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Profession
Meaning of Business S.2(13)-
Business includes-
(a) Any trade, commerce or manufacture
or
(b) any adventure or concern in the
nature of any trade, commerce or
manufacture.
Definition inclusive. Following factors
relevant-
(a) Profit Motive-
Narain Swadeshi Weaving Mills v. CEPT 26 ITR
765 (SC)
(b) Control and Profit Motive- Crucial Tests.
( c) Risk, Uncertainty, Foresightedness to
Visualise Imponderables.
(d) Services Rendered also Covered.
(e) Business cannot be carried on with oneself.
Adventure in the Nature of Trade, Commerce or
Manufacture-
(a) Initial intention a relevant factor, but not conclusive.
Subsequent events and ‘A’’s conduct also relevant in
cases of isolated transactions.
(b) A stray activity of a non businessman would not be
business- CIT v. Prabhu Dayal 82 ITR 804 (SC).
( c) Dealer in Land- Converting land into building sites-
an adventure, Seling to arrange funds not an adventure,
Sale after a long period not an adventure.
(d) Dealer in Shares- Motive, frequency of transactions,
borrowal of money may indicate profit motive.
Onus to prove-
It is for the revenue to establish that profit
earned in a transaction is within the taxing
provision and is taxable as income.
Janki Ram Bahadur Ram v. CIT 57 ITR 21
(SC).
Meaning of Profession S.2(36)-
Profession includes vocation.
Profession implies professed attainments in
special knowledge as distinguished from mere
skill, special knowledge to be acquired only
after patient study and application.
Income chargeable under this head S.28
(i) Profits and gains of any business or
profession;
(ii) Compensation due to or received by
(a) a managing agent of an Indian company,
(b) a managing agent of any other company,
( c) a person holding agency in India for any
activity
(iii) Income of a trade ,professional or similar
association from specific services performed for
its members,
(iv) Export Incentives- Cash Compensatory
Support-S.28(iiia), Duty Drawback-S.28(iiib),
Profit on sale of Import Entitlement Licence-
S.28(iiic);
(v) Value of any benefit or perquisite arising
from business or exercise of a profession
S.28(iv);
Value of use of residential premises, car and
telephone by a partner is taxable as perquisite
in the hands of the partner u/s. 28(iv)
V.P. Warrier v. CIT 181 ITR 303 (MP)
Foreign trips granted by a company whose
product is being sold by the ‘A’ and his family in
appreciation of business done by the
‘A’,constitutes benefit u/s. 28(iv).
R. Imbavalli v. ITO 83 TTJ 352(Chen.)
(vii) any interest, salary, bonus, commission or
remuneration due to or received by a partner of
a firm from such firm to the extent allowed as
deduction to the firm S.28(v), or
(viii) any sum received in cash or kind under an
agreement for not carrying out any activity in relation to
any business or not to share any knowhow, patent,
copyright, trademark, licence, franchise or any other
business or commercial right of similar nature or
information or technique likely to assist in manufacture or
processing of goods or provision of service S.28(va),
Where all assets are let out, the period for which they are let out
is a relevant factor to find out whether the intention of the ‘A’ is
to go out of business.
If a few business assets are let out temporarily while others are
used by the ‘A’ for his business, then it is commercial
exploitation of assets.
If business never started or has been ceased with no intention
to revive, the assets cease to be business assets.
Universal Plast Ltd. V. CIT 237 ITR 454 (SC).
Loss of cash by theft or embazlement is
allowable as trading loss.
Badridas Daga v. CIT 34 ITR 10 (SC)
CIT v.Nainital Bank Ltd. 55 ITR 707 (SC)
An agent of a non resident who paid tax on
behalf of the non resident and who could not
recover it from the Non Res. cannot claim it as
deduction.
CIT v. Abdullabhai Abdulkar 41 ITR 545 (SC).
Rent, Rates, Repairs & Insurance of Building S.30-