tax section

8/3/2019 Tax Section

http://slidepdf.com/reader/full/tax-section 1/28

KZWKZddyW>EE/E'

d

W

1



'

WWz /Wzz

dW

>

> W '

Z

Z /

2



'

Z

D/

/

>

>/

>/

3



K

Wz

Wz

Wz E

s

4



E

E

Z

E

E

Z

5



6

Business losses can be allowed as deduction only if

the following conditions are satisfied:

Condition 1 Losses should be revenue in nature.

Condition 2 Losses should be incurred during the previous year

Condition 3Losses should be incidental to the business or profession

carried on by the assessee.

Condition 4 It should not be notional or fictitious.

Condition 5It should have been actually incurred and not merely

anticipated to incur in future.

Condition 6 There should not be any, direct or indirect, restriction under

the Act against the deductibility of such loss.



^

• Rent, rates, taxes, repairs and

insurance of buildings (30)• Repairs and insurance of machinery,

plant and furniture (31)

• Depreciation (32)

• Tea/C/R development account (33AB)

• Site restoration fund (33ABA)• Expenditure on scientific research (35)

• Expenditure on acquisition of patent

rights and copyrights (35A) 7



Z

• D

• D

• D

• >

• K

• W

8



Z

• WDWz• E

•D

• D

9



dZ

dZ

/

'dZ/

10



dZ

t

WW

11



dZ

•

•

• d

• '^

12



^

/ '/

/

Wz

13



^

14



W^ZE>/^Z

15



W

Z^Z

Wz

t / ^Z

t

16



t

^^W

^ZE

/

17



• Exp. on acquisition of patent rights and copyrights (35A)

• Deduction in respect of expenditure on know how (35AB)

• Amortization of telecom license fees (35ABB)

• Expenditure on eligible projects or schemes (35AC)

(promoting social welfare and economic welfare)

• Exp. on specified business (35AD)

• Payment to the association and institutions carrying out

rural development programmes (35CCA)

• Amortization of preliminary expenses (35D)

18



• Amortization of exp. In case of amalgamation / de-merger (35DD)

• Amortization of exp. under VRS (35DDA)

• Amortization of expenditure on prospecting etc fordevelopment of certain minerals (35E)

• Insurance premium (36(1)(i))

• Insurance premium paid on health of employees(36(1)(ib))

• Bonus or commission to employees (36(1(ii))

• Interest on borrowed capital (36(1)(iii))

19



• Employer’s contribution to recognized PF andapproved super-annuation fund (36(1)(iv))

• Contribution towards approved gratuity fund (36(1(iv))

• Employee’s contribution towards staff welfareschemes (36(1)(va))

• Write off allowance for animals (36(1)(vi))

• Bad debts (36(1)(vii))

• Transfer to special reserves (36(1)(viii))

• Family planning expenditure (36(1)(ix))

20



• Revenue expenditure incurred by entities establishedunder any Central, State or Provincial Act. (36(I)(xii)).

• Expenditure on Advertisement (37(2B)).

– >/hd/

• General Deductions (37(1)): in order to claim

deductions under this section the following conditionsshould be satisfied.

– d

– /

21



– /

– /Wz – /

– /

– /

d

22



'

,

d:/dE^D>

23

Positive tests are : If the expenditure is incurred

(1) with a view to bring profits or monetary advantage eithertoday or tomorrow

(2) to render the assessee immune from impending orreasonably apprehended litigation

(3) In order to save losses in foreseeable future



,

24

(4) For effecting economy in working which may paydividends today or tomorrow

(5) For increasing efficiency in working(6) For removing inefficiency in the working.

(7) Where the expenditure incurred is such as a wise,prudent, pragmatic and ethical man of the world ofbusiness would conscientiously incur with an eye on

promoting his business prospects, subject to theexpenditure being genuine and within reasonable limits

(8) Where it is incurred solely by way of a civil duty owed bythe assessee to the society having regard to the nature ofhis business which brings him profits but results in some

detriment to the public at large either by way of healthhazard or ecological pollution or serious inconvenience tothe citizens with a view to mitigate the aforesaid evilconsequences of a like nature, subject to its beinggenuine and within reasonable limits.



,

25

Negative tests are : If the expenditure is incurred

(1) For a mere altruistic consideration,

(2) Mainly in order to satisfy his philanthropic urges

(3) Mainly in order to win applause or public appreciation

(4) For illegal, immoral or corrupt purposes or by any suchmeans or for any such reasons,

(5) Mainly in order to oblige a relative or an official,

(6) Mainly to earn the goodwill of a political party or a politician

(7) Mainly to show off or impress others with h is affluence or

for ostentatious purposes(8) Apparently for a factor listed as a positive factor, but in

reality for one of the obnoxious purposes listed as negativefactors



,

26

(9) On a nebulous plea or pretext by way of an alibi in thename of winning profits in remote future but really for oneor the other of the purposes listed as negative tests

(10) It is a bogus, fictitious or sham transaction

(11) It is unreasonable and out of proportion

(12) It is an expenditure merely with a view to avoid tax liabilitywithout any genuine purpose or reason in good faith and

(13) The advantage to be secured by incurring the expenditureis of the nature of a remote possible advantagedepending on ‘if’ and ‘but’ and if at all, to be secured at anuncertain future date which may be considered tooremote.



^

27

Under sec. 28(ii), compensation or payment due to orreceived by the following persons, by whatever namecalled, is chargeable to tax under the head “Profit andgains of Business or profession”:

a. Any person managing the whole or substantiallythe whole of affairs of an Indian company, at or in

connection with the termination of hismanagement or the modification of the terms andconditions relating there to,

b. Any person managing the whole or substantially

whole of affairs in India of any other company, ator in connection with the termination of his officeor the modification of the terms and conditionrelating there to,



^

28

c. Any person holding an agency in India or any partof the activities relating to the business of anyother person, at or in connection with the

termination of the agency or the modification ofthe terms and conditions relating thereto,

d. Any person, for or in connection with the vesting inthe Government or in any corporation owned or

controlled by the Government, under any law forthe time being in force, of the management of anyproperty or business.

tax section

Documents