That is all clear that the list specified is for maintenance of books of account. The issue is what is profession w.r.t. 44AB of the Act.

It is interesting to read definition of Independent Agents or brokers u/s 9 and also the various DTAAs India signs with other countries:-

Let us examine what is written in Section 9 of the Income Tax Act as that was changed as recently as 2002 or 2004 (I do not remember).

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 :

Provided further that where such broker, general commission agent or any other agent works mainly or wholly on behalf of a non-resident (hereafter in this proviso referred to as the principal non-resident) or on behalf of such non-resident and other non-residents which are controlled by the principal non-resident or have a controlling interest in the principal non-resident or are subject to the same common control as the principal non-resident, he shall not be deemed to be a broker, general commission agent or an agent of an independent status.

Explanation 3.Where a business is carried on in India through a person referred to in clause (a) or clause (b) or clause (c) of Explanation 2, only so much of income as is attributable to the operations carried out in India shall be deemed to accrue or arise in India;]

From these clauses in Section 9, it is apparent that the brokerage or commission is a business and not a profession for causing the sale ofgoods of the foreign principal.

The same is the definition of independent agents (GCAs or brokers) in most of the DTAAs also. The broker is doing business. He does not possessor acquire any qualification to become a commission agent that it should be viewed as a profession. I would also consider it wrong to call an insurance agent as a profession because insurance is itself a business. To be an agent you have to pass an additional exam conducted by IRDA but the basic eligibility is XII Standard Pass. That really cannot be a professional qualification. I had also become an insurance agent of private insurer and they kept on harping to us during our training that we are doing our business. Even the book IRDA issued for the insurance agents (if I remember well it was IC 33) they always refer to agent as doing business and same definitions as per contracts act. Yes, an insurance Actuary is a Profession because like Doctors, CAs, Law, Architects etc., he has to not only possess the professional qualification but he has to be registered as a member to practice.

Amolji, if you have the contracts act with you, see the definition of agents and brokers and similar and also check whether any of them construes these activities to be a profession.

This discussion is becoming a pot boiler thriller with the status like a see saw.

On going through the IRDA IC 33, they have basically defined Agent as someone who procures business for the principal. As far as his principal is concerned he is acting in regular course of business and remunerated commission. Even a broker is similarly defined for insurance. the agent is also called the salesman of the insurance company.

However, they also compare agency as a profession and that to as far as the prospect is concerned because the agent has to have the ability to advise etc.

Therefore if the Insurance Business is remunerating the broker or agent, it seems to be a business receipt.

If the agent is a professional for the prospect or policy holder, he is not being remunerated by the policy holder for the professional service that he is rendering free of charge. He is being remunerated the commission by the Insurance Company for getting them the insurance business. That now should be business if we are to see who is remunerating. After all, it is the principal who is remunerating the agent. If agent charges the policy holder then he is a professional.

We must also see the position of travel agents etc. whether they are professionals. They do hotel bookings, airline tickets on commission.

Even railway authorises agents to collect commission from traveller. Are they treated as business or profession for 44AB?

Your contention is true Mr. Sunil. But, still the term has lot of discussion to go. I think there should be some specific provision in the Act to define the word profession w.r.t Sec. 44AB of the Act.

It has not only to define profession. Business too needs to be defined properly. In the Act itself both have a vague definition that starts with 'includes'.

For 44AA, profession is not defined. It is specified.

Therefore, if there is no real definition of business or profession, we can only rely on legal definitions or vague context these terms are used as far as other sections of the Act are concerned.

However, let us consider the Departments own Form No. ITR 4 specifically their instructions. They write 'These instructions though stated to be non-statutory, may be taken as guidelines for filling the particulars in this Form. In case of any doubt, please refer to relevant provisions of the Income-tax Act, 1961 and the Income-tax Rules, 1962.'

In the section of Codes for Nature of Business

General Commission Agent is a seperate sub sector coming under the Sector 'Commission Agents'

Professionals is another Sector in which there is a sub sector others that would include those that are not mentioned. However, you would not put commission agent in this Others as there is already a specific sub sector for them.

There are sub sectors under the Service Sector that are also under specified professions.

Now the task is to interpret 44AB for business as well as profession based on this overlapping.

I am sure with advanced technology, a CASS scrutiny system will flag a return based on the code entered if it is not audited though it ought to be audited based on data populated in relevant fields of the P/L and Balance sheet. I hope someone will be able to make sense of the meaning of the two words business and profession.

Amolji, here is one more string to hold on to for the Business of a general Commission Agent A.K.A. kachha arahtias.

The department has itself mentioned the activity as business in its circular 452 of 1986 that I have attached for your reference. Please read what I highlighted in red. If government calls this activity a business, it should not widen the definition of profession to include a business as a profession.

In the judgement for the case where it was adverse, comments were never asked as to whether it was a business or profession for Section 44AB. The question of law was for whether the assessee was a kachha arahtia or pucca arahtia and whether the turnover to be considered was principal to principal basis or whether the agent assumed the risks of a principal. With department clarification already there, there was no need of further going and categorising it as a profession for section 44AB.

