Sethuraman, J.:— The following questions have been referred to this court under s. 256(1) of the Act, 1961:

“(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal Was right in holding that there was a commercial activity amounting to business and that the assessee is entitled to development rebate on X-ray equipment? and

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was within its jurisdiction in finding that the provisions of section 154 would not apply to the assessee's case?”

2. The assessee is a medical practitioner having taken a post-graduate degree. For the assessment year 1972-73, he claimed development rebate on X-Ray machines Amounting to Rs. 13,013. The machinery had been purchased on 18th February, 1972, at a cost of Rs. 86,754 and was installed in the relevant assessment year and used in the same year. The ITO allowed the claim for development rebate. Later on, he purported to rectify the assessment order by taking proceedings under s. 154 on the ground that there was a mistake apparent from the record. The assessee objected to the rectification proceedings and contended that there was no mistake apparent from the record. After overruling this objection, the ITO passed a rectification order on 17th December, 1973, disallowing the development rebate originally granted in the assessment. The assessee appealed to the AAC who allowed the appeal, relying on a decision of this court in Dr. Dr. P. Vadamalayan… v. The Commissioner Of Income Tax, Madras…., [1969] 74 ITR 94. He pointed but in the course of his order that the total receipts from the X-Ray pictures came to Rs. 77,265 and a sum of Rs. 28,346 had been spent as and by way of expenses on X-Ray films, chemicals, etc. The assessee had also incurred expenses by way of salaries and bonus to technicians amounting, to Rs. 4,564. Taking into account these facts, the AAC came to the conclusion that the assessee was indulging in a commercial activity. He, therefore, held that the disallowance of development rebate by the order under s. 154 was wrong. The ITO appealed to the Tribunal. The Tribunal held, on the facts found by the AAC, that the activities as regards the X-Ray amounted to a business and for this purpose, the Tribunal followed the decision of this court in the case of Dr. Vadamalayan, [1969] 74 ITR 94. In the view of the Tribunal, there could be two possible views in a case of this kind and, therefore, s. 154 was not applicable. The result was that the Tribunal confirmed the order of the AAC. The questions arising from this order of the Tribunal have been referred to this court. The present case could have been disposed of by a mere reference to a Bench decision of this court in Dr. Dr. P. Vadamalayan… v. The Commissioner Of Income Tax, Madras…., [1969] 74 ITR 94. Learned counsel for the Commissioner, however, contended that subsequent to this decision there were certain decisions of the Supreme Court which would be required to be taken into account and that the matter required consideration in the light of those judgments. In deference to his argument, we proceed to consider the matter afresh.

3. In Bangalore Water Supply and Sewerage Board v. A. Rajappa, (1978) 2 SCC 213 : AIR 1978 SC 548, the Supreme Court was concerned with the question whether the Bangalore Water Supply Board and certain other entities could be considered to be an industry within the meaning of the Industrial Disputes Act so that the provisions of that Act could apply to those institutions. The court considered the case of a hospital, a university, a library, a service club, a local body, a research institute, a pinjarapole, a chamber of commerce and a Gandhi ashram. All these were taken to be industries to which the provisions of the Industrial Disputes Act applied. Section 2(j) of the Industrial Disputes Act defines “industry” as meaning: “any business, trade, undertaking, manufacture, or calling of employers and including any calling, service, employment, handicraft or industrial occupation or avocation of workmen”. Having regard to the wide definition of the word, the Supreme Court held that the institutions described above would all come within the scope of an industry. In the course of the judgment, in para. 154, at page 593, Krishna Iyer J., who delivered the leading judgment, referred to the decision in Safdarjung Hospital's case. (1970) 1 SCC 735 : AIR 1970 SC 1407, and to the observations of Hidayatullah C.J therein, wherein the learned Chief Justice has stated that trade and business have a wide connotation. In the course of that judgment, Hidayatullah C.J observed (p. 1413): |

“A profession ordinarily is an occupation requiring intellectual skill, often coupled with manual skill. Thus, a teacher uses purely intellectual skill while a painter uses both. In any event, they are not engaged in an occupation in which employers and employees co-operate in the production or sale of commodities or arrangement for their production or sale or distribution and their services cannot be described as material services.”

