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:
"Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was not entitled to claim development rebate of Rs. 6,380/- under Section 10(2) (vi) (b) of the Income-tax Act, 1922?"
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, :
".....in trying to determine whether a certain transaction resulted in profits, we must come to a conclusion that the transaction resulted in real profit, profits which from the commercial point of view meant a gain to the person who entered Into the transaction, not profits from any narrow, technical or legalistic' point of view."
Apart from this, if an assessee who is a professional and an expert, contemporaneously carries on a trade which is annexed to the exercise of such a profession and if by doing so. he can take advantage of a provision in the fiscal Act by claiming an allowance or rebate, and if such a claim carries a lighter burden of tax, then he has the right to take advantage of the same. '
3. ' The term 'business' as used in the fiscal statute, cannot ordinarily be understood in its etymological sense. 'Business' has been defined in Section 2(4) but not profession, though for fiscal purposes, a distinction is sought to be made in the Act. The definition of 'business' being an, inclusive definition 'and not being exhaustive, is indicative of extension and expansion and not restriction. According to the Shorter Oxford Dictionary, 'business' includes a stated occupation, profession or trade; profession in a wide sense means any calling or occupation by which a person habitually earns his living. Even so, 'trade' is explained as the practice of some occupation, business or profession- habitually carried on. As is not unusual, several jurists and eminent Judges while attempt-Ing to define the limits of one or the other of the words business, profession and trade entered the "labyrinth together but made exits by different paths". The Supreme Court in Narain Swadeshi Weaving Mills v. Commissioner of Excess Profits Tax, , said that the word 'business' connotes some real, substantial and systematic or organised course of activity or conduct with a set purpose. Venkatarama Aiyar, J., speaking for the Court in Mazagaon Dock Ltd. v. Commissioner of Income-tax, explained 'business' as a word of wide import and In fiscal statutes it must be 'construed In a broad rather than a restricted 'sense. Held the Supreme Court in Lakshminarayan Ram Gopal v. Government of Hyderabad. :
"The activities which constitute carrying on business need not necessarily consist of activities by way of trade, commerce or manufacture or activities in the exercise of a profession or vacation. They may even consist of rendering services to others which services may be of a variegated character".
Jessel, M. R., in Smith v. Anderson, (1880) 15 Ch D 247 at p. 258 agreed with the dictionary meaning of the word as anything which occupies time and attention and labour of men for the purpose of profit or improvement. Rowlatt, J., in Christopher Barker & Sons v. Inland Revenue Commissioners, (1919) 2 KB 222 was of the view that all professions are businesses, but all businesses are not professions. Reviewing an analogous word 'undertaking' while construing the provisions of the Industrial Disputes Act, the Supreme Court observed in the case popularly known as "Hospital Mazdoor" case State of Bombay v. Hospital Mazdoor Sabha, :
"It is difficult to state definitely or exhaustively the possible attributes the presence of which makes an activity an undertaking within Section 2(j); as a working principle it may be stated that an activity systematically or habitually undertaken for the production or distribution of goods or for the rendering of material services to the community at large or a part of such community with the help of employees is an undertaking. Such an activity generally involves the co-operation of the employer and the employees; and its object is the satisfaction of material human needs. It must be organised or arranged in a manner in which trade or business is generally organised or arranged. It must not be casual nor must it be for oneself nor for pleasure. Thus the manner in which the activity in question is organised or arranged, the condition of the co-operation between employer and the employee necessary for its success and its object to render material service to the community can be regarded as some of the features which are distinctive of activities to which Section 2(j) applies".
Reiterating the above workable test, the Supreme Court in N. V. C. Employees v. Industrial Tribunal, stressed the heed for direct and essential nexus between the capital and labour to constitute industry and observed:--
"In other words, the co-operation between capital and labour or between the employer and the employees which Is treated as a working test in determining whether any activity amounts to an industry, is the co-operation which is directly involved in the production of goods or in the rendering of service. It cannot be suggested that every form or aspect of human activity in which capital and labour co-operate or employer and employees assist each other is an industry. The distinguishing feature of an industry is that for the production of goods or for the rendering of service, co-operation between capital and labour or between the employer and his employees must be direct and must be essential."
Thus a concerted continued activity to render service also would be an industry, analogous to trade or business.
