Category: Bangalore University B.com Notes

Business refers to any kind of economic activity done by an assessee for earning profits.

The term business/economic activity includes “any trade, commerce, manufacturing activity or any adventure or concern in the nature of trade, commerce and manufacture”.

There are two types of business, speculative and non-speculative.

• Speculative business income: Income from intraday equity trading is considered a speculative business income. Intraday trading simply means the buying and selling of financial instruments on the same day.
• In other words, the amount (net amount from it) is not fixed and it can change from time to time. For example, share trading business.
• Non-speculative business income: It is the income from trading Futures & Options is taken as a non-speculative business. F&O is also considered as non-speculative as these instruments are used for hedging and also for taking/giving delivery of the underlying contract.
• In other words, the amount (net profit/loss from it) is fixed and does not change for a period of time. For example, any manufacturing/trading or any business.

It is not compulsory to have a series of permanent transactions in a business. In other words, the repetition or continuity of business transactions is not essential.

‘Profession’

A profession is a kind of job that requires special expertise, skill and knowledge like that of C.A., Lawyer, Doctor, Engineer, Architect etc. In other words, he/she utilizes either his/her intellectual or manual skills to earn the livelihood.

The term “profession” is about his/her declared accomplishments, in special knowledge distinguished from mere skill.

Income from business and profession

The term ‘Income from business and profession’ means any income shown in profit and loss account after taking into account all the allowed expenditures by an assessee.

The income also includes both positive (profit) and negative incomes (loss). In other words, ‘profit and gains’ represent plus income while ‘loss’ represents minus income. So, both legal and illegal business incomes are taxable in nature.

The income earned by the assessee from the previous year is taxable. An assessee involved in the business/profession should file his/her income on or before 31 July of an assessment year.

The word “profession” & “vocation” have not been defined in the Act while as per section 2(36) of the Income Tax Act, 1961, “profession” includes vocation. The word “vocation” is a word of wider import than the word ‘profession”.

The words “business” and “vocation” are not synonymous, 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 (Upper India Chamber of Commerce, Cawnpore vs. CIT (1947) 15 ITR 263 (All).

Also it was observed in Addl CIT vs. Ram Kripal Tripathi (1980) 125 ITR 408 (All) that the expression “profession” involves the idea of an occupation requiring purely intellectual skill or manual skill controlled by the intellectual skill of the operator, as distinguished from an occupation or business which is substantially the production or sale, or arrangements for the production or sale, of commodities. “Profession” is a word of wide import and includes “vocation” which is only a way of living and a person can have more than one vocation, and the vocation need not be for livelihood nor for making any income nor need it involves systematic and organised activity.

It was observed in Dr. P. Vadamalayan vs. CIT (supra) at page 96) that the term “business” as used in the fiscal statute cannot ordinarily be understood in its etymological sense. According to the Shorter Oxford Dictionary, “business” includes a state 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 jurists 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”.

The Supreme Court in Narain Swadeshi Weaving Mills vs. Commissioner of Excess Profits Tax (1954) 26 ITR 765 (SC), said that the word “business” connotes some real, substantial and systematic or organised course of activity or conduct with a set purpose. Venkatarama Aiyar J.,speaking for the court in Mazagaon Dock Ltd. vs. CIT (1958) 34 ITR 368 at page 376 (SC), explained “business” as a word of wide import and in fiscal statutes it must be construed in a broad rather than a restricted sense.

Following Losses are Deductible from Business Income

• Loss of stock-in-trade as a result of enemy action, or arising under similar circumstances.
• Loss of stock-in-trade due to destruction by an act of God.
• Loss arising on account of failure on the part of the assessee to accept delivery of goods.
• Depreciation in funds kept in foreign country for purchase of stock-in-trade.
• Loss due to exchange rate fluctuations of foreign currency held on revenue account.
• Loss arising from sale of securities held in the regular course of business.
• Loss of cash and securities in a banking company on account of dacoity (maybe after banking hours.) Loss incurred on realisation of amount advanced in connection with business.
• Loss of security deposited for the purposes of acquisition of stock-in-trade.
• Loss due to forfeiture of a deposit made by the assessee for properly carrying out of contract for supply of commodities.
• Loss on account of embezzlement by an employee.
• Loss incurred due to theft or burglary in factory premises during or after working hours.
• Loss of precious stones or watches of a dealer while bringing them from business premises to his house.
• Loss arising from negligence or dishonesty of employees.
• Loss incurred on account of insolvency of banker with which current account is maintained by the assessee.
• Loss incurred due to freezing of the stock-in-trade by enemy action.
• Loss incurred by a sugar manufacturing company by foregoing advance made to sugarcane growers who used to sell sugarcane crop exclusively to the company.
• Loss on account of non-recovery of advances given by the assessee-company (engaged in the business of financing its subsidiaries) to its 100 per cent subsidiary company.
• Loss incurred by a holding company which has guaranteed a loan taken by its subsidiary company.
• Loss arising as a result of seizure and confiscation of illegal stock-in-trade is allowable as a business loss against income from illegal business
• Loss arising as a result of rejection of goods by the importer (as goods are unfit for human consumption).

