Nature of Business Relationship, for the purpose of clause (b)(viii) of Explanation below section 288(2), prescribed [Notification No. 50/2015, dated 24.6.2015]

Explanation below section 288(2) defines an “accountant” to mean a “Chartered Accountant” as defined in section 2(1)(b) of the Chartered Accountants Act, 1949, holding a valid certificate of practice under section 6(1) of the said Act, but does not include [except for appearing as an authorized representative under section 288(1)] in case of a non-corporate assessee, inter alia a person who, whether directly or indirectly, has business relationship with the assessee of such nature as may be prescribed. Consequently, the CBDT has, in exercise of the powers conferred by section 295 read with sub-clause (b) (viii) of Explanation below section 288(2), inserted Rule 51A prescribing the nature of business relationship. Accordingly, the term “business relationship” shall be construed as any transaction entered into for a commercial purpose, other than,—

(i) commercial transactions which are in the nature of professional services permitted to be rendered by an auditor or audit firm under the Act and the Chartered Accountants Act, 1949 and the rules or the regulations made under those Acts;

(ii) commercial transactions which are in the ordinary course of business of the entity at arm’s length price – like sale of products or services to the auditor, as customer, in the ordinary course of business, by entities engaged in the business of telecommunications, airlines, hospitals, hotels and such other similar businesses.”