OBSERVED THAT ASSESSEE IN FACT WAS RECEIVI NG SALARY INCOME AND THEREFORE HE WAS ASKED TO EXPLAIN AS TO WHY THE SO-CALLED INCOME BE NOT TREATED AS SALARY INCOME. THE LD AR VI DE REPLY DATED 4.10.2008 SUBMITTED THAT RETAINERSHIP AGREEMENT DOES N OT CREATE A RELATIONSHIP OF MASTER & SERVANT BETWEEN THE COMPANY A ND THE ASSESSEE HAD FOR CHARGEABILITY U/S 16 UNDER THE HEAD SAL ARIES THERE MUST EXISTS A RELATIONSHIP OF MASTER & SERVANT. THE ASSE SSING OFFICER AFTER GOING THROUGH VARIOUS CLAUSES OF RETAINERSHIP AGR EEMENT AS FURNISHED BY THE ASSESSEE AND ON THE BASIS OF DIFFERENCE B ETWEEN INDEPENDENT CONTRACTOR AND EMPLOYEE HELD THAT THE ASSESSEE WAS IN FACT AN EMPLOYEE ON THE BASIS OF FOLLOWING:- 1. THAT THERE IS A DIFFERENCE BETWEEN A CONTRACT OF SERV ICE AND CONTRACT FOR SERVICE AND IN THE FORMER CASE THE RELAT IONSHIP OF MASTER & SERVANT WOULD EXIST AND WHEREIN IN THE LATER SUCH A RELATIONSHIP WOULD NOT BE A PRESENT. 2. THAT ACCORDING TO CLAUSE (4) OF RELATIONSHIP AGREEMEN T THE ASSESSEE SHALL BE REPORTING TO DIRECTOR MEDICAL SERVICE S OR ANY OTHER PERSON NOMINATED BY THE MANAGEMENT THUS AS PER THE ASSESSING OFFICER THE ASSESSEE WAS CONTROLLED BY THE MANAGEMENT. 3. THAT ACCORDING TO CLAUSE (7) THE ASSESSEE WAS PROHIBITED FROM ACTING IN A SIMILAR OR ANY OTHER CAPACITY FOR ANY OT HER PERSON ENGAGED IN A SIMILAR TYPE OF BUSINESS AS THAT OF COMPANY . THUS ITA NO2323/DEL/2009 3 THE RESTRICTION ON ASSESSEE CLEARLY REFLECTS THAT HE HAS T O DEVOTE HIS TIME EFFECTIVELY FOR HIS EMPLOYER. 4. THAT ACCORDING TO CLAUSE (8) THE ASSESSEE IS TO WORK IN THE INTEREST OF THE COMPANY AND IN ACCORDANCE WITH ITS VA LUES AND PHILOSOPHY AND AS PER RULES & REGULATIONS OF THE COMPA NY MEANING THEREBY THAT THIS CLAUSE IMPOSES RESTRICTION ON THE INDEPENDENCE OF THE ASSESSEE. 5. THAT WORD SALARY IS GENERALLY APPLIED TO REWARD PAID TO A PUBLIC OFFICER FOR THE PERFORMANCE OF HIS OFFICIAL DUTIES AN D IS PAID AS STATED INTERVAL. THE ASSESSEE IN THE PRESENT CASE IS DRAWIN G FIXED AMOUNT OF ` .3 50 000/- AT STATED INTERVAL OF ONE MONTH. 6. THAT IN PIYARE LAL ADISHWAR LAL V. CIT 40 ITR 17 (SC ) IT WAS HELD BY HON'BLE SUPREME COURT THAT THE INDICIA OF A CONT RACT OF SERVICE ARE:- A) THE MASTERS POWER OF SELECTION OF THE SERVANT; B) THE PAYMENT OF WAGES OR OTHER REMUNERATIONS C) THE MASTERS RIGHT TO CONTROL THE METHOD OF DOING THE WORK AND D) THE MASTER RIGHT OF SUSPENSION OR DISMISSAL. 