Professionals who are eligible to opt Section 44ADA

1) How does Income Tax Act classifies professionals ?

Income Tax Act classifies professionals into 2 types,

a) Professionals specified u/s 44AA(1) [hereafter in this article, these professionals are referred as ‘Specified Professionals’]

b) Professionals covered u/s 44AA(2) [hereafter in this article, these professionals are referred as ‘Unspecified Professionals’]

2) Who are the Professionals specified u/s 44AA(1) ?

Professionals specified u/s 44AA(1) are,

i) Legal –  Advocates

ii) Medical –  Doctors

iii) Engineering –  Engineers

iv) Architectural Profession –  Architects

v) Profession of Accountancy –  CAs

vi) Technical Consultancy

vii) Interior Decoration

viii) Other Professions as is notified by the Board in the Official Gazette¹

Note 1 :

As of now, Board has expressly notified only 2 ‘Specified Professionals’ for the purpose of Sec. 44AA(1), who can opt Sec. 44ADA and they are,

a) Profession of Company Secretary [vide Notification No. S.O. 2675, dt. 25.09.1992]²

b) Profession of Information Technology [vide Notification No. S.O. 385(E), dt. 04.05.2001]³

Note 2 : Extracts of Notification No. S.O. 2675, dt. 25.09.1992 :

“In exercise of the powers conferred by sub-section (1) of section 44AA of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby notifies the profession of company secretary for the purpose of the said sub-section.

Explanation.– In this notification, “company secretary” means a person who is a member of the Institute of Company Secretaries of India in practice within the meaning of sub-section (2) of section 2 of the Company Secretaries Act, 1980 (56 of 1980).

[No. 9102/F. No. 225/51/92-IT(A-II)”

Note 3 : Extracts of Notification No. S.O. 385(E), dt. 04.05.2001 :

“In exercise of the powers conferred by sub-section (1) section 44AA of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby notifies the profession of information technology for the purposes of the said sub-section.

(Notification No. 116/F. No. 23/FB/2001-TPL]”

3) Who are the Professionals covered u/s 44AA(2) ?

• Professionals, not being Professionals referred to in Sec. 44AA(1), are covered u/s 44AA(2).

4) Who are the Professionals eligible to opt Sec. 44ADA ?

• List of ‘Specified Professionals’ who are specified in Sec. 44AA(1), are eligible to opt Sec. 44ADA.
• On a total, there are only 9 ‘Specified Professionals’ (as of now) as per Sec. 44AA(1), who are eligible to opt Sec. 44ADA.
• ‘Unspecified Professionals’ [those covered u/s 44AA(2)] cannot opt Sec. 44ADA.

5) What are the books of accounts that are required to be maintained by ‘Specified Professionals’ ?

• 44AA(1) specifies ‘Specified Professionals’ to keep and maintain such books, which may enable the Assessing Officer to compute his total income [without specifying any limits regarding Total Income &
• Turnover or Gross Receipts expressly in Sec. 44AA(1)].
• Note : Rule 6F(1) has to be referred, where Gross Receipts limit have been prescribed for certain professionals for the applicability of maintenance of books of accounts & other documents.

6) What are the books of accounts that are required to be maintained by ‘Unspecified Professionals’ ?

• 44AA(2) specifies ‘Unspecified Professionals’[& also business assessees] to keep and maintain such books, which may enable the Assessing Officer to compute his total income [with certain Total income & Turnover or Gross Receipts limits specified in Sec. 44AA(2)].

7)  Whether CBDT has prescribed any books for the purpose of Sec. 44AA(1) [i.e. specified professionals] & Sec. 44AA(2) [i.e. unspecified professionals (& also business assessees)] ?

• Yes
• Sec. 44AA(3) specifies that, CBDT through rules may prescribe the books of accounts & other documents (based on the nature of business or professions) that are required to be kept & maintained by,

a) Specified Professionals [i.e. u/s 44AA(1)]&

b) Unspecified Professionals & Business Assessees [i.e. u/s 44AA(2)]

• Extract of Sec. 44AA(3) for reference,
• “The Board may, having regard to the nature of the business or profession carried on by any class of persons, prescribe, by rules, the books of account and other documents (including inventories, wherever necessary) to be kept and maintained under sub-section (1) or sub-section (2), the particulars to be contained therein and the form and the manner in which and the place at which they shall be kept and maintained.”
• CBDT through Income Tax Rule 6F, specifies the books of accounts & other documents (with certain Gross Receipts limit) that are required to be kept & maintained by certain professionals.
• Kindly note that, Rule 6F is not for the purpose of business assessees, it is only for the purpose of certain professionals who are mentioned expressly in Rule 6F(1).
• Also note that, as of now, no books of accounts or other documents have been expressly notified by CBDT for business assessees through any rule.
• CBDT has inserted Rule 6F vide Notification No. S.O. 18(E), dt. 12.01.1977.

