TaxTMI 
TaxTMI 
2002 (9) TMI 247
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....ing Officer be restored. 4. The appellant craves leave to add or amend the grounds of appeal before the appeal is heard and disposed of." 3. From the above noted grounds, it would be clear that the only grievance of the Department relates to the allowing of deduction of Rs. 28,46,808 under section 35(2)(la) which was disallowed by the Assessing Officer. 3.1 The relevant facts relating to the issue in brief are that the assessee being a Private Limited Company was engaged in carrying on the Profession of Nursing Home which provides medical treatment to patients with all kinds of eye problems. The assessee filed its return of income declaring an income of Rs. 61,58,140 on 14-12-1992. During the assessment proceedings, the Assessing Officer noted that the assessee had claimed deduction under section 35(2)(1a) amounting to Rs. 28,46,808 on account of machinery used for scientific research costing Rs. 37,15,408. He further noted that the assessee had reduced from the cost of machinery Rs. 8,68,600 on account of experimental receipts. The Assessing Officer asked the assessee to substantiate its claim under section 35(2)(1a) of the IT Act. It was submitted before the Assessing Of....
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....s a Private Limited Company which could not do profession by itself, as such the activity of the assessee-company was a business of running a Nursing Home. It was emphasised that the assessee-company had a separate legal entity different from its share-holders and employees and as such could not have the skill, education or learning which was required for carrying on a profession. Accordingly, it was submitted that the activity of the assessee was business and not the Profession. The reliance was placed on the following case laws: (1) Dr. P. Vadamalayan v. CIT [1969] 74 ITR 94 (Mad.) (2) CIT v. Dr. V.K. Ramachandran [1981] 128 ITR 727 (Mad.). (3) Addl CIT v. Ram Kripal Tripathi, [1980] 125 ITR 408 (All.) It was argued that although the terms science and research were not defined in the Income-tax Act but the dictionary meaning of those terms made it clear that it referred to the knowledge possessed as a result of studies or practice, science was a branch of study which was concerned with observations, classification of facts and formulation of laws and any investigation or experimentation for the discovery of new facts and their correct interpretation which amounted to ....
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....thought that an undercorrection in a high myopia will lead to less dissatisfaction, than in the low myopia group. Our approach has been amply justified by the practical experience of the patients. The Myopia corrections results :- We have lumped the total number of the myopic dioptres to be corrected in each group, and the results actually obtained have been kept as sum total of all the cases. The results are as follows:- Group 1 (Myopia less than 5D) No. of cases 15 Total No. of dioptres 55.5 Undercorrection 15.5(27.92%) Overcorrection 0.75(1.53%) Group 2 (myopia 6 to 10D) No. of cases 44 Total No. of dioptres &nbs....
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.... of Laser delivery system but asserted that the machine was meant for reducing high refractive error and no research whatsoever was made by the assessee Company. The Assessing Officer further stated that if the Doctors associated with the assessee-company were able to reduce the number, that was mainly because of their experience in the field and not because of any research made by them. It was further submitted that merely the problems or quantitative data were discussed in some forum of international activity of research, but the exercise undertaken by the assessee was only a practice relating to the activity and as such the assessee could not take advantage of the deduction provided for a specific purpose. The Assessing Officer further stated that the assessee was engaged in the medical profession which could not be called the business for the purposes of Income-tax Act, 1961. Accordingly, it was submitted that the deduction under section 35 was not available to the assessee because the same related to the business only. 4.2 The learned CIT(A) after considering the rival submissions opined that deduction under section 35 of the I.T. Act related to the expenditure on scientifi....
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.... He, therefore, held that the assessee was carrying on the business of Nursing Home and the Scientific research undertaken by it was related to its business which caused a tremendous increase in the business. He, therefore, concluded that there was no justification to deprive the assessee of the deduction under section 35(2)(1a) of the Act, and accordingly he allowed the claim of the assessee. 5. Now, the department is in appeal against the order of the learned CIT(A). The learned D.R. submitted before us that the activities undertaken by the assessee were commercial under the terms 'profession' and not the 'Business', as such the deduction under section 35 was not available to it. It was further stated that the assessee had not conducted any scientific research but the capital expenditure incurred by the assessee was for extension of the commercial activities by acquiring new machinery. It was vehemently argued that the machinery acquired was new and whatever the work was done with the help of the machinery was analysed by the assessee in the shape of statistical records, as such no new finding had come out as a result of the compilation of the statistical data. It was further ....
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.... remove such type of difficulties faced by the patients and also by doctors as such new research was aimed at by the assessee by using the Excimer Laser. It was stated that in this new technique the curvature of the cornea was cut by using the laser for remodelling cornea surface in order to perform the task of etching a minus (-) or plus (+) lenticule on the surface of the cornea. For this purpose, a detailed clinical research had been done on a number of patients who had been operated with the Laser and their results were collected to study the response to the treatment and also what more changes were required for improving the technique to obtain better and consistent results. On the basis of above explanation, it was claimed that the assessee carried out the research, as such the deduction was available under section 35(1)(iv) of the Income-tax Act. 6.1 As regards to the contention raised by the department that the approval of Scientific Research Authority was required, the learned counsel for the assessee submitted that there was no such need because the approval was required for claiming deduction under section 35(1)(ii) & (iii) but not for claiming deduction under sect....
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....sion, it can be said that the word "business" on a wider interpretation can include within its scope profession for the purpose of the Income-tax Act. We think it appropriate to discuss the views of various Courts on the similar issues. The Hon'ble Gujarat High Court in the case of Natvarlal Ambalal Dave's case that: "Merely because a person happens to be a professionally qualified doctor, it cannot be said that such person's activity cannot be treated as an activity of carrying on business. A professional activity can also be characterised as an activity of carrying on business if it is carried on like a commercial activity." On the similar issue, the Hon'ble Madras High Court in the case of Dr. V.K. Ramachandran held that: "even a professional activity could be tinged with a commercial character if the indicia of commerce are manifest in it. The way in which the assessee carried on the Ex X-ray activity was in no way different from a non-qualified person carrying on a radiological institute. The mere fact that a professional man had, as an adjunct to his professional activities, such an institute did not disable him from running it as a commercial venture and earni....