Following Losses are Not Deductible from Business Income

• Loss which is not incidental to trade or profession, carried on by the assessee.
• Loss incurred due to damage, destruction, etc., of capital assets.
• Loss incurred due to sale of shares held as investment.
• Loss of advances made for setting up of a new business which ultimately could not be started.
• Depreciation of funds kept in foreign currency for capital purposes.
• Loss arising from non-recovery of tax paid by an agent on behalf of the non-resident.
• Anticipated future losses.
• Provision made by assessee in respect of non-performing assets.
• Loss relating to any business or profession discontinued before the commencement of previous year.

Expenditures disallowed for TDS default

The Income Tax Act states certain circumstances where if the TDS deductible on payments has not been deducted appropriately, such expenses are expressly disallowed.

The various provisions which relate to disallowance on account of TDS default are as follows:

• Payment (for other than salaries) outside India or to a non-resident or foreign company (for example payments for interest, royalty, technical fee, etc.)

The repercussions under various scenarios of TDS default are given below:

If any amount is paid as salaries to a person outside India or a non-resident without deduction of TDS, the amount so paid is disallowed as expenditure.

• Payment of any sum to a resident with TDS default (including salaries)
• The repercussions under various scenarios of TDS default are given below:

The act also provides for a relief in case of non-deduction of TDS if the below-mentioned clauses are fulfilled.

In a case where TDS is required to be deducted and the same has not been deducted, the assessee can claim a relief and the expenditures will be allowed if:

• The recipient has filed his return of income in time;
• The above payment has been taken into account by the recipient while filing his/her return;
• The recipient has paid taxes appropriately on the declared income;
• A certificate from a Chartered Accountant is obtained and uploaded with the return to this effect.

Expenditures disallowed for Equalization Levy default

In cases where for any particular expenditure (where the equalization levy is required to be deducted) there is a default on account of equalization levy through either of the following channels, the amount of such expenditure is disallowed.

• Non-deduction of equalization levy
• Non-deposit of equalization levy before due-date or filing of IT return

Although, in the subsequent year when the deduction or deposit is so made, the expenditure is thus allowed.

Expenditures disallowed for payment in cash

There are certain transactions where the payment for the services or goods are made by the assesses in cash instead of cheque or bank transfer, etc. In all such cases where the amount of payment exceeds Rs. 20,000, the expenditure is disallowed. The act provides for such payments to be made through an account payee cheque, account payee bank draft or bank transfer and likewise.

Although the section provides for disallowance in case of payments for expenditure in cash beyond Rs. 20,000, there are certain instances where the payment exceeding Rs. 20,000 is allowed in cash and the allowance for such expenditures are given as well. Such list of expenditures is prescribed in Rule 6DD.

An illustrative list is given here as follows:

• Payment to banks, financial institutions, etc.
• Payment to government
• Payment made by book adjustments
• Payment for purchase of agricultural products
• Payment made to cottage industries which are producing without the aid of power
• Payment to a person in a village which is not served by any banks
• Payment of employment terminal benefits (Up to Rs. 50,000)
• Payment of salary after deducting TDS appropriately
• Payment made on a day on which banks are closed
• Payment made by forex dealer

The provision applies in the case where the payment is made to a single person in a single day.

Recently, the income tax department has notified that the limit of all expenses made in cash on a particular day has been reduced to Rs 10,000. The rules provides for such payments made through an account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as prescribed under rule 6ABBA and will have effect from the 1st of September 2019.

Here is the list of other electronic modes specified in Rule 6BBA:

• Credit/debit card
• Net banking
• IMPS
• UPI
• RTGS
• NEFT
• BHIM Aadhaar pay

Section 43B is an over-ruling section and anything contained in other provisions of the Income Tax Act should not be applicable to the payments mentioned under this section.

