Explanation of us44ab

‘Profession’ and ‘business’ explained
4.1. The term "business" is defined in section 2(13) of the Act, as under:
"Business" includes any trade, commerce, or manufacture or any
adventure or concern in the nature of trade, commerce or
manufacture.
The word `business' is one of wide import and it means activity carried
on continuously and systematically by a person by the application of
his labour or skill with a view to earning an income. The expression
"business" does not necessarily mean trade or manufacture only -
Barendra Prasad Roy v ITO [1981] 129 ITR 295 (SC).
4.2 Section 2(36) of the Act defines profession to include vocation.
Profession is a word of wide import and includes "vocation" which is only a
way of living. - CIT v. Ram Kripal Tripathi [1980] 125 ITR 408 (All).
4.3 Whether a particular activity can be classified as `business' or
`profession' will depend on the facts and circumstances of each case. The
expression "profession" involves the idea of an occupation requiring purely
intellectual skill or manual skill controlled by the intellectual skill of the
operator, as distinguished from an operation which is substantially the
production or sale or arrangement for the production or sale, of commodities.
- CIT Vs. Manmohan Das (Deceased) [1966] 59 ITR 699 (SC), CIT v. Ram
Kripal Tripathi [1980] 125 ITR 408 (All).
4.4 The following have been listed out as professions in section 44AA and
notified thereunder (Notifications No. SO-18(E) dated 12.1.77, No. SO 2675
dated 25.9.1992 and No. SO 385(E), dated 4.5.2001):
(i) Accountancy
(ii) Architectural
(iii) Authorised Representative
Guidance Note on Tax Audit under Section 44AB of the Income-tax Act, 1961
19
(iv) Company Secretary
(v) Engineering
(vi) Film Artists/Actors, Cameraman, Director, Singer, Story-writer, editor,
singer, lyricist, dress designer etc.
(vii) Interior Decoration
(viii) Legal
(ix) Medical
(x) Technical Consultancy
(xi) Information Technology
4.5. The following activities have been held to be business :
(i) Advertising agent
(ii) Clearing, forwarding and shipping agents - CIT v. Jeevanlal Lallubhai
& Co. [1994] 206 ITR 548 (Bom).
(iii) Couriers
(iv) Insurance agent
(v) Nursing home
(vi) Stock and share broking and dealing in shares and securities - CIT v.
Lallubhai Nagardas & Sons [1993] 204 ITR 93 (Bom).
(vii) Travel agent.

Management consultancy will come under the head technical consultancy and is to be classified under "Profession"

Thanks Kavyaa.

But still now I have some confustion.

My client is in the business " Management Consultant" and he is raising bill to various companies monthly basis. His present turnover is near about 40.00Lacs. He raises bills in his firms name but it is a proprietorship firm ---- so should I deduct TDS from his sub-contractor as turn over is crossed Rs.25.00Lacs( incase of profession ) or should I not deduct TDS as his turnover not crossed Rs.100.00Lacs ( incase of business).

Please guide me

Jayanta

As our client is running a professional firm as explained earlier by Kavya, you should deduct tax at source while making the payment to your sub-contractor, provided your client was subject to audit in the previous financial year i.e F.Y 2013-14.

Note: Even proprietory firm is also considered as individual by the Act.

Originally posted by : raphael
	As our client is running a professional firm as explained earlier by Kavya, you should deduct tax at source while making the payment to your sub-contractor, provided your client was subject to audit in the previous financial year i.e F.Y 2013-14. Note: Even proprietory firm is also considered as individual by the Act.

Raphael is right...i agree.