8) What is the purpose of Rule 6F ?

• Rule 6F was introduced to insist certain professionals [as specified in Rule 6F(1)] to keep & maintain such books of accounts and other documents as specified in Rule 6F(2).
• Professional specified in Rule 6F(1),

i) Legal –  Advocates

ii) Medical –  Doctors

iii) Engineering –  Engineers

iv) Architectural Profession –  Architects

v) Profession of Accountancy –  CAs

vi) Technical Consultancy

vii) Interior Decoration

viii) Authorized Representative

ix) Film Artist

• Rule 6F is only for the purpose of Sec. 44AA(3) and not for the purpose of Sec. 44AA(1)
• Only Rule 6F was introduced vide Notification No. S.O. 18(E), dt. 12.01.1977 and hence Rule 6F(1) does not prescribe to say that, these 2 Professionals (i.e. Authorized Representatives & Film Artists) are included here for the purpose of Sec. 44AA(1)
• CBDT through Rule 6F has not notified Authorized Representatives or Film Artist for the purpose of Sec. 44AA(1), rather CBDT has notified Rule 6F only for the purpose of prescribing the books of accounts and other documents that are to be kept & maintained u/s 44AA(3) by persons carrying of certain professions.
• Rule 6F(1) insists certain professionals [as included in Rule 6F(1)] to keep & maintain, books of accounts & other documents as specified in Rule 6F(2).

9) Whether Company Secretary [inserted into Sec. 44AA(1) vide Notification No. S.O. 2675, dt. 25.09.1992 ] & Profession of Information Technology [inserted into Sec. 44AA(1) vide Notification No. S.O. 385(E), dt. 04.05.2001] are covered under Rule 6F ?

• No
• The phrases, “any other profession as is notified by the Board in the official gazette” as included in Sec. 44AA(1) is not included in Rule 6F(1).
• So, Rule 6F is not applicable to Company Secretary & Profession of Information Technology.
• Hence both Company Secretary & Profession of Information Technology are not required to keep & maintain books of accounts & other documents specified in Rule 6F(2).
• As the above mentioned phrases have been included only in Sec. 44AA(1) & not in Rule 6F(1), both these professionals are expressly notified only for the purpose of Sec. 44AA(1) in the respective notifications. 

10) Whether Authorized Representatives & Film Artists are notified for the purpose of Sec. 44AA(1) & can they opt Sec. 44ADA ?

• No
• Authorized Representatives & Film Artists are included only in Rule 6F(1) just to say that, these 2 professionals are required to maintain the books of accounts & other documents as specified in Rule 6F(2).
• These 2 professionals are not expressly notified for the purpose of Sec. 44AA(1) in any of the notifications from the CBDT till now.
• Only Rule 6F was inserted vide Notification No. S.O. 18(E), dt. 12.01.1977.
• Extracts of this Notification for reference,

– The following draft of certain rules further to amend the Income-tax Rules, 1962, which the Central Board of Direct Taxes proposes to make in exercise of the powers conferred by sub-section (3) of section 44AA, read with section 295, of the Income-tax Act, 1961 (43 of 1961), is hereby published for the information of all persons likely to be affected thereby ; and notice is hereby given that the said draft will be taken into consideration on or after the 1st day of March, 1977.

– Any objection or suggestion which may be received from any person with reference to the said draft before the said date will be considered by the Central Board of Direct Taxes.

– DRAFT RULES

(1) These rules may be called the Income-tax (Amendment) Rules, 1977.

2. In Part II of the Income-tax Rules, 1962, after rule 6E and before Sub-Part D, the following Sub-Part shall be inserted, namely :–

– “CC. Books of account.

– 6F. Books of account and other documents to be kept and maintained under section 44AA(3) by persons carrying on certain professions. — (1) Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or authorised representative or film artist shall keep and maintain the books of account and other documents specified in sub-rule (2).

– (2) The books of account and other documents referred to in sub-rule (1) shall be the following, namely :-

i) a daily cash book ;

ii) a journal, if the accounts are maintained according to the mercantile system of accounting ;

iii) a ledger ;

iv) duplicate copies of machine-numbered bills and receipts issued by the person ;

v) original bills and receipts in respect of expenditure incurred by the person or, where such bills and receipts are not issued and the expenditure incurred does not exceed twenty-five rupees, payment vouchers prepared and signed by the person.

