Y.R. MEENA, J.M. These three appeals are by assessee against order of CIT under s. 263. On scrutiny, CIT found that assessee had shown income from Hospital both under head Salary' and under head Profession', and ITO has assessed accordingly. According to CIT, assessment order is erroneous and prejudicial to interest of Revenue. Therefore, CIT had issued show cause notice as to why consultation fees should not be treated as income under head 'Salary'. In response to notice, assessee had made following submissions before CIT: (i) Notice under s. 263 was issued on total misapprehension without appreciating nature of contract between himself and Bombay Hospital. (ii) There is no relationship of master and servant or one of employer and employee of Bombay Hospital. fixed amount described as salary is in nature of honorarium for rendering services to Bombay Hospital in General Ward. (iii) In law, it is well settled that there cannot be contract of employment unless employer has right to control manner in which employee works. In absence of any rules and regulations regarding fixed hours of work amount received from Bombay Hospital cannot be treated as salary. (iv) Bombay Hospital does not control manner in which work of Doctors are conducted. hours of work, both consulting and operative, are decided by him depending upon his convenience. (v) There is no requirement that he should perform particular number of operations or he should examine particular number of patients in Consulting Room and Hospital has not reserved any right to regulate work of doctors in any particular manner. (vi) Hospital does not provide any facility in form of Dearness Allowance, Provident fund, Gratuity, etc. (vii) age of retirement is not fixed and there are no terms or rules regarding leave which can be taken by him and he is free to go on vacation whenever he decides to do so. However, during period of absence he has to provide locum and professional income during this period is credited to locum's account. (viii) patients are visiting him or engaging him on basis of his standing in profession and medical equipment in his rooms is his property. (ix) description of fixed amount which Hospital pays as salary is itself misleading and inappropriate. According to CIT, above submissions are not conclusive of claim made by assessee. But he has not given reasons why they are not exactly conclusive of claim. He only stated that ITO has accepted claim mechanically. ITO has not considered terms and conditions under which assessee was appointed. ITO has also failed to examine expenses claimed. Therefore, according to CIT, ITO's order was erroneous and prejudicial to interest of revenue. He set aside orders of ITO for all 3 years and directed ITO to make fresh assessments according to law, after bringing relevant facts and agreements on record. In appeal before us, learned counsel for assessee Sri S.E. Dastur submitted that all relevant material was before ITO, such as, letter of appointment of Dr. S.S. Jain; Certificate of shareable income from Bombay Hospital; Salary certificate, Statement of income filed with return of income and statement of income; Statement of income and expenditure; Copy of professional tax registration certificate; copy of professional tax challan and copies of appointment letters of Doctors who are really employees of Bombay Hospital. Therefore, it cannot be said that order of ITO was mechanical. In fact all relevant facts regarding issue, whether shareable income from Bombay Hospital is income from profession or salary, was before ITO and after examining all materials, he had allowed claim of assessee. Not only that, since appointment of assessee, income from consultation fees has been shown as income from profession and assessed like that. That is from 1965 onwards. Therefore, it is not correct on part of CIT to say that ITO has passed order mechanically. He also brought to our notice that there is letter from Bombay Hospital dt. 18th March, 1986, to Chairman, CBDT wherein hospital authorities expressed that assessee is not employee of hospital. Assessee is appointed as Consultant under contract wherein it is agreed that some honorarium, i.e. Rs. 1,000 per month would be paid to assessee and hospital would provide him Consultancy room, and in lieu of providing consultancy room, assessee has to share fees charged by him from patients in his consultancy room. He also drew our attention at pg. 23 to 26 of assessee's paper book containing appointment letters issued to various Doctors of Bombay Hospital who are really employees of hospital and are subjected with rules, regulations and service conditions provided by Bombay Hospital and hospital also was authorised to terminate services of these Doctors; while in case of assessee, there was no such service rules and regulations applicable. His service also cannot be terminated as in case of normal employees of Bombay Hospital. He is not supposed to take any permission for practice in any other place other than Bombay Hospital. Therefore, factually, it cannot be said that in any respect, Dr. Jain is employee of Bombay Hospital. Therefore his professional income in form of consultancy fees cannot be treated as salary. He also pointed out that there is no provident fund account in case of assessee, nor he is entitled for any gratuity or terminal benefits like superannuation as allowable to normal employee. assessee has his own telephone and consultancy in Bombay Hospital. All his equipments and furnitures are kept in consultancy room provided by Hospital. Even medicines etc. are purchased by him. Nothing is provided by hospital. His staff has nothing to do with Bombay Hospital. They are employees of assessee and assessee pays them salary. Therefore in reality and factually, Dr. Jain cannot be said to be employee of Bombay Hospital. sum of Rs. 1,000 which he is getting as salary is misleading. In fact that is only honorarium to consultant-assessee fixed about 20 years ago Rs. 800 and Rs. 1,000, and that remains practically same even today. In case of normal employees, it cannot be case. Therefore when assessee has placed all relevant materials before ITO and ITO after examination of same has assessed consultancy fees from profession, CIT was not justified in setting aside assessment orders of ITO. On other hand, Departmental Representative Sri Vohra relied on order of CIT. We have heard rival submissions and considered material on record. facts are not in dispute that assessee