2/8/11

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         In more meaningful way ; in more effective way ; in more beautiful way ; keep smiling ; keep mind open ; take care ; coming in large horde ; I try my best to justified myself ; carry on with self perception ; surge ahead ; lag behind ; pave the way ; cleave to your goal ; give me new lease of life ; not because of -----but because of ; you not only have to--------but you have to ; whole gamut of emotion ; intelligence, humor, generosity, empathy etc are a heady cocktail for a good sexual teaser ; self-worth ; have a knock for ; I could not understand you properly ; sometime your comments are encouraging & sometime your comments are deflating ; extend your social circle ; widening your social circle ; just the tip of iceberg ; make the huge difference ; gush of sympathy ; across the large swathe ; perfect blend of practical and emotional ; touch the whole gamut of ; no option left ; not a bad choice ;  spoil for the choice ; place in history ; this idea is difficult to come around ; close to heart ; rather hard to come by ; initial gush of  sympathy ; pave the way ; no mood to relent ; impeccable judgment ; rumor is doing the round ; I would rather choose ; open waste vistas of opportunity ;  last resort;  act of providence ; risk-aversion ; more than usual ; enriching experience ; oozing with confidence ; pressing need ; crying need ; serve little purpose ; sedentary lifestyle ; changing faster than ever ; the need of the hour ; in a big way ; precisely ; more importantly ; significantly ; generally ; usually ; relish the present ; clamoring for  ; sense of intrinsic ; put together ; savor the moment ; lost penchant ; as far as market is concern ; whether or not ; Midas touch ; so far ; as well ; ever seen ; ever before ; long lasting impact ; sense of urgency ; fastidious to detail ; impinge on ; hinge on ; in several way ; I am quite contend with my life; in good measure ; render advice ; give greater leeway ; dissolve the ego ; I am well aware of the fact ; despite the fact ; get well soon ; make sure ; please take the seat ; by the way ; settle the bill or you can say foot the bill ; as usual ; right now ; instead of ; despite the fact ; how often ; can you imagine ; each of us ;first of all; in the long run; no matter how much; shortly after; I don’t want any more ; hardly likely; make it less likely;  hard to imagine;

 Have you ever seen; correction is round the corner; rather than; strike a proper balance;    

More than once; therefore; in the other words; there is no clear cut distinction; matter of faith; matter of time; even more important; taken into account; actually I derived my power from myself ; loom large; spell good news; come to term with their problems ; show repentance ; stray from the path ; deviate from the path ; stumble in the future ;

For my spiritual well being; for my physical well being; you are looking beautiful as you once was; noting ever stay the same; ever seen; to certain extent; to great extent; to some extent; more than few; he is hard to please person; oblivious to surrounding; get used to;  

You have to make yourself with cool-heads and discreet tongues; what account for India success? Impending danger; yield better result; far larger; but it will in any case fall ; I’m far from sure; reserve for rainy days or darker days; expenditure always keep below your income ; we will win  the match not by one or the other but by the combination ; runaway victory; add elegance; chose wisely; depend on your taste; with or without any reason; I can do anything expect control the weather ; Are you being funny?; Well , of all the nerve!!; lag behind from; forge ahead; way ahead; road ahead; impossible to overcome;  would rather choose; alive and kicking; all of a sudden; I would be grateful…….; I prefer; I would require………; in advance; in conformity with; all the day long; wad off bad smell; its excellent way; equally impossible; There is no other way; she speak in a harsh tone; problems erupts again at any give time; I don’t want anything anymore; his attempts have always met with failure; pose no problems; she pulled off garland; flagged down the taxi; why he did what he did; party is in full swing; you are looking nothing less than gorgeous; One might not expect a………; in general and in specific; odious possibility; do your part; How does?; Where does?; make sure that ; do proceed; Do you mind me asking how old are you? Of course……..; Despite our differences; Despite the fact; lessen the severity of; make the difference; reconcile the difference; make huge difference; make little difference; zip the lip; smell musty; comes into force; comes into existence; unlike; whether; matter of concern; its excellent idea; heavy rain; secure place in final; virtually impossible; utterly successful; as far as; as well as; come into effect; burst into laughter; as soon as; have a good effect on; light rain; barely see; heavy rely on; cultural diversity; put in place; play a vital role; at the same time; cumulative impact;

I feel chafe at restriction; militate against; slowly but surly; put emphasis on; access denied; cognitive repair; very relevant in; no matter how long its takes; not world-shaking but I considered it worthwhile; defining movement in my life; walked out on me; a certain savior-fair that comes from living with the best; dampening impact; this bike consisted no seat; PM flanked by lot of security guards; claim responsibility; Either Government or Administration are……..; neither you or me……..; wholly or partially;