3. THE ASSESSING OFFICER HELD THAT CLAUSES 1 3 5 9 & 10 O F THE RETAINERSHIP AGREEMENT FULFILLS ALL THE CONDITIONS AS SET OUT BY HON'BLE SUPREME COURT IN THE ABOVE NOTED CASE AND THEREFORE HE HELD THAT THEIR EXISTED A RELATIONSHIP OF EMPLOYER-EMPLOYEE AND IN VIEW OF THE ABOVE ASSESSED RECEIPTS FROM FORTIES HOSPITAL AS INCOME FRO M SALARY. 4. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE LD CIT(A ) AND SUBMITTED AS UNDER:- ITA NO2323/DEL/2009 4 1. THAT ASSESSING OFFICER HAD NOT CONSIDERED FORM 16A ISSUE D BY THE FORTIES HEALTHCARE LTD. WHICH CLEARLY STATES THAT THE NATURE OF PAYMENT IS FEE FOR PROFESSIONAL SERVICES. 2. THAT ASSESSING OFFICER HAD NOT CONSIDERED SPECIFIC CERTIF ICATE DATED 15.10.2008 FROM FORTIES HEALTHCARE LTD. CERTIF YING THAT THE ASSESSEE WAS A PROFESSIONAL CONSULTANT. 3. THAT THE ASSESSING OFFICER HAS CONSTRUED HIS OWN MEANING O F THE CLAUSES STATED IN THE RETAINERSHIP AGREEMENT SO AS TO GI VE IT A SHAPE OF EMPLOYEE-EMPLOYER RELATIONSHIP. 4. THAT CLAUSE (1) OF AGREEMENT CLEARLY STATES THAT AGREE MENT IS FOR A PERIOD OF ONE YEAR A CONTRACT OF EMPLOYMENT WOUL D NOT STATE THE PERIOD OF EMPLOYMENT BUT WOULD STATE THE AGE AT WHICH EMPLOYEE MUST RETIRE FROM SERVICE OF EMPLOYER. 5. THAT THE AGREEMENT DOES NOT SPECIFY THE JOB TO BE PER FORMED BY ASSESSEE AND THE MANNER IN WHICH IT HAS TO BE PERFORMED THEREBY GIVING THE ASSESSEE FREEDOM AND INDEPENDENCE IN PERFORMANCE OF HIS PROFESSIONAL SERVICE. 6. THAT AS REGARDING REPORTING TO THE MANAGEMENT IT MA Y BE APPRECIATED THAT AN INDEPENDENT PROFESSIONAL CONSULTAN T WOULD BE REQUIRED TO INTERACT WITH SOME ONE NOMINATED BY MANAGEMENT FOR THE SUCCESSFUL COORDINATION AND COMPLET ION OF ANY PROJECT WHERE VARIOUS CONSULTANTS ARE PROVIDING IN DEPENDENT SERVICES. 7. THAT ASSESSING OFFICER HAS INCORRECTLY DRAWN INFERENCE F ROM CLAUSE (7) THAT ASSESSEE HAS TO DEVOTE HIS TIME EXCLUSIVELY FOR FORTIES. THIS CLAUSE MERELY REQUIRED THE ASSESSEE NOT TO PROVIDE SIMILAR KIND OF SERVICES TO ANOTHER COMPANY ENGAGED IN SIMILAR BUSINESS. THE OBJECT OF THE CLAUSE IS TO PREVENT THE ASS ESSEE FROM IMPARTING TO ANOTHER COMPANY ANY CONFIDENTIAL AND UNIQUE PROCESS OF THE COMPANY. ITA NO2323/DEL/2009 5 8. THAT WITH REGARD TO CLAUSE (8) OF THE AGREEMENT THE ASSESSEE WAS ONLY REQUIRED TO MAKE A COMMITMENT AND WAS NOT BO UND OR SUBJECT TO RULE & REGULATION OR POLICIES OF THE COMPA NY. 5. THE LD AR ALSO DIFFERENTIATED THE FOUR INGREDIENT S OF