TaxTMI 
TaxTMI 
2012 (5) TMI 134
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....applicable to any individual where he is liable to get the accounts of the year immediately preceding the relevant previous year audited u/s. 44AB of the Act. The gross receipts for the immediately preceding year were to the tune of Rs. 34.00 lacs and odd. That being the case, no tax was deducted at source for the current year on the impugned payments. However, in the view of the Assessing Officer (AO) the assessee was liable to deduct tax at source as he was exercising the profession of medicine and surgery and, therefore, the threshold limit applicable to him, i.e., for getting the accounts audited u/s. 44AB of the Act is not Rs. 40.00 lacs, i.e., as applicable to 'business', but only Rs. 10.00 lacs as prescribed for a 'profession'. Hence, the impugned disallowance. The same found confirmation in appeal by the ld. CIT(A). The assessee's contention that he was only running a hospital, the gross receipts of which included receipts and charges qua collateral activities, viz. operation theatre; room rent; sale of medicines, etc. did not find favour with him on the basis that it is not the assessee's case that its entire receipts were from such non-professional activities, and no part....
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....on by him. 4. We have heard the parties, and perused the material on record, as well as the case law cited. 4.1 We firstly observe that the AO had sought to analyse the law in the matter in sufficient detail, relying on case law, particularly by the hon'ble apex court, dealing with the question that arises for consideration in the present case, and which has not been dealt with by the assessee at any stage. The same was not brought to our notice by the ld. DR during hearing as well. The assessee, on his part, has also not met those decisions even before us, which becomes incumbent on it when the Revenue relies on the orders by the authorities below, as it does in the instant case. The said non-mention by both the representatives, we are afraid to say, is unfortunate. 4.2 It would be relevant to map the contours of the term 'profession', i.e., as distinct from a 'business'. The precedents on the subject are galore, and an authenticated version is at hand in the decision in the case of Dr. K. Thomas Varghese v. CIT, 161 ITR 21 (Ker.), relied upon by the Revenue, which bears abundant reference to the decision by the apex court in the case of National Union of Commerce Employe....
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....ties, which require skills other than strictly relating to medicine and surgery. Further, the receipts include charges for operation theatre, room charges, sale of medicines, etc. How could these charges and concomitant services, which definitely lend a commercial character to the institution, besides entailing the services of a number of medical, para medical as well as non-medical professionals, form part of the exercise of his profession by the assessee? In the present case, however, these services are for minor amounts, and primarily incidental to rendering of its core activities by the nursing home. As against the total proceeds of Rs. 34.74 lacs, the OPD and operation theatre receipts are at Rs. 1.49 lacs and Rs. 0.62 lacs respectively. The same would not in our clear view alter the character of the principal receipt of the assessee, i.e., for the provision of services relating to medical consultancy and surgery. As explained by the hon'ble apex court in the case of National Union of Commerce Employee's case (supra), subsidiary work of an incidental type intended to assist the core activities would be of no moment. A solicitor may, for example, for his convenience employ a cl....
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....have arranged to hire the services of other non-medicos and para medical professionals as well, i.e., rather than employing them. However, the moot question to our mind would be whether, if and to the extent the payment is to doctors, would it alter the nature of the firm from a professional one to that carrying on business; we having already examined the employment of professionals from other different/allied fields by the assessee in the preceding paragraph of this order. In our considered view, if the doctors to whom the payments are made are rendering services in respect of the principal activity of the assessee's nursing home, i.e., surgery, which may again be in a particular discipline/area, as, say, heart surgery, ENT, etc., the same would have the same bearing as the engagement of the services from other fields, as discussed in the preceding paragraph. That is, the firm would only be a professional firm. However, if the doctors are practicing independently, i.e., examining and rendering consultancy to patients, who come for being examined and treated by them or for their consultancy, the assessee's nursing home assumes the character of a business, i.e., providing a facility....
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.... different footing and, thus, not directly applicable. In fact, as would be apparent, our decision is itself based on the decision in the case of Dr. P. Vadamalayan v. CIT (supra). Continuing further, as explained therein, as also in Natvarlal Ambalal Dave v. CIT (supra), there is no bar for a professional to carry on trade or commerce, which could also be one annexed to the exercise of his profession. The distinguishing feature, thus, would be where the same engages him in the capacity of an entrepreneur, so that the resources employed, including human, are not merely geared to assist him in carrying out his profession in a more systematic, organized or efficient manner, but enables exceeding the limits insofar as the boundaries as a professional are concerned. A lawyer or an architect, say, may keep juniors or even experienced lawyers or architects, to assist him, or to be able to increase the capacity or manage efficiently the volume or range of services, i.e., impact positively the quality and quantum of work/professional output. The same would be essentially a question of size, i.e., make it a law firm or a solicitor firm as against an individual lawyer or solicitor, and not i....