Strike a proper balance; you could not impaired my enthusiasm; group efforts; galaxy of religious teachers; well-known religion; very conducive to understand; very conducive to work with; dent my confidence; its excellent time; failed dismally; part and parcel; waging wars; hobbled my projects; slashed rates; taking toll; ditched him; Gandhi revered as father of nation; assuming office; believe it or not; I personally believe; doing well; auger well; thanks to….; cheerful disposition; despite the intelligence you have ; cope with problems; this step in right direction; in cahoots with; ever did; ever seen; ever make; ever recognize; in that regard; I try my best to convince him; crashing the party; would you mind; play a active role; resorted to; fighting for existence; he is social in limited way; sometime I become selfish in the limited way; I am in high sprit; he is such a intelligent person indeed; she is such a gorgeous girl indeed; reputation formidable; intelligence formidable; unimpeachable reputation; no longer; yet more; long opposed; insist on; far and wide; hire and fire; riddled with; negative connotation; positive connotation; give a important role; means little for me; carry out duties; he represent himself in such a manner that I cant reject him; eat humble pie; pie in sky; intend to eat humble pie; forced to eat humble pie; courage of one’s conviction; undergo a sea change; if you want to do study forgo marriage plan; stand in my way; one possible way; How far it is true?; He swap his lifestyle for a girl; along with; retreated from; receded from; under its wing; wriggle out of; do me a favors or not; shrugs off; stop grumbling about; he sounded very convincing; convincing evidences; take advantage; imposing on; its still far from clear what action the government proposed to(intend to) take over the affair………;

Chosen to be; what vegetable you proposed to make? ; destined to happen; remain intact; still intact; left intact; I like the way you converse with someone; in a rather silly way; in a rude way; in such a way; in a certain way; you would be better off if; remain intact; remain relevant; make it less likely; in perfect harmony; perfect blend of; once considered; sad to say; perseverance paid off; pay off dividends;  earn notoriety; give a level playing field; declined to give; reason to believe; chinks in armor; plug the loophole;  as possible you must avoid conflict with Pakistan;  for the purpose of; 

tax(05\07\11)

1. income tax laws
1. the income tax act 1961

(Amended up to date)

Scope of income tax act

Annual amendments

2. income tax rule, 1962

(Amended up to date)

3. circular and clarification by CBDT
4. judicial decision
1. scheme of taxations
2. important concepts
1. persons (section 2(31))

a)      an individual

b)      a HUF

c)      a firm

d)      association of persons (AOP)

e)      body of individuals (BOI)

AOP Vs BOI

f)        a local authority

g)      artificial juridical persons

2. assessment year (section 2(9))
3. previous year (section 3)

Ø      first previous year for a business/profession newly set up during the financial year or for a new source of income

Ø      cases where income of previous year is assessed in the same year

o       shipping business of non residents (section 172)

o       assessment of persons leaving India (section 174)

o       assessment of associations of persons or body of individuals or artificial juridical persons formed for a particular event or purpose (section 174A)

o       assessment of persons likely to transfer property to avoid tax (section 175)

o       discontinued business (section 176)

4. maximum amount which is not chargeable to income tax
5. rate of income tax assessment year 2011-12

Ø      in case of individuals

1)      for woman, resident in India and below the age of 65 years at any time during the previous year

2)      for an individual(man or woman), resident in India who is of age of 65 years or more at any time during previous year

3)      for an individual, (other than mentioned in Para 1.3c(A) and (B) above),HUF, AOP/BOI (other than co-operative society)

v     educational cess

v     secondary and higher education cess (SHEC)

Ø      in case of a firm(including limited liability partnership)

Ø      in case of domestic company

v     rate of tax

v     educational cess

v     secondary and higher secondary education cess(SHEC)

6. rate or rate of tax
7. assesses (section 2(7))
8. charge of income tax (section 4)
9. total income

a)      definitions of income

b)      concepts of income

                                                                     i.            regularity of income

                                                                   ii.            form of income

                                                                  iii.            tainted/illegal income

                                                                 iv.            Application of income VS. diversion

                                                                   v.            disputed income

                                                                 vi.            contingent income

                                                                vii.            basis of income

                                                              viii.            personal gifts

                                                                 ix.            composite income

                                                                   x.            pin money

                                                                 xi.            lump sum receipts

                                                                xii.            income must come from outside

                                                              xiii.            revenue receipts VS capital receipts

c)      gross total income

d)      total income

10. rounding off of total income (section 288A)
11. how to compute tax liability on total income
12. rounding off of tax  etc. (section 288B)

       (2)     SCOPE OF TOTAL INCOME AND RESIDENTIAL STATUE

1. definitions of total income (sections 2(45))
2. scope of total income/incidence of tax (section 5)

Scope of total income according to residential status is as under

1. in case of resident in India(residential and ordinarily resident in case of individual or HUF) (section 5(1))
2. in the case of a residential but not ordinarily resident in India (In the case of individuals and HUF only) (section 5(1) and its proviso
3. in the case of Non-resident (section 5(2))

Important notes

                         Residential status of an Assesses

3. Need to determine residential status?
4. basic rules for determining residential status of an assesses
5. rules for determining the residential status of an individuals (section 6(1))
1. When an individual is said to be resident in India?
2. When an individual is said to be resident and ordinarily resident in India?
3. When an indiuivial is said to be resident in India? (section 6(6)a)
4. When an individual is said to be non-resident in India (section 2(30))

a)      Conditions for determining whether an individual is resident or not (conditions for category A)

b)      Conditions to be satisfied for being an ordinarily resident in India

(Conditions of category B)

Illustration 1 to 10

6. residential status of HUF (section 6(2))
1. When is HUF said to be a resident in India?
2. When is HUF said to be a Non-resident?
3. When is HUF said to be resident and ordinarily resident in India?
4. When is HUF said to be resident but not ordinarily resident in India (section 6(6)b)

