Commission Received From LIC

Person earning income from commission / brokerage can not opt for prespative Taxation. As your friend is earning income from commission, he can not file return u/s 44AD or 44ADA.

In your case, if the Income from commission is one time and/or casual in nature (some time it may be there and some time it may not be there) then it needs to be considered as income from other sources and ITR1/2 shall be most suitable.

However, if the income from commission is going to be substantial, every year and year after year, if it's regular in nature then such income shall fall under income from business and Profession and ITR 3 shall be suitable.

So, from this year and thereafter if every year you will going to receive this income than, You can file return in ITR 3 as business income.