| Originally posted by : Meet Abhani |
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Professionals – who are carrying on the profession of engineering/ technical consultancy falls under section 44 ADA.you can file your return as ITR 3 giving complete balancesheet and statement of profit or you can declare 50% or more profit than your gross receipts under ITR 4 |
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NO , the original poster is asking about whether his bussiness entity being a partnership firm doing " software development " as major bussiness activity is eligible for filing ITR under section 44AD ... First thing , as a partnership firm is a "artificial entity " and posses no instric skill of a " profession " in itself ..is not eligible for 44ADA as 44ADA specifically refers to " professions " and "profession" in itself is an activity done by individuals/humans .....
Next the question is " whether the bussiness activity of " software development " is eligble for 44AD ??? " ..YES a partnership firm devoping softwares is eligible for section 44AD as the activity of " software development " is a manufacturing activity resulting in intangible goods ..and when a thing can falls under the category of GOODS then selling of such GOODS will definitely be an activity of bussiness eligible for section 44AD...below are few case laws excerpts in support of this view : -
(1) CIT v Oracle Software India Ltd 2010 ELT 161 [SC]
"It has been upheld that transforming blank CD into software loaded disc is manufacture and hence possess the essential characteristics of goods."
(2) Tata Consultancy Services vs. State of A.P [(2004) 271 ITR 401 SC]
“ The landmark judgment of TCS held that, software,whether customized or not shall be categorized as “goods”, only if it has the following characteristics:
(a) Utility .
(b) Capable of being bought and sold; and
(c) Capable of being transmitted, transferred, delivered, stored and possessed.
A software programme consists of various commands, which enable the computer to perform a designated task. The copyright in that programme may remain with the originator of the programme. But when the copies are made and sold in the market, it becomes goods, and hence liable to VAT.
The software is an indispensable part of media and it is not possible to separate the two. It is important to note that, the consideration that the buyer pays is for the software and not for the hardware in which the software is embedded. Thus sale of computer software is clearly sale of goods within the meaning of Sales Tax Act. Further, it is to be noted that branded or packaged software, which is capable of abstraction, consumption, use, transmission, transfer or delivery, it would be treated as goods, when such software is marketed or sold. Thus, once the software is classified as goods, it is liable to the goods taxes of customs, excise duty and VAT.
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(3) Infosys Technologies Ltd. vs. Commissioner of Commercial Taxes, Chennai [2009 (233) ELT 56 (Mad)]
“The landmark judgment of TCS case was upheld and it observed that whether the software is customized or non-customized, the same will be considered as goods and liable to sales tax. Hence it is immaterial whether the software is canned or un-canned, it would still be liable to sales tax/VAT.”
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