Capital Gains

M.K.
GUPTA TAX CLASSES

PH: 9212011367/ 9811429230
www.mkgu!"#"#$"%%&%.#'m
&(m")$ )*: mkgu!"!"+#$"%%&%,-&*)..m")$.#'m
/E/UCT012 13 TAX AT S1U4CE 20(64
SET 133 A2/ CA445 3146A4/ 13 L1SSES 67(92
P4180S012S 314 30L02G 13
4ETU42 13 02C1ME 93(114
CHA40TA9LE T4UST/ 4EL0G01US T4UST 117(130
02C1ME U2/E4 THE HEA/ CAP0TAL GA02S 131(288
0:#$u*):g
EXAM02AT012 ;UEST012S
CA. 4.2. <ALA2
CA
0PCC
218(2012
P.5. = 2011(12
A.5. = 2012(13
3. A. = 2011

ASSESSME2T 5EA4
2012(13
2
`200/(
S5LLA9US
0PCC
P"&- 4: T"+"!)':
(One paper Three hours 100 Marks)
L&>&$ '. K:'w$&*g&: Working knowledge
1?@&#!)>&%: (a) To gain knowledge of the provisions of Income-tax law relating to the topics mentioned in
the contents below and
(b) To gain ability to solve simple problems concerning assessees with the status of Individual!" and
covering the areas mentioned in the contents below#
C':!&:!%:
P"-! 0: 0:#'m&(!"+ A70 M"-k%B
$# Important definitions in the Income-tax %ct& $'($
2# )asis of charge" *ates of taxes applicable for different types of assessees
+# ,oncepts of previous year and assessment year
-# *esidential status and scope of total income" Income deemed to be received . deemed to accrue or arise in
India
/# Incomes which do not form part of total income
(# 0eads of income and the provisions governing computation of income under different heads
1# Income of other persons included in assessee!s total income
2# %ggregation of income" 3et-off or carry forward and set-off of losses
'# 4eductions from gross total income
$5# ,omputation of total income and tax payable" *ebates and reliefs
$$# 6rovisions concerning advance tax and tax deducted at source
$2# 6rovisions for filing of return of income#
P"-! 00: S&->)#& T"+ A27 M"-k%B ":* 8AT A27 M"-k%B
1?@&#!)>&: To gain knowledge of the provisions of service tax as mentioned below and basic concepts of
7alue added tax (7%T) in India#
S&->)#& T"+ A27 M"-k%B
C':!&:!%:
$# 3ervice tax 8 ,oncepts and general principles
2# ,harge of service tax and taxable services
+# 7aluation of taxable services
-# 6ayment of service tax and filing of returns
Individual services covered in the syllabus
(i) ,onsulting 9ngineer 3ection (/($5/)(g)
(ii) :andap ;eeper 3ection (/($5/)(m)
(iii) 6racticing ,hartered %ccountants 3ervices 3ection (/($5/)(s)
(iv) 3cientific and Technical ,onsultancy 3ection (/($5/)(<a)
(v) ,ommercial Training or ,oaching 3ection (/($5/)(<<c)
(vi) Technical Testing and %nalysis 3ection (/($5/)(<<h)
(vii) )usiness 9xhibition 3ection (/($5/)(<<o)
(viii) Information Technology 3oftware 3ection (/($5/)(<<<<e)
8AT A27 M"-k%B
/# 7%T 8 ,oncepts and general 6rinciples
(# ,alculation of 7%T =iability including input Tax ,redits
1# 3mall 4ealers and ,omposition 3cheme
2# 7%T 6rocedures#
2'!&: If new legislations are enacted in place of the existing legislations the syllabus will accordingly
include the corresponding provisions of such new legislations in the place of the existing legislations with
effect from the date to be notified by the Institute#
+
3tudents shall not be examined with reference to any particular 3tate 7%T =aw#
1. 80<E2/E4 AGGA46AL 218(2010 A4'$$ 2'.174639B A$$ 0:*)" T'&- ): CA(0PCC
% person who possesses such vast knowledge in the field of taxation& that we people can only dream of& is
none other than :# ;# >upta 3ir#
0e possesses the rare ability to teach this procedural sub?ect with utmost ease& enabling his students to grasp
all the provisions without any confusion#
The @uality of study material provided is such that a good study of it helped me score '2 marks# The variety
and complexity of practical problems covered in the books are not available anywhere else#
Ane can find many places where taxation is being taught but it is hardly possible to find a better place where
tax laws are combined with their practical applicability to ensure that all concepts are crystal clear#
3ir is extremely generous# :oney-making doesn!t appear to be his priority and it is clearly reflected in his
classes& where the infrastructure and administration stands second to none and students are awarded
handsome cash-pri<es not only in classes but also in tests& which are regularly conducted#
Thanking 3ir for all what he has done would be an insult since it was only his efforts that helped me reach
