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TMI Blog2025 (3) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the appellant's case and in law the ld. CTT(A) erred in confirming the addition of Rs. 86,25,000/- made by the Id. AO on account of alleged suppressed professional receipts. The appellant prays this Hon'ble Tribunal to delete the addition made by the Assessing Officer, which is confirmed by the Id. Commissioner of Income Tax (Appeals)." 3. The key facts of the case are as follows: The assessee is a partnership firm operating a nursing home under the name "Kety Medicare Centre." A survey was conducted under Section 133A of the Income Tax Act on 08/03/2019. During the survey, it was discovered that the assessee had suppressed its receipts. The statement of one of the partners, Dr. A.S. Poonawala, was recorded, wherein he admitted to an additional income of Rs. 86,25,000/- due to the suppression of receipts for the relevant financial year. Subsequently, the assessee filed its income tax return (ITR), declaring a total turnover of Rs. 1,40,15,090/-. The profit was reported under Section 44AD of the Act at a rate of 8.9% of the turnover, amounting to Rs. 12,47,373/-. The assessee also disclosed interest income, and the total income declared in the return was Rs. 15,98,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is not possible for any business. Accordingly, it is submitted that the action of taxing the entire receipts as income is incorrect. 8. Without prejudice to the above, it is also submitted that the statement recorded during the survey does not have evidentiary value. In this regard, reliance is placed on the decision of Hon'ble Madars High Court in the case of CIT vs. S. Khader Khan Son, 300 ITR 157, which was later upheld by Hon'ble Supreme Court reported in 25 taxmann.com 413(SC) wherein it was held that statement recorded under section 133A has no evidentiary value and any admission made during such statement cannot be made basis of addition. The relevant part of the said decision is reproduced as under:- "A power to examine a person on oath is specifically conferred on the authorities only under section 132(4) of the Act in the course of any search or seizure. Thus, the Income-tax Act whenever it thought fit and necessary to confer such power to examine a person on oath, has expressly provided for it, whereas section 133A does not empower any Income-tax Officer to examine any person on oath. Thus, in contradistinction to the power under section 133A, section 132(4) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered by a corporate enterprise. It also taken noted that decision of Hon'ble Gujrat High Court in the case of CIT vs. Dr. K. K. Shah 135 ITR 146 (Guj) wherein it was held that where a group of doctors were doing business, the same would come under the ambit of business activity. With such findings, Hon'ble Court held that the hospital which is corporate company in nature, would be covered under the professional services for the limited point of deduction of tax u/s 194J. However, where the doctors were engaged in the business activity, the same cannot be covered as profession. 11. The assessee firm is earning income only from IPD services, room rent, X- ray charges, etc. whereas the entire OPD income from doctor services were directly shown as income by concerned partners. This fact along with the return of income of partners were filed before Ld. CIT(A). Therefore, as such, no medical professional services income has been shown by the appellant whereas in the decision referred above, the hospital was earning income from doctor services. Therefore, the decision relied upon by Ld. CIT(A) is distinguishable on facts and cannot be relied upon. 12. Further, reliance is placed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the services of doctors. 5.6 There is a very narrow demarcation between a profession and a business. The word "profession" is of wider scope than "business". What may not amount to business may amount to 'profession' and what may not amount to 'profession' may amount to 'vocation' and what may not amount to vocation may amount to occupation. A 'profession' in the present use of language involves the idea of an occupation requiring either purely intellectual or if any manual skill, as in painting and sculpture, or surgery, skill controlled by the intellectual skill of the operator, as distinguished from an occupation which is substantially the production or sale, or arrangement for the production or sale of commodities. Bringing out the distinction between a business and a profession, Rajasthan High Court in the case of CIT v. Bhagwan Broker Agency [1995] 212 ITR 133 held as follows- "The word "business" has been defined under clause (13) of section 2 of the Income-tax Act, 1961, to include any trade, commerce or manufacture or any adventure, or concern in the nature of trade, commerce or manufacture. The word "profession" has been defined in sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.8 Considering the totality of facts and entirety of the circumstances of the instant case in the light of the above discussion, we find merit in the above contentions of the assessee. One important aspect to be remembered is that what is assessed here is a 'Nursing Home', a partnership firm, which is a distinct assessable entity distinct from the professionals who run it or engaged by it. Added to it, it is the contention of the assessee, uncontroverted by the Department, that it is only the room rent, operation theatre rent and nursing charges that are accounted for in the books of the assessee, whereas the fee for the professional services rendered by the surgeons and doctors, are directly received by them from the patients. Therefore, what is earned by the assessee- firm in the course of business is for letting out the facilities possessed by it as a nursing home and for provision of nursing and other supportive services provided by it to the patients who take treatment from the doctors in the nursing home. Therefore, the activities of a nursing home constitute business and not profession." 13. Further, reliance is placed on the decision of Hon'ble Kerala High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntancy or technical consultancy or interior decoration or any other profession as is notified by the Board in the Official Gazette shall keep and maintain such books of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of this Act. 15. A combined reading of the above two sections clearly establishes that the provisions of Section 44AD do not apply to individuals engaged in the medical profession. However, it is submitted that the assessee is a partnership firm providing services such as patient room rentals, X-ray facilities, and other ancillary inpatient department (IPD) services. The income generated from doctors' fees is separately declared by the respective doctors in their individual tax returns. Therefore, the assessee cannot be classified as a 'person' engaged in the 'medical profession.' We respectfully rely on the rulings in Dr. K. K. Shah (supra) and Shalini Hospitals (supra), which support this position. Accordingly, the turnover of the assessee firm should not be considered as professional income. The addition of Rs. 86,25,000/-, based solely on the partner's statement, is unwarranted, part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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