M. P. THAKKAR, J. ( 1 ) TILL death both us part the oath uttered at the time of solemnization of marriage may have to be to altered into till the income tax authorities both us part by the medicos who marry and intend to carry on their professional activities in partnership. That cannot be helped if the interpretation placed by the Income Tax Appellate Tribunal in respect of the provision popularly known as the clubbing provision embodied in section 64 (1) (i) of the Income-tax Act of 1961 is untenable as is canvassed by the Revenue. The said provision speaks as under :"64 (1) In computing the total income of any individual there shall be included all such income as arises directly or indirectly. (J) to the spouse of such individual from the membership of the spouse in a firm carrying on a business in which such individual is a partner;in essence it provides that when the husband and the wife are members of the very same partnership firm carrying on a business the income of the two is to be clubbed together. In so far as the income arising directly or indirectly from the business of the partnership is concerned such dubbing together would naturally result in a higher rate of tax being attracted having regard to the fact that income-tax at a higher rate is levied in regard to the slab of income which is in the higher bracket. The assessee is therefore interested in escaping the clutches of this provision. The revenue on the other hand would be anxious to call into aid this provision in case any question of inter- partition arises which would result in an assessee being in a position to successfully contend that the provision would not be attracted in his case. Such a question has arisen in the context of a partnership firm between two spouses who happen to be professionals. Each of them is a qualified medical practitioner (a doctor ). The husband and the wife team of doctors have formed a partnership and are carrying on their profes- sional activities in partnership. Such a question has arisen in the context of a partnership firm between two spouses who happen to be professionals. Each of them is a qualified medical practitioner (a doctor ). The husband and the wife team of doctors have formed a partnership and are carrying on their profes- sional activities in partnership. The activities inter alia consist of a running of a Nursing Home where the time under the treatment of the team of doctors are admitted as in door patients and the income from the Nursing Home also forms a part of the professional income of the part- nership firm. The assesses contend at the clubbing provision contained in sec. 64 (1) (i) would be attracted provided and only provided the basic pre-condition envisioned by the provision namely that the two spouses must be members of a partnership firm carrying on a business is satisfied. The expression carrying on a business has been placed under spotlight and it has been contended that when a doctor husband and a doctor wife carry on their profession in partnership it cannot be said that they are carrying on a business. If the contention is right the assesses must succeed. Otherwise the revenue would be justified in clubb- ing together their income. It appears that a similar question on similar facts has arisen in the cases of a number of doctor couples carrying on their profession in partnership. In the case of a couple from Godhra the question arose in three successive years viz. 1972-73 and 1973-74 and 1974 The Income-tax Appellate Tribunal upheld the contention of the assessee couple that the provision in question was not attracted because they were partners in a firm carrying on profession and not partners in a firm carrying on business. Thereupon three allied references have been made at the instance of the Revenue. In I. T. R. Nos. 193/78 and 113 we are concerned with the case of the doctor husband who has succeeded in respect of assessment for the aforesaid three years. In I. T. R. No. 154/78 we are concerned with the doctor wife who has also succeeded before the Tribunal. All these three references will be disposed of by this common judgment. We will also dispose of two Income-tax Applications (I. T. A: Nos. In I. T. R. No. 154/78 we are concerned with the doctor wife who has also succeeded before the Tribunal. All these three references will be disposed of by this common judgment. We will also dispose of two Income-tax Applications (I. T. A: Nos. 158/81 and 159/81) pertaining to another doctor couple from Ahmedabad in respect of two successive years 1974-75 and 1975-76. These applications have been made by the Commissioner of Income-tax with a view to invoke the jurisdiction of this Court under Article 256 (2) in order to require the Appellate Tribunal to state the case and refer the question to us. A reference is sought by the Commissioner of Income- tax in the case of a doctor couple from Bhuj. (I. T. A. No. 167/81 ). If we negative the plea of the revenue that the Income-tax Tribunal was wrong in holding that the provision concerned would not be attracted in the case of a husband and wife couple carrying on a profession in partnership these three applications must of necessity fail. That is why these three applications have been tagged on and are being disposed of along with the aforesaid three references. These three Income-tax Applications will also be disposed of by this common judgment. ( 2 ) FOR the purposes of the present judgment it will be sufficient to advert