4. Krishna Iyer J. was not prepared to agree with these observations and it was stated that where there was systematic activity organised by cooperation between the employer and the employees for production of goods and services calculated to satisfy human wants and wishes, prima facie there was an industry in that enterprise and that the true focus was functional and the decisive test was the nature of the activity with special emphasis on the employer employee relations, and if the organisation was a trade or business it did not cease to be one because of philanthropy animating the undertaking. The result was that the distinction between a trade and a profession was practically annihilated in view of the definition. Learned counsel for the Commissioner contended that this result followed because of the particular definition in the Industrial Disputes Act.

5. Assuming that the result that follows from the judgment of the Supreme Court has to be attributed only to the language of the provision, then it would not be a proper guide for construing the provisions of a different enactment where there is no statutory definition. Therefore, we do not consider that this decision, in any manner, requires the earlier decision of this court to be reconsidered. On the other hand, this very decision would support the view that even a professional activity can be tinged with a commercial character if the indicia of commerce are manifest in it. Thus, this decision, far from conflicting with the decision of this court, in a way supports it.

6. In S. Mohan Lal v. R. Kondiah., (1979) 2 SCC 616 : AIR 1979 SC 1132, the Supreme Court, in applying the provisions of the Andhra Pradesh Buildings (Lease, Rent and Eviction) Control Act (15 of 1960), held that the expression “business” was used in the said Act in a wide sense so as to include the practice of the profession by an advocate. It was only on that basis that when an advocate required the premises for his occupation he was granted a decree for eviction in respect of non-residential premises. Thus, this decision also shows that in appropriate cases the distinction between business and profession would get blurred as a result of the contextual requirements of the statute. Learned counsel for the Commissioner contended that s. 28 contemplated a dichotomy between a business and a profession as the two expressions have been separately used in the said section and it shows that the Legislature contemplated the two being different. We consider that this argument does not take him any far. It is possible for a professional man to have a business or for a businessman to have a profession. Therefore, what we have to consider is the nature of the activity rather than any abstract construction of the term “business” or “profession”.

7. In Dr. Dr. P. Vadamalayan… v. The Commissioner Of Income Tax, Madras…., [1969] 74 ITR 94 (Mad), there are passages which throw light on this question of a professional man having a business. At page 96, the learned judges observed:

“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.”

8. At page 99, the learned judges again observed:

“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.”

9. At page 100, the following passage occurs;

“Giving, therefore, a wide connotation to the word ‘business’ we are of the view that if 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.”

10. We are in respectful agreement with each one of these passages. It is in the light of this legal position that we have to consider the facts of the present case. The AAC has pointed out the nature of the activity carried on by the assessee. He has pointed out also the total receipts and the receipts from the X-Ray pictures. He has also referred to the expenditure involved in the purchase of X-Ray films, chemicals, salary and bonus to technicians and electricity charges. The way in which this activity is carried on is in no way different from a non-qualified person carrying on a radiological institute. The mere circumstance that a professional person has, as an adjunct to his professional activities, such an institute does not disable him from running it as a commercial venture and earning income therefrom. For instance, a medical practitioner can have a medical shop in which medicines are sold not only to his patients, but also to others who come and ask for them. In such a case, it cannot be gainsaid that he was carrying on a trade as such. In this case, there is no finding that the persons who came and took X-ray photographs were only the assessee's own patients and that he carried on the activity of X-Ray photography in a manner restricted as an aid for diagnosis of his own cases. Just as an unqualified person could carry on such a radiological institute and have the benefit of development rebate, similarly a professional person who carries on such an institute as a commercial activity would be entitled to development rebate. The Tribunal has, in the present case, given a finding that the assessee has been carrying on the business as a commercial activity. In view of this and in the light of the above reasoning, we would answer the first question in the affirmative and in favour of the assessee.

11. The second question raises the point as to whether there was a mistake apparent from the record. Learned counsel for the Commissioner took quite some time before us in arguing this matter. This clearly goes to show that the point is a debatable one and, therefore, it is not a mistake apparent from the record. The result is that the second question is also answered in the affirmative and in favour of the assessee. There will be no order as to costs.