TY - GEN AU - Inamdar, Satish TI - Taxation - 1 U1 - 336.2 PY - 2010/// CY - Pune PB - Symbiosis Centre for Distance Learning KW - N1 - 1. Definitions Under Income Tax Act, 1961 1 1.1 Introduction Sec. Ref. 1.2 Definitions under the Act - Assessment Year 2(9) - Previous Year 2(34) - Person 2(31) - Assessee 2(7) 1.3 Total Income 1.4 Rates of Taxes 1.5 Residential Status (6) - Resident - Non Resident - Resident but Not Ordinarily Resident 1.6 Accrual of Income (9) 1.7 Illustrations 1.8 Summary 1.9 Key Words 1.10 Self-assessment Questions 2. Income Exempt from Tax 19 2.1 Introduction Sec. Ref. 2.2 Incomes Exempt under Section 10 of the Act 2.2.1 Agricultural Income 10(1) 2.2.2 Share of profit of a partner from a Firm 10(2A) 2.2.3 Amount received under a Life Insurance Policy 10(10D) 2.2.4 Interest, premium or bonus on specified investments 10(15) 2.2.5 Educational Scholarship 10(16) 2.2.6 Payments to MPs, MLAs etc. 10(17) 2.2.7 Income of a Local Authority 10(20) 2.2.8 Income of a Mutual Fund 10(23D) 2.2.9 Income of venture capital fund 10(23FB) 2.2.10 Income of Trade Unions 10(24) 2.2.11 Income of certain funds 10(25) 2.2.12 Income of Employees State Insurance Fund 10(25A) 2.2.13 Capital gains arising from the transfer of units of UTI 10(33) 2.2.14 Dividend reed from domestic Companies 10(34) 2.2.15 Some other exemptions 2.2.16 Occasional Incomes or Gifts 10(39) 2.3 Newly Established Undertakings In Free Trade Zones, Software Technology Park 10A) 2.4 Income of 100% Export Oriented Units 10B 2.5 Income of a Political Party 10(13A) 2.6 Annexure 2.7 Illustration 2.8 Summary 2.9 Key words 2.10 Self-assessment Questions 3. Income from Salaries 37 3.1 Meaning of Salary Sec. Ref. 3.2 Exemptions 3.2.1 Leave Travel Concession 10(5) 3.2.2 Gratuity 10(10) 3.2.3 Pension 10(10A) 3.2.4 Leave Salary 10(10AA) 3.2.5 Retrenchment Compensation 3.2.6 VRS Compensation 3.2.7 Provident Fund 3.2.8 Super Annuation Fund 3.2.9 House Rent Allowance 10(13A) > 3.2.10 Special allowances 10(14) 3.3 Perquisites 17(2) 3.3.1 ESOP 3.3.2 Rent Free Accommodation 3.3.3 Furnished Accommodation 3.3.4 Accommodation at concessional Rate 3.3.5 Domestic Servants 3.3.6 Gas, Electricity Etc. 3.3.7 Educational Facilities 3.3.8 Other Fringe Benefits 3.3.9 Transfer of Employer's Movable Assets 3.3.10 Medical Facility 3.4 Perquisites Exempt from Tax 3.5 Deductions 3.5.1 Entertainment Allowance 3.5.2 Professional Tax 3.6 Illustrations 3.7 Summary 3.8 Key Words 3.9 Self-assessment Questions 4. Income from House Property and Other Sources 75 4.1 Scope Sec. 22 4.2 Deemed Ownership Sec 27 4.3 Determination of Annual Value 4.4 Classification of House Property 4.5 Deductions Sec. 24 4.6 Inadmissible Deductions Sec. 25 4.7 Income from other Sources Sec. 56 4.8 Deductions From Income From Other Sources 4.9 Inadmissible Expenses Sec. 58 4.10 Illustrations 4.11 Summary 4.12 Key Words 4.13 Self-assessment Questions 5. Profit and Gains from Business and Profession 105 5.1 Introduction Sec. Ref. 5.2 Expenses allowed as Deductions 5.2.1 Rent, Repairs, etc. 30 5.2.2 Repairs and maintenance 31 5.2.3 Depreciation 32 5.2.4 Other Deductions 36 5.2.5 General Deductions 37(1) 5.3 Capital Expenditure vs. Revenue Expenditure 5.4 Expenditure Not Allowed as Deductions 5.4.1 Royalties and Interest, Bonus 