was appointed as ENT Consultant on 1st March, 1965 with salary of Rs. 800 per month and one of conditions was that assessee will share 50 per cent of his income for indoor patients, consulting rooms and outside visits of patients. Even today assessee is getting only Rs. 1,000 per month as salary/honorarium. In their letter to Chairman, CBDT, dt. 18th March, 1986, Bombay Hospital has clarified that word salary' of Rs. 1,000 is misleading. That should not be treated as salary. I n fact that is fixed monthly honorarium to consultant-assessee and assessee is not employee of hospital. In its letter dt. 1st March, 1965 of Bombay Hospital, which is placed at pg. 10 of paper-book, nothing has been stated about termination of services, or about age of superannuation, or regarding rules, regulations and service conditions as existing in Hospital which are applicable to other employees. This means, rules, regulations and service conditions which are applicable normally to other employees are not applicable in case of assessee; nor assessee is entitled for any benefit of provident fund, or gratuity etc. at time of retirement, as there are no retirement benefits available to assessee as are available to other employees. Assessee has his own staff in his consultancy room. They are not employees of Bombay Hospital. Assessee owns his own telephone in consultancy room and other equipments and furnitures in consultancy room which belong to assessee. In support of that, assessee has shown payment o f telephone bills and other expenses incurred in maintaining consultancy room. Details are placed from pg. 5 to 10 of assessee's paper book. In case of appointment letters issued to other Doctor-employees, hospital authorities have clearly mentioned period of probation, and they are subjected to rules, terms and conditions of hospital. Their services also can be terminated by giving one month's notice on either side. Appointment letters of Doctor- employees placed from pg. 23t o 26 in assessee's paper book are placed for our perusal. These facts are not disputed by learned Departmental Representative Sri Vohra. Even on specific inquiry from Bench to Shri Dastur whether letter of appointment of assessee and other details including materials supporting expenses were available to ITO at time of assessment, t h e answer of Sri Dastur was in affirmative. This also has not been contradicted by Departmental Representative Sri Vohra. When facts stated above are not disputed by Sri Vohra and professional fees received by assessee was assessed under head Income from Profession, in our view, CIT is not correct in saying that ITO has mechanically accepted claim of assessee especially when submissions of assessee were reproduced by CIT in his order and when CIT has not commented why those submissions including arguments and evidences mentioned therein are not sufficient to hold that ITO's order was not erroneous. Therefore, it cannot be said that ITO has mechanically accepted claim of assessee regarding professional fees which is being assessed under head Income from Profession since 1965 onwards in case of assessee. Now limited question remaining for consideration is whether assessee is employee of Bombay Hospital. To ascertain whether assessee is employee or not, it is to be seen whether contract between assessee and hospital was for employment or whether contract is independent which will govern equally and bind both parties. Therefore it is to be seen what are control and superintendence Bombay Hospital has over assessee: (a) Whether one party to contract has power to direct and control work of other party to contract. (b) Whether one party to contract has power to transfer other party to contract from one place to another place, from one branch to another branch or from one office to another office in same management. (c) Or in case of Doctor-employees, whether patients select doctor of his own choice or patients are sent to Doctor through administration of hospital. If patient selects Surgeon to perform operation especially when patient makes payment to Surgeon indicates that hospital is not employer of Surgeon. (d) Whether one party to contract has power of dismissal or suspension to other party to contract is important indication of relationship of employer and employee. (e) Supply of equipments and ownership of assets if one party to contract provides place, supply tools, machines or equipments used by other party, is important factor to be taken into account to decide whether contract is for contract of employment. (f) Fixation of time and place of work In case of contract of employment, one party has power to fix hours or times when person is to work, or when he is to take his holidays. (g) Whether one party to contract is entitled to delegate entire performance of his work to another person without permission to other party to contract. If one party is entitled to delegate entire performance of his work to another person in that case, it cannot be said that contract is contract of employment. (h) Obligation to work or to employ If it is entirely left to one party to contract to choose whether or not to work, then that cannot be said to be contract for employment. (i) Whether one party to contract (so-called employee) is entitled for benefit or facility of Dearness allowance, Provident fund, Gratuity, etc. (j) Lastly, most important test to ascertain whether it is contract for employment or not, depends upon intention of parties. In agreement or appointment letter, it is to be seen what is genuine intention to transform employment relationship; whether both parties to contract or agreement have intended to have relationship as employer and employee. If in agreement or appointment letter, there was no such intention, then it cannot be said that parties are having relation of employer or employee. To find out intention, terms in appointment letter and other treatment which party to contract gives each other is most important. Now, we have to apply these tests, vis-a-vis, appointment letter dt. 1st March, 1965 and other relevant factors, and whether assessee was employee of hospital or not is basically question of fact. It is argued before u s , as well as before CIT that salary which is described in appointment letter is in nature of honorarium and not as salary payable to employee. In 1965, assessee was getting Rs. 800 per month and today he is getting Rs. 1,000 per month. hospital has no control on work of assessee, how he