Business means the purchase and sale or manufacture of a commodity with a view to make profit. It includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture.
Profession means the activities for earning livelihood which require intellectual skill or manual skill, e.g., the work of a lawyer, doctor, auditor, engineer and so on, are in the nature of profession. Profession includes vocation. Vocation means activities which are per- formed in order to earn livelihood, e.g., brokerage, insurance agency, music, dancing, etc.
The following incomes are chargeable to income tax under the head 'Profits and Gains of Business or Profession':
(1) Revenue profits from business or profession:
The profits and gains of any business or profession which was carried on by the assessee at any time during the previous year;
(2) Any compensation due to or received by :
(a) any person, managing the whole or substantially the whole of the affairs of an Indiar Company in connection with the termination of his management or the modification of the terms and conditions relating thereto.
(b) any person, managing the whole or substantially the whole of the affairs in India of any other company in connection with the termination of his office or the modification of the terms and conditions relating thereto;
(C) any person, holding an agency in India for any part of the activities relating to the business or any person in connection with the termination of agency or the modification of the terms and conditions relating thereto.
(3) Income of trade association etc.:
Income derived by a trade, professional or similar association from specific services performed for its members.
(4) Receipts in connection with foreign trade :
(a) Profit on sale of a licence granted under the Imports Control Order, 1955.
(b) Cash assistance received or receivable by any person against exports under any scheme of the Government of India.
(c) Repayment of any customs or excise duty to any person against exports.
(d) Any profit on the transfer of the Duty Entitlement Pass Book Scheme, being Duty Remission Scheme, under the export and import policy.
(e) Any profit on the transfer of the Duty Free Replenishment Certificate, being the Duty Remision Scheme, under the export and import policy.
(5) Value of any benefit or perquisite:
The value of any benefit or perquisite whether convertible into money or not, arising from business or the exercise of a profession.
(6) Receipts of a partner from the firm.
(7) Interest on securities
(8) Any sum, whether received or receivable in cash
(9) Any sum, whether received or receivable, in cash or kind, on account of any capital asset
(10) Income from speculative transactions.
(1) Business or Profession carried on by the assessee. Tax is chargeable from the person who carries on the business or profession. It is immaterial if the assessee (owner of the business) carries on the business through a manager or other servant, or any other agent duly authorized by him.
(2) Tax is chargeable on the aggregate income from all businesses or professions carried on by an assessee. The profits and gains of different businesses or professions carried on by an assessee are not taxable separately; but tax is chargeable under one head on the aggregate income from all businesses or professions carried on by the assessee.
(3) Profits and Losses of speculation business are kept separate.profit and losses of speculation business carried on by an assessee are kept separate, i.e., if there is a loss in a speculation business it can be set-off only against profits of speculate business .
(4) The business or profession is carried on by an assessee for any time during the previous year. The assessee should have carried on the business or profession for any time during the business year, i.e., whether for full year or for a part of previous year only.
(5) Profits on sale of assets on the winding up of a business. Profits made in winding up of a business by the sale of assets in one lot are not taxable as business profit but as capital gain.
(6) No tax is payable on anticipated or notional profits. Tax is levied on the actual profit of the previous year and not on the anticipated profits. If in a business there is an expectation of earning some profits in the near future no tax can be levied on such profits.
(7) Expenses of an isolated transaction.
(8) Income of illegal business or profession
(9) Expenses incurred before setting up a business.
(10) Deductible Business Losses. Business.
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