If you take the Article 7 of DTAAs, these agencies are businesses and not categorised as included personal or professional services Under Article 12.

Eventually, India will have to align itself with the world and it should definitely not be so inconsistent to call this activity business in Section 9 and DTAA and other circulars and then suddenly take a U Turn and call it profession for section 44AB. If the item has to be included under profession for 44AB it will have to be specifically defined for the section to include such activities because it is recognised as business everywhere else in the Act and even in Circulars. Circulars are binding on department and not on courts.

It will help if the Supreme Court Judgements in the article in Business Line of newspaer Hindu of 20/1/2001 can be traced.

Right now the bone of contention is definition of profession for Section 44AB. However, there is also a contentious issue for definition of profession in Section 55 for Capital Gains on sale of Goodwill. While it is taxed for Business, it does not seem to be taxed for Professionals. Therefore a very consistent and true definition is required rather than a combinition of fictitious ones.

Refer this link:-

https://www.hinduonnet.com/businessline/2001/01/20/stories/042064t1.htm

whether advertisement activity is a business or whether it is a profession

Advertisement in a media or internet or magazines or newspaper or any publication is a business. If you sell space on your website for ads it is a business.

However if you are providing ad designing, consultancy or ad preparation or models service for the ads, ad film production etc. it is a deemed profession u/s 44AA. For 44AB all the recognised professions as well as deemed professions per 44AA are included.

People always confuse the words profession and vocation with occupation. A profession including vocation is an occupation. Business is also an occupation.

You do not call someone a carpenter by profession or vocation. You call him a carpenter by occupation. Carpentry is not a profession even though it requires skill. The skill has to be recognised and given recognition by an act of parliament or legally recognised as a professional association. These would be professions like Doctor, Lawyer, Accountant, Company Secretary, Actuary, Architect, Engineer. Without membership in these association you cannot practice. Besides these, the Income tax Act has deemed certain occupations as professions. These are artistes, models, fashion designers, Information technology, Interior Decorators, painter, sculptor etc. You do have associations for these professions but they are not formed by acts of parliament (eg. ICAI is an association by act of parliament). These are self made associations and membership is not mandatory to carry on with these activities. These are activities that are deemed professions by Income Tax Act. The Income Tax Act will also include in its fold activities like legal advisors, accounting etc. that may be done by those who are not registered in the official association. Any receipt for work done that is in the domain of these professions is a professional receipt.

An insurance agent, although a dependent agent is doing a business activity. His activity in a professional capacity is free of charge (as an advisor to the prospect or policy holder) but he is remunerated for business for causing sale of his principals'policy. As the remuneration is from Insurance Company, it is a business receipt. So is the case with an Insurance Broker. Both Agent and Broker are registered and licensed by IRDA to carry out their business activity of selling policies.

Thereforeit is not necessary to have requisite qualifications for your receipts to be termed professional receipts. Just engaged in that domain is sufficient. A diet consultant is not a business. Even if not a doctor, still he is working in the domain of a doctor and accordingly a professional.

As far as your query is concerned, displaying ads is not a profession but every auxiliary work to preparation of an ad is deemed a profession by the income Tax Act.

can buying & selling of Properties ( Residential & Commercial ) be termed as business?? ...I mean can the profit be taxed as business Profit ..or it has to be HP OR Capital gains ?

I hope I can reopen this discussion with my case and get the advice.

I am a Graduate Engineer of 1973 and was employed in BHEL, NTPC, DLF Industries, ALSTOM etc till 2004.

After that I have been working as service provider.

Since Jan 2010 I am employed in a Company as Chief Engineer but paid as a service provider. As per the company's letter my engagement is as a consultant and not as an employee of the company but I have to perform assigned duties and the assigned duty at present is to head a department at a project site.

I get Form 16A and submitting my income tax return in ITR-4. I have prepared the Books of Account for previous year.

The company pays me Consultancy Serviecs Fees for which I raise an invoice every month.

Since the gross receipts of previous year exceed Rs 10 Lacs I have this question.

Is it a Business or Profession?

I have been preparing and submitting my Income Tax Return during my entire career. As a Service Provider also I have submitted ITR-4 and got refunds for last 3 years.

I thougt that I can do it also for AY 2010-11 and when I read about mainting books of accounts I prepared them using gnucash (a free open source software). Since there is no separate Bank Account for Business receipts and expenditure the Books of Account contain both personal and business expenditure.

I am now stuck up at the question:

Are you liable for audit under Section 44AB? Yes/No

If you feel that the answer is Yes. Please let me also know:

Who could be the auditor signing the tax audit report?

How can I get it in remaining days of this month so that I can submit the return?

Kamalakar

Can anyone tell me .. would income under Job work Charges received after deduction of TDS under section 194 C will be considered in professional or not ?