INCOME TAX ACT, 1961

Section 14

Head of income - Retainership fee received by assessee-doctor from hospital - Income from business and profession or Income from salary -

Assessee was a doctor by profession. AO disallowed expenditure claimed by the assessee from professional fees on the ground that the retainership fee received by the assessee from hospital was not in the nature of professional fees assessable under the head 'Income from business and profession', but was in the nature of salary income assessable under the head 'income from salary'. Assessee submitted that the contract entered into between him and the hospital, was for rendering services as a professional and not a contract where there was an 'employer-employee' relationship. Held: A perusal of the agreement entered into between assessee and hospital, demonstrated that the assessee was rendering professional services. It did not lead to a conclusion that there was 'employer-employee' relationship between the assessee and the hospital. Further, there was no master-servant relationship between the assessee and the hospital and the hospital deducted tax at source on the payments made under section 194J as it was of the opinion that the payment was for professional services. Therefore, the fee received by the assessee from the hospital would be assessable under the head 'income from business and profession'. Accordingly, the AO was directed to allow expenditure claimed by the assessee from professional fees.

REFERRED : CIT v. Asian Heart Institute and Research Centre Private Limited (2019) 262 Taxman 471 (Bom): 2019 TaxPub(DT) 1834 (Bom-HC), CIT (TDS) v. Yashoda Super Speciality Hospital (2014) 365 ITR 356 (A.P.): 2014 TaxPub(DT) 2842 (AP-HC)

FAVOUR : In assessee's favour

A.Y. : 2013-14

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