In performing our assignment, we had to take the help and guideline In performing our assignment, we had to take the help and guideline of some respected persons, who deserve our greatest gratitude. The of some respected persons, who deserve our greatest gratitude. The completion of this assignment gives us much Pleasure. We would like completion of this assignment gives us much Pleasure. We would like to show our gratitude Ms. RICHA BHATIA Course Instructor, for to show our gratitude Ms. RICHA BHATIA Course Instructor, for giving us a good guideline for assignment throughout numerous giving us a good guideline for assignment throughout numerous consultations. We would also like to expand our deepest gratitude to consultations. We would also like to expand our deepest gratitude to all those who have directly and indirectly guided us in this all those who have directly and indirectly guided us in this assignment.assignment.

In addition, a thank you to Professor ANURADHA GOSWAMI, who In addition, a thank you to Professor ANURADHA GOSWAMI, who inroduced us to the Methodology of work, and whose passion for the inroduced us to the Methodology of work, and whose passion for the “underlying structures” had lasting effect. We also thank THE “underlying structures” had lasting effect. We also thank THE BHOPAL SCHOOL OF SOCIAL SCIENCES for consent to include BHOPAL SCHOOL OF SOCIAL SCIENCES for consent to include copyrighted pictures as a part of our paper.copyrighted pictures as a part of our paper.

Many people, especially our classmates and team members itself, Many people, especially our classmates and team members itself, have made valuable comment suggestions on this proposal which have made valuable comment suggestions on this proposal which gave us an inspiration to improve our assignment. We thank all the gave us an inspiration to improve our assignment. We thank all the people for their help directly and indirectly to complete our people for their help directly and indirectly to complete our assignmentassignment..

ACKNOWLEDGEMENACKNOWLEDGEMENTT

ANNAYA RAUTANNAYA RAUTDEEPAK SHARMADEEPAK SHARMAJIVESH SONIJIVESH SONIISHAN JAINISHAN JAINANJU SINGHANJU SINGH

PRESENTED BY-PRESENTED BY-

TITLETITLE

Profits and gains of any Profits and gains of any profession/professionprofession/profession

Any compensation received related Any compensation received related businessbusiness

Income received from members of Income received from members of similar professionsimilar profession

Any benefit or perquisites from Any benefit or perquisites from business /professionbusiness /profession

Export incentives from governmentExport incentives from government

Charging Charging Section[Sec.28]Section[Sec.28]

5

Any interest, salary, bonus, commission Any interest, salary, bonus, commission or remuneration received by a partner or remuneration received by a partner from firm.from firm.

Sum received(compensation) from other Sum received(compensation) from other company not to carry on any business for company not to carry on any business for know how, patent, copy right, know how, patent, copy right, trademark.trademark.

Profits and gains of managing agencyProfits and gains of managing agency

Charging -Charging -ContinueContinue

6

Profit motiveProfit motive Business and rendering services to Business and rendering services to

othersothers Business cannot be carried on with Business cannot be carried on with

oneselfoneself

Meaning of Meaning of businessbusiness

7

Duty drawback import entitilement Duty drawback import entitilement licenceslicences

Are taxable u/s 28-Business/professionAre taxable u/s 28-Business/profession

Export Export incentivesincentives

8

1. Rental income in case of dealer in 1. Rental income in case of dealer in property taxable under the head income property taxable under the head income from house property[u/s22].from house property[u/s22].

2. Dividend on shares in case of a dealer 2. Dividend on shares in case of a dealer in shares- taxed under income from in shares- taxed under income from other sources [u/s 56].other sources [u/s 56].

3. winning from lotteries (lottery 3. winning from lotteries (lottery business) taxed u/s 56-income from other business) taxed u/s 56-income from other sources.sources.

