TMI Blog1969 (2) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... evelopment rebate under section 10(2) (vib) of the Indian Income-tax Act, 1922, in respect of the above plant. He was unsuccessful before the revenue. The Tribunal on second appeal found that the assessee was running a nursing home as part of his profession and could not therefore classify his income under the head " Income from business ", held it was income from his profession, and disallowed the claim for development rebate. On the assessee requiring the Tribunal to refer the question of law arising out of its order, the following question has been referred to us to render our opinion thereat : " Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was not entitled to claim dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fession. We think not. Any kind of commercial activity telescoped to professional activity ought to be understood as a business, as is properly understood. In such circumstances it may be that the business aspect of the activity springs from the professional activity of the person concerned and is irretrievably connected with it. Nevertheless, if it is said that if there is an organic and composite activity and if there is a merger of professional skill with trading or business, the poser to be answered is whether the combined endeavour results in emoluments which, though not strictly terniable as profits, are really gains in the shape of profits. If the answer is in the affirmative, it is a business as it is the outcome of combined efforts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profession habitually carried on. As is not unusual, several jurists and eminent judges while attempting to define the limits of one or the other of the words "business, profession and trade", entered the labyrinth together but made exits by different paths ". The Supreme Court in Narain Swadeshi Weaving Mills v. Commissioner of Excess Profits Tax, said that the word " business " connotes some real, substantial and systematic or organised course of activity or conduct with a set purpose. Venkatarama Aiyar J., speaking for the court in Mazagaon Dock Ltd. v. Commissioner of Income-tax, explained " business " as a word of wide import and in fiscal statutes it must be construed in a broad rather than a restricted sense. The Supreme Court in La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct is the satisfaction of material human needs. It must be organised or arranged in a manner in which trade or business is generally organised or arranged. It must not be casual nor must it be for oneself nor for pleasure. Thus the manner in which the activity in question is organised or arranged, the condition of the co-operation between employer and the employee necessary for its success and its object to render material service to the community can be regarded as some of the features which are distinctive of activities to which section 2(j) applies. " Reiterating the above workable test, the Supreme Court in National Union of Commercial Employees v. Industrial Tribunal, Bombay, stressed the need for direct and essential nexus between t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mental and professional expenses which include details of salary and bonus paid to his assistants throw considerable light on the commercial nature of the activity. Above all, the assessee claims that he is carrying on a business. Payment of bonus to employees is ordinarily a concept allied to trade. The assessee has shown that he is running a costly establishment employing a big staff and incurring heavy expenditure for running a nursing home and earning gains in the shape of profits and on that basis the claim for development rebate is sought to be sustained. The revenue including the Tribunal was not satisfied that the assessee was running a nursing home apart from his profession as a doctor. The Supreme Court has unreservedly made it cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s" in the clause relating to development rebate and such business should be completed divorced from professional activity. Once it is found that in a individuals professional activity there is inhered in it a trading or business concept as irresistible that the totality of the vocation has to gain the statutory allowance of development rebate. Even in the United Kingdom at one time, it was felt that if there was such an unison in the two, that is, business and profession, the income from each had to be separated by adopting an actual formula and dealt with as such and concessions granted. Such a doctrine of severability was noticed in Commissioners of Inland Revenue v. Maxse, Webster v. Commissioners of Inland Revenue and Neild v. Inland Re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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