– Explanation — In this rule, —

a) “authorized representative” means a person who represents any other person, on payment of any fee or remuneration, before any tribunal or authority constituted or appointed by or under any law for the time being in force, but does not include an employee of the person so represented or a person carrying on legal profession or a person carrying on the profession of accountancy ;

b) “daily cash book” means a record of all cash receipts and payments, kept and maintained from day to day, and giving the cash balance in hand at the end of each day ;c;’

c) “film artist” means any person engaged in his professional capacity in the production of a cinematograph film, whether produced by him or by any other person, as –

i) an actor ;

ii) a cameraman ;

iii) a director, including an assistant director ;

iv) a music director, including an assistant music director ;

v) an art director, including an assistant art director ;

vi) a dance director, including an assistant dance director ;

vii) an editor ;

viii) a singer ;

ix) a lyricist ;

x) a story writer ;

xi) a screen-play writer ;

xii) a dialogue writer ; and

xiii) a dress designer.

(3) A person carrying on medical profession shall, in addition to the books of account and other documents specified in sub-rule (2), keep and maintain the following, namely :–

i) a daily case register in Form No. 3C ;

ii) an inventory, as on the first and the last day of the previous year, of the stock of drugs, medicines and other consumable accessories used for the purpose of his profession.

(4) The books of account and other documents specified in sub-rule (2) and sub-rule (3) shall be kept and maintained by the person at the place where he is carrying on the profession or, where the profession is carried on in more places than one, at the principal place of his profession :

– Provided that where the person keeps and maintains seperate books of account in respect of each place where the profession is carried on, such books of account and other documents may be kept and maintained at the respective places at which the profession is carried on.”.

– In Appendix II to the Income-tax Rules, 1962, after Form No. 3B, the following Form shall be inserted, namely :–

– “FORM No. 3C [See rule 6F(3)] Form of Daily Case Register

– (To be maintained by practitioners of any system of medicine, i.e., physicians, surgeons, dentists, pathologists, radiologists, vaids, hakims, etc.)

– —— Date S. No. Patient’s name Nature of professional Fees or charges for services rendered, i.e., services rendered general consultation, – surgery, injection, By By visit, etc. cash cheque Rs. Rs. —— (1) (2) (3) (4) (5) (6) ——

– ——-

– [No. 1620/F. No. 133(102)/76-TPL

• In this notification, nowhere it is specifically mentioned that, authorized representative & film artist are notified for the purpose of Sec. 44AA(1) unlike in notification issued for including Company Secretary [Notification No. S.O. 2675, dt. 25.09.1992]& profession of Information Technology [Notification No. S.O. 385(E), dt. 04.05.2001]into Sec. 44AA(1).
• Also, in this notification, nowhere it is expressly mentioned that, professionals specified in Rule 6F(1) are for the purpose of Sec. 44AA(1).
• In this notification, CBDT has inserted a new rule, i.e. Rule 6F and through which CBDT specifies that, all the professionals who are mentioned in Rule 6F(1) are required to maintain books of accounts & other documents as specified in Rule 6F(2).
• Since these 2 professionals (i.e. Authorized Representatives & Film Artists) are not expressly notified for the purpose of Sec. 44AA(1), these 2 professionals cannot be considered as ‘Specified Professionals’ and hence they both are hereby known as ‘Unspecified Professionals’.
• Authorized Representatives & Film Artists are not notified for the purpose of Sec. 44AA(1) & hence they both cannot opt Sec. 44ADA.

Note :

• For more clarity compare the following 3 notifications,

i) Notification No. S.O. 2675, dt. 25.09.1992

ii) Notification No. S.O. 385(E), dt. 04.05.2001

iii) Notification No. S.O. 18(E), dt. 12.01.1977

• By comparing these 3 notifications, we will be able to conclude that, there is a difference in context of notification (i) & notification (ii) above when compared with that of notification (iii).
• In the first 2 notifications [i.e. Notification (i) & Notification (ii)] it can be clearly understood that, Company Secretary & Profession of Information Technology are expressly notified for the purpose of Sec. 44AA(1).
• But in the 3^rd Notification, it is clearly evident that Authorized Representatives & Film Artists are included only for the purpose of Rule 6F(1) and not for the purpose of Sec. 44AA(1).
• Rule 6F conveys that, these 2 ‘Unspecified Professionals’ (i.e. Authorized Representatives & Film Artists) along with that of 7‘Specified Professionals’ (i.e. Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration) have to keep & maintain books of accounts & other documents as specified in Rule 6F(2)

11) What is the general view towards Authorized Representatives & Film Artists regarding their chance of opting of Sec. 44ADA ?

