Pramendra Maheshwari (HUF), Bareilly V. Income Tax Officer, Bareilly

ITA 177/LKW/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1089 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-03-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 08-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C A K SINGH
• Assessee Lawyers: J J MEHROTRA
• Keywords: Business income; Capital expenditure
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 177/LKW/2017 ASSESSMENT YEAR: 2013 - 14 PRAMENDRA MAHESHWARI (HUF) BEHIND SHRI GANGA CHARAN HOSPITAL RAMPUR GARDEN BAREILLY V. INCOME TAX OFFICER RANGE 2(1) BAREILLY T AN /PAN : AAGHP7471 (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI J.J. MEHROTRA, FCA RESPONDENT BY: SHRI C.A.K. SINGH, D.R. DATE OF HEARING: 13 0 3 201 8 DATE OF PRONOUNCE MENT: 19 0 3 201 8 O R D E R PER P ARTHA SARATHI CHAUDHURY, J.M : THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), BAREILY DATED 19/12/2016 ON THE FOLLOWING GROUNDS OF APPEAL: - 1 . THAT THE ID. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE ACE IN CONFIRMING THE PENALTY LEVIED U/S 271B OF THE INCOME TAX ACT, 1961. 2 . THAT THE ID. COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT THE APPELLANT IS AN HUF AND THE FACT THAT AN H UF CANNOT CARRY ON ANY PROFESSIONAL ACTIVITY AS THE SAME REQUIRES PROFESSIONAL SKILL(S). ITA NO.177/LKW/2017 PAGE 2 OF 5 3 . THAT THE ID. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN HOLDING THAT THE APPELLANT HUF WAS CARRYING ON A PROFE SSION. 4 . THAT IN ANY VIEW OF THE MATTER, THE PENALTY CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IS UNJUSTIFIED, UNCALLED FOR AND LIABLE TO BE DELETED. 5 . THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR WITHDRAW ANY OR ALL GROUNDS OF APPEAL AT ANY TIME ON OR BEFORE THE DATE OF HEARING. 2 . AT THE OUTSET WE FIND THAT THE APPEALS IS TIME BARRED BY 3 DAYS AND THERE IS A CONDONATION PETITION FILED BY THE ASSESSEE. WE ARE CONVINCED WITH THE GROUNDS CONTAINED IN THE SAID CONDONATION PETITION AND THEREFO RE WE CONDONE THE DELAY IN FILING OF THE APPEAL AND ADMIT THE APPEAL FOR HEARING. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN HINDU UNDIVIDED FAMILY ( HUF). THE ASSESSES IS RUNNING CT SCAN CENTRE IN THE NAME AND STYLE AS GANGA CHARAN CT SCAN CE NT RE. THE ASSESSEE IS NOT A QUALIFIED DOCTOR. THE REPORT OF CT SCAN IS GIVEN BY A QUALIFIED DOCTOR FOR WHICH PROFESSIONAL CHARGES ARE PAID TO HIM. HOWEVER THE KARTA OF HUF IS A QUALIFIED DOCTOR BUT HE IS NOT A RADIOLOGIST AND NOT PROVIDING ANY SERVICE TO THE ASSESSEE AS DOCTOR. THE ASSESSES FILED THE RETURN OF INCOME SHOWING AN INCOME OF RS. 13,00,824/ - HAV ING