High Court Of Allahabad
Dr. K.P. Srivastava vs. CIT
Section 69
Sudhir Narain & D.P. Gupta, JJ.
IT Ref. No. 103 of 1994
24th April, 2003
Counsel Appeared
V.B. Upadhyaya, for the Assessee : A.N. Mahajan, for the Commissioner
JUDGMENT
BY THE COURT :
The Tribunal has referred the following nine questions purported to arise from the order of the Tribunal in ITA Nos. 4037, 4738 and 4737/Delhi of 1988 for the asst. yrs. 1983-84, 1984-85 and 1985-86. “1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that income derived by Shri Bhagwan Prasad from running the nursing home was the income of the assessee ? Whether, on the facts and circumstances of the case, the Tribunal was correct in law in holding that the nursing home could be run only by a qualified doctor ?Whether, on the facts and circumstances of the case, the Tribunal had any material to hold that the assessee was paying only rental for beds and equipments of the nursing home and in further holding that the nursing home was run by the assessee ? Whether, on the facts and circumstances of the case, the Tribunal was correct in holding that income from running the physiotherapy centre did not represent the income of Smt. Shobha Srivastava but was the income of the assessee ? Whether, on the facts and circumstances of the case, the Tribunal came to a correct conclusion that income from the physiotherapy centre could be derived only by a professionally qualified physiotherapist ? Whether, on the facts and circumstances of the case, the Tribunal was correct in holding that the income from operation of the x-ray machine did not belong to Shri Sanjay Srivastava but was the income of the assessee ? Whether, on the facts and circumstances of the case, the Tribunal was correct in holding that income from the operation of x-ray machine could belong to a qualified doctor only ? Whether the Tribunal was legally correct in holding that the operation of x-ray machine, the physiotherapy centre and the nursing home were carried on under the control and supervision of the assessee ? Whether, on the facts and circumstances of the case, the Tribunal had any material to give directions for the computation of income of the assessee by including income earned by the wife, the father and the son in his hands by , merely allowing hire charges and expenses relating to various assets and equipments ?” Many of the questions referred to above relate to the question of fact but a finding can be challenged when it is based on irrelevant consideration or material evidence has been ignored or there is misreading of any material evidence. In this respect questions Nos. 2, 3, 4 and 6 require consideration.
The assessee in the relevant assessment years was a reader in the Orthopaedic Department of S.N. Medical College, Agra. He was carrying on his practice as Orthopaedic Surgeon at Agra. He was assessed up to the asst. yr. 1982-83 on the salary as a reader as well as from his profession as surgeon. The Department carried out search operation at his residence on 6th Sept., 1985. The statements of the assessee, his wife, Smt. Shobha Srivastava, and his father, Bhagwan Prasad, were recorded and certain documents were also seized though no assets or money was seized by the search party. A nursing home was being run for the patients of the assessee and the assessment of its income was made in the hands of the father of the assessee, Shri Bhagwan Prasad, for the asst. yrs. 1979-80 to 1981-82. For the asst. yr. 1982-83, the income from the nursing home was assessed in the hands of Bhagwan Prasad. The physiotherapy centre was run by the wife of the assessee from 24th Jan., 1981, the income of which
was assessed in the hands of Smt. Shobha Srivastava. The assessments on the father and the wife were made on
2nd July, 1981, and 6th Nov., 1981, respectively.
The ITO proceeded to estimate the professional income of the assessee consequent to the search made by him and held that the income earned from the nursing home called “Fracture and Orthopedic Centre” which was shown in the hands of Shri Bhagwan Prasad, the father of the assessee, and the income from physiotherapy centre shown in the hands of Smt. Shobha Srivastava and income from x-ray machine shown as belonging to the son, Shri Sanjay Srivastava was includible in the hands of the assessee. He took the view that none of these persons has any professional or technical qualification for running the various activities and they could not have any income of their own.