           Illustration

7. residential status of firm, associations of persons(AOP), body of individuals(BOI) and of other persons (except companies) section 6(2) and 6(4)
1. When is a firm, AOP, BOI etc said to be resident in India?
2. When is a firm, AOP, BOI etc said to be Non-resident in India?
8. residential status of a company (section 6(9))
1. When is a company said to be resident in India?
2. When is a company said to be Non-resident in India?
9. income received or deemed to be received in India (section 7)
1. received in India(section 7)

v     receipts means the first receipts

2. Income deemed to be received in India (section 7)
9. income which accrue or arise in India or are deemed to accrue or arise in India (section 9)
1. accrue or arise in India
2. Income which are deemed to accrue or arise in India (section 9)

                                                                                                                                       i.            Income from business connection in India

                                                                                                                                     ii.            Income from a property, asset source of Income situated in India

                                                                                                                                    iii.            Income from the transfer of any capital asset situated in India

                                                                                                                                   iv.            Any income which falls under the head “salaries” if it is earned in India

                                                                                                                                     v.            Salary payable by the Government to an Indian citizen/national for services rendered outside India

                                                                                                                                   vi.            Interest payable by

                                                                                                                                  vii.            Royalty payable by

                                                                                                                                viii.            Fees for technical service payable

11. the provisions regarding incidence of tax above may be summarized in the following table

                        highlight of provisions of incidence of tax

(3)            INCOME WHICH DO NOT FORM PART OF TOTAL INCOME

Income which do not part of total income

A.     Income not to be included in total income of any person (section 10)

1.      agricultural income (section 10(1))

2.      sum received by a member from HUF (section 10(2))

3.      share of profit of a partner from a firm (section 10(2A))

4.      interest on non-resident (external) account (section 10(4))

5.      travel concession or assistance received by a individual from his employer (section 10(5))

6.      remuneration to persons who are not citizen of India (section 10(6))

a.       remuneration received by diplomats, etc. (section 10(6)(ii))

b.      remuneration received by a foreign national as employee of foreign enterprise (section 10(6)(vi))

c.       non-resident employed on foreign ship (section 10(6)(viii))

d.      remuneration of employee of foreign government during his training in India (section 10(6)(xi))

7.      allowances or perquisites outside India (section 10(7))

8.      Death-cum-retirement gratuity received by an employee (section (10(10))

9.      payment in commutation of pension received by the employee (section (10(10A))

10.  Leave encasement (section 10(10AA))

11.  compensation on retrenchment (section 10(10B))

12.  payment under Bhopal Gas Leak Disaster (processing of claims) act 1985 (section 10(10BB))

13.  exception for compensation received or receivable on account of any disaster (section 10(10BC)

14.  amount received on voluntary retirement (section 10(10C))

15.  Tax on non-monetary perquisites paid by employer (section 10(10CC))

16.  amount received under a life insurance policy (section 10(10D))

17.  provident fund (section 10(11)

18.  payment from recognized provident fund (section 10(12))

19.  any payment from an approved superannuation fund (section 10(13))

20.  house rent allowance (section 10(13A))

21.  notified special allowance (section 10(14))

22.  interest premium or bonus on specified investment (section 10(15))

a.       exemptions in case of any assesses (section 10(15)(i))

b.      exemption in case of interest on gold receipts

c.       Exemption in case of on bonds issued by a local authority.

d.      Interest on deposit with offshore banking unit (section 10(15)(viii))

23.   scholarship granted to meet the cost of education (section 10(16))

24.  daily and constituency allowance etc. received by MPs and MLAs (section 10(17))

25.  award or reward (section 10(17A))

26.  pension received by certain awardees/any members of their family (section 10(18))

27.   exemption of the family pension received by the family members of armed forces(including para-military forces personnel killed in action certain circumstances (10(19))

28.   annual value of one palace of ex-ruler (section 10(19A))

29.  income of a local authority (10(20))

30.  income of an approval research association (10(21))

31.  income of specified news agency (10(22B))

32.  income of professional association/institution (section 10(23A))

33.  income of certain funds of national importance (10(23C))

34.  income of notified mutual funds (10(23D))

35.  income of trade union (10(24))

36.  income of member of scheduled tribe residing in certain specified areas (10(26))

37.  income of an individual being a Sikkimese

38.  income of minor clubbed in the hands of a parent (10(32))

39.  dividend to be exempt in the hands of the shareholders (10(34))

40.  income from units to be exempts in the hands of the unit-holders (10(35))

41.  exemption of capital gain on compensation received on compulsory acquisition of agriculture land situated within specified urban limits (10(37))

42.  exemption of long term capital gain arising from sale of shares and units (10(38))

43.  exemption of specified income from international sporting events held in India (10(39))

44.  exemption of amount received by an individual as loan under reverse mortgage scheme (10(43))

45.  exemption of income of new pension scheme trust 10(44))

B.     Income of newly established industries undertakings in free trade zone

            46. General

1)      Om namah shivay

2)      Assesses who are eligible for deduction

3)      Essential conditions to claim deduction

4)      Periods of tax holiday

5)      How to compute deduction for such undertaking (10A(4))

6)      Option not to claim benefit of tax holiday (10A(8))

7)      Deduction is not to be allowed if return of income is not submitted by due

C.     Special provisions in respect of newly established units in SEZ(10AA)

             47. General

1)      Om

2)      Assesses who are eligible for deduction

3)      Essential conditions to claim deduction

4)      Periods for which deduction is available

Example a, b, c

(c) Condition to be satisfied for claiming deduction for further 5 years (after 10 years) 10AA (2)

(d) Consequences of mis utilisation/non-utilisation of reserve 10AA (3)

5)      How to compute deduction for such undertakings (10AA(7))

6)      Treatment of unabsorbed depreciation brought forward losses etc.