to the facts giving rise to Income-Tax Reference No. 193/78 which may be treated as typical for the entire group. The facts pertaining to each of these matters need not therefore be unnecessarily stated. In the allied references and the I. T. Applications an identical question of law arises on similar facts. ( 3 ) THE following facts are not in dispute : (1) The assessee Dr. K. K. Shah is a qualified Gynecologist. His wife Dr. Mrs. Harilal K. Shah is also a qualified Gynecologist. (2) Both of them are carrying on their profession as Gynecologists in partnership with each other under the name and style of Sevashram Hospital. (3) They are also running a Nursing Home for the purposes of carrying on their profession. (4) Patients are admitted to this Nursing Home and are treated by the doctor couple. (5) It is not the case of the revenue that any patient other than the patients treated by one or other of the partners is admitted as a patient. (3) They are also running a Nursing Home for the purposes of carrying on their profession. (4) Patients are admitted to this Nursing Home and are treated by the doctor couple. (5) It is not the case of the revenue that any patient other than the patients treated by one or other of the partners is admitted as a patient. (6) Nor is it the case of the revenue that any other activity not wholly connected with the activity pertaining to the medical practice of the two doctors is carried on in partnership. For instance it is not the case of the revenue that Sevashram Hospital also runs a Chemists shop as a partnership activity where drugs are sold to patients. ( 4 ) THE last mentioned factor requires to be highlighted because in such an event the profits attributable to that branch of the activity would require to be accorded a different treatment. No such question arises in the present reference or in the allied references wherein doctor couples are carrying on their profession which consists of treating their patients acting as Consultants performing operations and treating them as indoor patients in the Nursing Home which is run exclusively for the purpose of treatment of the patients under the treatment of the doctor couple. ( 5 ) BEFORE we deal with this question in the context of sec. 64 (1) (i) of Income-tax Act 1961 it is necessary to trace the history of the rele- vant provision as it existed prior to the enactment of the said Act i. e. in the context of the Indian Income-tax Act of 1922 (hereinafter referred to as the old Act) which was replaced by the Income-tax Act of 1961 (hereinafter referred to as the new Act ). The corresponding provision in the old Act was contained in sec. 16 (3 ). These provisions require to be reproduced in juxtaposition. OLD Act New Act 16 (3) In computing the total income 64. (1) In computing the total income of of any individual for the purpose of asses- any individual there shall be included all sment there shall be included. such income as arises directly or indirectly. (a) so much of the income of a wife (i) to the spouse of such individual from or minor child of such individual as the membership of the spouse in a arises directly or indirectly. such income as arises directly or indirectly. (a) so much of the income of a wife (i) to the spouse of such individual from or minor child of such individual as the membership of the spouse in a arises directly or indirectly. firm carrying on a business in which such individual is a partner; (i) from the membership of the wife in a firm of which her husband is a partner; (Emphasis added) 6 It is necessary to stress the circumstance that sec. 16 (3) (a) (i) of the old Act has undergone a metamorphosis in the corresponding provi- sion contained in sec. 64 (1) (i) of the new Act. An analytical study of these provisions would reveal the following features : (1) Sec. 16 (3) (a) (i) of the old Act provides for the clubbing toge- ther of the income of the wife with the income of the husband when the income of the wife is derived directly or indirectly (what follows is of great significance) in a firm of which her husband is a partner. In other words the mere membership of the firm on the part of a wife would attract the clubbing provision and the income arising to the wife from the firm would be clubbed with the income of her husband. (2) As against this under the corresponding provision in sec. 64 (1) (i) of the new Act (the clubbing provision ) has introduced the concept of income arising to a spouse in a Sir carrying on a business. The expression membership of the spouse in a firm carrying on a business requires to be under-scored with red ink. (3) Under the old Act the mere membership of the wife in a firm was sufficient to attract the clubbing provision. Under the new Act the Legislature has made the applicability of the clubbing provision dependent on the spouse deriving income not in any firm but in a firm carrying on business. ( 6 ) THE expression membership of a firm has been replaced by the expression membership in a firm carrying on business. Is this change a merely incidental change or is it a change which is introduced with some deliberate design or purpose is a relevant question to ask. It is pertinent to pose this question because the expression affirm carrying on business is not interchangeable with the expression of a firm. Is this change a merely incidental change or is it a change which is introduced with some deliberate design or purpose is a relevant question to ask. It