• There is a general view towards Authorized Representatives & Film Artists that, these 2 professionals can opt Sec. 44ADA.
• The reason for the general view could be that, since these 2 professionals have been included in Rule 6F(1), they can also be considered for Sec. 44AA(1) & hence they become eligible to opt Sec. 44ADA.
• But this general view is not acceptable because of the considerations made and discussed above (i.e. in Question No. 10 of this article)

Difference between Sec. 44AA(1) & Rule 6F(1)

Particulars	44AA(1)	Rule 6F(1)
List of Professionals	(i)   Legal  –  Advocates (ii)  Medical  –  Doctors (iii) Engineering  –  Engineers (iv)  Architectural Profession – Architects (v)   Profession of Accountancy  –  CA (vi)  Technical Consultancy (vii)  Interior Decoration (viii)  Other Professions as notified by Board in the Official Gazette. a)     Company Secretary [vide Notification No. S.O. 2675, dt. 25.09.1992] b) Profession of Information Technology [vide Notification No. S.O. 385(E), dt. 04.05.2001]	(i)   Legal  –  Advocates (ii)  Medical  –  Doctors (iii) Engineering  –  Engineers (iv)  Architectural Profession – Architects (v) Profession of Accountancy  –  CA (vi)  Technical Consultancy (vii)  Interior Decoration (viii) Authorized Representative (ix) Film Artist
What the respective Sub-Section or Sub-Rule says ?	Above mentioned professionals shall keep & maintain such books of accounts & other documents as my enable the Assessing Officer to compute his Total Income in accordance with the provisions of this act.	Above mentioned professionals shall keep & maintain the books of accounts & other documents specified in Rule 6F(2)
Applicability of Sec. 44AA (1) & Sec. 44ADA	Company Secretary & Profession of Information Technology have been notified as specified professions for the Sec. 44AA(1) & hence they both can opt Sec. 44ADA	Authorized Representative & Film Artist are included in the list of professions under Rule 6F(1), just to prescribe that these 2 professional have to keep & maintain books of accounts & other documents specified in Rule 6F(2) and not for the purpose of Sec. 44AA(1) or Sec. 44ADA
Particulars	44AA(1)	Rule 6F(1)
Contents of the respective notifications	Company Secretary & Profession of Information Technology have been included in Sec. 44AA(1) vide above said notifications, by specifically mentioning that these 2 professions are for the purpose of Sec. 44AA(1)	Whereas, Rule 6F was introduced vide Notification No. S.O. 18(E), dt. 12.01.1977, so as to prescribe the Books of account and other documents that are required to be kept and maintained u/s 44AA(3) by persons carrying on above said professions.
Applicability of Rule 6F(2)	Since the phrase, “any other profession as is notified by the Board in the official gazette” as included in Sec. 44AA(1) is not included in Rule 6F(1), Rule 6F is not applicable to Company Secretary & Profession of Information Technology, so they need not keep & maintain such books of accounts & other documents specified in Rule 6F(2)	Professions of Authorized Representative & Film Artist are included in Rule 6F(1) only for the purpose, that these two have to keep & maintain such books of accounts & other documents specified in Rule 6F(2) and as there is no inter connection between Rule 6F & 44AA(1)
Connection between Sec. 44AA & Rule 6F	Rule 6F & Sec. 44AA(1) are not interconnected	Only Rule 6F & Sec. 44AA(3) are interconnected
Conclusion	Company Secretary & Profession of Information Technology can be considered as specified professions for the purpose of Sec. 44AA(1) & hence they both can opt Sec. 44ADA	Professions of Authorized Representative & Film Artist cannot be considered as specified professions for the purpose of Sec. 44AA(1) & hence they both cannot opt Sec. 44ADA

Conclusion :

• Just because these 2 professionals (Authorized Representative & Film Artist) are included in Rule 6F(1) does not mean that they can be considered as ‘Specified Professionals’ for the purpose of Sec. 44AA(1).
• Based on the above considerations & analysis it is evident that,

i) Authorized Representatives & Film Artists are considered as ‘Unspecified Professionals’ u/s 44AA(2).

ii) Authorized Representatives & Film Artists cannot opt Sec. 44ADA.

iii) Assessees involving in Profession of Company Secretary & in Profession of Information Technology are not required to maintain books of accounts & other documents as specified in Rule 6F(1).

iv) As of now, no rules have been prescribed by CBDT for the purpose of maintenance of books of accounts & other documents for these 2 professionals (i.e. Company Secretary & Profession of Information Technology).

v) But these professionals (i.e. Company Secretary & Profession of Information Technology) shall keep & maintain such books of accounts & other documents as may enable the Assessing Officer to compute their total income in accordance with the provisions of this Act.

Disclaimer : This article is only for educative purposes and to gain knowledge about a subject through interpretation from author’s point of view [ or understanding of the subject ] and this article is not to influence anyone in their decisions related either to their profession or their practice or their education. Matters contained in this article are only author’s view or opinion regarding the subject and not to force anyone to follow as per this article while anyone refer this article.