7)      WDV after tax holiday periods

8)      Deduction allowable in case of amalgamation and demerger 10AA(5)

D.     Special provisions in respect of newly established 100% export oriented undertakings (10B)

             48. General

1)      Om namah shivay

2)      Assesses who are eligible for deduction

3)      Essential conditions to claim deduction

4)      Periods of tax holiday

5)      How to compute deduction from exports of such undertakings

6)      Deduction is not to be allowed if return of income is not submitted by due date

E.      Income from property held for charitable or religious purposes

* Purpose trusts for charitable or religious purposes

     49. Exemption under section 11 to 13

           * Conditions to be satisfied for claiming exemption under section 11

     50. Which income will be exempt under section 11

     50a.Exemption is limited to the extent such is applied for charitable or religious purpose

     50b.Income applied during the previous year included the following ( a and b)

Income deemed to have been applied during the previous year for charitable or religious purposes(explanation 2 to 11(1))

              Explanation for reason (a)

              Explanation for reason (b)

Consequences if the income is not actually applied within the prescribed period after exercising the above opinion11 (1B)

    51. Accumulation of income in excess of 15% of the income earned 11(2)

Ø      Conditions to be satisfied

Ø      Mode of investment

Ø      Donation to other institution out of accumulated income not to be treated as application of income for charitable religious purpose

    51a.consequences if such accumulated income in excess of 15% is not applied/invested in the   prescribed manner 11(3)

   51b. circumstances where the accumulated income in excess of 15% can be utilized for a purpose other than that for which it was accumulated

   52. Certain points for consideration

1.      voluntary contribution

2.      Exemption under section 11(1) not to be allowed in the following cases.

   53. Treatment of business income of trust 11(4A)

   54. Registration of trust (12A)

a)      Conditions as to registration of trusts and effective date of exemption

b)      Cancellation of registration 12AA(3)

   55. Section 11 and 12 not to apply in certain cases (section 13)

   55a.persons referred to in section 13(3)

   55b.meaning of substantial interest

   55c.meaning of relative

F.      Income of political parties

         56. Income which are exempt (13A)

Ø      Requisite conditions

G.     Income of a electoral trusts

         57. Income of electorate trust shall be exempt (13B)

                       INCOME UNDER THE HEAD “SALARIES”

1.      computation of income under the head income from “salaries”

2.      basis of charge (section 15) (illustrations)

Ø      arrear of salary

3.      meaning of salary

Treatment of various incomes to be included in gross salary

4.      wages

5.      annuity

6.      retirement benefits

7.      treatment of bonus

8.      salary in lieu of notice period

9.      fee an commission

10.  overtime payments

Allowance

11.  meaning an type of allowance

12.  house rent allowance (section 10(13A) and rule 2A)

Ø      quantum of exception

Ø      illustrations 6 to 8

13.  prescribed allowance which are exempt to a certain extent (section 10(14))

A.     special allowance which are exempt to the extent of actual amount received or the amount spent for the performance of the duties of an office or employment of profit, whichever is less

a.       travelling allowance

b.      daily allowance

c.       conveyance allowance

d.      academic allowance

e.       uniform allowance

B.     allowance to meet personal expenses

1.      allowance which are exempt to the extent of amount received or the limit specified, whichever is less

a)      children education allowance

b)      hostel expenditure allowance

c)      tribal area/scheduled area/agency area allowance

d)      special compensatory hilly area allowance; disturbed area allowance

e)      compensatory field area allowance

f)        counter insurgency allowance granted to members of armed forces

g)      transport allowances

h)      underground allowances

i)        high altitude(uncongenial climate) allowances

j)        special compensatory highly active field area allowances granted to members of armed forces

k)      island (duty) allowances

2.      allowance which is exempt to the extent of certain % of amount received

v     allowances allowed to transport employees working in any transport system

14.  treatment of entertainment allowance (illustrations)

15.  allowances which are exempt in case of certain persons

16.  allowance which are fully taxable

PERQUISITIES

17.  what are perquisites

18.  definition of perquisites as per section 17(2)

v     certain clarification on definition of “perquisites”

                       TAXABILITY OF PERUISITIES

19.  perquisites which are taxable in the hands of all categories of employee

20.  perquisites which are taxable only in case of specified employee

20a.who is a specified employee (section 17(2)(iii))

VALUATION OF PERQUISITES

21.  rent free accommodation or accommodation provided at concessional rate

A.     accommodation provided by the government to its employees

B.     where the accommodation is provided by any other employer

C.     where the accommodation is provided by the employer/government employer in a hotel

                        21a.the above rules shall not apply in certain cases

A.     accommodation provided at certain site or in a remote area(proviso 1 to rule 3(1))

v     remote area means

B.     accommodation provided at new place of posting on transfer while retaining the accommodation at the other place(proviso 2 to rule 3(1))(illustration)

22.  valuation of monetary obligation of the employee discharge by the employer

23.  valuation of life insurance premium /deferred annuity premium/paid/payable by the employer

24.  fringe benefits or amenities which shall be taxable perquisites in the hands of all employees

1)      interest free or concessional loans(rule 3(7)(i))………illustrations

2)      the value of travelling, touring, accommodation and any other expenses paid for or borne or reimbursed by the employer for any holiday availed of by the employee or any member of his household (rule 3(7)ii)