performed his duties. assessee is free to go on vacation whenever he likes. assessee is not subject to any rules and regulations which are applicable to other Doctor-employees of hospital, like Dr. V.M. Panse, Dr. V.S. Shevade, Dr. K.S. Gupta, who are subject to rules and regulations of hospital applicable to employees of hospital. assessee has no facilities in form of dearness allowance, provident fund & gratuity etc. as are normally available to other employees of hospital. medical equipments in consultancy room belong to assessee. Assessee is having his own personal telephone in consultancy room. Telephone charges are borne by him. Assessee has kept his own staff in consultancy room, whose salary is paid by assessee himself. assessee can do his private practice in any other place wherever he likes without permission of Bombay Hospital. In our view, these relevant facts have not been properly appreciated by CIT. They are material facts which should be taken into account to decide whether assessee is employee of hospital or not. Sri Dastur also brought to our notice similar facts in case of Dr. M.G. Naraini. In said case, ITO has revised his original assessment order on basis of directions of CIT under s. 263. Thereafter, assessee approached CIT. CIT has allowed claim of assessee that professional fees received by assessee are income assessable under head 'Income from profession'. copy of CIT (A's) order dt. 4th June, 1986 in case of Dr. M.G. Naraini was placed for our perusal. It is seen that inspite of inquiries directed by Commissioner, ultimately again it is found that professional fees received from hospital should be assessed under head 'Income from profession'. intention of authorities of Bombay Hospital is expressed in appointment letter. They further remove doubt whether consultant like assessee in hospital, is employee or not. In their letter to Chairman, CBDT dt. 18th March, 1986, they have stated that word 'salary' in appointment letter is in reality honorarium and that should be treated as honorarium and not salary. They have stated clarifying facts as under: (a) Each of aforesaid consultants is provided by Hospital with consulting rooms with essential furniture, in Hospital premises, for convenience of patients. (b) They have their own staff employed by them and paid by them, working for them as per timings fixed by said consultants. (c) consultants have their own medical equipments and instruments in consulting rooms. (d) Patients, whether indoor, general ward, or patients from outside, including some from nearby foreign countries, seek and obtain direct appointments from these consultants without reference to or interference from Hospital. (e) consultants maintain their own appointment diaries, and give appointments to patients according to their convenience. (f) consultants have complete discretion to exempt patients from charging fees, in indoor wards as well as in their consulting rooms. authorities of hospital further categorically admitted that consultants like assessee in hospital are not employees of hospital; there is no relationship between consultant and hospital as employer and employee. For ready reference, we reproduce that portion from said letter dt. 18th March, 1986 also: "For your kind information, we beg to further submit to your goodself following facts which would make it clear that there is no employer-employee relationship between Hospital and such consultants: No attendance record is required to be maintained by consultants or by Hospital, for their attendance in Hospital. They charge professional fees to patients on basis of examinations done by them and on basis of work performed by them. Provident Fund benefit as available to employees of Hospital is not available to these consultants. benefit of gratuity scheme as applicable to employees of Bombay Hospital is not applicable to them. They are not governed by service rules and conditions applicable to employees of Hospital. They attend to patients according to requirements and convenience o f patients and according to their own convenience, and even during night hours and Sundays and public holidays. No kind of allowance is given to these consultants, which are given to employees of hospital. staff working in consultant rooms of said consultants are not t h e employees of Bombay Hospital. They are recruited by said consultants and are their employees". Taking into account facts which are not disputed by learned Departmental Representative also as clarified by hospital authorities above, we have no hesitation in coming to conclusion that assessee is not at all employee of hospital. word 'salary' used in appointment letter is not conclusive factor to determine whether there was employer-employee relationship. In interpreting contract or appointment letter, it is duty of Court to take reasonable interpretation of document as whole, instead of taking literal interpretation which does not fit in with intention of both parties. When both parties are not treating themselves as employer and employee, we do not find any justification in directions of CIT to set aside order of ITO. Therefore, taking into account facts stated above which are not disputed and intention of parties in letter dt. 1st March, 1965, and their conduct thereafter, we are of view that assessee is not employee of Bombay Hospital, merely taking literal meaning of word 'salary' is not enough to deny claim of assessee. hospital authorities themselves have clarified that salary was not correct word used in appointment letter, that is in reality honorarium to consultants/experts in hospital. When authorities themselves have clarified doubt regarding literal meaning of word 'salary', we have no hasitation in coming to conclusion that CIT was wrong in directing ITO for any examination without stating exactly what further material he wants on record when agreement or appointment letter was already available to ITO since 1965 onwards, and assessee was assessed for professional fees he received under head 'Income from profession'. When no materiel further was suggested either by CIT or at time of hearing by learned Departmental Representative to be looked into, required material was enough which was available to ITO to decide character of professional fees whether it is salary or professional receipt. Accordingly we set aside order of CIT and restore order of ITO. In result, appeals of assessee are allowed. *** DR. SHANTI SARUP JAIN v. FIRST INCOME TAX OFFICER