GROSS RECEIPTS OF RS.5 9,66,65 0/ - . THE ASSESSING OFFICER I.E. INCOME TAX OFFICER, WARD 2(1), BAREILLY HAS IMPOSED THE PENALTY U/S 27 1 B FOR NOT GE TT IN G THE ACCOUNTS AUDITED UNDER SECTION 44AB ( 1 )(B) OF THE ACT BEING PROFESSIONAL RECEIPTS MO RE THAN RS. 10 LA KH S. THE ASSESSEE FILED THE REPLY AND WRITTEN SUBMISSION. ITA NO.177/LKW/2017 PAGE 3 OF 5 4 . WHEN THE MATTER WAS TAKEN IN APPEAL BEFORE THE LD. CIT(A), ASSESSEE STATES THAT PATIENT COME S FOR CT SCAN AND DEPOSIT THE CHARGES OF CT SCAN . CT SCAN IS DONE BY CT TECHNICIAN UNDER THE SUPERVISION OF RADIOLOGIST . CT SCAN FILM IS SHOWN TO THE RADIOLOGIST WHO PRE PARES THE REPORT AND SIGNS IT AND THEN THE REPO R T IS HANDED OVER TO PATIENTS. THE RE TURN IS FILED AS AN HUF AND HUF IS DOING BUSINESS OF CT SCAN CENTRE IN THE NAME AND STYLE AS STATED HEREINABOVE. THE HUF DEFINITELY CANNOT BE A PROFESSIONAL. THE DEFINITION OF PROFE S SION UNDER SECTION 2(36) DEFINES THE WORD PROFESSION INCLUDES VOCATIO N. THE WORD PROFESSION IS WIDER THAN BUSINESS. WHAT MAY NOT AMOUNT TO BUSINESS MAY AMOUNT T O PROFESSION AND WHAT MY NO T AMOUNT TO PROFESSION MAY AMOUNT TO VOCATION AND WHAT MAY NO T AMOUNT TO VOCATION MAY AMOUNT TO OCCUPATION ( LA LA INDRA SEN, IN RE (1940 ) 8 ITR 187 ; D MALICK V CIT (1986) 67 ITR 616 (ALL) ) . A PROFESSION IN T HE PRESENT USE OF LANGUAGE INVOLVES THE IDEA OF AN OCCUPATION REQUIRING EITHER PURELY INTELLECTUAL SKILL OR IF ANY MANUAL SKILL, AS IN PAINTING AND SCULPTURE OR SURGERY, SKILL CONTROLLE D BY THE INTELLECTUAL SKILL OF THE OPERATOR, AS DI STINGUISHED FROM AN OCCUPATION WHICH IS SUBSTANTIALLY THE PRODUCTION OR SALE OR ARRANGEMENTS FOR THE PRODUCTION OR SALE OF COMMODITIES (CIT VS . MAN MOHA N DAS ( 1 966) 59 ITR 699 710 (SC) ) . ALL PROFESSIONS ARE BUSINESS BUT ALL BUSINESS ARE NOT PROFESSION. ONLY THOSE BUSINESS ARE PROFESSION THE PROFITS OF WHICH A R E DEPENDENT MAINLY UPON THE PERSONAL QUALIFICATIONS AND IN WHICH NO CAPITAL EXPENDITURE IS REQUIRED OR ONLY CAPITAL EXPENDITURE OF A COMPARATIVELY SMALL AMOUNT (P ST ANWILL & CO. CIT (1952) 22 ITR 316 (ALL). 5 . THE ASSESSEE FURTHER SUBMITTED THAT A MEDICAL PRACTI TI ONER RUNNING A NURSING HOME IS AN ILLUSTRATION OF PROFESSIONAL MAN CARRYING ON BUSINESS ACTIVITY (DR P VADAALAYAN VS CIT (1969) 74 ITR 94 (MAD). S IMILARLY, IN THE CASE OF MEDICAL PRACTITIONER RECEIVING INCOME FROM USE ITA NO.177/LKW/2017 PAGE 4 OF 5 OF X - RAY MACHINE (S. MOHAN LAL VS. R. KONDIAH AIR 1979 SC 1132). IN THE CASE OF C I T V. UPASANA HOSPITAL (199 7 ) 225 JTK 852 (KER), IT WAS HELD THAT WHEN A MEDICAL PRACTITIONER WITHOUT CONFINING HIMSELF TO HIS CONVENTIONAL FUNCTION OF EXAMINING PATIENTS AND PRESCRIBING