Manpower recruitment agency - business or profession - audit

1.   The receipt does not become one from 'profession' merely becausethe TDS was under S. 194J.

As held (see below) by the Delhi HC, the deduction has to be under S 194J if the service rendered is 'technical', as well.

S.194J: Deduction at sourceTechnical services Payments made by school to contractors for

training students in horse riding Liable to deduct at source.(S. 194J)

The assessee entered into a contract with Mustang Riding School to provide five horses for Rs.

10,000/‐ per horse per month along with qualified and experienced instructor to teach the children

horse riding. The school deducted the tax at source as per section 194C of the Income‐tax Act. The

Assessing Officer held that it was fee for professional or technical services to the assessee and

therefore, invoked section 194J. The order was up held by the Commissioner (Appeals) and

Tribunal. (A.Y. 2008‐09)    Lotus Valley Educational Society v. ACIT (2012) 13 ITR 61 (Delhi)(Trib.);

2. In your case there is no exercise of any professional knowledge.

Whether a particular activity can be classified as `business' or `profession' will depend on the facts and circumstances of each case. The expression "profession" involves the idea of an occupation requiring purely intellectual skill or manual skill controlled by the intellectual skill of the operator, as distinguished from an operation which is substantially the production or sale or arrangement for the production or sale, of commodities. - CIT Vs. Manmohan Das (Deceased) [1966] 59 ITR 699 (SC). 

The following have been listed out as professions in section 44AA and notified thereunder (Notifications No. SO-17(E) dated 12.1.77 and No.SO 2675 dated 25.9.1992):

1. Accountancy
2.  Architectural
3. Authorised Representative
4.  Company Secretary
5.  Engineering
6.  Film Artists/Actors, Cameraman, Director, Singer, Story-writer,etc.
7.  Interior Decoration
8.  Legal
9.  Medical
10.  Technical Consultancy

Therefore you have a strong case to argue that yours is a business and not profession.

Hi Rajagopalan Sir,

I have a little query/confusion, and I will be very much thankful to you for solving it.

Kindly let me know the recruitment consultant services/fees comes under the professional services/charges or brokerage/commission.

Also help me out to calculate the TDS for the amount Rs.9438, in the month of feb'2014.

Thanks and regards,

Abhishek.

DEAR SIR,

A LABOUR CONTRACTOR  CAN FILE ITR 4S FY2016-17 IF NET PROFIT DECLARED ABOVE 8%  ON GROSS RECEIPT ( UDAYKANTPATHAK@GMAIL.COM)