Whether Business income/ Professional Income

BUSINESS INCOME

“Business” simply means any economic activity carried on for earning profits. Sec. 2(3) has defined the term as “ any trade, commerce, manufacturing activity or any adventure or concern in the nature of trade, commerce and manufacture”.

“Profession” may be defined as a vacation, or a job requiring some thought, skill and special knowledge like that of C.A., Lawyer, Doctor, Engineer, Architect etc. So profession refers to those activities where the livelihood is earned by the persons through their intellectual or manual skill.

For a General Commission Agent or a broker, the closest reference that you can get is in Section 9 (1) Explanation 2 that reads:- Provided that such business connection shall not include any business activity carried out through a broker, general commission agent or any other agent having an independent status, if such broker, general commission agent or any other agent having an independent status is acting in the ordinary course of his business. If you consider this sentence, the Act recognizes the activity of a commission agent as a business. However there are certain circumstances in which a commission agent can be a professional. If he offers technical, managerial or consultancy services and provides personnel for these services or other services, then the same Section 9 defines these as Technical Services. Then it is a profession.

Hence Real Estate broker income falls under the Business Income.