Kety Medicare Centre Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that presumptive taxation scheme under section 44AD of the Income Tax Act is duly applicable to nursing home since the assessee cannot be classified as a ‘person’ engaged in the ‘medical profession’.
Facts- The assessee is a partnership firm operating a nursing home under the name “Kety Medicare Centre.” A survey was conducted under Section 133A of the Income Tax Act on 08/03/2019. During the survey, it was discovered that the assessee had suppressed its receipts. The statement of one of the partners, Dr.A.S. Poona Wala, was recorded, wherein he admitted to an additional income of Rs.86,25,000/- due to the suppression of receipts for the relevant financial year. Subsequently, the assessee filed its return, declaring a total turnover of Rs.1,40,15,090/-. The profit was reported u/s. 44AD of the Act at a rate of 8.9% of the turnover, amounting to Rs.12,47,373/-.
During the assessment proceedings, AO considered the recorded statement of the partner, and added back the undisclosed income of Rs.86,25,000/-. Dissatisfied with the assessment order, the assessee filed an appeal before CIT(A), which was ultimately dismissed. Aggrieved by the decision, the assessee has now filed an appeal before us.
Conclusion- Held that the provisions of Section 44AD do not apply to individuals engaged in the medical profession. However, it is submitted that the assessee is a partnership firm providing services such as patient room rentals, X-ray facilities, and other ancillary inpatient department (IPD) services. The income generated from doctors’ fees is separately declared by the respective doctors in their individual tax returns. Therefore, the assessee cannot be classified as a ‘person’ engaged in the ‘medical profession.’ We respectfully rely on the rulings in K. K. Shah and Shalini Hospitals, which support this position. Accordingly, the turnover of the assessee firm should not be considered as professional income.