Section 43B states that certain payments should be allowed to be claimed as an expense only in the year in which they have been paid and not in the year in which the liability to pay such sum was incurred. Thus, for the following expenses, accrual concept of accounting should not be followed and only cash basis of accounting should be followed.

However, the provisions of Section 43B shall not apply in relation to any sum which is actually paid by the assessee on or before the due date applicable in his case for furnishing his Income Tax Return under Section 139(1) in respect of the previous year in which liability to pay such sum was incurred by the assessee and the evidence of such payment is furnished along with the income tax return.

Payment of Taxes

Any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called under any law for the time being in force, or

Employer Contribution for benefit of Employee

Any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity find or any other fund for the welfare of the employees

Bonus/ Commission

Any Bonus or Commission payable to the Employees

Interest on any Loan or Borrowing

Any sum payable by the assessee as Interest on any Loan or borrowing from any public financial institution or a State Financial Corporation or a State Industrial Investment Corporation, in accordance with the terms and conditions of the agreement governing such loans of borrowings, or

Interest on any Loan or Advance

Any sum payable by the assessee as Interest on any Loan or Advance from a scheduled bank in accordance with the terms and conditions of the agreement governing such loan or advance

Provision for Leave Encashment

Any sum payable by the assessee as an employer in lieu of any leave to the credit of his employee

Payment made to Railways

With a view to promote prompt payment to Railways, Budget 2016 has amended Section 43B and from Financial Year 2016-17 onwards, the payments made to Railways would be allowed to be claimed as an expense on Payment basis.

Other Relevant Points

For the removal of any doubts, it has been clarified that a deduction of any sum being interest payable under Clause (d) or Clause (e) of this Section, shall be allowed if such interest has been actually paid and any interest referred to in that clause which has been converted into a loan .or borrowing shall not be deemed to have been actually paid.

As per Section 43B

Notwithstanding anything contained in any other provision of this Act*, a deduction Sudame otherwise allowable under this Act in respect of:

a) Any sum payable by the assessee by way of tax, duty, cess or fee, (by whatever name called, under any law for the time being in force);

b) Any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees;

c) Any sum payable as bonus or commission to employee for services rendered;

d) Any sum payable by the assessee as interest on any loan or borrowing from any public finan­cial institution or a State financial corporation or a State industrial investment corporation, in accordance with the terms and conditions of the agreement governing such loan or borrowing;

e) Any sum payable by the assessee as interest on any loan or advances from a scheduled bank or (wef A.y 2018-19 from a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank) in accordance with the terms and conditions of the agreement governing such loan or advanc­es;

f) Any sum payable by the assessee as an employer in lieu of any leave at the credit of his em­ployee.

g) Any sum payable to Indian Railways for the use of railway Assets (wef A.y 2017-18)-Section 43B to include certain payments made to Railways

A sole proprietor business is established, owned, financed and controlled by a single person who is known as sole trader or sole proprietor.

Such a business run by sole trader or sole proprietor is known as sole trade or sole proprietorship.

Advantages of Sole Proprietorship:

Sole proprietorship offers the following pros:

• Easy to Form:

Proprietary concerns can be formed easily and quickly. Very few legal formalities need to be fulfilled. There is no need to go for any registration or enter into an agreement with someone. One can form it and dissolve it quickly.

• Effort-Reward Relationship:

Proprietary ventures give a kick in the belly. You can burn the candle of energies and make money. You take the risk and get rewarded. The effort-reward relationship often excites people to chase creative ideas and turn them into successful ventures.

• Full Control:

The owner has full control over everything. He is answer­able to no one else. He decides everything in the best interests of the business. Right or wrong, he takes charge of the situation.

• Quick Decisions:

Proprietors can put things in order quickly if something goes wrong. If opportunities come his way, he can exploit them readily. He can give a fat discount to a loyal customer on the spot if he feels that such a step brings in additional revenues in future. Small businesses are known for their quick and effective decisions.

• Economical and Efficient Operations:

The owner can put resources to best use. He can take steps to eliminate wastages of all kinds. He can control the cost of running the show.

• Personal Touch:

The owner can bring his skills, knowledge and exper­tise to the table. He can play with his ideas and get them going. He can convert his dreams into concrete realities. He can make things happen. He can use his brilliance to good advantage.

