Digital Marketing Is Business, Not Profession; Audit Report Not Required For Turnover Below ₹5 Crores: Madras High Court

Justice Krishnan Ramasamy stated that “Digital Marketing is the business for persons who carry out the said activities. In the event anybody carrying on the business of Digital Marketing with cash transactions both on the aspect of receipts and payments in cash below 5% of the turnover, which is below Rs.5 Crores as per the proviso to Section 44 AB (a), the said assessee is not required to file an audit report and they are exempted.”

The assessee/petitioner is carrying on the business of Digital Marketing with a turnover of below Rs.5 Crores and they have not received or spent any amount in cash beyond the limit of 5%, in which case the audit report is not required to be filed for the turnover upto Rs.5 Crores and therefore, they have not filed audit report.

The assessee received an intimation notice from the department and on the same day, the assessee filed reply stating that the cash receipts and payments were less than 5% of the turnover and also the turnover is below Rs.5 Crores and therefore, they have not furnished the audit report. However, the department passed the assessment order.

The department submitted that the assessee is not carrying on the business of Digital Marketing but carrying on the profession. Since they carry out all the work through the computers, it falls under the category of profession. Therefore, in the event of profession, the limit of Rs.5 Crores will not be applicable.

The assessee submitted that the question of carrying on the business of Digital Marketing would not fall under the category of profession and therefore, under the wrong impression, the department proceeded to pass the impugned order as if the assessee did not carry on the business but carried on the profession.

The bench stated that “according to the respondent/department, the petitioner/assessee carries on the business of Digital Marketing through computers and therefore, it comes under the category of profession. However, Digital Marketing cannot be treated as profession, but it should be treated as business. Merely because it carried on the business through computers, it cannot be treated as profession.”

The bench noted that the assessee turnover is below Rs.5 Crores and the cash transaction is below 5% on both aspects of expenses and receipts and everything was carried on through bank transactions. In this regard, evidence has also been produced and the said aspects had not been considered by the department.

In nonapplication of mind, the department arrived at a conclusion that the present transaction is in the nature of profession, not in the nature of business and passed the impugned order, observed the bench.

In view of the above, the bench allowed the petition and set aside the impugned order.

Case Title: Vajra Global Consulting Service LLP v. Assistant Director of Income Tax

Citation: 2025 LiveLaw (Mad) 265

Case Number: W.P.No.18560 of 2023

Counsel for Petitioner/Assessee: Hema Muralikrishnan

Counsel for Respondent/Department: S. Premalatha

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