CONTRACT OF SERVICE AS DETERMINED BY HON'BLE SUPREME COURT IN THE CASE OF PIYARE LAL ADISHWAR LAL V. CIT 40 ITR 17 WITH THE CLAUSES OF RETAINERSHIP AGREEMENT AS FOLLOWS:- I) THE WORD ENGAGED USED IN THE AGREEMENT IS USED FOR AVA ILING OF SERVICES OF INDEPENDENT CONSULTANT WHEREAS TERM APPOINTMENT IS USED WHERE EMPLOYER-EMPLOYEE RELATIONSH IP EXIST. II) THE WORD CONSIDERATION FOR SERVICES HAS BEEN USED IN THE AGREEMENT INSTEAD OF WORD SALARY WHICH IS USED WHERE INTENTION IS TO CREATE EMPLOYER EMPLOYEE RELATIONSH IP. III) THAT CLAUSE 10 STATES THAT NO REASON IS TO BE ASSIGNED FO R TERMINATION OF SERVICES WHEREAS NORMALLY UNDER AN EMPLOYMENT CONTRACT REASONS HAVE TO BE SPECIFIED FOR TERMINATION OF EMPLOYMENT OF EMPLOYEE. IV) THAT WITH REGARD TO OTHER ESSENTIAL ELEMENTS THAT ARE REQUIRED TO ESTABLISH EMPLOYER-EMPLOYEE RELATIONSHIP AND WHICH DO NOT EXIST IN THE PRESENT CASE ARE AS UNDER:- I) THE ASSESSEE DOES NOT HAVE ANY FIXED TIMINGS NOR DOES HE HAVE ANY ATTENDANCE RECORD. II) THERE ARE NO CLAUSES FOR EITHER ANY REVISION OR ANY DISCRETIONARY POWER OF THE MANAGEMENT FOR REVISION IN THE RETAINERSHIP AMOUNT. ITA NO2323/DEL/2009 6 III) THE CONTRACT IS FOR A FIXED PERIOD OF ONE YEAR UNLESS THERE IS MUTUAL AGREEMENT TO EXTEND IT FURTHER ON MUTUALITY AGREEABLE TERMS. IV) THE COMPANY HAS NO RIGHT TO BIND THE ASSESSEE FOR TRANSFER FROM ONE PLACE TO ANOTHER. V) THERE ARE NO CLAUSES FOR SUPERANNUATION OF THE ASSESSEE WHICH IS A MUST IN ANY EMPLOYMENT CLAUSE. VI) THERE IS NO BINDING ON THE ASSESSEE TO ADHERE TO THE RULES REGULATIONS AND POLICIES OF THE COMPANY BUT ON LY A COMMITMENT FROM THE ASSESSEE TO FOLLOW THE RULES REGULATIONS AND POLICIES OF THE COMPANY. THE ASSESSEE MAY OR MAY NOT FOLLOW AND IF HE DOES NOT FOLLOW HE WILL NOT BE LIABLE FOR PUNITIVE ACTION AS HE HAS ONLY MADE A COMMITMENT AND HAS NOT BOUND HIMSELF TO THE RULES POLICIES ETC. THE ASSESSEE MAY TRY TO DO SO BUT IS NOT BOUND COMPULSORILY TO FOLLOW RULES REGULATIONS AND POLICIES AND WORK ETHICS OF THE COMPANY. 6. WITH EFFECT FROM 1.7.2006 THE ASSESSEE HAS TAKEN UP EMPLOYMENT WITH M/S FORTIES HEALTHCARE LTD. AND AS PER EMPLOYMENT LETTER DATED 24.7.2006 ISSUED BY FORTIES HEALTHCARE LT D. AND AS PER RETAINERSHIP AGREEMENT THERE ARE FOLLOWING DIFFERENC ES:- I) PERIOD THE RETAINERSHIP AGREEMENT IS FOR A PERIOD O F ONE YEAR WHICH MAY BE RENEWED ON MUTUALITY AGREEABL E TERMS WHEREAS THE EMPLOYMENT LETTER STATES THAT