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TMI BlogSCOPE OF BUSINESS ENTITYX X X X Extracts X X X X X X X X Extracts X X X X ..... SCOPE OF BUSINESS ENTITY - By: - Dr. Sanjiv Agarwal - Other Topics - Dated:- 11-2-2015 - - It is important to understand what is meant by 'business entity' in Service Tax. The expression 'business entity' is used in exemption notification and reverse charge mechanism and as those exemption / reverse charge provisions are applicable to business entity only. Meaning of Business Entity [ Section 65B(17) ] Business entity means any person ordinarily carrying out any activity relating to industry, commerce or any other business, or profession. Earlier, business entity was defined in section 65(19b) as an inclusive definition to include an association of persons, body of individuals, company or firm but did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... include an individual. Thus, under the new definition, business entity would mean any persons including individual who carries out any of the following activities in ordinary course - (a) industry, (b) commerce, (c) any other business , or (d) profession. Business Oxford s English Dictionary provides business the following meanings - - A person s regular occupation, profession or trade. - An activity that someone is engaged in. - Works that have to be done or matters that have to be attended to. - The practice of making one s living by engaging in commerce. - Operating, especially in commerce. The term business is very common and popular in usage. The derived terms of business are also used co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mely such as business cards, business cycle, business day, business hours, business like, businessman, business person, business process, business studies etc. In Income Tax, business has been defined to include any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. According to Halsbury (4th edition, Vol. 27), the word business extends the covenant to all cases where work, involving the recourse of numerous persons to the premises, is done for payment, or even without payment where the result is in effect the same as if a charge were made. The making of profit is not essential to constitute a business; nor, on the other hand, does payment necessarily constitute one. Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court has interpreted business as follows in various decided cases - - Business connotes some real, substantial and systematic or organised course of activity or conduct with a set purpose. [ Narain Swadeshi Mills v. Commissioner of Excess Profits Tax, 1954 (10) TMI 11 - SUPREME Court ]. - The business referred to is commercial business. The Government is engaged in huge commercial projects and so far as such activities are concerned (e.g. transport by land, air or sea) it cannot be said that the Government is not carrying on business. In its commercial ventures, the Government is entering into contracts with citizens. These contracts are governed by the ordinary law of the land. - The word business is of large s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignification, and in its broadest sense includes nearly all the affairs in which either an individual or a corporation can be actors. - The word business has been held to denote an activity with the object of earning profit. The business of a tea-grower and manufacturer is not merely to grow tea-plants but to collect tea-leaves and render them fit for sale. The tending of tea-garden to preserve the plants cannot be described as a continuation of the business. [ Senairam Doongarmall v. Commissioner of Income Tax, 1961 (3) TMI 7 - SUPREME Court ]. - A single transaction does not constitute business. The concept of business postulates continuity of transactions. [ Manipur Administration v. Nila Chandra Singh, 1963 (11) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TMI 78 - SUPREME COURT ] - Business is a wider term than trade and is not synonymous with it, and means almost anything; which is an occupation as distinguished from a pleasure. However, the term must be construed according to its context. [Words and Phrases BUTTERWORTHS, 3rd Edn. 47 Halsbury s Laws, 4th Edn., para 2 as cited in B.R. Enterprises v. State of U.P., 1999 (5) TMI 498 - SUPREME COURT OF INDIA ]. - In a broad sense it is taken to mean, everything that occupies the time, attention and labour of men for the purpose of livelihood or profit. Practice of law is business. [S. Mohan Lal v. R. Kondiah, AIR 1979 SC] - Business has a very wide import. In its generic sense, is any purposeful activity any activ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity, directed towards some end, an activity engaged in as normal, logical, or inevitable and usually extending over a period of time. In its narrow sense, it is confined to activity of a commercial nature with a profit motivation. [Bakhtawar Singh Balakrishnan, New Delhi v. Union of India, AIR 1983 Del 201, 204. [CPC (5 of 1908), S. 20]] - The word business applies to an occupation of mercantile or commercial nature. The physical involvement for carrying on business or trade is not necessary. The impression that the respondent should have skill or capability to do the business of tailoring herself is wholly misplaced. The word business by itself is very comprehensive and it may at some time include carrying on of a business thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh employees. [Sher Ahmad Jan v. Zubeda Nasreen, 1989 CLC 1113 (Pak.) (Legal Terms and Phrases - Ilyas Khan)]. - Business includes: (a) day-to-day running of the business, (b) rationalization of business administration and modernization of machinery of business, (c) preservation of business and protection of its assets and property from expropriation, coercive process or assertion of hostile title, (d) payment of statutory dues and taxes imposed as pre-condition for commencement or carriage of business, (e) things incidental to carriage of business. [ Birla Cotton Spng. and Wvg. Mills Ltd v. CfT, 1967 (3) TMI 104 - CALCUTTA HIGH COURT , affirmed, Commissioner of Income-Tax, West Bengal I Versus Birla Cotton Spi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nning And Weaving Mills Limited - 1971 (8) TMI 9 - SUPREME Court ]. Entity Literally, entity is a thing with distinct and independent existence. P Ramanatha Aiyar in Advanced Law Lexicon, 2005ed provides the following meanings of entity - A real being existence. An organization or being that possesses separate existence for tax purposes. Examples would be corporation, partnerships, estates and trusts. The accounting entity for which accounting statements are prepared may not be the same as the entity defined by law. Entity includes corporation and foreign corporation not for profit corporation profit and not for profit unincorporated association business trust, estate, partnership, trusts, and two or more persons having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a joint or common economic interest, and state, United States, and foreign government . - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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