Meaning of “Business”

Case Name : Narain swadeshi wvg. Mills v. Cept 

Citation : [1954] 26 itr 765 (sc)

Court : Supreme court

Section : 2(13)

Meaning : The word ‘business’ connotes some real, substantial and systematic or organised course of activity or conduct with a set purpose. The question, whether a particular source of income is business or not must be decided according to ordinary notions as to what a business is.

Case Name : Mazagaon dock ltd. V. Cit/cept 

Citation : [1958] 34 itr 368 (sc)

Court : Supreme court

Section : 2(13)

Meaning : The word ‘business’ is one of wide import and in fiscal statutes, it must be construed in a broad rather than a restricted sense.

Case Name : Cit v. Calcutta national bank ltd. 

Citation : [1959] 37 Itr 171 (sc)

Court : Supreme court

Section : 2(13)

Meaning : The term ‘business’ is a word of very wide, though by no means determinate scope. It is neither practicable nor desirable to make any attempt at delimiting the ambit of its connotation. Each case has to be determined with reference to the particular kind of activity and occupation of the person concerned. Though ordinarily, ‘business’ implies continuous activity in carrying on a particular trade or vocation, it may also include an activity which may be called ‘quiescent’.

Case Name : Senairam doongarmall v. Cit 

Citation : [1961] 42 itr 392 (sc)

Court : Supreme court

Section : 2(13)

Meaning : The word ‘business’ is not defined exhaustively in the income-tax act, but it denotes an activity with the object of earning profit. To say that a business is being carried on means no more than that profit is to be earned by a process or production.

Case Name : Cit v. Prabhu dayal 

Citation : [1971] 82 itr 804 (sc)

Court : Supreme court

Section : 2(13)

Meaning : Business, as understood in the income-tax law, connotes some real, substantial and systematic or organised course of activity or conduct with a set purpose. This does not, however, mean that under no circumstances a single transaction can amount to a business transaction.

Case Name : Sole trustee, loka shikshana trust v. Cit 

Citation : [1975] 101 itr 234 (sc)

Court : Supreme court

Section : 2(13)

Meaning : The expression ‘business’ though extensively used in taxing statutes is a word of indefinite import. In taxing statutes, it is used in the sense of an occupation, or profession which occupies the time, attention and labour of a person, normally with the object of making profit. To regard an activity as business, there must be a course of dealings, either actually continued or contemplated to be continued with a profit motive, and not for sport or pleasure. Whether a person carries on business in a particular commodity must depend upon the volume, frequency, continuity and regularity of transactions of purchase and sale in a class of goods and the transactions must ordinarily be entered into with a profit motive. Business is an activity capable of producing a profit which can be taxed.

Case Name : Barendra prasad ray v. Ito 

Citation : [1981] 129 itr 295 (sc)

Court : Supreme court

Section : 2(13)

Meaning : The expression ‘business’ does not necessarily mean trade or manufacture only; it is being used as including within its scope professions, vocations and calling for a fairly long time. The word ‘business’ is one of wide import and it means an activity carried on continuously and systematically by a person by the application of his labour and skill with a view to earning an income.

Case Name : Cit v. A. Dharma reddy 

Citation : [1969] 73 itr 75 (sc)

Court : Supreme court

Section : 2(13)

Meaning : The word ‘business’ is of wide import, the underlying idea being of continuous exercise of an activity.

Case Name : S.G. Mercantile corpn. (P.) Ltd. V. Cit 

Citation : [1972] 83 itr 700 (sc)

Court : Supreme court

Section : 2(13)

Meaning : The definition of ‘business’ in section 2(4) of the 1922 act [corresponding to section 2(13) of the 1961 act] is of wide amplitude and it can embrace within itself dealing in real property as also the activity of taking a property on lease, setting up a market thereon and letting out shops and stalls in the market.

Case Name : Upper india chamber of commerce v. Cit 

Citation : [1947] 15 itr 263 (all.)

Court : Allahabad high court

Section : 2(13)

Meaning : Upon a proper construction of the words ‘business’ and ‘vocation’ in the context of the indian income-tax act, there must be some real, substantive and systematic course of business or conduct, before it can be said that a business or vocation exists the profits of which are taxable as such under the act.

Case Name : Cit v. Distributors (baroda) (p.) Ltd. 

Citation : [1972] 83 Itr 377 (sc)/narain swadeshi wvg. Mills v. Cept 

Court : Supreme court

Section : 2(13)

Meaning : The expression ‘business’ is a well-known expression in income-tax law. It means some real, substantial and systematic or organised course of activity or conduct with a set purpose.

Case Name : Chamundi hotels (p.) Ltd. V. Cit 

Citation : [1987] 30 taxman 556/166 itr 683 (kar.)