• Keep the Business Simple, Dynamic and Flexible:

The owner can cut everything according to the cloth available. If there is demand, he can increase the scale and reach. If the demand is sluggish he can limit or­ders, reduce stocks and take measures to save every penny. He can run the show in sync with changing customers’ tastes and preferences.

• Keep the Secrets Close to Heart:

The proprietor need not share business secrets with any one. He need not place all his cards on the table at any point of time.

• Society Gains as a Whole:

Small ventures benefit society a lot. Ownership is diffused. If the venture turns successful, it generates employment. Customers get what they want in nearby places.

Disadvantages of Sole Proprietorship:

Sole proprietorship suffers from the following drawbacks or cons:

• Small Size:

By its very nature, proprietary concerns cannot grow big. They have limited means. They cannot expand operations in a big way. As a result, they do not enjoy the economies of scale. Customers, in the final analysis, do not gain from such miniscule concerns in the long run.

• Limited Shelf Life:

You never know when a big Mall will come nearby and kill all small players. Small businesses have limited life spans. They exist for a while and disappear within no time if customers turn into mall rats (shopping always from big malls).

• Lacks Professional Skills and Talent:

The proprietor lacks professional skills, talent and expertise. He has limited knowledge and does not have the ability to gauze competition, changes in fashions and customer tastes and preferences, trends in economy etc. He cannot run the show in a professional way.

• See the Big Picture:

His overall knowledge of market, competition, prod­ucts, tastes of customers, changes in fashions and trends, general trends in economy, danger from global firms etc.—is relatively poor. As a result he might take inappropriate decisions in a hurry, looking at things from a narrow perspective.

• Unlimited Liability:

If the small business owner fails, he has to swallow all losses. The liabilities of a firm might eat away the accumulated wealth of the owner almost instantaneously. The risk of unlimited liability forces many a sole proprietor not to expand operations beyond a point.

• Growth Prospects:

Business cannot go beyond a point for a variety of reasons—limited capital, owner lacks needed skills and competencies required to run the show on a large scale, unlimited liability compels many owners to remain small etc. The proprietary concern, therefore, does not grow to an optimum level and enjoy the economies of scale.

Chartered Accountancy

Chartered accountancy is a profession which works closely with the core of all business whether it is small, medium or big size firm. A professional chartered accountant typically involves in accounting, auditing, tax, and financial planning. This job is highly rewarding and is also considered very challenging. Career opportunities post chartered accountancy are full of excitement.

There are various professional challenges that a person can face while working as a CA. You can see these challenges below:

Have to Work Overtime

During the fiscal year, there come several times when a chartered accountant has to work more than 70 hours a week.

Competitive Job

CA job is very competitive, People who are in this professionals are naturally driven, determined, focused and more intelligent as compared to other jobs. The training and job in this profession are highly competitive and intense.

Handle Pressure Situations

CA job has very responsible tasks and activities, as you have to make sure that each and every detail is up to the mark and when are doing overtime and having strict deadlines, it becomes very difficult to keep your focus.

Never Ending Training

Working in this field always require continuing professional development, so availing training in this profession is a continuous process. So you will have to keep studying throughout your career.

Detail Oriented Job

This job is meant for those professionals who are naturally highly detail-focused for any task.

Hierarchical Career

CA profession is a hierarchical career, here you will have to follow some sets of defined protocols and steps to move in the career hierarchy.

Deadlines in this career are non-negotiable and it is very important to meet the deadlines. So if you like to keep pushing things up to the last second then you are not in the right profession.

Advocate

A lawyer’s profession is meant to be a divine or sacred profession by all means. In every profession, there are certain professional ethics that need to be followed by every person who is into such a profession. But there is the fact that professional misconduct is a common aspect, not only in other professions but also in advocacy also. In simple terms, it means certain acts done by the persons which seem to be unfit for the profession as well as which are against certain ethics in this field. The term has been clearly defined in Black’s Dictionary as, the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, unlawful behavior, improper or wrong behavior. Its synonyms are a misdemeanour, impropriety, mismanagement, offense, but not negligence or carelessness. From the definition, it is now clear that the act of professional misconduct is done purely with an intention of getting unlawful gains. The Advocates Act, 1961 and the Indian Bar Council play a vital role in providing rules and guidelines regarding the working, code of conduct and such other matters concerning lawyers and advocates in India.

