Business income or profession income
Dec-7th-2011
Dear Sir
My brother doing consulting work to company - type service is
1. Procurement of purchase order
2. Handling delivery of goods
3. following up for payment
4. Customer support work.
But he will get fixed amount of fee for above service.
For income tax purpose - Is it Business income or profession income.
education qualification is graduation.
Please provide information
dinesh
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Dear Mr. Dinesh
U/s 2(36) of IT Act profession includes vocation. The word "profession" implies professed attainments in special knowledge as distinguished from mere skill; "special knowledge" which is "to be acquired only after patient study and application". Whether a person in any given case carries on a profession is a question of degree and always of facts. However, as profits and gains of a business, profession or vocation are chargeable to tax under the head "Profits and gains of business or profession", distinction between "Business, profession or vocation" does not have any material significance while computing taxable Income. It is material w.r.t the requirements of the Audit u/s 44AB.
With the facts given in your query, consultancy services is being provided with experience in the field and mere skill i.e., no special knowledge is being acquired to perform the said consultancy. Hence in our view the Income is to be shown as "Business Income".
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