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TMI Blog2012 (5) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... 07-08 dated 03-03-2010, rejecting the assessee's appeal contesting its assessment u/s. 143(3) of the Income Tax Act, 1961 ('the Act' hereinafter) dated 13-11-2009. 2. The only issue arising in appeal is the disallowance of payments made to professionals (Rs. 17,32,680/-), of incentive (Rs. 1,99,260/-) and interest (Rs. 59,370/-) by the assessee, effected u/s. 40(a)(ia) of the Act, i.e., on account of non-deduction of tax at source thereon. Opening the arguments for and on behalf of the assessee, it was explained by the ld. AR, his counsel, that the assessee is an individual running a private nursing home by the name 'Shri Ram Hospital' at Jodhpur. The provisions of tax deduction at source become applicable to any individual where he is liable to get the accounts of the year immediately preceding the relevant previous year audited u/s. 44AB of the Act. The gross receipts for the immediately preceding year were to the tune of Rs. 34.00 lacs and odd. That being the case, no tax was deducted at source for the current year on the impugned payments. However, in the view of the Assessing Officer (AO) the assessee was liable to deduct tax at source as he was exercising the profession o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diologist, where there was nothing to show that the said equipment was being used only in respect of the assessee's own patients, who was found to be using the same in a commercial manner, much as a non-professional would. Likewise in the case of Natvarlal Ambalal Dave v. CIT , 225 ITR 936 (Guj.). In CIT v . Trinity Hospital , 264 ITR 317 (Raj.), the hon'ble jurisdictional high court upheld the claim for deduction u/ss. 80HH and 80I to a hospital. 3.2 The ld. DR, on the other hand, relied on the orders by the authorities below. A proprietary concern running a nursing home is only the exercise of profession of medicine or surgery by the assessee in a more organized manner and, thus, only the exercise of profession by him. 4. We have heard the parties, and perused the material on record, as well as the case law cited. 4.1 We firstly observe that the AO had sought to analyse the law in the matter in sufficient detail, relying on case law, particularly by the hon'ble apex court, dealing with the question that arises for consideration in the present case, and which has not been dealt with by the assessee at any stage. The same was not brought to our notice by the ld. DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in number, even as recent times have witnessed the coming up of speciality hospitals, viz. dedicated to cancer, heart ailments, etc. These services, without doubt, require specialized knowledge and training in the field of medicine and surgery; the domain area of the assessee's unit being 'surgery', as well as exercise of intellectual as also manual skills, and which would, where practised by the assessee himself, as in the instant case, would only be regarded as an exercise of 'profession' as against conduct of a 'business'. The assessee's case, however, is that the activity is being conducted on commercial lines by engaging the services of other doctors. A gamut of services is being rendered, which include those qua allied activities, which require skills other than strictly relating to medicine and surgery. Further, the receipts include charges for operation theatre, room charges, sale of medicines, etc. How could these charges and concomitant services, which definitely lend a commercial character to the institution, besides entailing the services of a number of medical, para medical as well as non-medical professionals, form part of the exercise of his profession by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e services it sets out to provide, i.e., as afore-stated, the reception and treatment of patients, including their recuperation. This would not stand to change even if some such services are even being billed separately to the patients, being only toward providing for a more rational and systematic basis for charging the patients for the services availed or, rather, required for their proper treatment. The more crucial aspect is, and on which there is no dispute, that the same are only for the patients of the nursing home. 4.4 Next, we may consider the fact of payments to professionals at Rs. 17.33 lacs during the year. It is not clear if the same is entirely to doctors or to other professionals as well. This is as the assessee's firm may well have arranged to hire the services of other non-medicos and para medical professionals as well, i.e., rather than employing them. However, the moot question to our mind would be whether, if and to the extent the payment is to doctors, would it alter the nature of the firm from a professional one to that carrying on business; we having already examined the employment of professionals from other different/allied fields by the assessee in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cquires the character of a business enterprise. We, accordingly, restore the matter back to the file of the assessing authority for an examination of this aspect of the matter, and issue of the consequential finding/s of fact, along with his reasons, i.e., if and to the extent the findings are inferential, after allowing the assessee reasonable opportunity of hearing. Needless to add, the onus to lead evidence in substantiation of its claims would be on the assessee. We decide accordingly. 4.5 In arriving at our finding/s and consequent decision afore-stated, we have, besides the decisions relied upon by the Revenue, perused and also considered the import and the ratio of the decisions relied upon by the assessee, even as each of the same are on different footing and, thus, not directly applicable. In fact, as would be apparent, our decision is itself based on the decision in the case of Dr. P. Vadamalayan v . CIT ( supra ). Continuing further, as explained therein, as also in Natvarlal Ambalal Dave v. CIT ( supra ), there is no bar for a professional to carry on trade or commerce, which could also be one annexed to the exercise of his profession. The distinguishing feat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and arranging for a gamut of services, the promoter assumes a level of business risk not warranted by the exercise of profession, inasmuch as he is trading or leveraging on the professional ability of those employed or hired to successfully run a particular segment of the business, if not the whole of it, and not merely to act as assistants or facilitators working under a stable, supervised and, thus, controlled, condition/s. It is for this reason that professionals usually engage other professionals as partners, mitigating the risk by sharing the stakes as well as professional liability. The decisions relied by the assessee, as also stated earlier, are rendered in the context of the specific questions raised (refer para 3), and not on the issue under reference, which rather concerns the defining attributes of a profession, and as distinct from business, and which stand addressed directly in the decisions cited by the Revenue. The sole issue in CIT v . Trinity Hospital (Raj.) was whether the hospital is located in a backward area or not, with it being trite that a decision is an authority for what it actually decides [refer: CIT v. Sun Engineering Works (P.) Ltd . [1992] 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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