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TMI Blog1991 (2) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... admitting, that the firm's activity amounted to profession, whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in holding that section 64(1)(i) was not attracted ? " The first question arises in the case of the firm while the other two questions pertain to the assessee in the other two references. The firm in question came into existence by virtue of the partnership entered into between the two doctors, one is the husband and the other is the wife (Dr. Vanamala J. Herekar) ; the wife is the assessee in the last two references. According to the assessee, the aforesaid husband and the wife started small nursing home and a substantial number of cases were treated in the nursing home relating to maternity cases. Dr. Vanamala is a gynaecologist while her husband is a general practitioner. The Income-tax Officer sought to apply the provisions of section 64(1)(i) of the Income-tax Act, 1961 ("the Act", for short). Dr. Vanamala objected to this. The Appellate Tribunal has accepted the contention of Dr. Vanamala and held that section 64(1) was inapplicable. The primary question will be, whether the firm in question is carrying on bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r who was running a nursing home by himself was entitled to claim the development rebate treating the nursing home as "business". The Madras High Court did not find that the nursing home in question was confined to the patients of the assessee therein. The nursing home was being run as a business concern and, in the context of section 33 of the Act, the assessee was given the benefit of development rebate. One decision of the Supreme Court referred to by Mr. Chanderkumar is to be noted in this context. In Barendra Prasad Ray v. ITO [1981] 129 ITR 295, at page 305, it was observed that "business" includes professions, vocations and callings. The basic facts involved in the said case are relatable only to section 9(1). The question was whether a particular income of the assessee accrued or arose in India as deemed under section 9(1). This had to be considered along with section 161(l)(i) because the assessee therein was treated as a representative assessee. A legal practitioner in Calcutta: had appeared in a case which was ultimately found to be connected with the appearance of a counsel in U. K. The court was not concerned with the concept of "business", but with the meaning attri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e earlier Act of 1922 and the present Act, the Bench held that Parliament has shown great awareness about the distinction between the concept of "business" and that of a "profession" and accorded different treatment to these two activities, not only under these two relevant provisions, but also under a few other provisions. At page 154, the Bench observed : "That is why it is of considerable importance to find out whether the intendment and purpose of the Legislature in introducing the new concept of a firm carrying on a 'business' in the new Act in order to replace the existing concept of a mere firm in the corresponding provision of the old Act assumes importance. It assumes importance because the provision is provision pertaining to the clubbing of the income of two partners by reason of the 'relationship' between them. Ordinarily, the incomes of the partners in a firm would be assessed independently. There would be no question of clubbing (them) together. The provision for clubbing together was introduced in the old Act presumably in order to prevent evasion of tax. It is not difficult to visualise a husband forming a partnership with wife so that the income would be distribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e may be no more than an illiterate housewife or housewife who is not capable of carrying on an economic activity on her own. On her own, the wife may not be able to earn any income or make any contribution." The Bench also pointed out that the Law Commission had also expressed itself against the earlier provision applying to a partnership between the husband and wife engaged in professions as doctors, lawyers, etc. However, the Bench pointed out that, in the case of a couple running nursing home admitting patients of other doctors and charges for the same or runs any other business activities like a drug store, section 64(1) will be attracted to that income which is attributable to these activities. The Kerala High Court also has taken the same view in the decision in Dr. K. Thomas Varghese v. CIT [1986] 161 ITR 21 and followed the views expressed by the Gujarat High Court. Apart from the reasons given by the High Courts of Gujarat and Kerala, we would like to add an additional reason. Any provision of law affecting the rights of individuals will have to be read in the context of the Indian Constitution. The provision of law should not contravene the constitutional provision ..... 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