Diognostic center( lab ) receipts constitutes whether professional or business receipts

[TALLURI SRINIVASARAJU]

sir,

My client a pvt ltd company was incorporated on 23-05-1991 with an object to do business in providing Lab facilities like blood investigations, urine investigations, X- ray, ECG and all types of medical tests to the needy people.

All the tests will be done by semi qualified people like diploma holders in Lab Technology and not by the qualified doctors.

As per the provisions of Sec 44 AB audit is to be conducted of a person if his gross receipts exceeds ₹ 1 Crore in case of business and ₹ 25 Laks in case of profession .

In our Company, our gross receipts for asst.year 2012-13 is ₹ 41,86,745 which includes charges received from patients in providing tests by semi qualified persons having only diploma qualification.

the assessing officer issued a notice u/s 271B treating Lab receipts as professional receipts and wants levy penalty @ 5 % of gross receipts.

In theis background i request u to give correct legal position with regard to Lab receipts whether constitutes professional or business receipts with supporting case laws

thanking you

SRINIVASA RAJU TALLURI

AI Summary

Lab Company Wins: Income to be Classified as Business, Not Professional, Avoids Penalty Under Section 271B A private limited company, incorporated to provide lab facilities such as blood tests and X-rays, is facing a tax issue. The company, staffed by semi-qualified personnel, reported gross receipts of 41,86,745 for the assessment year 2012-13. The tax officer classified these receipts as professional income, subjecting them to a penalty under Section 271B. The query seeks clarification on whether lab receipts should be considered business or professional income. The response clarifies that since the company is engaged in business activities, the income should be classified as business income, not professional income, based on the nature of the work performed.