40(a) 5.4.2 Taxation of Partnership Firm 40(b) 5.4.3 Payment to relatives 40A (2) 5.4.4 Payment in cash excess of limit 40A(3) 5.4.5 Payment of Gratuity 40A(7) 5.4.6 Mandatory Payments 43B 5.5 Allowability of Certain Expenditures 5.6 Illustrations 5.7 Annexure 5.8 Summary 5.9 Key Words 5.10 Self-assessment Questi ons 6. Capital Gains 159 6.1 Introduction Sec. Ref. 6.2 Capital Asset 6.2.1 Transfer of Capital asset 6.3 Calculation of Capital Gains 6.3.1 Cost of Acquisition 6.3.2 Cost of Improvement 6.4 Deductions from Capital Gains 6.4.1 Transfer of Residential House (54) 6.4.2 Transfer of Agricultural land (54B) 6.4.3 Investment in Bonds (54EC) 6.4.4 Transfer of asset other than Residential Property (54F) 6.4.5 Transfer of asset other than house property 6.5 Illustrations 6.6 Key Words 6.7 Summary 6.8 Self-assessment Questions 7. Deductions from Total Income 197 7.1 Introduction Sec. Ref. 7.2 Deductions (General) (80C) 7.2.1 Contribution to Pension Funds (80CCC) 7.2.2 Pension Funds-Central Govt. (80CCD) 7.2.3 Medical Insurance (80D) 7.2.4 Medical Payment of Dependants (80DD) 7.2.5 Medical Treatment (80DDB) 7.2.6 Repayment of loan (80E) 7.2.7 Donation (80G) 7.2.8 Rent paid (80GG) 7.2.9 Scientific research donation (80GGA) 7.3 Profits from Biodegradable Waste (80JJA) 7.3.1 Deduction of New Workmen (80JJAA) 7.3.2 Income of Off shore Banking (80LA) 7.3.3 Persons with Disability (80U) 7.4 Profits from Infrastructural Activity (80IA) 7.4.1 Profits from Other Undertakings (80D3) 7.5 Illustration 7.6 Summary 7.7 Key Words 7.8 Self-assessment Questions 8. Tax Deducted at Source, Interest, Rebates and Relief 229 8.1 Introduction Sec. Ref. 8.2 Tax Deductions at Source (TDS) (27) 8.2.1 Payment of salary (192) 8.2.2 TDS- interest on securities (193) 8.2.3 TDS- Interest on other than securities (194A) 8.2.4 TDS- Winnings from lotteries (194B) 8.2.5 TDS- Payment to contractors (194C) 8.2.6 TDS- Insurance commission (194D) 8.2.7 TDS- Payment to non resident (194E) Sportsmen or Sports Association 8.2.8 TDS- Payment in respect of NSC (194EE) 8.2.9 TDS- Repurchase of Mutual Funds (194F) 8.2.10 TDS-Commission (194H) 8.2.11 TDS-Rent (1941) 8.2.12 TDS- Professional fee> (194J) 8.3 Advance Tax 8.4 Self Assessment Tax 8.5 Interest 8.5.1 Late filing of return (234A) 8.5.2 Interest-Non payment of advance tax (234B) 8.5.3 Interest-Non payment of advance tax (234C) 8.5.4 Interest on refund (234D) 8.5.5 Interest-Late payment of tax (220) 8.5.6 Interest-Failure to pay TDS (201) 8.6 Rebate in respect of securities Transaction tax 8.6.1 Rebate to association of persons (86) 8.6.2 Arrears of salary 8.7 Summary 8.8 Key Words 8.9 Self-assessment Questions - 9. Assessment and Procedures 265 9.1 Introduction Sec. Ref. 9.2 Powers of Income Tax Officers 9.3 Filing of Returns 9.3.1 Filing of bulk returns 139(1A) 9.3.2 E-Filing Of Returns 139(1B) 9.3.3 Loss return 139(3) 9.3.4 Belated Returns 139(4) 9.3.5 Returns by Trusts 139(4A) 9.3.6 Returns by political parties 139(4B) 9.3.7 Returns by Certain Associations 139(4C) 9.3.8 Revised return 139(5) 9.3.9 Defective Returns 139(9) 9.3.10 Signature on Return 140A 9.4 Enquiry Before assessment 142 9.4.1 Assessment 143A 9.4.2 Best Judgment Assessment 144 9.4.3 Income Escaping Assessment 147 9.4.4 Notice under