Court : Karnataka high court

Section : 2(13)

Meaning : The words used in the definition of ‘business’ in section 2(13) are wide enough. It includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. It connotes some real, substantive and systematic or organised course of activity or conduct with a set purpose.

 

Case Name : Dr. P. Vadamalayan v. Cit 

Citation : [1969] 74 itr 94 (mad.)

Court : Madras high court

Section : 2(13)

Meaning : The term ‘business’ as used in the fiscal statutes cannot ordinarily be understood in its etymological sense. ‘Business’ has been defined in section 2(4) of the 1922 act but not profession, though for fiscal purposes a distinction is sought to be made in the act. The definition of ‘business’, being an inclusive definition and not being exhaustive, is indicative of extension and expansion and not restriction. According to the shorter oxford dictionary, ‘business’ includes a stated occupation, profession or trade; profession in a wide sense means any calling or occupation by which a person habitually earns his living. Even so, ‘trade’ is explained as the practice of some occupation, business or profession habitually carried on. As is not unusual, several juristic and eminent judges while attempting to define the limits of one or the other of the words ‘business’, ‘profession’ and ‘trade’, entered the ‘labyrinth together but made exits by different paths’.

Case Name : Cit v. Saurashtra cement & chemical industries ltd. 

Citation : [1973] 90 Itr 170 (guj.)

Court : Gujarat high court

Section : 2(13)

Meaning : Business is nothing more than a continuous course of activities and all the activities which go to make up the business need not be started simultaneously in order that the business may commence. The business would commence when the activity which is first in point of time and which must necessarily precede the other activities is started.

Case Name : Cit v. Admiralty flats motel 

Citation : [1982] 133 itr 895 (mad.)

Court : Madras high court

Section : 2(13)

Meaning : Section 4 of the partnership act defines ‘partnership’ as the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. While as a result of section 2(23) of the act, the concept of the partnership act has been imported into the income-tax act, there is no provision in the partnership act which imports into it the concept of income-tax law. Therefore, because of the classification of the income under several heads under the act, it cannot be stated that whatever is classified under the head ‘business’ under the income-tax act alone could constitute business in the sense of the partnership act. So, the result is whatever may be the head of assessment under the income-tax act, so long as what was carried on by the firm could be classified as business in the sense of the partnership act, the firm would be entitled to registration.

Case Name : Cit v. Lallubhai nagardas & sons 

Citation : [1993] 204 itr 93 (bom.)

Court : Bombay high court

Section : 2(13)

Meaning : Though the word ‘business’ is a word of wide import, it would not take in its ambit activities which may constitute ‘profession’. This is because the two expressions ‘business’ and ‘profession’ have been used in the act in mutually exclusive sense. That being so, even if the word ‘business’, on a wider interpretation, can include within its scope ‘profession’, for the purpose of the act, particularly the applicability of rate of tax/surcharge, ‘profession’ has to be understood as distinct and separate from ‘business’.

Case Name : Eclat construction (p.) Ltd. V. Cit 

Citation : [1988] 172 itr 84 (pat.)

Court : Patna high court

Section : 2(13)

Meaning : The expression ‘business’ in ordinary parlance means any trading activity accompanied by regularity of transactions intended for the purpose of making profit. The word ‘business’ has been used from time to time with varying connotation. It means the state of being busily engaged in anything; that about which one is busy; function, occupation; stated occupation, profession or trade; trade, commercial transactions or engagements.

Case Name : Cit v. Hyderabad race club charitable trust 

Citation : [2003] 129 taxman 788/262 itr 194 (ap)

Court : Andhra pradesh high court

Section : 2(13)

Meaning : The word ‘business’ is one of large and indefinite import. However, it connotes something which occupies the labour and attention of a person, for the purpose of profit. Generally speaking, business is an activity of a commercial nature and means practically anything which is an occupation as distinguished from a pleasure. If the transaction is a trading transaction or an adventure in the nature of trade, it will amount to business, whether it results in loss or profit. It also includes adventure in the nature of trade. The object of the definition of ‘business’ in the act is to treat the receipts from an adventure also to tax just as the receipts from the trade profits are brought to tax. In each case, however, one has to determine the nature of transaction, its volume, frequency, continuity and regularity. There is no hard and fast rule for application that a particular transaction is a business. Any transaction, whether it is continuously undertaken or isolated transaction, can be treated alike to hold that a particular transaction is a business.

Case Name : Dy. Cit v. Dr. Daljit singh eye hospital (p.) Ltd. 