The assessee preferred appeal before the CIT(A). The CIT(A) deleted, vide his order dt. 21st April, 1988, inclusion of income of father, wife and his son in the hands of the assessee. He came to the conclusion that the assessee was a whole-time employee of the Government and he left very little time to look after several activities like running of nursing home, physiotherapy centre and x-ray clinic. He also noted that the father had engaged two whole-time doctors who were paid regularly for this purpose. The assessee was paid operation charges only. The operations were done only by professional doctors. He further came to the finding that the investment in the nursing home was made by the father out of his personal resources which was received by him when he retired from the Government service. He relied upon the books of account, cash books, ledger maintained by them. He also took note of the fact that the hiring charges of the rooms and the account with the bank was also in the name of the father of the assessee. He considered many documents seized at the time of search and observed that the wife had some experience in physiotherapy work though she was not professionally qualified but had engaged a technical person and had also a doctor for this purpose. She had made certain investment in the physiotherapy centre by sale of jewellery. In regard to x-ray clinic he found that the son had purchased these machines from his mother.
The Department preferred an appeal before the Tribunal and the Tribunal took the view that the wife, father and son of the assessee were not professionals and, therefore, they could not own and manage the nursing home and the income derived from them should be treated as the income of the assessee.
An application was filed for making reference against the order of the Tribunal to this Court. The Tribunal has referred the above noted questions.
We have heard Sri V.B. Upadhyaya, learned senior counsel appearing on behalf of the assessee, and Sri A.N. Mahajan, learned counsel appearing on behalf of the Department.
The questions, which have been referred to above, relate to the correctness of the finding on the ground that the Tribunal has taken into account irrelevant consideration and ignored certain material evidence on the record and that vitiated its finding. Question No. 2 is whether, on the facts and circumstances of the case, the Tribunal was correct in law in holding that the nursing home could be run only by a qualified doctor ? The observation of the Tribunal is as follows : “We have given our very careful consideration to the rival submissions. The undisputed fact is that other than the assets, his father, his wife and son are not professionally trained to assist the doctor carrying on the medical profession. There could be no restriction whatsoever in the father acquiring various equipments, etc., for running of a nursing home employing assitants, having doctors on the rolls for looking after the patients. The assessee had not placed any norms for establishing of a nursing home that it could be run by persons other than qualified doctors.” (emphasis’ supplied) It is not essential that the persons who are proprietor of the nursing home should also be doctors. It is admitted that the father had employed doctors who were looking after the patients and doing necessary surgery. The finding which is based on this finding is legally erroneous. The finding is based on partly relevant and partly on irrelevant considerations. Such finding cannot be supported under the law. In Dhirajlal Girdharilal vs. CIT (1954) 26 ITR 736 (SC), it has been held that if the Court of fact whose decision on a question of fact is final, arrives at the decision by considering material which is irrelevant to the inquiry, or, by considering material which is partly relevant and partly A irrelevant, or bases its decision partly on conjectures, surmises and suspicions, and partly on evidence, then in such a situation clearly an issue of law arises and the finding recorded on irrelevant consideration cannot be upheld under law.
The other questions in regard to running of physiotherapy centre, x-ray machine and income from rental from beds were related with each other. The assessee had given evidence and such evidence was relied upon by the CIT(A) and unless those evidence are considered in the light that it can be owned by the father, the son and the wife, though they are not professionals, the findings cannot be sustained. It is made clear that we have not expressed our final opinion in regard to any finding which is to be recorded by the Tribunal afresh keeping in view the observation made above.
Our answer to question No. 2 is that the Tribunal was not correct in holding that the nursing home can be run only by qualified doctors and as questions Nos. 3, 4, 5 and 6 can be reconsidered on the light of answer on question No.
2. The matter is directed to be considered again by the Tribunal keeping in view of our answer to question No. 2.
The parties shall bear their own costs.
[Citation : 262 ITR 299]