3)      value of free food and non-alcoholic beverage………illustrations

4)      value of any gift, voucher or token(rule 3(7)(iv))……illustrations

5)      expenses on credit card (rule 3(7)v)

Ø      specified conditions to be fulfilled to claim that expenses have been incurred wholly and exclusively for official purpose

6)      club membership and expenses incurred in a club(rule 3(7)vi)

v     specified conditions to be fulfilled to claim that expenses have been incurred wholly and exclusively for official purposes

7)      use of moveable assets(rule 3(7)vii)

8)      transfer of any moveable assets(rule 3(7)viii)

24a.treatment of any other benefits amenity, etc. provided by the employer (rule     3(7)(ix))(illustration)

PERQUISITES TAXABLE IN THE HANDS OF SPECIFIED EMPLOYEES

25.  valuation of motor car/other vehicles(rule 3(2))

Ø      value of perquisites per calendar month

o       vehicle provided by the employer for commuting from residence to office and back (explain to section 17(2)iii)

Ø      where more than one motor car is provided

Ø      Specified documents to be maintained for S.No.(1)(a) or S.No. (2) and (3)…illustrations

26.  provision by the employer of services of a sweeper, a gardener, a watchmen or personal attachment (rule 3(3))

27.  value of benefits to the employee resulting from the supply of gas, electric energy or water for household consumption (rule 3(4))

28.  valuation in respect of free or concessional educational facilities to any member of employee’s household (rule 3(5))

29.  free or concessional journey given to the transport employees and their family members (rule 3(6))

30.  value of any specified security or sweat equity shares

Ø      valuation of specified security or sweat equity shares being a share in the company (rule 3(8))

A.     valuation of a share

a.       fair market value where the shares are listed on a recognized stock exchange

b.      fair market value where the shares are not listed on any recognized stock exchange

B.     valuation of specified security not being equity share in the company (rule 3(a))

31.  Contribution to an approved superannuation fund.

32.  tax-free perquisites (for all employees)

1)      medical facility

2)      recreational facility

3)      training of employees

4)      to 8)

9)      food and beverage provided to employees

10)  loans to employees

11)  perquisites provided outside India

12)  rent free House/ conveyance facility

13)  residence of officials of parliaments

14)  accommodation in a remote area

15)  educational facility for children of the employees

16)  a

17)  leave travel concession

18)  tax paid by the employer on non-monetary perquisites

33.  treatment of medical facilities

a)      medical facilities/reimbursement in India

b)      medical treatment outside India………..illustrations

34.  treatment of Leave Travel Concession or Assistance(LTC/LTA) section 10(5)

Ø      exemptions will, however, in no case exceed, actual expenditure incurred on the performance of journey

Ø      exemption available only in respect of two children…….exceptions

IMPORTANT NOTES

35.  profits in lieu of salary (section 17(3))

1)      terminal compensation

2)      payment from an unrecognized fund or an unrecognized superannuation fund

3)      payment under keyman insurance policy

4)      any amount due or received before joining or after cessation of employment

5)      any other sum received by the employee from the employer

TREATMENT RETIREMENT BENEFITS

36.  gratuity

A.     exemption in case of government employees and employees of local authorities(section 10(10)i)

B.     exemptions in the case of employee who have been received gratuity under the Payment of  Gratuity Act 1972 (10(10)ii)…….illustrations

36a.meaning of salary/average salary

36b.completed years of services…..illustrations

37.  treatment of pension (section 17(i)(ii))

v     uncommuted pension i.e. the periodical pension

v     commuted pension

Exemption in the case of Government employees or employees of local authority or statutory corporation

a)      where the employee receives gratuity also

b)      where the employee does not receive any gratuity……illustrations

38.  treatment of leave salary

v     encasement of leave during tenure of service

v     encasement of accumulated leave at the time of retirement (section 10(10AA)i)

1)      government employees (which mean central and state government employees) section 10(10AA)i

2)      other employees (section 10(10AA)

o       meaning of salary

o       average salary………..illustrations

39.  retrenchment compensation (section 10(10B))

40.  compensation received on voluntary retirement (section 10(10C)

Guidelines (rule 2BA)

41.  contribution by the employer to recognized provident fund

42.  interest credited to recognized provident fund

43.  transferred balance

Deductions from salaries (section 16)

44.  entertainment allowances (section 16(ii))

45.  tax on employment (professional tax)(section 16(ii))…..illustrations

46.  treatment of provident fund

46a.kind of provident funds

1.      statutory provident funds(SPFs)

2.      recognized provident funds(RPFs)

3.      unrecognized provident funds(UPFs)

4.      public provident funds(PPFs)

46b.treatment of provident fund for income tax purpose (important notes)….illustrations

47.  approval superannuation fund

v     tax treatment

48.  relief when salary is paid in arrears or in advance etc. section 89/rule 21A

a)      where any portion of the assesses salary is received in arrears or in advances

b)      where the payment is in the nature of gratuity other than exempt under section 10(10)/rule 21A(3)

c)      where the payment is in the nature of taxable compensation received from the employers or former employers at or connection with the termination of his employment (rule 21A(4))

d)      where payment is for commutation of pension(rule 21(A)5

e)      where the payment is of a nature other than given under Rule 21A(2) to 21A(5) discussed above (rule 21A(6)

Furnishing of particulars for calming relief under section 89(rule 21AA)

49.  Deduction from gross total income………..illustrations

50.  summarized provisions

50a.exemption of gratuity under section 10(10)

50b.exemtion of commuted pension u\s 10(10A)

