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How to determine nature of business in itr 4s

Ram.J (Others) (61 Points)

03 August 2015

I am an individual having a proprietorship firm. In FY 2014-15, I have earned through various avenues. It includes...

1. Website and software development and maintenance for various entities.

2. Ad revenue by placing Google ads on my websites.

3. Earned bitcoins by selling ad spaces on my websites and then sold those bitcoins against INR.

Now, while filing ITR 4S, I am confused which Nature of Business(es) I should chose. I have narrowed down on a few...

711 - Software development agencies

709 - I.T. enabled services and BPO service providers

701 - Advertisement agencies

My questions are...

1. Which one(s) should I chose ?

2. Do I need to mention the Tradename for each ?

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7 Replies

Tarun (AM) (216 Points)
Replied 03 August 2015

Trade name should be mentioned and it would be 1 name for all businesses. Also, for nature choose the one that is your main business. I think it should be 711 for you.

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Ram.J (Others) (61 Points)
Replied 03 August 2015

Originally posted by : Tarun
	Trade name should be mentioned and it would be 1 name for all businesses. Also, for nature choose the one that is your main business. I think it should be 711 for you.

Why do you think Trade Name should be mentioned ? In ITR 4S it is shown as optional. Nature of Business is mandatory.

Z ( ) (2965 Points)
Replied 03 August 2015

ITR 4 is applicable in your case since your income is from profession and CBDT has notified profession of Information and Technology in the list of notified professions of S.44AA

ITR 4S can not be used for those professions covered u/s 44AA

Ram.J (Others) (61 Points)
Replied 04 August 2015

Originally posted by : Z
	ITR 4 is applicable in your case since your income is from profession and CBDT has notified profession of Information and Technology in the list of notified professions of S.44AA ITR 4S can not be used for those professions covered u/s 44AA

Oops... thanks for ponting it out. Will I be in trouble if I submit ITR 4S ? My net earning for FY 2014-15 is less than 5L INR.

Z ( ) (2965 Points)
Replied 04 August 2015

It is not an appropriate form so yes there could be problems . Although there is a provision which protects assesse by not treating the return as invalid but a wrong form could create problem & raises suspicion. You will have to revise the return anyway . Kindly go through 44AA once regarding maintenance of books . Remember u/s 44aa Board has power to notify the profession & your is covered Further I think that your income from advertisements should not be shown as business income . It appears "income from other source" to me . It is not your business to earn income via ad . See google can be treated as advertising agency but I really dont think its your business Income . In my opinio "711" ie software development , would be an appropriate classification .You may very well take a second opinion on this. . Also a person can have different trade name , therefore its not necessary to use same trade name for all .

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Ram.J (Others) (61 Points)
Replied 04 August 2015

Originally posted by : Z
	It is not an appropriate form so yes there could be problems . Although there is a provision which protects assesse by not treating the return as invalid but a wrong form could create problem & raises suspicion. You will have to revise the return anyway . Kindly go through 44AA once regarding maintenance of books . Remember u/s 44aa Board has power to notify the profession & your is covered Further I think that your income from advertisements should not be shown as business income . It appears "income from other source" to me . It is not your business to earn income via ad . See google can be treated as advertising agency but I really dont think its your business Income . In my opinio "711" ie software development , would be an appropriate classification .You may very well take a second opinion on this. . Also a person can have different trade name , therefore its not necessary to use same trade name for all .

Well, 53% of my earning comes from Google ads, whereas 40% comes from website & software development. In this scenario, can I count earning from Google ads as other source of income, whereas it is the integral part of the eaning ? And if Google ad earning is considered as main business, what would be my business category ?

Moreover, from next financial year, my earning from bitcoin based ads may surpass Google ads earning. Then what would be business category as I will encash those bitcoins against INR ?

Z ( ) (2965 Points)
Replied 04 August 2015

I think NO, Google earns income ,by showing the ads, from the company, say Maruti

You are not receiving moeny from the co but you are receiving the money from google

And I don't think this will make you an ad agency.

What does the contract between google and you says ?

Many companies have more income from other than their operations.

Nature of the transaction is to be given weight.

I do not want to recommend you anything which might turns out to be incorrect therefore I advice you to go for a second opinion. In my understanding only '711" is the appropriate head , software development is the nature of business and rest is income from other sources.