THE EMPLOYEE WILL RETIRE AT THE AGE OF 58 YEARS AS PER CL AUSE 10 OF THE EMPLOYMENT LETTER. II) REVISION OF REMUNERATION: RETAINERSHIP AGREEMENT DOES NOT CONTAIN ANY CLAUSE FOR REVISION IN THE RETAINERSHI P ITA NO2323/DEL/2009 7 AMOUNT WHEREAS THE EMPLOYMENT LETTER STATES THAT THE SALARY REVISION WILL BE REVIEWED ON IST APRIL EACH YE AR AND IS SUBJECT TO THE EFFECTIVE PERFORMANCE AND RESULT S. III) POSTING & TRANSFERS THE EMPLOYMENT LETTER CONTAINS THE CLAUSE FOR POSTINGS AND TRANSFER OF THE ASSESSEE AT THE SOLE DISCRETION OF THE MANAGEMENT AND ON THE TERMS AND CONDITIONS AS MAY BE DECIDED BY THE MANAGEMENT. HOWEVER THERE IS NO CLAUSE FOR POSTING AND TRANSFERS OF THE ASSESSEE UNDER THE RETAINERSHIP AGREEMENT. IV) FULL TIME EMPLOYMENT THE EMPLOYMENT LETTER SPECIFICALLY LAYS DOWN THAT THE ASSESSEE WILL NOT TAKE UP ANY WORK IN ANY MANNER AS STATED IN CLAUSE -4 OF THE EMPLOYMENT LETTER WHEREAS UNDER THE RETAINERSHIP AGREEMENT THE RESTRICTION ON THE ASSESSEE IS VERY LIMITED AS STATED IN CLAUSE N -7. IT CAN BE SEEN FROM CLAUSE 4 OF THE EMPLOYMENT LETTER THAT THE RESTRICTIO N ON THE ASSESSEE WITH REGARD TO HIS EMPLOYMENT ARE VERY SPECIFIC AND MORE DETAILED IN COMPARISON. INTELLECTUAL PROPERTY AS PER THE EMPLOYMENT LETTER THE INTELLECTUAL PROPERTY RIGHTS WILL REMAIN THE PROPERT Y OF THE COMPANY WHEREAS THERE IS NO CLAUSE FOR INTELLECTUA L PROPERTY RIGHTS TO BE THE PROPERTY OF THE COMPANY UN DER THE RETAINERSHIP AGREEMENT. THEREFORE THE INTELLECT UAL PROPERTY RIGHTS OF NEW OR ADVANCED DESIGN OR PROCESS ETC. IN RELATION TO BUSINESS OPERATIONS OF THE COMPANY CAN REMAIN WITH THE ASSESSEE UNDER THE RETAINERSHIP AGREEMENT AS COMPARED TO THE EMPLOYMENT LETTER WHEREIN THEY BECOME THE PROPERTY OF THE COMPANY. ITA NO2323/DEL/2009 8 V) RESPONSIBILITIES AND DUTIES- UNDER THE RETAINERSHIP AGREEMENT THE ASSESSEE ONLY MAKES A COMMITMENT TO WORK IN ACCORDANCE WITH THE RULES & REGULATIONS OF TH E COMPANY WHEREAS UNDER THE EMPLOYMENT LETTER THE ASSESSEE WILL BE SUBJECT TO THE RULES & REGULATIONS OF THE ORGANIZATION AND THE ASSESSEE HAS NO CHOICE UNDER THE EMPLOYMENT BUT TO SUBJECT HIMSELF TO THE RULES & REGULATIONS OF THE COMPANY WHEREAS UNDER THE RETAINERSHIP AGREEMENT HE ONLY COMMITS BUT IS NOT SUBJECT TO THE RULES & REGULATIONS OF THE ORGANIZATION . VI) PAST RECORD- UNDER THE EMPLOYMENT CONTRACT THE ASSESSEE IS REQUIRED TO PROVIDE PAST RECORDS TO THE COMPANY AND IS LIABLE FOR REMOVAL