escaping assessment 148 9.4.5 Assessment of any other person 153C 9.5 Appeals to High Court 260A 9.5.1 Revisions 263 9.5.2 Appeal to commissioner 264 9.6 Summary 9.7 Key Words 9.8 Self-assessment Questions 10. Taxation of Partnership Firms 289 10.1 Introduction 10.2 Assessment as a Firm 10.3 Change in Constitution 10.4 Succession of Firms 9. Assessment and Procedures 265 9.1 Introduction Sec. Ref. 9.2 Powers of Income Tax Officers 9.3 Filing of Returns 9.3.1 Filing of bulk returns 139(1A) 9.3.2 E-Filing Of Returns 139(1B) 9.3.3 Loss return 139(3) 9.3.4 Belated Returns 139(4) 9.3.5 Returns by Trusts 139(4A) 9.3.6 Returns by political parties 139(4B) 9.3.7 Returns by Certain Associations 139(4C) 9.3.8 Revised return 139(5) 9.3.9 Defective Returns 139(9) 9.3.10 Signature on Return 140A 9.4 Enquiry Before assessment 142 9.4.1 Assessment 143A 9.4.2 Best Judgment Assessment 144 9.4.3 Income Escaping Assessment 147 9.4.4 Notice under escaping assessment 148 9.4.5 Assessment of any other person 153C 9.5 Appeals to High Court 260A 9.5.1 Revisions 263 9.5.2 Appeal to commissioner 264 9.6 Summary 9.7 Key Words 9.8 Self-assessment Questions 10. Taxation of Partnership Firms 289 10.1 Introduction 10.2 Assessment as a Firm 10.3 Change in Constitution 10.4 Succession of Firms 10.5 Joint and Several Liabilities of Firms 10.6 Dissolution of Firms 10.7 illustrations 10.8 Summary 10.9 Key Words 10.10 Self-assessment Questions 11. Taxation of Companies 305 11.1 Introduction 11.2 Concept of Amalgamation 11.3 Concept of Demerger 11.4 Taxation of Companies 11.4.1 Minimum Alternate Tax 11.4.2 MAT-Foreign Companies 11.4.3 Credit of MAT 11.5 Illustration 11.6 Summary 11.7 Key Words 11.8 Self-assessment Questions 12. Set off and Carry Forward of Lossess 325 12.1 Introduction Sec. Ref. 12.2 Setoff of Losses 12.3 Deemed Income 12.3.1 Cash Credit (68) 12.3.2 Unexplained Investment (69) 12.3.3 Unexplained Money, Jewellery (69A) 12.3.4 Unexplained Expenditure (69C) 12.3.5 Investment not Fully Disclosed (69B) 12.3.6 Any Amount Borrowed/Repaid on Hundi (69D) 12.4 Carry Forward of Losses 12.5 Illustrations 12.6 Summary 12.7 Key Words 12.8 Self-assessment Questions 13. Tax Audit 345 13.1 Introduction Sec. Ref. 13.2 Form 3CD 13.3 Presumptive Profits (Clause No. 10) 13.3.1 Business of Civil Construction (44AD) 13.3.2 Business of Plying and Fining (44 AE) 13.3.3 Retail Business (44AF) 13.4 Method of Accounting (145) 13.5 .Amount Admissible under Act 13.5.1 Tea or rubber and Coffee Dev. (33AB) 13.5.2 Extraction of Oil (3ABA) 13.5.3 Scientific Research Expenditure (35) 13.5.4 Sum Paid to Public Sector Cos. (35 AC) 13.5.5 Payment to Certain Associations (35CCA) 13.5.6 Preliminary Expenses (35D) 13.5.7 Extraction of Minerals (35E) 13.6 Amounts Debited to P and L Account 13.7 Payment made to Specified Persons 13.8 Deemed Profits 13.9 Profits Chargeable to Tax 13.10 Deduction on Actual Basis (43B) 13.11 Details of Loan borrowed and Accepted 13.12 Brought forward Losses 13.13 Deduction under Chapter VIA 13.14 Tax Deduction at Source 13.15 Quantitative Details 13.16 Cost Audit Report 13.17 Accounting Ratios 13.18 Summary 13.19 Keywords 13.20 Self-assessment Questions 13.21 Annexure Appendix A - Computation of Income 375 Appendix B - Suggested Reference Books 401 ER -