is pertinent to pose this question because the expression affirm carrying on business is not interchangeable with the expression of a firm. The rider added in the corresponding provision in the New Act pertains to the carrying on of business. Is it merely an amplification of the earlier provision a mere elaboration of the earlier provision or is it purposeful change introduced by the Legislature 7 To this question we must now address ourselves. The expression business has been employed by the Legislature in order to emphasize the distinction between a business and a profession. The Legislature in enacting the Indian Income- tax Act of 1922 as also the Income-tax Act of 1961 has shown great awareness about the distinction between the concept of a business and that of a profession and has accorded different treatment depending on whether the activity falls within description of business or profession. This distinction between the two concepts has been projected income of the provisions of the Act as we shall presently point out. 1961 Act (New Act) 1922 Act (Old Act) Business is defined by sec. 2 (13) as Business is defined by sec. 2 (4) as under: under: business includes any trade commerce Business includes any trade. commerce or manufacture or any adventure or concern or manufacture or any adventure or in the nature of trade commerce or concern in the nature of trade commerce manufacture; or manufacture; the expression profession has been The expression profession has not been defined by sec. 2 (36) as under: defined. profession includes vocation; it takes within its sweep the expression vocation. Sec. 28 which is the charging section treats Sec. 10 (1) refers to business profession professional income as of a different or vocation. category from that of business income as (Note: In the New Act the expression is evident from the opening words: vocation is omitted and is brought within The following income shall be chargeable the ambit of the expression profession to income-tax under the head profits which is defined for the first time by and gains of business or profession sec. category from that of business income as (Note: In the New Act the expression is evident from the opening words: vocation is omitted and is brought within The following income shall be chargeable the ambit of the expression profession to income-tax under the head profits which is defined for the first time by and gains of business or profession sec. 2 (36) (emphasis added) ( i ) the profits and gains of any business or profession which was carried on by the assessee at any time during the previous year; (iii) income derived by a trade professional or similar association from specific services performed for its members; (iv) the value of any benefit or perquisite whether convertible into money or not arising from business or exercise of a profession. Explanation I refers to profits of business only in the context of profits of managing agency. Explanation 2 refers to business only in regard to speculative transactions. Note: The expression vocation employed by sec. 10 (1) of the old Act is omitted and Vocation is included in the dictionary of New Act (See sec 2 (36 ). Sec. 29 refers to method of computation of profits from business or profession. That is why it has considerable importance to find out whether the intendment and purpose of the Legislature in introducing the new concept of a firm carrying on a business in the new Act in order to replace the existing concept of a mere firm in the corresponding provision of the old Act assumes importance. It assumes importance because the pro Vision is a provision pertaining to the clubbing of the income of two partners by reason of the relationship between them. Ordinarily the income of the partners in a firm would be assessed independently. There would be no question of clubbing together. The provision for clubbing together was introduced in the old Act presumably in order to prevent evasion of tax. Ordinarily the income of the partners in a firm would be assessed independently. There would be no question of clubbing together. The provision for clubbing together was introduced in the old Act presumably in order to prevent evasion of tax. It is difficult to visualize a husband forming a partnership with a wife so that the income would be distributed and both of them may escape the tax net altogether in the event of their income falling below the exempt line or at any rate would attract tax at a much lower rate having regard to the fact that the scheme of taxation is such that a higher rate of tax is applicable to income falling within the higher slab in the case of an assessee. An individual can form a partnership with his wife regardless of the fact that the wife may have no capacity to make any contribution in running the business. She may be an altogether illiterate wife who does no more than engage herself in the domestic chores. And by and large such would be the case in the case of a large number of assesses in India having regard to the structure of the society as it has existed for a number of years. She would be only a nominal or a notional partner who has been made a partner only for the sake of escaping the rigueur of tax liability. It must be realised that when an individual forms a partnership with a stranger even if the stranger agrees to be a nominal partner the person who enters into such arrangement runs a risk because the stranger may assert his right and may