FROM SERVICES IF THE PAST RECORDS ARE FALSE. THERE IS NO SUCH CLAUSE UNDER THE RETAINERSHIP AGREEMENT. VII) RETIREMENT UNDER THE EMPLOYMENT CONTRACT THE ASSESSEE IS TO RETIRE ON ATTAINING THE AGE OF 58 YEARS. HOWEVER IN THE RETAINERSHIP AGREEMENT IS ONLY FOR LIMITED PERIOD OF ONE YEAR AND THE RENEWAL OF THE RETAINERSHIP AGREEMENT IS SUBJECT TO MUTUALLY AGREEABL E TERMS. VIII) TERMINATION OF EMPLOYMENT UNDER THE EMPLOYMENT CONTRACT THE TERMINATION CAN BE BY EITHER SIDE BY T HREE MONTHS NOTICE OR SALARY IN LIEU THEREOF BUT UNDER TH E RETAINERSHIP AGREEMENT THE CONTRACT CAN BE TERMINATE D BY THREE MONTHS NOTICE OR PAYMENT OF THREE MONTHS MINIMUM ASSURED AMOUNT IN LIEU THEREOF. IX) MEDICAL FITNESS UNDER THE EMPLOYMENT CONTRACT THE EMPLOYMENT IS SUBJECT TO THE ASSESSEE REMAINING ITA NO2323/DEL/2009 9 MEDICALLY FIT WHEREAS THERE IS NO SUCH CLAUSE UNDER THE RETAINERSHIP AGREEMENT. X) OTHER BENEFITS THE ANNEXURE TO THE EMPLOYMENT CONTRACT GIVES THE DETAILS OF COMPENSATION ALONG WITH VARIOUS OTHER BENEFITS LIKE BONUS GRATUITY AND PROVID ED FUND ON RETIREMENT AND LEAVES ALONG WITH THE BREAK U P OF THE REMUNERATION INTO BASIC SALARY HRA SPECIAL ALLOWANCE AND MEDICAL REIMBURSEMENT. THE RETAINERSHIP CONTRACT DOES NOT PROVIDE FOR ANY BONUS RETIREMENT BENEFITS LIKE PROVIDENT FUND AND GRATUITY AND ENTITLEMENT OF LEAVES. 7. THE LD AR SUBMITTED THAT ASSESSEE HAD CLAIMED THE RE CEIPTS FROM FORTIES HEALTHCARE LTD. DURING THE YEAR 2004-05 AS PROFESSIONAL RECEIPTS AND THE SAME HAS NOT BEEN COUNTERED BY THE DE PARTMENT. 8. THE LD CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF L D AR ARRIVED AT THE CONCLUSION THAT THE RECEIPTS WERE PROFESSIONAL R ECEIPTS TAXABLE UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION. THE RELEVANT PORTION OF LD CIT(A)S ORDER IS REPRODUCED BELOW:- I HAVE CONSIDERED FACTS OF THE CASE. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER HAS ASSESSED THE APPELLANT AS AN EMPLOYEE OF M/S FORTIS HEALTHCARE LTD. AND HAS TAXED THE AMOUNT RECEIVED BY HIM AS SALARY INCOME. TH E ASSESSING OFFICER HAS REACHED THIS CONCLUSION BY INTERPRET ING CLAUSES 4 5 7 8 9 & 10 OF THE AGREEMENT ENTERED INTO BY THE APPELLANT WITH M/S FORTIS HEALTHCARE LTD. ITA NO2323/DEL/2009 10 IT IS HOWEVER NOTICED THAT THIS AGREEMENT IS BASICALL Y MEANT TO ENSURE A SMOOTH AND EFFICIENT INTERACTION BETWEEN THE APPELLANT AND THE HOSPITAL AND ITS VARIOUS CLAUSES HAVE TO BE INT ERPRETED