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TMI Blog1996 (7) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 1,07,991 in respect of the X-ray machine and accessories, I.C.C.U. and E.C.G. equipment. The above claim was disallowed by the officer on the ground that the assessee was not engaged in the manufacturing activity in the hospital. However, the claim of the assessee was allowed in the first appeal by the Commissioner of Income-tax (Appeals) placing reliance on the decision of the Madras High Court in CIT v. Dr. V. K. Ramachandran [1981] 128 ITR 727 and that of the Allahabad High Court in Singh Engineering Works Pvt. Ltd. v. CIT [1979] 119 ITR 891. On further appeal by the Revenue, the Tribunal followed its earlier decisions in the case of Dr. Surender Reddy [1989] 30 ITD 296 (Hyd) and in the case of Dr. P. Vittal Bhat [1983] 6 ITD 560 (Bang) [SB], and confirmed the order of the Commissioner of Income-tax (Appeals). The Revenue being aggrieved by the order passed by the Tribunal filed an application for reference under section 256(1) of the Act. That is how the matter is coming up before us for decision. The answer to the questions referred to us for decision involves determination of two points, namely, whether the running of the hospital where the X-ray and other equipment was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee contended that the clinic was to be treated as a small-scale industrial undertaking. In the aforesaid background, the Tribunal came to the following conclusion : "The setting up of the X-ray plant in the assessee's clinic was a commercial activity independent from his professional capacity. If an unqualified person sets up an X-ray plant, it will be a business activity. Merely because a professional man had set up the X-ray unit, it could not be said that it was not a business activity. Further, since X-ray photographs of persons who were not his patients were also taken in his clinic, it could not be said that the plant was installed as an aid for diagnosis of his own patients. Thus, by setting up the X-ray plant, the assessee had been carrying on the business as a commercial activity. As held by the Madras High Court in CIT v. Dr. V. K. Ramachandran [1981] 128 ITR 727, even a professional activity could be tinged with a commercial character if the indicia of commerce were manifest in it". In view of the above situation, the Tribunal found that the assessee had satisfied all the conditions laid down in section 32A and the Appellate Assistant Commissioner was justified i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal is criticised as a cryptic one, it cannot be said to have contained no reasonings in view of its reliance on two of its earlier decisions which we have discussed hereinbefore. In CIT v. Dr. V. K. Ramachandran [1981] 128 ITR 727, the Madras High Court held to the following effect (headnote) : "Even a professional activity could be tinged with a commercial character if the indicia of commerce are manifest in it. The way in which the assessee carried on the X-ray activity was in no way different from a non-qualified person carrying on a radiological institute. The mere fact that a professional man had, as an adjunct to his professional activities, such an institute did not disable him from running it as a commercial venture and earning income therefrom. The Tribunal was right in its view and the assessee was entitled to development rebate." That was a case where a medical practitioner purchased an X-ray machine, installed and used it in the year ending March 31, 1972. The assessee's claim for development rebate on this machine was originally allowed by the Income-tax Officer but later rectified under section 154 of the Act and was disallowed. The Appellate Assistant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sure". (Halsbury's Laws of England, Third edition, Vol. 38, page 10). The Supreme Court in Khoday Distilleries Ltd. v. State of Karnataka [1995] 1 SCC 574, 612 said : "There is no doubt that the word 'business' is more comprehensive than the word 'trade' since it will include manufacture which the word 'trade' may not ordinarily include." "The expression 'business' though extensively used is a word of indefinite import ; in taxing statutes it is used in the sense of an occupation or profession which occupies the time, attention and labour of a person, normally with the object of making profit". (State of Andhra Pradesh v. H. Abdul Bakhi and Bros., AIR 1965 SC 531). The object of making profit is the guiding force that sustains all occupations and professions coming within the expression of "business". Organised business activity combining professionals and non-professionals together can be imagined in a commercially developing society when the profit or any other benefit is available. Such an attempt is sufficiently evident in running the present hospital by seven partners of whom one alone is a doctor and the others "lay men". The reasoning that the association of non-qualif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne and accessories is a small-scale industrial undertaking for the production of X-ray photographs coming within the ambit of section 32A(2)(b)(ii) of the Act. Broadly speaking, all professions are businesses. When a professional man organises an activity which consumes his time and labour in connection with his professional work, either individually or in collaboration with others, it cannot be said that there is no profit motive behind such adventure. When there is an element of profit motive it will be a business activity whether it actually derives profit or not. When a medical practitioner, without confining himself to his conventional function of examining patients and prescribing medicines, establishes an X-ray plant and machinery for augmenting his professional work, it cannot be said that he has no profit motive in such adventure. That means he is carrying on a business activity which attracts the investment allowance under section 32A. This being our view, the reasonings contained in the decisions of the Income-tax Appellate Tribunal in the case of Dr. Vittal Bhat [1983] 6 ITD 560 (Bang) [SB] and of Dr. Surender Reddy [1989] 30 ITD 296 (Hyd) cannot be said to be erroneo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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