Citation : [2002] 77 Ttj (asr. – Trib.) 550

Court : Andhra pradesh high court

Section : 2(13)

Meaning : The word ‘business’ is a word of wide import. The expression business, though extensively used in taxing statutes, is a word of definite import. In taxing statutes, it is used in the sense of an occupation or profession which occupies the time, attention and labour of a person, normally with the object of making profit to regard an activity as business there must be a course of dealings, either actually continued or contemplated to be continued with a profit motive, and not for sport of pleasure. The person carrying on business in a particular commodity must depend upon the volume, frequency, continuity and regularity and the transaction must ordinarily be entered into with a profit motive. On the other hand, “profession” involves idea of occupation requiring special knowledge and skill, usually advanced education, on the basis of some special learning and there should be some special qualification of a person, apart from skill and ability which is required for carrying any activity, which can be considered as “profession”. This can be by having education in particular system either in college or university or it may be even by experience. The word “business” on a wider interpretation can include within its scope ‘profession’ for the purpose of the income-tax act.

Case Name : Pydah suryanarayana murthy v. Ito 

Citation : [1996] 58 itd 224 (hyd. – Trib.)

Court : Itat-hyderabad

Section : 2(13)

Meaning : The expression ‘business’ is of wide import and it means an activity carried on continuously and systematically by a person by the application of his labour and skill for the purposes of earning profit. Trade connotes the idea of buying and selling. Activities organised on normally accepted commercial lines constitute the essence of any business.

Case Name : Jindal vijayanagar steel ltd. V. Asstt. Cit 

Citation : [2003] 87 itd 630 (bang. – Trib.)

Court : Itat-bangalore

Section : 2(13)

Meaning : The word ‘business’ as defined in section 2(13) includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. These words are of wide import, the underlying idea being of continuous exercise of an activity. The definition being inclusive and not exhaustive is indicative of extension and expansion and not restriction. The word ‘business’ is one of large and indefinite import and connotes something which occupies time, attention and labour of a person normally with the object of making profit. The word means almost anything which is an occupation or duty requiring attention as distinguished from sport or pleasure and is used in the sense of an occupation continuously carried on for the purpose of profit. Thus, the word ‘business’ is a wider term than, and not synonymous with, trade and means practically anything which is an occupation as distinguished from pleasure. Thus, ordinarily business implies continuous activity in carrying on a particular trade or a vocation. The frequency or repetition of the activity, though at times a decisive factor, is by no means an infallible test. The word ‘business’ connotes some real, substantial and systematic or organized course of activity or conduct with a set purpose.

Case Name : Yum! Restaurants (india) (p.) Ltd. V. Addl. Cit 

Citation : [2012] 14 itr (trib.) 420 (Delhi)

Court : Delhi high court

Section : 2(13)

Meaning : Word ‘business’ is one of wide import which means an activity carried out continuously and systematically by a person by the application of his labour and skill with a view to earn income.

Case Name : Vikram vishwanath v. Jt. Cit (osd) 

Citation : [2013] 40 taxmann.Com 89 (bang. – Trib.)

Court : Itat-bangalore

Section : 2(13)

Meaning : The definition of ‘business’ as indicated in section 2(13) is an inclusive definition and includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. When activities involve time, attention and labour of a person and when such activities are carried out with profit motive, it can be said that the person carries on business.

The definition of ‘business’ as indicated in section 2(13) is an inclusive definition and includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. When activities involve time, attention and labour of a person and when such activities are carried out with profit motive, it can be said that the person carries on business.

Case Name : Asstt. Cit vs. Kunal printers ltd. 

Citation : [2005] 2 Sot 414 (ahd. – Trib.)

Court : Itat-ahmedabad

Section : 80-ia

Meaning : The word ‘business’ is a word of wide amplitude so as to cover any trade, industry or any act of adventure in the nature of trade whereas the word ‘industry’ is a word of very limited meaning. The word ‘business’ is a word of wide amplitude and does not restrict to purely carrying on of the industrial undertaking.

Case Name : Cit vs. U.P. Electronic corpn. Ltd. 

Citation : [2005] 145 Taxman 494/276 itr 45 (all.)

Court : Allahabad high court

Section : 35

Meaning : The term ‘business’ is to be given a wide meaning and with the rapid advancement and growth in the field of science and technology, even the consultancy services offered would be covered under the term ‘business’. These days providing consultancy is the major source of revenue and it is not at all required to confine the term ‘business’ to mean only sale and purchase of merchandise or manufacturing activities.

Case Name : Asstt. Cit vs. Consolidated energy consultants ltd. 

Citation : [2014] 41 Taxmann.Com 379/63 sot 10 (uro) (indore)

Court : Indore high court

Section : 35

Meaning : The term “business” is to be given a wider meaning with the rapid advancement and growth in the field of science and technology, even consultancy services offered would be covered under the term “business”. These days providing consultancy has become a major source of the revenue; therefore, the term “business” cannot be confined to only sale and purchase of merchandise or manufacturing activities. Thus, such expenditure on scientific research, related to its business, will be allowable deduction.