this position# 3ir& its your success# The relationship between us started in ,6T only and continued in I6,,
and I hope it will continue forever#
2. P4ACH0 <A02 MA5(2010 A4'$$ 2'.66312B A$$ 0:*)" T'&- ): CA(PCC
:# ;# >upta 3ir is an outstanding teacher# 0e is not only a good teacher but a good person by heart# 0is way
of teaching is excellent# There are many provisions in tax but 3ir repeats every provision atleast two times#
This helps in understanding those provisions easily#
0is books are very good# 9verything from theory to 6*%,TI,%= I==B3T*%TIAC& 9D%:IC%TIAC
EB93TIAC3 and )%*9 %,T is covered in his books# 3ir!s staff and management is also very good#
9verything is handled in a systematic manner and on time# Averall it was a good experience#
Thanks 3ir FF G-
3. SAH0L AGGA46AL 218(2011 A4'$$ 2'.271741B 4
!C
4A2K
The material provided by the 3ir in the class as well as in books is self sufficient for the exams# :#;# >upta
3ir!s knowledge about the sub?ect is excellent# :oreover& his down-to-earth nature make him the best tax
teacher one could get#
4. MA5A2K AGA46AL <U2E(2009 A4'$$ 2'. 37786B 4
!C
4A2K
3ir has always been very motivating and his guidance has helped me to excel in the exams# 3ir has an
immense knowledge of the sub?ect and has always been available to answer our @ueries# Thank you 3irF
7. SAH0L A414A 218(2011A4'$$ 2'.217712B 6
!C
4A2K
:y opinion towards :#;# >upta 3ir is very good# 0is enthusiasm in class has ama<ed me a lot# There are
many provisions in the sub?ect but 3ir repeats them atleast twice which is of immense help# %lso& the
explanation of topic with a relevant practical example clears all the @ueries# :#;# >upta 3ir!s books along
with notes cover easily the entire syllabus and the notes prove really helpful one day before the exam#
A79*%== % >*9%T 9D69*I9C,9F
6. 20KETA SA911 MA5(2011A4'$$ 2'.72328B 6
!C
4A2K
I think :#;# >upta 3ir is an outstanding Teacher# 0e has excellent knowledge of the sub?ect# With his skills
and knowledge& he has made Tax sub?ect very easy to understand and really interesting#
I would recommend every aspiring ,%& to take guidance from 3ir# It will really be helpful#
Thank you 3ir& for guiding us throughout# It was a wonderful experience#
7. A2U G1EL 218(2011 A4'$$ 2'.288966B 7
!C
4A2K
The experience with :#;# >upta Tax ,lasses was really ama<ingFF 3ir is full of knowledge and experience#
0e repeats every provision and concept behind it in detail# I have personally never seen him in a hurry to
finish the course# 0is very motive is to make sure the student understand the provisions fullyF The book has
large number of practical illustrations& which further helps to understand the sub?ectF Thank you 3irFFF
8. MA/HA8 9A2KA 218(2011A4'$$ 2'.233313B 8
!C
4A2K
:#;# >upta 3ir is one of the best teacher in my life and he is the best teacher of taxation in whole India# 0e
has a vast knowledge in the field of taxation which helped me a lot to get such good marks and he inspired
-
me to get rank# )ecause of him& I developed great interest in tax due to which I am going to choose my
career in field of taxation# Hor this I am very thankful to the 3ir#
9. 4A<AT GUPTA 218(2011A4'$$ 2'.408691B 9
!C
4A2K
I got '
th
rank by scoring great marks in all six sub?ect but the biggest credit for my achievement goes to
:#;# >upta 3ir# 0is way of appreciating the students is excellent# )ooks given by :#;# >upta 3ir is so easy
and understandable# In ,% market :#;# >upta 3ir is the only name which helps the students in all areas
whether in studies or in motivating the students# Thank you 3ir#
10. 2E8A0/ AGGA46AL 218(2010A4'$$ 2'.178788B 10
!C
4A2K
:y opinion towards 3ir is very good# 0is enthusiasm in class ama<ed me a lot# 0is indepth knowledge of
the sub?ect along with detailed books was of immense help# 0e is by far the best tax teacher one can go for
guidance#
11. 4UCH0KA A414A MA5(2008 A4'$$ 2'. 62449B 13
!C
4A2K
:#;# >upta 3ir has vast knowledge about the sub?ect and is every ready to help their students to touch the
heights of their career# I owe a great deal of my success to 3ir and this institute and considers myself to be
fortunate of being the part of this institute#
:#;# >B6T% 3I* *A,;3 FF
12. ASH0SH SA911 <U2E(2009 A4'$$ 2'. 47977B 13
!C
4A2K
%s a teacher& :#;# >upta 3ir is ?ust like a sea of knowledge and you get each and every thing from very
