Proprietor of Institution need not possess a Qualified Professional Degree for applying Provisions of S. 44AD: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Cuttack bench has held that in order to apply the provisions of section 44AD of the Income Tax Act, 1961, there is no requirement that the proprietor of the institution should possess a qualified professional degree.

The assessee was engaged in the medical profession and running a nursing home. The main source of income of the assessee is from the consultancy/services from the treatment of patients which was being given by the doctors/professionals/technicians etc. During the course of assessment proceedings, the Assessing Officer(AO) noted that certain incriminating documents were found and seized from the assessee during the search proceedings. He further noted that the assessee does not submit the books of accounts as mandated under section 44AD of the Income Tax Act.

Before the Tribunal, the assessee submitted that it was not required to maintain any books of accounts and he had filed return as per section 44AD of the Act. It was further contended that the assessee is neither a doctor nor possessed any other professional or technical qualification to be engaged in the medical profession.

The provisions of section 44AD are originally provided to give relief to small taxpayers engaged in any business, except certain businesses provided under section 44AE.

While rejecting the contentions of the assessee, the Tribunal observed that the assessee has maintained various registers and money receipt books containing details of the fee received from patients against the medical services obtained by the patients.

“Therefore, it cannot be said that assessee is not engaged in the medical profession. It is not necessary that the ITAT proprietor of the institution must have a qualified degree. The predominant purpose of service needs to be tested for falling u/s.44AA of the Act, 1961 which is existing in the present case. The Assessing Officer(AO) has calculated the income of the assessee in a detailed manner after verifying from the seized record,” the Tribunal said.