Tax audit limit

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This query is : Resolved

Praveen Kumar k (Querist)

20 October 2013 A doctor has a clinic which also has rooms for inpatients. Separate room charges are collected from inpatients apart from professional fees. Whether room charges will b part of professional receipts or business? n whether it will be considered in the limit of tax audit.?

Suresh Ramaswamy

Suresh Ramaswamy (Expert)

20 October 2013 The income of the doctor from his clinic is professional receipts and professional receipts only. The doctor has not rented out immovable property for the rental income to be treated as 'Income from House Property'. A person who is not a patient, cannot use the rooms for inpatients on payment of room charges. The nexus of room rent is the clinic and patient of the medical practitioner.

Hence the room rents collected from inpatients are also part of the professional income. However, the doctor can show the room charges as other income and the professional fees separately but under I.T.Act such income is part of Profits & Gains from Business or Profession and cannot be treated as either 'Income from House Property' or 'Income from Other Sources' and hence the receipts will be part of the Income from business or profession and included in computing the limit for tax audit.

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