Business income not taxable Business income not taxable u/s 28u/s 28

9

Loss due to natural calamityLoss due to natural calamity Loss due to non acceptance of goodsLoss due to non acceptance of goods Reduction in value of foreign currency Reduction in value of foreign currency

which is meant for purchase of stock.which is meant for purchase of stock. Loss of cash/goods due to embezzelment, Loss of cash/goods due to embezzelment,

burglary, forfeiture of deposits.burglary, forfeiture of deposits. Loss of forgoing advance given by sugar Loss of forgoing advance given by sugar

industries to formers due to monsoon industries to formers due to monsoon failurefailure

Losses deductible from Losses deductible from business incomebusiness income10

Loss not deductible from Loss not deductible from businessbusiness11

Loss due to destruction of Capital asset.Loss due to destruction of Capital asset. Loss on sale of investments held as Loss on sale of investments held as

investment.investment. Loss of advance to set up a business but Loss of advance to set up a business but

business could not be started.business could not be started. Depreciation in value of foreign currency for Depreciation in value of foreign currency for

capital purposecapital purpose Anticipated future losses.Anticipated future losses. Loss of discontinued businessLoss of discontinued business Loss from illegal Loss from illegal

business[T.A.Qureshiv.CIT(2006)SC]business[T.A.Qureshiv.CIT(2006)SC]

Net profit as per P/L AccountNet profit as per P/L Account AddAdd: Amount debited to P/L A/c in : Amount debited to P/L A/c in

respect of the followingrespect of the following Loss of earlier yearsLoss of earlier years Capital lossesCapital losses Personal expenses (such as drawings)Personal expenses (such as drawings) Income tax, surtax, wealth tax, gift tax, Income tax, surtax, wealth tax, gift tax,

estate duty[Direct taxes], tax penalty, estate duty[Direct taxes], tax penalty, penal interest, fine.penal interest, fine.

Computation of assessable Computation of assessable profits/loss for taxprofits/loss for tax12

Add:Add: Charity and donation Charity and donation Gifts and presents to othersGifts and presents to others All reserves/provisions such as tax All reserves/provisions such as tax

provision, Reserve for dividend, provision, Reserve for dividend, provision for bad debts except provision provision for bad debts except provision for depreciationfor depreciation

All expenses related to other heads of All expenses related to other heads of incomeincome

ContinuesContinues13

AddAdd: Expenses not deductible u/s 40 and : Expenses not deductible u/s 40 and 40A40A

Expenses debited to P/L A/C not Expenses debited to P/L A/C not admissible u/s 30 to 40Aadmissible u/s 30 to 40A

AddAdd: Amount not credited to P/L A/c: Amount not credited to P/L A/c Deemed incomeDeemed income DeductDeduct :Income credited to P/L A/c but :Income credited to P/L A/c but

not chargeable under other headsnot chargeable under other heads

ContinuesContinues

14

LessLess:: Salary income( income from salary(u/s 15)Salary income( income from salary(u/s 15) Rental incomeIncome from House Rental incomeIncome from House

property(u/s22)property(u/s22) Capital gain(u/s 45)Capital gain(u/s 45) Dividend[ Income from other sources(56)]Dividend[ Income from other sources(56)] Direct taxes refund such as Income tax, Direct taxes refund such as Income tax,

Wealth tax, estate duty, surtax refundsWealth tax, estate duty, surtax refunds Bad debts, excise duty recovered not allowed Bad debts, excise duty recovered not allowed

as expenditure preceding previous yearsas expenditure preceding previous years Deduct:Deduct: Expenses not debited to P/L A/c but allowed Expenses not debited to P/L A/c but allowed

u/s 30 to 40Au/s 30 to 40A Depreciation u/s 32Depreciation u/s 32

Income chargeable under income from Income chargeable under income from business/profession.business/profession.

ContinuesContinues15

Registered ownership is not necessary Registered ownership is not necessary Sec. 53A of the transfer of property Act.Sec. 53A of the transfer of property Act.

If the assessee can be the co-owner to If the assessee can be the co-owner to claim depreciationclaim depreciation

Any capital expenditure incurred by the Any capital expenditure incurred by the person who takes building can provide person who takes building can provide depreciation on capital expenditure.depreciation on capital expenditure.

Rules of Accounting Standard (AS19) not Rules of Accounting Standard (AS19) not applicable for depreciation as per IT Act.applicable for depreciation as per IT Act.