50c.exemption of leave encasement at the time of retirement u/s 10(10AA)

50d.exemption of H.R.A. u\s 10(13A)

50e.valuation of rent free accommodation\accommodation provided at concessional rate (new rule 3(1)

1.      unfurnished accommodation

a.       accommodation provided by the government to its employees

b.      accommodation provided by any other employer

2.      furnished accommodation

50f.deduction of entertainment allowance (section 16ii)

50g.other exemption……….illustrations

INCOME UNDER THE HEAD “INCOME FROM HOUSE PROPERTY”

1.      chargeability(section 25)

2.      basis of charge

3.      essential conditions for taxing income under this head

1)      property must consist of any building or land appurtenant thereto

2)      ownership of property

A.     deemed ownership

a)      transfer to spouse(27(i)

b)      transfer to child (27(i)

c)      holder of an impartible estate (27(ii)

d)      member of a co-operative society etc. (27(iiia)

e)      persons in possession of property (27(iia)

f)        person having right in a property for a period not less than 12 years (27(iiib)

3)      use of the house property

4.      cases of composite rent

5.      when income from house property is not charged to tax

Determination of annul value

6.      what is annual value

a.       actual rent received or receivable

b.      municipal value

c.       fair rent of the property

d.      standard rent

7.      computation of annul value of property(23(i)

A.     house property which is let throughout the previous year

a.       step 1: determine the gross annul value

                  How to calculate expected rent

                                                                                                                                                                                                     i.            municipal valuation

                                                                                                                                                                                                   ii.            fair rental value…..illustrations

b.      step 2: taxes levied by any local authority in respect of the property i.e. municipal taxes levied for services…..illustrations

B.     house property which is let and was vacant during the whole or part of the previous year

Situations 1 to 2……….illustrations

C.     house property which is part of the year let and part of the year occupied for own residence…….illustrations

8.      treatment of unrealized rent

(Explanation to section 23(1)

Ø      rules for unrealized rent

Ø      important note………illustrations

9.      deductions from income from house property (24)

a.       standard deduction

b.      interest on borrowed capital…….illustrations

                              9a.deduction provided under section 24 are exhaustive………illustrations

10.  computation of income of a property which is self-occupied for residential purpose or which could not actually be self occupied owing to employment (23(2),(3) and (4)

a.       where the annul value of such house shall  be nil (section 23(2)(a) and (b)

b.      where the annual value of such house shall not be nil (23(3)

c.       where assesses, has more than one house for self-occupation (23(4)

d.      deduction in respect of one self-occupied house where annual value is nil….illustrations

11.  computation of income of house property which is partly let and partly self-occupied

11a.interest when not deductible from “Income from House Property” (25)

12.  unrealized rent received subsequently to be charged to income tax(25AA)

13.  special provisions for arrears of rent received (25B)

14.  property owned by co-owners (26)

a)      where house property is self-occupied by each co-owner

b)      where the entire or part of the property is let…..illustraions

15.  Can annual value (Net Annual Value) be negative?

16.  Can there be any loss under the head income from house property?

            Illustrations on House Property

INCOME UNDER THE HEAD “PROFITS AND GAINS OF   BUSINESS OR PROFESSION 

1. business or profession
1. adventure in the nature of trade
2. profession
3. vocation
2. chargeability/scope of income under the head “profits and gains of business or profession”
3. profits and gains of business

Ø      profits and gains of business or profession

Ø      necessary ingredients

4. business must be carried on during the previous year

a)      exceptions

5. business loss

5a.lossses which are not deductible from business income

6. legal business Vs illegal business
7. cases where income from certain business is not taxable under the head “profits and gains of business”

1)      rent from house property

2)      dividend income

3)      Winning from lotteries, race etc.

8. income from business or profession-how to be computed
9. general principles for allowability of deductions

9a.reserves/provisions for contingencies or anticipated losses cannot be claimed as deductions

10. losses and expenditure
11. method of accounting (section 145)

a)      merchant system

b)      cash system

c)      mixed system or hybrid system

                      Accounting system

1.      AS 1: disclosure of accounting policies

2.      AS 2: disclosure of prior periods and extraordinary items and changes in accounting policies

      11a.method of accounting in certain cases (145A)

12. expenses which are expressly allowed as deduction(section 30 to 37) “meaning of item paid”
13. rent, rates, taxes, repairs and insurance for buildings (section 30)

13b.current repairs

14. repairs and insurance of machinery, plant and furniture (section 31)
15. depreciation (section 32)

1)      straight line method

2)      written down method

• types of depreciation allowance under income tax
• General principles regarding depreciation under income tax Act

15a.what is block of assets

Block of assets (section 2(ii)

a)      Buildings

b)      Furniture and fittings

c)      Machinery

Block 1 to 8

d)      Intangible assets

How to form blocks

      15b.written down value of changing depreciation (section 43(6)

             Step 1 to IV (page 233)

            Meaning of word “money payable”

            Meaning of the word “sold”……….illustration

      15c.actual cost (section 43(1) (page 235)

       Interest paid before the commencement of production on amounts borrowed by the assesses for the acquisition and installation of plant and machinery forms part of the actual cost

Ø      What is included /not included in cost of the assets

Ø      Interest

15d.notional actual cost (page 236)

       Summarized table of notional actual lost (section 43(1)

15e.computation of depreciation (page 238)

15f.steps for computing depreciation ………illustration

15g.depreciation on asset in the previous year of acquisition if the asset is put to use for less than 180 days during that previous year (page 239)

