TMI Blog2006 (5) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... l fee is charged by the surgeons and doctors treating the patients, and the same is not part of the income of the nursing home. That being so, the nursing home does not have any professional income, so as to fall within the ambit of clause (b) of section 44AB, and as its gross receipts from business are below the limit of Rs. 40 lakhs set in clause (a) of section 44AB, it is not required to get its accounts audited as prescribed in that section. While maintaining these contentions, the assessee also raised the plea that it was under a bona fide impression that it was not covered by the provisions of section 44AB. However, when the assessee was advised to get the books audited, to avoid protracted litigation, it ultimately got the books of account audited on 21-1-2000, though with some delay, which again, is for good and sufficient reasons. Not convinced with the explanation of the assessee, Assessing Officer levied penalties under section 271B of Rs. 12,364 for the assessment year 1998-99 and of Rs. 15,809 for the assessment year 1999-2000. On appeal, the CIT(A) observing that a nursing home normally caters to the needs of patients, and is run by professionals like doctors indicate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the terms 'business' under section 2(13), 'person' under section 2(31) of the Act clearly indicate that the assessee-firm also constitutes a 'person' as defined in section 2(31), and the activities carried on by it also constitute 'profession', as defined in section 2(36). The activity of a nursing home is distinct from any business, commerce or trade and any person cannot run a hospital. Nursing home is a vocation, and it cannot be a business. Profession includes vocation. That being so, since the gross receipts of the assessee exceeded the limit of Rs. 10 lakhs prescribed, the provisions of section 44AB are attracted to the case of the assessee, and for the failure of the assessee, penalties under section 271B were correctly levied. 5.1 Rival submissions heard and relevant orders read, including the order of the Tribunal relied upon by the assessee. We find that there is substantial force in the stand of the assessee unlike the defence of the Revenue in this appeal, for the reasons following: 5.2 The question before us is as to whether the assessee-nursing home is covered by the provisions of section 44AB. At the outset, we may extract the relevant portion of the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er duty to community which may transcend the duty to a particular client or patient; (iii) professional association which regulates admission and seeks to uphold the standards of the profession through professional codes on matters of conduct and ethics; and (iv) high status in the community." He held that the above four characteristics are applicable to a nursing home and as such the income from nursing home is definitely considered as professional income. We are afraid, we cannot uphold this finding of the Assessing Officer for the reasons discussed hereunder. 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 Indian Medical Association. The assessee further contends that it is only room rent, operation theatre rent and nursing charges that are accounted for in its books of account, whereas the professional fees for the services rendered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 is not strictly a professional activity but savours of a commercial activity as well, it is a case of commercial activity telescoped to professional activity and amounts to a 'business'. In these days of even corporate hospitals rendering medical services on commercial lines, it is too ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and not restriction." 5.10 Similarly, in the case of CIT v. Dr. V.K. Ramachandran [1981] 128 ITR 727. Hon'ble Madras High Court held as follows: "Held, that 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." 5.11 Similarly in the case of Natvarlal Ambalal Dave v. CIT [1997] 225 ITR 936 (Guj.), considering admissibility of investment allowance on X-ray machines, Hon'ble Gujarat High Court held that merely because a person happens to be a professionally qualified doctor, it cannot be said that such person's activity cannot be treated as an activity of carrying on business. A professional activity can also be characterized as an activity of carrying on business if it is carried on like a commercial activity. 5.12 In the light of the above discussion, we hold that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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