not agree to make over the amount falling to his share to the real partner. There would be no such risk when a wife is introduced as a partner. That is conceivably the reason why sec. 16 (3) (a) (i) has introduced the clubbing provision. The situation however would be altogether different when a professional couple say a doctor couple enters into a partnership. Each of the two can carry on his or her profes- sion in his or her individual capacity. Each of them can also enter into a partnership with other members of the same profession. In that event their professional income would be assessed separately and no question of clubbing would arise. Each of the two can carry on his or her profes- sion in his or her individual capacity. Each of them can also enter into a partnership with other members of the same profession. In that event their professional income would be assessed separately and no question of clubbing would arise. It must also be realised that a doctor husband cannot form a partnership with a wife who is not a doctor in order to carry on his profession. The rules of professional ethics would not permit this. It would be unethical to do so and he would run the risk of being debarred from practice. It would not also be recognised by law. But when both of them are qualified doctors and they join in partnership there is practically no risk of the partnership coming into existence being a nominal one. As mentioned earlier in a business partnership the husband may be an astute businessman and the wife may be no more than an illiterate house-wife or a house-wife who is not capable of carrying on an economic activity on her own. On her own the wife may not able to earn any income or make any contribution. Even so she can be introduced as a partner in a partnership firm in a business. It is here that the aspect regarding the difference in the situation in the context of doctor husband and a doctor wife would require to be emphasized. A doctor wife is capable of carrying on her own profession say as a Gynecologist and earn her own income. It would be unreason- able to make her pay tax at a higher rate merely because she carries on an activity in partnership with her doctor husband. Again so far as the businessmans wife is concerned no body would ever accept her as a partner and give her a share in the profits if she is herself not capable of carrying on a business and making any worth-while contribution in the business activity. As against this the doctor wife of a doctor husband can enter into partnership with any other doctor and carry on the pro- fessional activity. As against this the doctor wife of a doctor husband can enter into partnership with any other doctor and carry on the pro- fessional activity. There would be no reluctance on the part of another doctor to take her in as a partner because she would be fully qualified and can share the work and contribute her talent in the profession in order to secure income for the firm. Thus the reason desire for clubbing together the income of non-professionals does not exist in the case of professionals. It is this aspect which was presumably realised and that is why in the new Act a change was introduced by provision that the provision would be attracted only in the case of spouses carrying on business in partnership and not in the case of spouses who do not carry on business (but carry on profession) in partnership. And it is now worth- while to reproduce an extract from the speech of the Finance Minister made on the floor of the House at the time of introducing the income tax Bill of 1961. We will refer to that part of the speech which pertains to the clubbing provision under the old Act and the change sought to be introduced in this sphere by the new Act. The speech has been reproduced on page 33 of Treatise on the Income-tax Act 1961 by S. C. Manchanda K. Srinivasan and B. Malik in Volume I of the First adti- tion of 1962. The relevant extract from page 37 may be quoted"a provision which will be of interest to persons engaged in the professions is that in clause 64. Under the existing law if a husband and wife are partners in the same firm the share income of the wife is clubbed with that of the husband who has to pay tax on the income so aggregated. The Law Commission has expressed Itself agent this provision as applied to partnerships between husband and Wife engaged in professions of doctors waters etc. The Commission has recommended that such cases should be exempt from the operation of this provision. The Government has accepted this suggestion and the provision has been suitably modified. The Law Commission has expressed Itself agent this provision as applied to partnerships between husband and Wife engaged in professions of doctors waters etc. The Commission has recommended that such cases should be exempt from the operation of this provision. The Government has accepted this suggestion and the provision has been suitably modified. (Emphasis added)"two salient features required to be highlighted are: (1) that the law Commission had expressed the opinion that the clubbing provision should not be applied to the husband and wife partnerships engaged in profes- sions such as doctors lawyers etc. and (2) that the Government had accepted this suggestion and had suitably modified the clubbing provision. Thus it is evident that the change rejected in the clubbing provision in the new Act is not a mere casual change of phraseology or an