beginning to end from him# 3ir is really a nice person# 0e gives each and everything to his student# ,oaching
is excellent and the book is complete# If a student read 3ir!s notebook I book and get 3ir!s knowledge he
will sureshot get very good marks#
13. GA40MA MA/A2 MA5(2010 A4'$$ 2'.77619B 13
!C
4A2K
Co one can replace :# ;# >upta 3ir# 0is way of teaching is uni@ue in this world# The environment of
classrooms is well maintained# The facilities provided were upto the mark# There is no need to refer any
other book if you are studying :# ;# >upta 3ir!s notes and study material# )e honest towards your studies
and 3ir will show you the way of success#
14. KESHA8 G1EL 218(2011 A4'$$ 2'.234797B 14
!C
4A2K
% complete package# % good teacher with good teaching skills making you learn and practice a lot in the
class itself# 0is notes are excellent both for the exams and future# 0e also provides a lot of knowledge for
the other issues as well# Thank you 3irF Thanks a lot for your help and support#
17. A/0T0 AGA46AL 218(2011 A4'$$ 2'.298278B 17
!C
4A2K
:#;# >upta 3ir is a great teacher having an exceptionally well knowledge about the sub?ect# 0e teaches
every concept in very detailed manners and the notes provided are sufficient for preparation during exam#
16. HA4SH KUMA4 GA4G 218(2011 A4'$$ 2'.207614B 17
!C
4A2K
The notes of :#;# >upta 3ir was very useful for my preparation# I give the credit of my success to 3ir# %lso&
the study material and the motivational words of 3ir was very useful#
17. SA2/0P AGA46AL MA5(2010 A4'$$ 2'. 73610B 17
!C
4A2K
% man who has achieved all the levels of satisfaction and is here ?ust to serve the society with his knowledge
and aura# 0e is the man with the ability to produce rank holders with most ease# 0is book is more than
enough for scoring heavily#
18. 4EEMA 218(2010 A4'$$ 2'.174999B 17
!C
4A2K
I think& :# ;# >upta 3ir is one of the best teacher in Taxation# Hor me& taxation becomes so much easy ?ust
because I have studied from :#;# >upta 3ir# It!s a life time achievement for me that I have studied from
:#;# >upta 3ir# Thanks a lot to 3ir& you are great#
19. SACH02 GUPTA MA5(2008 A4'$$ 2'. 29304B 16
!C
4A2K
9D,9==9CT ,A%,0IC> F 9D,9==9CT ;CAW=94>9 F 9D,9==9CT )AA; F 9D,9==9CT W%J
AH T%;IC> B6 EB9*I93 F The way of teaching of 3ir is very nice# 0e makes each and every thing so
easy that we can learn it in the class room itself# The notes and books provided by 3ir are excellent# There is
no need to consult any book and in my opinion :#;# >upta 3ir is the best teacher of income tax in world#
20. SUMA2 4A20 218(2008 A4'$$ 2'. 21180B 16
!C
4A2K
/
0e is the best teacher and having excellent practical knowledge# 0e is very cooperative and boosts the
confidence level of the students# Co teacher can be compared with him because he is the best# 0e is also a
superb person as a human being and understands the problems of students and solves them# I am very
Thankful to him and even words are not sufficient to express his gratitude#
21. 40/H0 2A4ULA 218(2009 A4'$$ 2'. 60967B 16
!C
4A2K
,oaching provided by :# ;# >upta 3ir is very good and knowledge of teacher is very good#
9xcellent Teacher& Habulous personality and :arvellous >uide 8 these are the apt words to describe :#;#
>upta 3ir# 0e taught me how beautiful the studying is# 0is knowledge of the sub?ect is outstanding#
22. A20L KUMA4 MAL0 218(2010 A4'$$ 2'. 73101B 16
!C
4A2K
)roadly 3peaking& :# ;# >upta 3ir! knowledge& experience and ,% oriented approach is far beyond other
teachers# 0e is very much excellent in his concept# Thanking you and my colleagues and seniors namely
%mit& %nkit& :ano?& :y ,#%# K %kshay 3ir# Thanking you again# If you want to get *ank& do what your
teacher and your mind vis-L-vis your heart guides# *eallyF
23. 4AM /AS S12A6ALA MA5(2011 A4'$$ 2'.47919B 16
!C
4A2K
Hirst of all Thank Jou 7ery :uch 3ir for your support& it helped me to take a rank# Jou are a good teacher#
Jour method of teaching and your never ending knowledge& become very useful for me to get the good
marks in taxation# Averall I am fully satisfied with your teaching#
24. CHA4U S02GHAL <U2E(2009 A4'$$ 2'. 46941B 17
!C
4A2K
:#;# >upta 3ir is the best teacher for Tax# 0e is a very nice person# 0e is always there to help the students#
0is class notes and book are self sufficient to score good marks in Tax# I admire him not only as a teacher
