Section 28 - Profits and gains of business or profession.

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The following income shall be chargeable to income-tax under the head "Profits and gains of business or profession"

1. The profits and gains of any business or profession which was carried on by the assessee at any time during the previous year;

2. Compensation received by any person in following cases:

a. In case of any person managing the whole or substantially the whole of the affairs of an Indian company or any other Co in India –

Termination of his management or the modification of the terms and conditions relating thereto;

b. In case of any person holding an agency in India for any part of the activities relating to the business of any other person-

Termination of the agency or the modification of the terms and conditions relating thereto;

c. Vesting in the Government, or in any corporation owned or controlled by the Government of the management, of any property or business;

d. Termination or the modification of the terms and conditions, of any contract relating to business of any person;

3. Association: Income derived by a trade, professional or similar association from specific services performed for its members;

4. Import/Export related:

a. Profits on sale of a Import/Export licenses.

b. Cash assistance against exports under any scheme of the Government.

c. Duty Drawbacks

d. Profit on the transfer of the Duty Entitlement Pass Book (DEPB) .

e. any profit on the transfer of the Duty Free Replenishment Certificate(DFRC).

5. Perquisite: The value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession;

6. Partner: Interest, salary, bonus, commission or remuneration or any other amount, to a partner of a firm.

Provided that where any interest, salary, bonus, commission or remuneration are disallowed clause (b) of section 40, the income under this clause shall be adjusted to the extent of the amount not so allowed to be deducted;

7. Non-Compete Fees: Any sum, whether received or receivable, in cash or kind, under an agreement for:

a. Not carrying out any activity in relation to any business or profession; or

b. Not sharing any know-how, patent, copyright, trade-mark, license, franchise or any other business or commercial right of similar nature or information or technique likely to assist in the manufacture or processing of goods or provision for services:

Provided that above clause shall not apply to:-

a) any sum, whether received or receivable, in cash or kind, on account of transfer of the right to manufacture, produce or process any article or thing or right to carry on any business or profession, which is chargeable under the head "Capital gains";

b) any sum received as compensation, from the multilateral fund of the Montreal Protocol on Substances that Deplete the Ozone layer under the United Nations Environment Programme.

"service" means service of any description which is made available to potential users and includes the provision of services in connection with business of any industrial or commercial nature such as accounting, banking, communication, conveying of news or information, advertising, entertainment, amusement, education, financing, insurance, chit funds, real estate, construction, transport, storage, processing, supply of electrical or other energy, boarding and lodging;

8. Keyman Insurance Policy: Any sum received under a Keyman insurance policy including the sum allocated by way of bonus on such policy.

9. Inventory: Fair market value of inventory as on the date on which it is converted into, or treated as, a capital asset determined in the prescribed manner;

10. 35AD: any sum, whether received or receivable, in cash or kind, on account of any capital asset (other than land or goodwill or financial instrument) transferred, if the whole of the expenditure on such capital asset has been allowed as a deduction under section 35AD.

Transfer includes demolished, destroyed, discarded.

Note: Where speculative transactions carried on by an assessee are of such a nature as to constitute a business, the business (hereinafter referred to as "speculation business") shall be deemed to be distinct and separate from any other business.