incidental or a purposeless change in phraseology without any design or purpose. It is a change introduced with open eyes and with full awareness of the need to exempt professional couples carrying on their profession in a partnership firm from the clutches of the clubbing provision. There was a deliberate design and purpose in introducing the new concept of a spouse carrying on a business in place of the old concept of a mem- bership of a spouse in partnership regardless of the nature of the activity carried on. The intendment and the purpose of the legislation and the drift of the legislative mind is manifest. It was intended to exclude spouses carrying on professional activity from the purview of the clubb- ing provision. Incidentally we may advert to the content of the expression professional activity as interpreted by the Supreme Court in Dr. Devendra Surtis Case (A. I. R. 1969 S. C. 63.) Says the Supreme Court:"there is a fundamental distinction between a professional activity and an activity of a commercial character. A profession involves the idea of an occupation requiring either purely intellectual skill or of manual skill controlled as in painting and sculpture or surgery by the intellectual skill of the operator as distinguished from an occupation which is substantially the production or sale or arrangements for the production or sale of commodities. A profession involves the idea of an occupation requiring either purely intellectual skill or of manual skill controlled as in painting and sculpture or surgery by the intellectual skill of the operator as distinguished from an occupation which is substantially the production or sale or arrangements for the production or sale of commodities. A professional activity must therefore be an activity carried on by an individual by his personal skill and intelligence and unless the profession carried on by a person also partakes of the character of a commercial nature the professional activity cannot be said to be an activity of a commercial character. We are therefore of the opinion that when professional couples such as a doctor husband and a doctor wife or a lawyer husband and a lawyer wife or an architect husband and an architect wife form a partnership for the purpose of carrying on a professional activity which would fall within the scope of the interpretation in Dr. Devendra Surtis Case (supra) their income is not liable to be clubbed together under sec. 64 (1) (i ). We would however add the following riders : (1) If a doctor husband and a doctor wife are also carrying the activity of a Nursing Home in the context of their professional activity for the purpose of treating their own patients the income from the Nursing Home can be treated as the professional income of the professional couple and no question of clubbing together can arise. (2) If any business activity is carried on by a firm constituted by the doctor husband or doctor wife such as of running a Drug Store for setting drugs to the patients or to others the income from such activity can be clubbed together. Such income will not be exempt from being clubbed together merely because it is an activity which is adjunct to the main professional activity. Similarly when a doctor couple carries on the Nursing Home activity by admitting patients of other doctors and charging fees such as room fees or fees for services rendered to them it may amount to a business activity carried on by the firm and that part of the income can be clubbed together. Similarly when a doctor couple carries on the Nursing Home activity by admitting patients of other doctors and charging fees such as room fees or fees for services rendered to them it may amount to a business activity carried on by the firm and that part of the income can be clubbed together. (3) Merely because a part of the activity is professional activity the assessee cannot escape the clutches of the clubbing provision even in respect of its income which can be said to be an income arising in the context of his business activities as distinguished from professional activities. Accordingly we decide the group of references and the group of Income-tax Applications in the following manner :i. T. R. No. 193/78. I. T. R. No. 154/78 and I. T. R. No. 113/79. Questions Answer Nos. 1 and 2 the income of the spouses from the professional activi- ties of the firm cannot be clubbed together but if the spouses are also engaged in any distinct business activity such as running a Chemists shop their income to that extent can be clubbed together. Income from Nursing Home run by the doctors who themselves treat their own patients as an integral part of the profession must be treated as professional income. If the Nursing Home is one where patients of doctors other than the part- ners are admitted and treated it may be considered a business as discussed in the main judgment provided the tests indicated in the course of the discussion are satisfied. Income-tax Application Nos. 158/81 159 and 167/81 9 These three applications are rejected having regard to the fact that the activity carried on is professional activity and the view taken by the Tribunal is unexceptionable and in accordance with the view taken by us in the course of the discussion hereinbefore. 10 In the result the three references are answered in the aforesaid manner. The three Income-tax Applications are rejected. There will be no order regarding costs in all the six matters. Answered accordingly. .