INCOME FROM BUSINESS
The third source of income from which a person may derive income is income from business’. In this chapter, the law regarding taxation of this source will be discussed.
BUSINESS
Business includes any trade, commerce, manufacture, profession, vocation or adventure or concern in the nature of trade, commerce, manufacture, profession or vocation but does not include employment.
Explanation
Trade. It means buying goods and selling them to make profit.
Commerce is a broad term and it includes not only buying and selling, but also the services which are helpful in trade, such as marketing, transportation, banking, insurance, etc.
Manufacture. It means to work upon something by hand or by machine in order to turn it into something different from what it was before.
Profession. If any income is earned through purely intellectual skill or through manual skill controlled by intellectual skill, it is called profession such as income of professors, doctors, lawyers, accountants, surgeons, etc.
All professions are business, but all kinds of business are not professions. Only those items of business are profession, the profits of which are dependent mainly upon the personal qualification and in which no capital expenditure is required or only capital expenditure of a comparatively small amount is required.
Vocation. It means the ability of a person to do some particular work generally by the application of manual skill, eg singer, dancer, broker, carpenter, etc.
Adventure in the nature of trade. A transaction can be termed as an adventure in the nature of trade, commerce or manufacture if some elements of trade or business are present therein, it is not necessary for all elements to be present
Concern in the nature of trade. A concern in the nature of trade, commerce or manufacture also falls within the definition of business. A concern Dfa Ho in the nature of trade implies that it has an adequate degree of business organization for the purpose of carrying on an undertaking The size of organization necessarily depends upon the character of the concern itself.