Lease propertyLease property

16

Yes.Yes. Block asset method.Block asset method. What is block asset What is block asset

method?method? Similar nature of asset Similar nature of asset

having the same rate of having the same rate of depreciation are clubbed depreciation are clubbed together.together.

Method of Method of depreciationdepreciation17

1. Building acquired on or after 1. Building acquired on or after September 1, 2002 forming part of water September 1, 2002 forming part of water supply projectsupply project

2. Pollution control equipments2. Pollution control equipments 3. waste control equipment3. waste control equipment 4.wooden parts used in artificial silk 4.wooden parts used in artificial silk

manufacturing machinemanufacturing machine 5.cinimatograph films5.cinimatograph films 6. Books6. Books

100% 100% depreciation?depreciation?

18

Block value in the beginningBlock value in the beginning Add:- Purchase of asset of the same Add:- Purchase of asset of the same

blockblock Less:- Net sale value of the consideration Less:- Net sale value of the consideration

received/receivable in cash /cheque/draft received/receivable in cash /cheque/draft if any of the block of assets sold during if any of the block of assets sold during the yearthe year

calculation of calculation of depreciationdepreciation19

AllowedAllowedBonus to Bonus to employees[36employees[36(1)(ii)](1)(ii)]

Insurance premium to protect Insurance premium to protect the asset or employees[36(1)the asset or employees[36(1)(i)](i)]20

Includes:Includes:1.1. Local taxes, duty cess or fee Local taxes, duty cess or fee

under any lawunder any law2.2. Sum payable to employees such Sum payable to employees such

PF, Gratuity, superannuation PF, Gratuity, superannuation fund to employees, BONUS, OR fund to employees, BONUS, OR COMMISSIONCOMMISSION

3.3. Interest on loan borrowed from Interest on loan borrowed from public financial institution such public financial institution such as ICICI,IFCI, IDBI,LIC AND UTI as ICICI,IFCI, IDBI,LIC AND UTI ONLYONLY

DEDUCTION ALLOWED ON DEDUCTION ALLOWED ON PAYMENT BASIS OR ACCRUAL PAYMENT BASIS OR ACCRUAL BASIS?BASIS?

***Unpaid liabilities***Unpaid liabilities21

It should not be a capital expenditure orIt should not be a capital expenditure or Not personalNot personal Not prohibited by law such as fine, Not prohibited by law such as fine,

penaltypenalty Not be an illegal expenditureNot be an illegal expenditure

Can we see some of the expenditures Can we see some of the expenditures allowed as per various case laws?allowed as per various case laws?

General General deductions[37(1)]deductions[37(1)]22

*****Interest paid on *****Interest paid on borrowed funds to pay borrowed funds to pay Income tax is disallowedIncome tax is disallowed

Interest paid on installment Interest paid on installment of the price of propertyof the price of property

*****Expenditure to raise *****Expenditure to raise capitalcapital

***Expenditure on shifting of ***Expenditure on shifting of registered officeregistered office

Disallowed Disallowed ExpenditureExpenditure23

*#*#*#*#*#*#DisalloweDisallowedd

Penalty/fine /interest on Penalty/fine /interest on penaltypenalty

24

Cash bookCash book A Journal on mercantile basisA Journal on mercantile basis LedgerLedger Carbon copies of machine numbered bills Carbon copies of machine numbered bills

exceeding Rs. 25 issued by the personexceeding Rs. 25 issued by the person Original bills if exceed Rs. 50. If bills are Original bills if exceed Rs. 50. If bills are

not issued payment vouchers signed by not issued payment vouchers signed by the personthe person

Specified Books to be Specified Books to be maintainedmaintained25

SOURCESOURCE

THANK THANK YOUYOU

27

ALTERNATIVE WORK IS REST

Happiness by giving but not receiving

Learn every day

No bad day. It depends upon our mind set

Two sides in a coin. One is failure(50% )

Other is success(50%)

Accepting failure leads to success

Enjoy whatever you do

Everyone is good