MEDICINES ESTABLISHES AN X - R AY PLANT AND MACHINERY FOR AUGMENTING HIS PROFESSIONAL WORK, IT CANNOT BE SAID THA T HE HAS NO PROFIT MOTIVE IN SUCH ADVENTURE. THAT MEANS HE I S C ARRYING ON A BUSINESS ACTIVITY . SIMILARLY, CT SCAN CENTRE OF THE ASSESSEE, IT WAS ARGUED THAT, IS FOR BUSINESS AND NOT FOR PROFESSIONAL AND THE ACCOUNTS ARE AUD ITED UNDER SECTION 44AB(1)(B) IS NO T COMPULSORY ON THE GROSS TURNOVER EXCEEDING RS.10 LAKHS AND, THEREFORE, PENALTY UNDER SECTION 271B MAY BE DELETED. 6 . THE LD. CIT(A) AFTER CONSIDERING THE WRITTEN SUBMISSIONS OF THE ASSESSEE AND ASSESSMENT ORDER WAS NOT CONVINCED WITH THE SUBMISSION OF THE ASSESSEE AND AS PER REASONS APPEARING IN HIS ORDER WHICH I S ON RECORD, UPH E LD THE FACT THAT ASSESSEE IS CARRYING ON PROFESSION AND, THEREFORE, SINCE THE ACCOUNTS WERE NOT AUDITED, PENALTY UNDER SECTION 271B WAS UPHELD. 7 . WE HAVE PERUSED THE CASE RECORDS, ANALYSED THE FACTS AND CIRCUMSTANCES OF THE CASE AND WE FIND THAT IN THE BALANCE SHEET ON THE FIXED ASSET SIDE THERE ARE MENTION OF VARIOUS MACHINES LIKE CT SCAN MACHINE, GENERATOR AND STABILIZER WHICH CLEARLY DEMONSTRATES THAT INVESTMENT DONE ON MACHINERY FOR THE PURPOSE OF RUNNING CT SCAN CENTRE AND INVESTED TO EA RN PROFIT FROM THE ADVENTURE UNDERTAKEN. THE ACTIVITIES DEMONSTRATED CLEARLY SHOWS THAT A CHARGE IS TAKEN FROM THE PATIENTS AND CT SCAN IS DONE BY A CT TECHNICIAN UNDER THE SUPERVISION OF A RADIOLOGIST AND ULTIMATE REPORT AND SIGN IS DONE BY THE RADIOLOGI ST. THE ASSESSEE IS RUNNING CT SCAN CENTRE AND HAS MADE ESTABLISHMENT WHERE PEOPLE ARE GETTING TREATMENT FROM QUALIFIED PERSON AS IN THE CASE ITA NO.177/LKW/2017 PAGE 5 OF 5 OF A BUSINESS CENTRE. THE RETURNS HAVE BEEN FILED ALL THROUGHOUT AS HUF BEFORE THE DEPARTMENT AND AS BUSINESS IN COME OF THE HUF. ON THE SIMILAR FACTS FOR THIS YEAR THERE CANNOT BE ANY DEVIATION AND STATUS QUO OF BUSINESS INCOME HAS TO BE MAINTAINED. MOREOVER, WHEN WE HAVE EXAMINED THE BALANCE SHEET AND PROFIT & LOSS ACCOUNT OF THE ASSESSEE WHEREIN IT IS CLEARLY DE MONSTRATED ESTABLISHMENT OF BUSINESS CENTRE AND ASSESSEE IS FACILITATING AND ARRANGING THAT CENTRE ONLY TO EARN PROFIT. THIS IS BASIC TENDENCY OF BUSINESS. THEREFORE, ON THESE FINDINGS WE HOLD THAT THE ACTIVITIES ARE OF BUSINESS IN NATURE AND NO PROFESSI ON. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT DELETION OF PENALTY UNDER SECTION 271B OF THE ACT. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 / 0 3 / 201 8 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SARATHI CHAUDHURY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 19 TH MARCH , 201 8 JJ: 1303 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR