RAVI KANWAL NURSING HOME PVT. LTD.,BAREILLY vs. INCOME TAX OFFICER-2(3), BAREILLY

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ITA 770/LKW/2016Status: DisposedITAT Lucknow26 April 2019AY 2013-143 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the nursing home, being a private limited company, was engaged in business activities and not professional activities. Since its turnover was below the limit for business audit under Section 44AB(b), the penalty was not justified.

What were the facts?

The assessee, a private limited company running a nursing home, was penalized under Section 271B for not auditing its accounts. The Assessing Officer and CIT(A) held that the company's receipts exceeded the threshold for professional activities under Section 44AB(a).

What were the issues?

Whether a nursing home run by a private limited company is considered a professional activity or a business activity for the purpose of audit requirements under Section 44AB.

Which sections of the Income-tax Act were involved?

Section 271B,Section 44AB(a),Section 44AB(b)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, LUCKNOW BENCH ‘B’, LUCKNOW

Before: SHRI A. D. JAIN & SHRI T. S. KAPOOR

For Appellant: Shri Ashish Raj Shukla, Advocate
For Respondent: Shri C. K. Singh, D.R
Hearing: 22/04/2019Pronounced: 26/04/2019

PER T. S. KAPOOR, A.M.

This is an appeal filed by the assessee against the order of learned CIT(A), Bareilly dated 18/10/2016 pertaining to assessment year 2013-14. This appeal was earlier dismissed for non prosecution on 10/05/2018. However, the order dated 10/05/2018 dismissing the appeal of the assessee ex-parte was recalled vide order dated 18/01/2019 and now the appeal has been refixed for hearing the grounds on merits.

2.

In this appeal the only ground taken by the assessee is the action of learned CIT(A) by which he has upheld the penalty imposed by the Assessing Officer u/s 271B of the Act.

I.T.A. No.770/Lkw/2016 Assessment Year:2013-14 2

3.

Learned A. R. submitted that assessee is a private limited company which is engaged in running of a nursing home and Assessing Officer imposed the penalty u/s 271B of the Act by holding that the total receipts declared by the assessee exceeded the minimum amount which required the accounts to be audited u/s 44AB(a) of the Act. Learned A. R. in this respect submitted that assessee itself was not engaged in professional activities and rather it was running a business in the form of a private limited company therefore, the provisions of section 44AB(b) of the Act were applicable and the turnover limit for that year under consideration was Rs.60 lacs as against the turnover of Rs.54,45,940/- declared by the assessee. It was submitted that the authorities below have wrongly assumed that the assessee was engaged in professional activities whereas the company itself did not possess any professional qualification and therefore, the penalty should not have been levied.

4.

Learned D. R., on the other hand, relied on the orders of the authorities below.

5.

We have heard the rival parties and have gone through the material placed on record. We find that assessee is a private limited company which is engaged in providing medical facilities through engagement of professional doctors. The receipts of the assessee were Rs.54,45,940/-. The authorities below have held that this was the professional activity of the assessee and therefore, the assessee was liable to penalty for not getting its accounts audited as the turnover exceeded the limit mentioned in section 44AB(a) of the Act. However, we find that assessee itself did not possess any professional degree and rather it was engaged in commercial activities. There is difference between business and profession. For carrying on a profession, possession of some professional qualification is must. From the qualification we mean that there must be some special training of particular

I.T.A. No.770/Lkw/2016 Assessment Year:2013-14 3

skill which involve high level education. The company in itself cannot be said to be having any professional qualification or education. It was running only with a motive to earn profit through engagement of specialized doctors and with the help of plant & machinery. Therefore, the assessee company cannot be said to be engaged in professional activities and rather it is held to be engaged in business activities. Therefore, the provisions of section 44AB(a) will apply for determining the amount of limit required for audit of accounts. The turnover limit for the year under consideration was Rs.60 lacs and the turnover of the assessee was Rs.54,45,940/- therefore, the assessee was not liable to get its accounts audited and therefore, the penalty imposed and sustained by learned CIT(A) u/s 271B is not justified and hence it is deleted.

6.

In the result, the appeal of the assessee stands allowed.

(Order pronounced in the open court on 26/04/2019)

Sd/. Sd/. ( A. D. JAIN ) ( T. S. KAPOOR ) Vice President Accountant Member

Dated:26/04/2019 *Singh

Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. The CIT(A) 5. D.R., I.T.A.T., Lucknow Assistant Registrar

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