Income From Business or Profession

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As per Income Tax act 1961 Business includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture and Profession includes vocation. 

Business: Business has been defined in Section 2(13) of the Income-tax Act. According to this definition, business includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture.

Profession:  Profession has been defined in Section 2(36) of the Act to include any vocation. Meaning of the term profession involves the concept of an occupation requiring either intellectual skill or manual skill controlled and directed by the intellectual skill of the operator.

Continuity of Business or Profession: Continuity in the business or profession is not an essential condition for making the assessee liable to tax under this head. 
Even a single receipts arising from the exercise of a business or profession would be chargeable to tax under this head although they may be casual and non-recurring in nature.
However it is compulsory that such activity should be carried during relevant Previous Year

INCOME CHARGEABLE TO INCOME TAX UNDER HEAD PGBP
The profits and gains of any business or profession which was carried on by the assessee at any time during the previous year
Any compensation or other payment due to or received by,—

(a) any person, by whatever name called, managing the whole or substantially the whole of the affairs of an Indian company, at or in connection with the termination of his management or the modification of the terms and conditions relating thereto;

(b) any person, by whatever name called, managing the whole or substantially the whole of the affairs in India of any other company, at or in connection with the termination of his office or the modification of the terms and conditions relating thereto ;

(c) any person, by whatever name called, holding an agency in India for any part of the activities relating to the business of any other person, at or in connection with the termination of the agency or the modification of the terms and conditions relating thereto

LEGAL VS ILLEGAL BUSINESS
There is no distinction between legal and illegal business and both are subject to tax just as legal business. 

METHOD OF ACCOUNTING
As per section 145 Assessee may adopt any method of accounting that is
Mercantile system
Cash System. 
However assessing officer can also reject the accounts book under section 145 and can make best judgment assessment under section 144 if: 
The accounts books are incorrect, false or incomplete. 
If the accounting method employed is such that the profit cannot be derived from it correctly. 
Where the method of accounting adopted by the assessee is not followed by him regularly. 
If the assessee has not followed the accounting standards notified by the government.

These online MCQ Mock tests and MCQ questions includes all main concepts of the chapter (Income From Business or Profession) in CS Executive Module I Tax Laws & Practice (MCQ based OMR) Exam

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