4. It was however, argued for the Revenue that the claim for development rebate by the assessee is not sustainable since the activity of the Doctor cannot be termed as commercial. There are however a variety of circumstances in the instant case which tend to the conclusion that the exercise of the profession by the assessee though for rendering service is yet of a commercial nature.
5. The general monthwar statement of receipts and disbursements disclose that during the assessment year the assessee was expending about 50 per cent of his income, on an average, as his outgoings. Similar details regarding equipmental and profession expenses which include details for salary and bonus paid to his assistants throw considerable light on the commercial nature of the activity. Above all, the assessee claims that he is carrying on a business. Payment of bonus to employees is ordinarily a concept allied to trade. The assessee has shown that he is running a costly establishment employing a big staff and incurring heavy expenditure for running a Nursing Home and earning gains in the shape of profits and on that basis the claim for development rebate is sought to be sustained. The Revenue including the Tribunal was not satisfied that the assessee was running a Nursing Home apart from his profession as a Doctor. The Supreme Court has unreservedly made it clear in that there is no doubt that if an hospital is run by private citizen for profit it would be an undertaking very much like the trade or business in their conventional sense. The conclusion to the contrary by the Revenue as well as the Tribunal is therefore, unsupportable.
6. Mr. Balasubramanlam however, took us through the various sub-clauses of Section 10 of the Indian Income Tax Act, 1922, to sustain that a marked distinction has been made by the Legislature while granting allowances or rebates between business on the one hand and profession or vocation on the other. He also drew various analogies by referring to a sugar chemist in United States v. Harry L. Laws, (1896) 41 Law Ed 151, a herbalist in Robbins Herbal Institute y. Federal Commissioner of Taxation, 32 Com WLR 457 a race horse trainer in Bradfied v. Federal Commissioner of Taxation, 34 Com WLR 1 and a Chartered Accountant in Fraser and Ross v. Sambasiva Iyer, . Analogies may be drawn, but each case has to be decided on its particular merits, regard being had to the variegated activities indulged in by an assessee who at once practises a profession and carries on a business activity as well. No doubt, Section 10(2) (vi) (b) which grants development rebate as prescribed refers only to business and the said allowance can be claimed only in respect of machinery or plant being new, which is installed after March 31, 1954, and which is wholly used for the purpose of the business carried on by the assessee. The wide scope of the inclusive definition of 'business' does not persuade us to accept the argument of the learned Counsel for the Revenue that there, is a deliberate departure in the Act by the inclusion of the word 'business' the clause relating to development rebate and such business should be completely divorced from professional activity. Once it is found that in an individual's professional activity there is inhered in it a trading or business concept as well and is also owned as such by the person, then the conclusion is irresistible that the totality of the vocation has to gain the statutory allowance of development rebate. Even in the United Kingdom at one time, it was felt that if there was such an unison in the two, that is, business and profession, the income from each had to be separated by adopting an actual formula and dealt with as such and concessions granted. Such a doctrine of severability was noticed in Commissioner of Inland Revenue v. Maxse, (19191 12 Tax Cas 41. Webster v. Commissioners of Inland Revenue, (1942) 2 All ER 517 and Neild v. Inland Revenue Commissioners, (1948) 2 All ER 1071. But as the Editor says in Webster v. Commissioners of Inland Revenue, (1942) 2 All ER 517:-
"Now that we have the authority of the House of Lords that even professions have their trade unions, it is clear that the once cherised distinction between a profession and a trade is becoming somewhat blurred."
Such a dichotomy if undertaken or attempted in the instant case, is not useful to the revenue either. We are therefore, left with the argument that the Legislature having omitted profession in Section 10(2) (vi) (b) the claim for development rebate is not sustainable. The obvious fallacy in the argument is that the word 'business' in that clause ought to be understood etymologically and in a restricted sense. This is what the Supreme Court says, ought not to be done. Giving therefore, a wide connotation to the word 'business' we are of the view that if the activity though garbed as profession is really commercial or in any event if the Vocation of the assessee is an admixture of both, then the assessee would be entitled to relief for development rebate as claimed.
7. 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.
8. We answer the question in the negative, but ,in favour of the assessee with costs. Advocate's fee Rs. 250/-.