Business Income or Income from Other sources

This query is : Resolved

sujit (Querist)
Follow

30 April 2009 I purchase goods from UK and sell the same in India and I pay a royalty @ 5 % to UK Company on the sale of products for usage of rights. Now further to it I sub let the rights to another company xyz in India and receive an one time amount.

Under which head the amount received from company xyz would be charged? Business Income or Income from other sources! What would the pros and cons if the Income is treated as Income from other sources?

Manmohan ACA, CS

Manmohan ACA, CS (Expert)
Follow

30 April 2009 Normally business means recurring economic activity, but for income tax purpose an isolated activity may be termed as business depending upon facts and circumstances. Following elements shall be considered to judge a transaction as business transaction:
• Nature of commodity;
• Nature of transaction (whether incidental to a business or not);
• Intention of the related party;
• The periodicity or duration of transaction;
Efforts applied in transaction.

The litreral reading of your case implies that income generated is Business Income.

what pros & cons you are taking about?(be specific)