1978 (6) TMI 70 - AT - Income Tax

Summary

Issues:
1. Classification of fees received by the assessee as professional income or salary.
2. Disallowance of expenses incurred by the assessee for a study-cum-lecture tour to the USA.

Analysis:

Issue 1: Classification of Fees Received
The appeal by the Revenue pertains to the classification of fees received by the assessee in the exercise of his profession at paying clinics set up by the Government. Both parties agree that the facts are similar to a previous case and the arguments are the same. The Tribunal had previously held that such fees are professional receipts. Given the similarity in facts, the Tribunal adopts the previous reasoning and confirms that the fees received by the assessee are to be treated as professional receipts. The order of the AAC on this issue is upheld.

Issue 2: Disallowance of Expenses
The next ground of appeal concerns the disallowance of expenses amounting to Rs. 11,048 by the ITO, which was later reversed by the AAC. The assessee, a tuberculosis specialist, undertook a study-cum-lecture tour to the USA, focusing on advanced cardiac non-invasive diagnostic techniques. The ITO contended that the expenditure was capital or personal in nature and not deductible against professional receipts. However, the AAC held that the expenditure was revenue in nature as it was incurred for acquiring knowledge and not personal or capital expenditure. The Revenue argued that the expenditure was of enduring nature and could be considered capital or personal expenditure. The assessee's counsel supported the AAC's view, citing relevant authorities. After considering the submissions, the Tribunal agreed with the AAC, emphasizing that the expenditure was incurred to update the assessee's professional knowledge and was thus revenue in nature. The appeal by the Revenue on this issue was dismissed.

In conclusion, the Tribunal upheld the classification of fees received by the assessee as professional income and allowed the expenses incurred for the study tour as revenue expenditure. The appeal by the Revenue was dismissed in its entirety.