IN THE LIGHT OF THE OVER ALL CONTEXT OF THE AGREEMENT. FOR EXAMPLE CLAUSE 4 SAYS THAT THE APPELLANT SHALL BE REPORTING TO THE DIRECTOR MEDICAL SERVICES OR ANY OTHER PERSON NOMINATED BY THE MANAGEMENT. THIS CLAUSE HAS BEEN INTERPRETED AS CREATI NG A MASTER-SERVANT RELATIONSHIP BETWEEN THE HOSPITAL AND OF THE APPELLANT. IN THE GIVEN CONTEXT IT ONLY MEANS THAT FOR PROPER EXECUTION OF DIFFERENT ACTIVITIES SOME REPORTING MECH ANISM HAS BEEN LAID DOWN. EVEN A CONSULTANT WOULD HAVE TO REP ORT TO SOME ONE. OTHERWISE THE ARRANGEMENT SIMPLY CANNOT FUNCTIO N. SIMILARLY CLAUSES 7 & 8 ENJOIN UPON THE APPELLANT TO WORK IN THE INTEREST OF THE COMPANY AND NOT WITH THE COMPETITOR IN THE SIMILAR CAPACITY. THIS CLAUSE ALSO CANNOT BE INTERPRETE D AS CREATING MASTER-SERVANT RELATIONSHIP. MERELY BECAUSE A PROFESSIONAL RESTRICTS HIS PROFESSIONAL ACTIVITIES TO A PAR TICULAR CLIENT IT CANNOT BE SAID THAT HE IS AN EMPLOYEE OF T HE CLIENT. REFERENCE IN THIS REGARD MAY BE MADE TO THE OBSERVATI ONS MADE BY THE HON'BLE BOMABY HIGH COURT IN THE CASE OF DURG A KHOTE 21 ITR 22. IN FACT ANY PERSON EMPLOYING A CONSULTANT WO ULD HAVE TO NECESSARILY RETAIN SOME POWER TO GET THE WORK DONE IN AN EFFICIENT MANNER. IT WOULD ALSO HAVE THE POWER TO TE RMINATE THE CONSULTANCY AS IS EVIDENT FROM CLAUSE 10. ALL THESE PRO VISIONS HOWEVER DO NOT NECESSARILY CREATE A RELATIONSHIP OF M ASTER AND SERVANT. THE FACT THAT THIS RELATIONSHIP WAS NOT THAT O F MASTER- SERVANT IS ALSO ESTABLISHED FROM FORM NO.16A ISSUED BY M/S FORTIS HEALTHCARE LTD. IT INDICATES THAT THE PAYMENT WAS MA DE FOR FEES FOR PROFESSIONAL SERVICES AND THERE IS NO REASON TO DISBEL IEVE THIS. IT IS FURTHER SEEN THAT THE AGREEMENT WAS FOR ONE YEAR AND COULD ITA NO2323/DEL/2009 11 BE RENEWED WITH MUTUALLY AGREEABLE TERMS. THERE IS NO PROVISION OF INCREMENTS/SALARY REVISION TRANSFER AND POSTING RET IREMENT LEAVE OTHER BENEFITS ETC. IN THIS AGREEMENT. THESE AR E NORMAL CONDITIONS WHICH ARE FOUND WHERE EMPLOYER-EMPLOYEE RELATIONSHIP EXISTS. IT IS ALSO NOTICED THAT IN THE NEXT YEAR I.E. FROM JULY 2006 THE APPELLANT HAS BEEN APPOINTED AS F ULL TIME EMPLOYEE OF THE COMPANY WITH THE BENEFITS OF SALARY R EVISION LEAVE BENEFITS AS WELL AS PROVISION FOR RETIREMENT AND RETRIAL BENEFITS. IN VIEW OF THESE FACTS IT DOES NOT APPEAR TO BE CORRECT TO SAY THAT THERE EXISTED AN EMPLOYER-EMPLOYEE OR MAST ER- SERVANT RELATIONSHIP BETWEEN THE ASSESSEE AND THE COMPAN Y IN THE YEAR UNDER CONSIDERATION. THE TREATMENT OF THIS I NCOME AS INCOME FROM SALARY THEREFORE DOES NOT APPEAR TO BE JUSTIFIED. THE INCOME HAS TO BE TAXED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. 