VADAMALAYAN P DR Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assesses is a Doctor and a leading Surgeon who is practising his profession at Madurai and also maintaining and running a Nursing Home. In the year of account he installed a Combination Sterilizer at a cost of Rs. 16,090/- and an equipment called the Major Surgical Luminaire at a cost of Rs. 8,065/-, THEse new items of plant were wholly utilised by the 'assessee for the activities indulged in by him. He claimed development rebate under Section 10(2)(vi)(b) of the Indian Income-tax Act, 1922, in respect of the above plant. He was unsuccessful before the Revenue. THE Tribunal on second appeal found that the assessee was running a Nursing Home as part of his profession and could not therefore, classify his income under the head 'income from business', held it was income from his profession and disallowed the claim for development rebate. On the assessee requiring the Tribunal to refer the question of law arising out of Its order, the following question has been referred to us to render our opinion thereat:

(2.) THE problem confronting us is indeed a nice one, at once interesting and attractive- No doubt, the learned professions of Medicine. Law and THEology enfold into their conclave only members who practise" such professions as a vocation and not as a trade. But in these days of advanced science and ebullient developments commensurate with the need of the community, society and country, a centrifuged activity though related to a profession as such, may not , in a given case be interpreted as a wooden exercise thereof, if other compelling and surrounding circumstances need an expansive understanding of it in a commercial way. An expert professionalist if he has the inclination capacity and zeal to expand his activities may do so. As a result whereof he might tread into the arena of business activity. Such a composite activity, is conceivable and indeed is plausible in modern days. No doubt, no decisive test can be laid down but the multitude of incidents haloing the same might reflect on the true nature of the vocation. If therefore, an expert equips himself, as in this case, with plant and machinery with which he. with the aid of his professional skill and in collaboration with qualified assistants, is able to turn out an activity which is not strictly a professional activity but savours of a commercial activity as well, is it to be understood still that he is mechanically exercising his profession. We think, not. Any kind of commercial activity telescoped to professional activity ought to be understood as a business, as is popularly, understood. In such circumstances, it may be that the business aspect of the activity springs from the professional activity of the person concerned and is irretrievably connected with it. Nevertheless, if it is, said that if there is an organic and composite activity and if there is a merger of professional skill with trading or business, the poser to be answered is whether the combined endeavour results in emoluments, though not strictly termable as profits, are really gains in the shape of profits. If the answer is in the affirmative, it is a business at it is the outcome of combined efforts. 'As Chagla, C. J., said in C. I. T. v. Sri Homi Mehta's Executors, :

(3.) IN the "ultimate analysis and after noticing' the features of the instant case and after weighing the combined efforts of the doctor, we are unable to agree with the conclusion reached by the Revenue and the Tribunal. Though prima facie the finding is a question of fact, yet the question whether an activity is a business or not under the INdian INcome-tax Act as defined in Section 2(4), is undoubtedly a question of law and this Court is entitled to set aside the same, if the conclusion reached by the Tribunal is unreasonable (See Edwards v. Bairstow and Harrison, 1956 AC 14). We find that the plant installed having' been admittedly used wholly for the purpose of the combined activities of the assessee, which we characterise as a business; the assessee is entitled to the development rebate as claimed.