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

[SEETHARAMAN R]

“Profession” may be defined as a vacation, or a job requiring some thought, skill and special knowledge like that of C.A., Lawyer, Doctor, Engineer, Architect etc. So profession refers to those activities where the livelihood is earned by the persons through their intellectual or manual skill.

It is a Private limited Co. formed to do business in providing lab facilities and tests done by semi qualified people, income earned by it is only a business income based on the above definition.

AI Summary

Tax classification of diagnostic lab receipts: business income when services are provided by technical staff, not registered professionals. Whether diagnostic laboratory receipts are treated as business or professional receipts hinges on the nature of the activity and personnel: a private limited company operating lab services and employing diploma-qualified technicians ordinarily generates business income, while the label 'profession' implies services attributable to specialized or statutory professional qualifications, which informs application of tax-audit thresholds and penalty provisions.