The attributes of a profession are:

1. Existence of a body of specialized knowledge or techniques.
2. Formalized method of acquiring training and experience.
3. Establishment of a representative organization with professionalism as its goal.
4. Formation of ethical codes for the guidance of conduct.
5. Charging of fees based on services but with due regards to the priority of service over the desire of monetary rewards.

Misconduct means any acts which are unlawful in nature even though they are not inherently wrongful. Before the Advocates Act, 1961, we had the Legal Practitioners Act, 1879. There is no definition given for the term ‘misconduct’ in the Act, but the term ‘unprofessional conduct’ is being used in the Act. Some of the instances of professional misconduct are as follows:

• Dereliction of duty
• Professional negligence
• Misappropriation
• Changing sides
• Contempt of court and improper behaviour before a Magistrate
• Furnishing false information
• Giving improper advice
• Misleading the clients in court
• Not speaking the truth
• Disowning allegiance to the court
• Moving application without informing that a similar application has been rejected by another authority
• Suggesting to bribe the court officials
• Forcing the prosecution witness not to say the truth.

Advocates Act, 1961

The provisions of Section 35 of the Advocates Act deal with professional misconduct of lawyers and advocates in India, which read as:

A person is found guilty of professional misconduct; it shall refer the case to a disciplinary committee, shall fix a date of hearing and issue a show cause notice to the Advocate and the Advocate General of the State. The disciplinary committee of the State Bar Council, after being heard of both the parties, may:

1. Dismiss the complaint, or where the proceedings were initiated at the instance of the State Bar Council, directs that proceedings be filed;
2. Reprimand the advocate;
3. Suspend the advocate from practice for such a period as it deems fit;
4. Remove the name of an advocate from the state roll of advocates.

Misconduct is of infinite variety; this expression must be understood in a broad meaning, such that it extends the meaning under natural law, and there is no justification for restricting their natural meaning. Section 49 of the Advocate Act empowers the Bar Council of India to frame rules and standards of professional misconduct. Under the Act, no person has a right to make advertisement or soliciting; it is against advocate’s code of ethics. He is also not entitled to any advertisement through circulars, personal communications or interviews, he is not entitled to demand fees for training and to use name/service for unauthorized purposes.

Contempt of Court as Professional misconduct

Contempt of court may be defined as an offense of being disobedient or disrespectful towards the court or its officers in the form of certain behaviour that defies authority, justice, and dignity of the court. In various cases involving contempt of court, the court held that if any advocate or legal practitioner is found guilty of the act of contempt of court, he/she may be imprisoned for six years and may be suspended from practicing as an advocate  (In re Vinay Chandra Mishra). The court also held that license of the advocate to practice a legal profession might be canceled by the Supreme Court or High Court in the exercise of the contempt jurisdiction.

There are many other landmark judgments regarding the cases involving professional misconduct of the advocates. In the case of V.C. Rangadurai v. D.Gopalan, the court looked into the matter of professional misconduct in such a way that the decision was made in a humanitarian manner, considering the future of the accused in this case. The court held that “even so justice has a correctional edge, a socially useful function, especially if the delinquent is too old to be pardoned and too young to be disbarred. Therefore, a curative, not cruel punishment has to be delivered in the social setting of the legal profession”. The court then gave the decision in such a way that it looked at each and every aspect concerning the case as well as the parties concerned. It adopted a deterrent was of justice mechanism so that the accused person is awarded certain punishments but also provided a warning towards such other people who intend to commit acts of a similar nature. The judgment turned out to be a landmark in cases concerning professional misconduct as it delivered an effective judgment and but did not jeopardize the future of the accused person. In various other cases like J.S. Jadhav v. Musthafa Haji Muhammed Yusuf, the court delivered the decision in such a way that it created a notion in the minds of the wrongdoers that offenders will be punished accordingly.

The Competition Commission of India is established under the Competition Act, 2002. It is a statutory body that has the power to govern and enforce the Competition Act including penalties.  It was established when the need for a healthy competitive environment became necessary following liberalisation under the Vajpayee government. 

The Commission is composed of a chairman and a minimum of 2 board members and a maximum of 6 board members. These members are required to have a minimum of 15 years of experience in their respective fields. Its objectives, duties and powers are enumerated in the Competition Act, 2002. Its main duty and object is to ensure that the Indian markets maintain a healthy and fair competitive environment and is granted power to ensure such an environment and penalise any acts adversely affecting its duties.

