The central legal point established in the judgment is the interpretation of the term 'business' under the Income Tax Act, emphasizing the distinction between 'business' and 'profession' and the purposeful departure made by Parliament in the present Act.

K. Shivashankar Bhat, J.—Out of the three references, in the fi rst reference, the assessee is a firm. In the other two references, the partner of the said firm is the assessee

2. The following questions are referred to us under the provisions of the Income Tax Act, 1961, for our opinion :

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the assessee's activities did not amount to business ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the Income Tax Officer's action under section 147(b) on the basis of audit objection amounted to 'change of opinion' ?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the assessee's activity did not amount to business ?

Assuming, but not admitting, that the firm's activity amounted to profession, whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in holding that section 64(1)(i) was not attracted ?"

3. The first question arises in the case of the firm while the other two questions pertain to the assessee in the other two references. The firm in question came into existence by virtue of the partnership entered into between the two doctors, one is the husband and the other is the wife (Dr. Vanamala J. Herekar); the wife is the assessee in the last two references.

4. According to the assessee, the aforesaid husband and the wife started a small nursing home and a substantial number of cases were treated in the nursing home relating to maternity cases. Dr. Vanamala is a gynaecologist while her husband is a general practitioner. The Income Tax Officer sought to apply the provisions of section 64(1)(i) of the Income Tax Act, 1961 ("the Act", for short). Dr. Vanamala objected to this. The Appellate Tribunal has accepted the contention of Dr. Vanamala and held that section 64(1) was inapplicantble.

5. The primary question will be whether the firm in question is carrying on "business" as referred to in section 64(1)(i) of the Act.

6. The assessee contends that section 64(1)(i) does not apply to a firm constituted by professionals like two doctors. According to them, the said provision is applicantable only to the cases considered as a business in the normal sense and carrying on of a profession cannot be equated with such a meaning attributed to business.

7. Learned counsel for the Revenue first referred to section 4 of the Partnership Act to contend that the very constitution of a firm is to enable the carrying on of a business and, therefore, whenever a firm is constituted it is only to carry on a business and no further investigation is necessary to make any distinction between a profession and any other business.

8. The contention cannot be accepted for the simple reason that the definition of "business" under section 2(b) of the Partners hip Act is wide and includes a profession. The said definition governs only the said Act. Learned counsel then referred to sec section 2(36) as well as section 2(13) of the Act. Section 2(13) of the Act defines "business" in an inclusive manner, to include any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. Section 2(36) states that "profession" includes "vacation". In view of the inclusive definition of "business", Mr. Chanderkumar r contended that "profession" also would fall within the concept of "business". For this purpose, a few decisions were referred to starting with the decision of the Supreme Court arising out of the Industrial Disputes Act in The State of Bombay and Others Vs. The Hospital Mazdoor Sabha and Others, AIR 1960 SC 610. It should b e noted that the decision therein is entirely based on the interpretation of the relevant word and the meaning attributed to the concept of "trade" or "business" flowed out of the context of the Industrial Disputes Act. A hospi