The definition of “scientific research”, contained in section 43(4), is broad enough, wherein the legislature in its wisdom as in no uncertain term stated that references to the scientific research related to business, shall include any scientific research which may lead to or facilitate an extension of that business. When the term scientific research is used in relation to business, it does not have to be a research only in the field of natural or applied sciences. The results oozing out of such scientific research are useful for public at large, though such benefits enures to a third party. In every situation, it cannot be said that the scientific research done by govt. Agencies can only be said a research. Any research done through private sector will definitely be covered under scientific research. Before providing the exemption under section 35, the activity/research activity of an individual is thoroughly examined by the competent authority and then such approval is granted. Where it is not allowable, it has been specifically explained by adding provisos and explanations as is evident from the act itself by inserting suitable amendments from time-to-time.

Case Name : Ito vs. Mritunjay mukherjee 

Citation : [1985] 11 itd 626 (cal. – Trib.)

Court : Kolkata high court

Section : 64

Meaning :Business’ includes ‘profession’ for the purpose of being taxed under the head ‘profits and gains of business or profession’, but the word ‘business’ appearing in section 64(1)(i) does not include profession, as has been held in the case of cit v. Dr. K.K. Shah [1982] 135 itr 146 (guj.).

Case Name : Tetron commercial ltd. Vs. Cit 

Citation : [2003] 261 itr 422/133 taxman 781 (cal.)

Court : Kolkata high court

Section : 36

Meaning :Business’ is an adventure or undertaking to gain profit out of the transaction. Even if it is one transaction, even then it is an adventure and a business. If someone starts a business and then leaves it after one transaction, even then it would be a business. As such, a sporadic action cannot be singled out to discard that it is not part of the business.

Case Name : G.K. Choksi & co. Vs. Cit 

Citation : [2007] 165 taxman 299/295 itr 376 (sc)

Court : Supreme court

Section : 32

Meaning : The word ‘business’ occurring in clause (iv) of section 32(1), by no stretch of imagination, can be said to include ‘profession’ as well. If the expression ‘business’ is interpreted as including within its scope ‘profession’, it would not mean that the lacuna has been made good by giving a wider interpretation to the word ‘business’. There is nothing in section 32(1)(iv) which envisages the scope of word ‘business’ to include in it ‘profession’ as well. If the expression ‘business’ is interpreted to include within its scope ‘profession’ as well, it would be doing violence to the provisions of the act. Such interpretation would amount to first creating an imaginative lacuna and then filling it up, which is not permissible in law. The contention of the assessee that section 32(1)(iv) should be given purposive interpretation to include ‘profession’, has to be rejected.

Case Name : C.K. Choksi & co. Vs. Cit

Citation : 2002 tax lr 360 (guj.)

Court :Gujarat high court

Section : 32

Meaning : On a close reading of the entire scheme, it is apparent that the legislature has used both the terms ‘business’ and ‘profession’ as having distinct meaning and operating in specified situation for the purpose of computing income specified in section 28 in the manner laid down in section 29. The submission that the word ‘business’ in clause (iv) of section 32(1) should mean to include the term ‘profession’ and the benefit should be available to an assessee who employs such persons in profession, cannot be accepted because the second limb of clause (iv) is an inherent indicator that the deduction is available only in relation to an assessee carrying on business.

Case Name : Cit vs. Dcm sriram consolidated ltd. 

Citation :[2009] 176 Taxman 49/221 ctr (delhi) 519

Court :  Delhi high court

Section : 115j

Meaning : Term ‘business’, which prefixes generation of power in clause (iv) of explanation to section 115ja(2), is not limited to one business which is prosecuted only by engaging with an outside third party; definition of ‘business’, which is inclusive, clearly brings within its ambit activity of assessee of captive gene-ration of power for its own purposes.

Case Name : Dy. Cit vs. Jindal exports ltd. 

Citation : [2006] 7 Sot 732/101 itd 129/103 ttj 743 (delhi – trib.)

Court : Itat-delhi

Section : 70 to 79

Meaning : The word ‘business’ is not required to be understood in isolation and out of context and given wider or narrow meaning. There is no need to give ago by the classification of income under different heads for computation of income particularly under the head ‘business’. In fact, the language of section is so clear that there is no need to speculate as to what meaning is required to be given to word ‘business’ for purpose of the said section.

Case Name : Cit vs. Y. Narayana murthy 

Citation : [2004] 270 itr 275/141 taxman 404 (ap)

Court : Andhra pradesh high court

Section : 184 to 187

Meaning : The expression ‘business’ contemplates continuous activity from year-to-year.