9911796707
TMI Blog2025 (3) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... URT] and Shalini Hospitals [2006 (5) TMI 138 - ITAT HYDERABAD-B] which support this position.
Accordingly, the turnover of the assessee firm should not be considered as professional income. The addition based solely on the partner's statement, is unwarranted, particularly when the remaining receipts have been treated as business income and the net profit rate has been accepted by the Ld. AO. See S. Khader Khan Son [2013 (6) TMI 305 - SC ORDER]. The assessee has consistently maintained a net profit ratio ranging between 6% and 11% on its turnover in preceding and succeeding years, which has been accepted by the revenue authorities. Assessee appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... offered the difference in the receipts from the nursing home amounting to Rs. 86,25,000/-. 5. While filing the return of income, assessee has already declared business receipts of Rs. 1,40,15,090/- which is includes the above receipts of Rs. 86,25,000/- and has offered profit @ 8% on the same. In the assessment order, Ld. AO has added the entire receipts as income of the assessee. 6. The Ld. AR argued that the action of the Ld. AO in adding the entire income is incorrect. In the statement recorded, it was clearly explained that the books of accounts were not complete for the year under consideration and therefore, the entire receipts were not recorded. On direction of the officials, a tentative incomplete profit & loss statement was prepared and presented at the time of survey action. On the basis of the said statement, the partner stated that the receipts of Rs. 86,25,000/- has not been accounted and accordingly, the said receipts were offered. 7. The assessee has already offered the profit @ 8% on the said receipts and accordingly, the question of any addition cannot arise. Moreover, when the assessee has followed the presumptive taxation scheme u/s 44AD, only net profit @ 8% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 133A would not automatically bind upon the assesses we do not see any reason to interfere with the order of the Tribunal." 9. The Ld. AR argued that addition made purely relying upon the statement recorded during the survey action is incorrect and it is necessary that income should be assessed based on the correct law. In this present case, when it has been explained that the entire receipts cannot be added as per law and based on section 44AD of the Act, the question of adding the same on the basis of statement, is bad in law and incorrect. 10. In the appellate order, Ld. CIT(A) has relied upon the decision of Hon'ble Bombay High Court in the case of Dedicated health Care service TPA(India) (P.) Ltd. vs. ACIT, 324 ITR 345in order to contend that the services provided by hospital are professional services. In this regard, the reliance placed by Ld. CIT(A) is distinguishable. It is submitted that the issue decided by Hon'ble High Court is limited to the scope of the professional fees for the purpose of sec.194J of the Act. The Hon'ble High Court in this case has held that the services provided by hospital which employs qualified doctors also provide medical professionals whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee, its activities constitute 'business' and hence the limit of Rs. 40 lakhs prescribed in clause (a) above applies. However, since its gross receipts were less than Rs. 40 lakhs, the mandatory requirements of section 44AB of getting the accounts audited, etc. do not apply to it. On the other hand, it is the contention of the Revenue that the activities of a nursing home in providing medical care and nursing required by the patients, which require specialized professional skill and knowledge, constitute 'profession' and as such the ceiling of Rs. 10 lakhs prescribed in clause (b) of section 44AB applies, and consequently, it is liable to comply with the mandatory requirements of getting its accounts audited, etc. as contemplated under section 44AB. ........................... 5.5 Disputing the above findings of the Assessing Officer, the assessee contends that it is the surgeons and doctors, who treat the patients, have professional knowledge, qualification and skill to render professional service and receive professional fees from the patients, whereas the running nursing home, as such, does not have any of the above attributes, nor is it recognized by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cates the issue of determining whether a particular activity constitutes 'business' or 'profession'. That is, there is no bar that prohibits a business being carried on by a professional. Thus, a professional may carry on his activities on commercial lines, by expanding his base and hiring the services of several professionals and non-professionals. In these days of advanced science and ebullient development commensurate with the need of the community, society and country, a centrifuged activity, though related to a profession as such, may not in a given case be interpreted as a wooden exercise thereof, if other compelling and surrounding circumstances need an expansive understanding of it in a commercial way. An expert professional, if he has the inclination, capacity and zeal to expand his activity, may do so. As a result thereof, he might tread into the arena of business activity. Such a composite activity is conceivable and indeed plausible in modern days. If, for instance, an expert equips himself with plant and machinery with which, he, with the aid of his professional skill and in collaboration with qualified assistant, is able to turn out an activity which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 erroneous. We have observed this because the Tribunal in the present case has placed reliance on those decisions." 14. Considering above we find that the activity carried out by the assessee firm are in the nature of business and not profession as per provisions of section 44AD (6) and section 44AA(1) of the Act. The Ld. AO in the alleged assessment order made reference to clause 6 of section 44AD of the Act which provides certain exclusion to which provision of section 44AD are not applicable. The clause 6 of section 44AD is reproduced as under:- "(6) The provisions of this section, not ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