        Example and illustrations

15h.cases where WDV of a block at the end of the year shall be reduced to Nil and hence no depreciation (page 241)

a.       Where the block of assets ceases to exist i.e. all the assets of the block are transferred…..illustrations

b.      Where a part of a block is sold and the sale considerations of the assets sold exceeds the value of the block (page 242)….illustrations

16. special provisions for depreciation in certain cases(page 243)

a)      special provisions for depreciations in case of assets of an undertakings engaged in generation or generation and distribution of power (section 32(i)(i) and rule 5 (1A)

Consequences if the above assets are sold

1)      where the assesses opted for charging depreciation on the basis of WDV method on the block of assets

2)      where the assesses charged for depreciation on straight line method

Treatment

                                             i.            balancing charge

                                           ii.            capital gain (page 244)

b)      proportionate depreciation allowed in certain case (5^th proviso to section 32)….illustrations

c)      additional depreciations on new machinery or plant (section 32(iia)(page 245)

1)      assesses eligible for additional depreciation

2)      assets for which additional depreciation is allowed

3)      rent of additional depreciations(page 246)…..illustrations

d)      is it mandatory to claim depreciation(explanation to section 32) (page 247)

17. carry forward and set off of unabsorbed depreciation (section 32(2) page 247….illustrations
18. tea development account, coffee development account and rubber development account (section 33AB) page 248

Ø      essential conditions

Ø      quantum of deprecation(page 249)

Ø      how to compute profits from such business

Ø      restriction on utilization of the amount deposited

Ø      withdrawal of deposit (page 250)

Ø      withdrawal of deduction……illustrations (page 257)

19. Site restoration fund (section 33ABA) page 252

Ø      Essential conditions

Ø      Quantum of deductions

Ø      Restriction on utilization of the amount deposited (page 253)

Ø      Withdrawal of deposit

Ø      Withdrawal of deduction

20. Expenditure on scientific research (section 35) page 254

20a.in-house scientific research

a.       Revenue expenditure (section 35(i)(i)

b.      Capital expenditure (section 35(i)(iv) read with section section 35(2)

20b.sale of an assets used for scientific research (page 255

a.       Sold without having been used for other purposes (section 41(3)

b.      Sold after having been used for business….illustration

      20c.unabsorbed capital expenditure on scientific research……..illustrations (page 256

20d.payment to outside agencies (page 257

1)      Payment made to certain association/institution for scientific research (section 35(i)(ii) & (ii a)

2)      Payment made to certain institution for research in social sciences or statistical research (section 35(i)(iii)

3)      Deduction in case payment is made to a company to used for scientific research (section 35(i)(ii a)

     20e.weighted deduction for contribution to a national laboratory or a university or an India Institute ot      Technology (section 35 (2AA

20f.weighted deduction on in house research an development to a company assesses in certain cases (section 35 (2AB 

21. expenditure for obtaining license to operates telecommunication services (section 35ABB….illustrations (Page 258

21a.sale of license (page 259

a.       where the entire licenses is transferred

b.      where part of the license is transferred

22. expenditure on eligible projects or schemes (section 35AC (page 261

Deduction allowed

a.       expenditure by way of payment to aforesaid institution for specified purpose

b.      direct expenditure

23. deduction in respect of expenditure on specified business (section 35AD

1)      to whom deduction shall be allowed

2)      nature and amount of deduction

(Commencement of operation to be allowed in the year of commencement of operation)

Condition to be satisfied

Illustrations

24. expenditure by way of payments to associations and institution for carrying out rural development programmes (section 35CCA
25. amortization of certain preliminary expenses (section 35D and rule 6AB

Ø      expenditure in respect of which deduction is available

Ø      expenses qualifying for deduction

Ø      amount qualifying for deduction

Ø      quantum of deduction

Ø      compulsory audit of accounts

26. amortization of expenditure in case of amalgamation or demerger (section 35DD
27. amortization of expenditure incurred under voluntary retirement scheme (section 35DA
28. deduction for expenditure on prospecting etc. for certain minerals (section 35E and rule 6AB

Ø      what is specified expenditure

Ø      what is not included in specified expenditure

Ø      quantum of deduction

Ø      example

29. other deductions (section 36

a.       insurance premium of stocks (36(1)(i)

b.      insurance premium of cattle (36(1)(ia)

c.       insurance on health of employees (36(1)(ib)

d.      bonus or commission to employees (36(1)(ii)

e.       interest on borrowed capital (36(1)(iii)

Interest on borrowing for acquisition of an asset for extension of business shall not be allowed as revenue expenditure

f.        discount on issue of zero coupon bonds to be allowed as deduction on pro rata basis (section 36(1)(iiia)

1)      meaning of discount

2)      meaning of periods of life of the bond

g.       employer’s contribution to be recognized provident fund or approved superannuation fund (section 36(1)(iv)

h.       employer’s contribution to an approved gratuity fund (section 36(1)(v)

i.         sums received from employees towards certain welfare schemes if credited to their accounts before the due date (36(1)(va)

j.        allowance in respect of dead or permanently useless animals (36(1)(vi)

k.      bad debts (36(1)(vii)

Ø      treatment of subsequent recovery of an amount claimed and allowed as a bad debt (41(4)

Ø      provisions for bad and doubtful debts not eligible for deduction (section 36(1)(vii)

l.         provisions for bad and doubtful debts of certain banks and finacial institution (36(1)(viia)

m.     amount carried to special reserve credited and maintained special entity (36(1)(vii)

