Presumptive income for professionals

No 44ada is applicable for technical consultancy which involves having specialised knowledge.

Hi,

It is debatable whether your service is a "technical consultancy service".

In my opinion, your service is a technical consultancy since you do research for Pharma companies. So, you are eligible for 44ADA.

hi,

As you are providing consultancy services and market research reports is also a kind of service. it will fall under section 44ADA.

there are lots of conditions attached with 44ada. kindly go through them before opting for the same.

Here is the link for your reference:

https://www.google.co.in/#safe=active&q=section+44ada+income+tax+act

In my opi

In my opinion it is not included

hi,

The expression “Fees for Technical Services” (FTS)is defined in Explanation 2 to section 9(1)(vii) of the Income-tax Act as under:

“For the purposes of this clause, ‘fees for technical services’ means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel)……” A perusal of the aforesaid definition clarifies that the term FTS would include service of the following three types:

Managerial

Technical

Consultancy

Therefore, in order to decide whether the service will fall within FTS or not, it is necessary to determine the scope of the aforesaid three terms.

In the above context, reference may be made to a recent decision of the Mumbai Tribunal in the case of TUV Bayren (India) Ltd. dated 06.07.2012 in ITA No 4944/Mum/2002.

In the said case, the Hon’ble Tribunal has defined the scope of the aforesaid terms in the following manner:

'Technical services require expertise in technology and providing the client such technical expertise.

Managerial services is used in the context of running and management of the business of the client.

Consultancy is to be understood as advisory services wherein necessary advise and consultation is given to its clients for the purpose of client’s business.

The Hon’ble Delhi High Court in the case of CIT vs Bharti Cellular Limited (2009) 319 ITR 139 held that the “technical services” would have reference to only technical services rendered by a human; it would not include any service provided by machine or robots.

It is thus clear that every service cannot be called a “technical service” merely because some technicality or technical knowledge is involved in providing the service.

Likewise, the scope of “managerial service” and “consultancy service” is also restricted inasmuch as such services can be covered under FTS only when the service is provided in the context of running and management of client’s business. It is the act of offering expert or professional advice in a field .

Dear Sir,

Section 44AD and ADA is very open to interpretation and there is not much clarity from the government side as to what will constitute as a technical consultancy.

In my opinion you should not opt for these sections and maintain proper books of accounts.

Please feel free to call/ revert in case of any doubts

Thanks and Regards

Abhishek Dugar

CA CS B.Com

Hi,

The terms "Technical Consultancy Service" and also "Profession" are not properly defined in the Income Tax Act.

As I said earlier, it's not very clear whether your work can be classified as Technical consultancy services. Both 44AD and 44ADA sections are open for wide interpretations.

I would suggest you to maintain proper books of Accounts and file Returns accordingly. If your turnover exceeds the limits specified in Section 44AB, then you will have to get your Books of Accounts audited.

The phrase " fee for technical services" is defined under Explanation 2 to Section 9(1)(vii) of the Income Tax Act, which is quoted below:

" Explanation [2].—For the purposes of this clause, "fees for technical services" means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries".]

As you are providing consultancy services, in my view, you should be covered under 44AA and hence, you should be eligible to be assessed u/s 44ADA.

Hello Sir,

Based on the various queries raised by you, I am answering only the last one in which you wrote that you are getting conflicting opinion from experts.

You have answered our question for yourself, the section itself involves litigation and there is no strict guidelines to be followed.

Best option is to maintain proper books of accounts and file your return, if you feel like taking a chance just be prepared for the litigation and hire a proper Chartered Accountant to defend it for you.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

Technical services require expertise in technology and providing the client such technical expertise.

For the purposes of this clause, ‘fees for technical services’ means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel)……” A perusal of the aforesaid definition clarifies that the term FTS would include service of the following three types:

Managerial

Technical

Consultancy

Sir, it will cover specified professional as defined under Section 44AA

"legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration"

The Profession definition in general provided as knowledge acquired by way of education through recognised courses only