9. AGGRIEVED THE REVENUE HAS FILED APPEAL BEFORE TH IS TRIBUNAL. 10. THE LD DR AT THE OUTSET ARGUED THAT FIXED AMOUN T PER MONTH AMOUNTS TO SALARY ONLY AND VARIOUS CLAUSES OF AGREEMENT ESTABLISH THAT THERE IS MASTER SERVANT RELATIONSHIP. HE PARTICULARLY HIGHLIGHTED CLAUSES (6) OF AGREEMENT RELATING TO REIMBURSEMENT OF TRAVELING EXPENSES AND ARGUED THAT FOR A CONTRACTOR ONE CANNOT PUT BINDING CONDITION AND REITERATED THAT INCOME WAS INDEED SALAR Y INCOME. 11. THE LD AR ON THE OTHER HAND ARGUED THAT IN TH E EARLIER YEARS THE ASSESSEES RECEIPTS WERE TAXED UNDER THE HEAD PROFESSIO NAL; INCOME AND RULE OF CONSISTENCY CANNOT BE DENIED TO TH E ASSESSEE. IN THIS RESPECT HE TOOK US TO PAGE 1 104 OF PAPER BOOK WHERE COPIES OF INCOME TAX RETURNS FOR THE ASSESSMENT YEAR 1998-99 TO 2 006-07 ALONG ITA NO2323/DEL/2009 12 WITH COMPUTATION OF INCOME TAX AUDIT REPORT COPIE S OF BALANCE SHEET AND P&L A/C WERE PLACED. HE ARGUED THAT IN ALL THESE YEARS THE ASSESSEE WAS SUBJECTED TO TAX UNDER THE HEAD PROFESSIONAL I NCOME ONLY. HE FURTHER ARGUED THAT FORM NO.16A ISSUED BY F ORTIES HEALTHCARE LTD. CLEARLY SHOWS THE INCOME OF THE ASSESSEE AS PROFESSIO NAL FEES. RELIANCE WAS PLACED ON THE JUDGMENTS IN THE FOLLOWING CASES:- 1. CIT V. MRS. DURGA KHOTE 21 ITR 22 (BOM.). 2. DCIT V. COASTAL POWER CO. 9 SOT (DEL.). 3. CIT V. JNAN PRAKASH GHOSH 205 ITR 454 (CAL.). 4. ACIT V. KAMLESH SONI 107 TTJ 836. 12. THE LD DR IN HIS REJOINDER STATED THAT THIS RETAIN ERSHIP AGREEMENT WAS NOT THERE IN THE EARLIER YEAR SO THE C ONTENTION OF LD AR THAT IN EARLIER YEARS HIS INCOME WAS TAXED AS PROFESSIONA L INCOME DOES NOT MATTER. HE FURTHER ARGUED THAT EARLIER ASSESSEE WAS WORKING WITH SIR GANGA RAM HOSPITAL AS A CONSULTANT AND THAT IS WHY HIS INCOME WAS ASSESSED AS PROFESSIONAL INCOME. REGARDING FORM NO.16A HE ARGUED THAT EMPLOYER CAN MAKE ARRANGEMENT FOR MAKIN G PAYMENTS TO ITS EMPLOYEES AT ITS OWN CONVENIENCE. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PA RTIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED FROM AGREEMENT OF RETAINERSHIP AND NATURE AND EXTENT OF DUTIES PERFORMED BY THE ASSESSEE THAT THERE IS A VERY THIN DIFF ERENCE BETWEEN HOLDING ASSESSEE AS EMPLOYEE OR AS PROFESSIONAL ALL REQUIR EMENTS FOR HOLDING THE ASSESSEE AN EMPLOYEE DOES NOT EXIST AS PER T HE AGREEMENT FOR RETAINERSHIP. GENERALLY AND PRACTICALLY EMPLOYME NTS ARE ALWAYS FOR A LONG PERIOD THAN ONE YEAR WHICH IS NOT IN THE PRESE NT CASE WHICH IS ITA NO2323/DEL/2009 13 ONLY FOR ONE YEAR. SECONDLY EMPLOYMENT CONTRACTS GE NERALLY CARRIES VARIOUS OTHER BENEFITS LIKE BONUS GRATUITY HRA MED ICAL ALLOWANCE ETC. WHEREAS IN THE PRESENT CASE ONLY LUMP SUM PAYMENT PER M ONTH WAS FIXED FOR THE PERIOD OF RETAINERSHIP. 14. MOREOVER THE BENEFIT OF CONSISTENCY CANNOT BE DE NIED TO THE ASSESSEE. THE ASSESSEE HAD WORKED AS HONRARY CONSULTANT AT NATIONAL INSTITUTE OF ALL INDIA HEART FOUNDATION FROM 14.4.19 89 TO 31.5.1998 AND FOR ALL THESE YEARS HIS INCOME WAS TAXED AS PROFESSIONAL INCOME. THE RETURN OF INCOME ALONG WITH COMPUTATION SHEET AND P& L BALANCE SHEET FOR THE YEAR 1996-97 & 1997-98 PLACED AT PAGES 137-1 55 PROVES THIS FACT. SIMILARLY FROM 1998-99 TO 2000-01 THE ASSESSEE WORKED FOR SIR GANGA RAM HOSPITAL AND HIS INCOME WAS TAXED AS PROFESSION AL INCOME. THE RETURN OF INCOME COMPUTATION SHEETS ALONG WITH P&L & BALANCE SHEET PLACED AT PAGES 91-136 PROVES THIS FACT. THE ASSE SSEES CASE FOR ASSESSMENT YEAR 2001-02 WAS COMPLETED AS A PROFESSIONAL U/S 143(3) PAPER BOOK PAGES 111-112. THEREFORE KEEPING IN VIEW THE FACTS & CIRCUMSTANCES OF THE CASE AND KEEPING IN PRINCIPLE OF CONSISTENCY AND FOLLOWING VARIOUS JUDICIAL PRONOUNCEMENTS AS RELIED UP ON BY THE ASSESSEE WHEREIN EMPLOYER-EMPLOYEE RELATIONSHIP HAS BEEN DISCUSSED WE ARE OF THE VIEW THAT THE ASSESSEE CANNOT BE SAID TO B E AN EMPLOYEE AND THEREFORE HIS INCOME CAN ONLY BE TAXED UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION. IN VIEW OF THE ABOVE WE D O NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF LD CIT(A). 15. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. 16. ORDER PRONOUNCED IN THE OPEN COURT ON THE 27TH DAY OF JULY 2012. SD/- SD/- (RAJPAL YADAV) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER ITA NO2323/DEL/2009 14 DT.27.7.2012. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)- NEW DELHI. 5. THE DR ITAT LOKNAYAK BHAWAN KHAN MARKET NEW DEL HI. TRUE COPY. BY ORDER (ITAT NEW DELHI). DATE OF HEARING 14.6.2012 DATE OF DICTATION 24.7.2012 DATE OF TYPING 25.7.2012 DATE OF ORDER SIGNED BY 27.7.2012 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET 27.7.2012 & SENT TO THE BENCH CONCERNED.