Composition of Competition Commission of India (CCI):

The CCI comprises of a Chairperson and six Members, who are appointed by the Government of India. The Commission is manned by the following members

• Chairperson
• Member 1
• Member 2
• Member 3
• Member 4

The term of office of all the members of CCI is 5 years or till the attainment of age pf 65 years (whichever is early). The members are eligible for re-appointment.

The Chairperson and other members of CCI cannot hold any further employment for a period of two years from the date they cease to hold office in the Commission. But this restriction does not applies to any employment in the Union and State Government authority.

Objectives of Competition Commission of India CCI:

The Competition Commission of India (CCI) has been entrusted with the following task:

• To promote and then sustain an enabling competition culture through engagement and enforcement which would inspire businesses to be fair, competitive and innovative.
• To enhance the consumer welfare
• To support economic growth.
• The Competition Commission of India aims to establish a robust competitive environment through proactive engagement with all the stakeholders including the consumers, industry, government as well as international jurisdictions.

Functions of Competition Commission of India (CCI):

• It is the duty of the CCI to eliminate such practices that have adverse effect on competition.
• It is mandated to promote and sustain competition while protecting the interests of consumers.
• CCI ensures freedom of trade in the Indian market.
• The Commission also gives opinion on competition issues when asked by a statutory authority which is established under law.
• It is also required to undertake competition advocacy.
• The CCI also creates public awareness and imparts training on competition issues.
• Additionally, an appellate body called ‘Competition Appellate Tribunal‘ was also set up based on the Amendment Act of 2009, which allows for final appeal to Supreme Court of India.
• CCI is therefore, fully empowered to carry out the mandated functions.

Regulation of combination

The term combination has a broad definition under the ACT, it includes

• Any acquisition of shares,
• Voting rights,
• Control of assets
•  Party to merger or amalgamation of enterprises

Any person/enterprise shall not enter into a combination which is likely to have an adverse effect on the competition and such a combination will be void.

If any person/enterprise proposes to enter into a combination he shall intimate the Competition Commission of India within 30 days of:

• Approval of the proposal relating to mergers and amalgamation by the BOD of the enterprises involved in the process.
• Execution of any agreement pertaining to acquiring of control.

Business Perspective

Business Operations in India necessitates the knowledge of the various laws and regulations and also the implementation of the same. Competition in the market is a huge challenge which needs to be dealt with carefully. It is essential for the businesses to realize that although competition brings prosperity, thriving and striving shall be a continuous process. 

The various matters to be kept in mind by the business houses are:

1. The markets are susceptible to formation of cartels which pose a risk of formation of monopolies. The awareness of the fact that such associations are not permitted under the Competition Act 2002 is essential.
2. When discussions are made with competitors documentation of the same should be done.
3. Any meetings wherein any matter is being discussed, which shall raise issues under the competition law shall be avoided.
4. It is advisable to avoid discussions pertaining to price and the actual cost to the company.
5. Appointment of an Ombudsman for advise on the Competition Law so as to prevent any legal issues may be done.
6. Communication aspects although seem trivial may leave an impact when it comes to abuse of dominant position issues. Any statements made shall be weighed carefully.

The Competition Act 2002 is a comprehensive law and the intent of the legislation is 

To promote fair competition, catch up with the global economy, safeguard the interest of the consumers and ensure a stable market for India.

Objectives

1. To promote healthy competition in the market.
2. To prevent those practices which are having adverse effect on competition.
3. To protect the interests of concerns in a suitable manner.
4. To ensure freedom of trade in Indian markets.
5. To prevent abuses of dominant position in the market actively.
6. Regulating the operation and activities of combinations (acquisitions, mergers and amalgamation).
7. Creating awareness and imparting training about the competition Act.

Important features of the competition Act:

1. Competition Act is a very compact and smaller legislation which includes only 66 sections.
2. Competition commission of India (CCI) is constituted under the Act.
3. This Act restricts agreements having adverse effect on competition in India.
4. This Act suitably regulates acquisitions, mergers and amalgamation of enterprises.
5. Under the purview of this Act, the central Government appointed director General for conducting detail investigation of anti-competition agreements for arresting CCI.
6. This Act is flexible enough to change its provisions as per needs.
7. Civil courts do not have any jurisdiction to entertain any suit which is within the purview of this Act.
8. This Act possesses penalty provision.
9. Competition Act has replaced MRTP Act.
10. Under this Act, “Competition Fund” has been created.