Ø      amount withdrawn from reserve account (section 41(4A

n.       expenditure on promoting family planning amongst the employees (36(1)(ix)…illustration

o.      securities transaction tax paid to be allowed as deduction(36(1)(xv)

30. general deductions (section 37(1)

30a.conditions for allowance under section 37(1)

v     Deduction under section 37(1) is subject to overriding provisions

      Expenditure should have been incurred in the previous year

      Commercial expediency

30b.examples of expenditure allowable as a deduction u\s 37(1)

1)      Remuneration to employees

2)      Payment of penalty/damages

3)      Legal expenses

4)      Expenditure on razing loans

5)      Interest

6)      Expenditure on advertisement

7)      Expenses allowable under specific instructions of CBDT

30c.examples of expenditure not allowable as deduction under (section 37(1)

31. advertisement to political parties (section 37(2B)
32. building, plant and machinery or furniture not exclusively used for the purpose of business/profession (section 38)

Ø      premiums partly used for business and partly for dwelling purpose (section 38(1)

Ø      building, machinery, plant or furniture not exclusively used for business purpose (section 38(2)

33. amounts not deductible (section 40)

1)      in case of any assesses (section 40(a)

2)      disallowances in case of a partnership firm (section 40(b)

3)      disallowances in case of AOP/BOI

34. expenses or payment not deductible in certain circumstances (section 40A)

34a.expenses or payments not deductible where such payments are made to relatives (section 40A(2)(example)

34b.disallowance of 100% expenditure if payment is made by any mode other than account payee cheque or draft (section 40A(3)(a)

v     situation where payment is made in subsequent year although deduction for the expenses was already allowed in any earlier year

      34c.disallowance in respect of provisions for gratuity (section 40A(7)

35. disallowance in respect of contributions to non-statutory fund(section 40A(9)
36. certain deductions to be allowed only on actual payment (section 43(13)…illustrations
37. how to compute the income from business/profession
38. undisclosed income and investment taxed as deemed income

a.       cash credit(section68

b.      unexplained investments (section 69

c.       unexplained money (section 69A

d.      amount of investment, not fully disclosed in books of account (section 69B

e.       unexplained expenditure etc.(section 69C

f.        amount borrowed or repaid on hundi (section 69D

39. deemed profits chargeable to tax

1)      recovery against any allowance or deduction allowed earlier (section 41(1)

a)      recovery by same assesses (section 41(1)a

b)      recovery by the successor in business/profession (section 41(1)b

v     Successor means…………

2)      balancing charge on assets of an undertaking engaged in generation or generation and distribution of power (section 41(2)

v     Money payable includes……..

3)      sale of capital assets used for scientific research (section 41(4)

4)      recovery out of bad debts allowed as a deduction (section 41(3)

5)      amount withdrawn from special reserve created and maintained by certain financial institution (section 41(4A)

6)      deemed income in the hand of recipient in case of discontinued business or profession (section 176(3A) and (4)

a)      recovery of any sum in case of discontinued business (section 176(3A)

b)      recovery of any sum in case of discontinued profession (section 176(4)

40. maintenance of accounts by certain persons carrying on profession or business (section 44A and Rule 6F

a)      person carrying on certain profession

Ø      the board may prescribe by rules the books of account, etc. to be kept

1.      Authorized representative means……….

2.      Film artist for the aforesaid means………

Ø      prescribed books of account and documents to be kept and maintained under section 44A(3) by person carrying on certain professions (rule 6F)

1.      Rule 6F(A)

2.      Rule 6F(5)

Circumstance where maintaining the prescribed books of account shall not be necessary

b)      person carrying on non-specific profession or carrying on business

c)      assesses covered under sections 44AD, 44AE, 44BB and 44BBB

                  Where maintenances of books of account not necessary

d)      Consequences of failure to keep accounts etc.

41. compulsory audit of accounts(section 44AB)

41a.is tax audit under section 44AB compulsory, even if the accounts are audited under any other law or any other provisions of income tax act

                     i.            where accounts are audited under any other law

                   ii.            where accounts are audited and/or report/certificate of an accountant are required under other provisions of income tax Act

41b.report of audit of accounts (rule 6G)

Estimated income method for computing business income in certain cases.

42. special provisions for computing profits and gains of any business (excluding the business covered under section 44A(E) (section 44AD….illustrations
43. special provisions for computing profits and gains of business of plying, hiring or leasing goods carriage (section 44AE

A.     consequences if preemptive income scheme is opted

                                             i.            expenses deemed to have been allowed

                                           ii.            depreciation deemed to have been allowed

                                          iii.            turnover of this business not to be included for computing limits of section 44AA and 44AD

B.     consequences if presumption income scheme is not opted…..illustrations

44. special provisions for computing profits and gain of shipping business in case of non-residents (section 44B
45. special provisions for computing profits and gains in connection with the business of exploration, etc of mineral oils (section 44BB)

Ø      the assesses can declare income under section 44BB to be lower than 10% (section 44BB(3)

Definition (a) plant (b) mineral oils

46. special provisions for computing profits and gains of business of operation of aircraft in case of non-resident (section 44BBA)
47. special provisions for computing profits and gains of foreign companies engaged in the business of civil construction, etc. in certain turnkey power projects (section 44BB)

Ø      the assesses can declare income under section 44BB to be lower than 10% section 44BB(2)….illustrations