but also as a guide and as a person#
Thank you 3ir#
27. 8A4U2 LAK4A 218(2008 A4'$$ 2'. 69371B 18
!C
4A2K
In my view& :#;# >upta 3ir is the best teacher for Income Tax for 6,,# 0e is a brilliant teacher# The study
material provided was excellent with perfect examples# =astly& it is hard work and support of our teacher
which has helped me to get $2
th
*ank in 6,,#
THA2K 51U S04DD 4EGA4/S
26. AMA2 <A02 218(2011 A4'$$ 2'.233247B 19
!C
4A2K
MThe mediocre teacher tells# The >ood Teacher explains# The superior teacher demonstrates K The >reat
teacher inspires#N :#;# >upta 3ir is really a great teacher# 0is unmatchable style of teaching coupled with
3ir!s peace K calm nature of dealing with students K handling their @ueries is really excellent# The reason
behind my excellence in taxation entirely goes to :#;# >upta 3ir# The notes K books provided is more than
enough K exhaustive# It was really a great experience K memorable period of my life# Thanks a lot 3irF
27. A4P0T 9A2SAL 218(2011 A4'$$ 2'.222713B 20
!C
4A2K
Jou know you are in the right place when you are taking coaching from :#;# >upta 3ir# :#;# >upta 3ir!s
vast knowledge and ama<ing conceptual clarity goes a long way in helping you understanding Taxation in
great detail# Thank Jou 3ir for teaching meFF
28. A2SH0KA GUPTA 218(2010 A4'$$ 2'.177016B 20
!C
4A2K
:# ;# >upta 3ir is very good teacher and he has a MTreasure of ;nowledgeN# 0is teaching style is excellent
and I will pray to >od for giving successful life.future to :#;# >upta 3ir# )ooks contain all the necessary
materials# The Institute is also very nice and the staff is very co-operative in nature and finally I wish to pay
MThanksN to 3ir and his staff for their excellent teaching and co-operative behaviour#
ThanksFFF
29. A2K0T G1LASH <U2E(2009 A4'$$ 2'. 47738B 21
%!
4A2K
>uidance given by 3ir was excellent# Cotes are excellent& your concepts are very good# %s far as your book
is concerned& it is a complete package in itself& covering all the peculiar @uestionsF
Thanks for all your support and guidanceF Thanks a lot F
30. 4AHUL <A02 <U2E(2009 A4'$$ 2'. 47797B 22
:*
4A2K
:#;# >upta is the best teacher for Taxation# :#;# >upta 3ir has vast knowledge about the sub?ect and is
ready to help their students to touch the heights of their ,areer# 0e has always been encouraging and without
his support& I would not have been able to score a rank#
(
Thank you 3ir#
31. MA21< 2A46AL MA5(2011 A4'$$ 2'.73612B 23
-*
4A2K
Hirst of all I would like to say MT0%C;3N thousand times to :# ;# >upta 3ir#
I owe my success to him# 0e is a complete package for every ,% aspirant for MTaxationN# I think 3ir should
be called as MTax >uruN#
I have ?oined this coaching in order to achieve a rank and 3ir made it possible#
3ir boosted our morale from time to time& gave us the confidence needed to aim the *ank# 3ir handled our
@ueries both& in and after the class& so well that we do not need to worry about it at home#
Teaching style of 3ir is fabulous and 3ir himself is a very great personality#
In last& please bless me 3ir# Thanking you#
32. M. S4020/H0 218(2011 A4'$$ 2'.220746B 27
!C
4A2K
:#;# >upta 3ir teaches tax to all his students in the easiest possible way so that the concepts are clear to
every student in the class# 0e not only teaches us but also makes us learn in the class itself# 3o attending the
class completes the preparation then K there# The material provided is another important plus# Thank Jou
3ir# Jour teaching has indeed made T%D%TIAC 8a favourite sub?ect of mine#
33. 41U2AK AGA46AL 218(2011 A4'$$ 2'.236372B 27
!C
4A2K
Co words can describe our teacher (M:#;# >upta 3irN)& if anyone wants to be under good hands of taxation&
you are where you should be#
The teacher& the centre were all ama<ing# The performance of students itself speaks about the teacher and the
coaching# What was taught in the classes was more than enough for a rank#
34. CHHA80 MEHTA MA5(2010 A4'$$ 2'.76911B 27
!C
4A2K
Income tax coaching were very helpful in my preparation for the exams# 3tudy material is very well
organi<ed# The practice @uestions clarified the concept beautifully# I thank :# ;# >upta 3ir for helping me
score so well in taxation which helped my overall score in the 6,, examination# :y warm regards and a
heart full Thank Jou! to you 3ir#
37. 20SHA2T GUPTA 218(2010 A4'$$ 2'.173038B 27
!C
4A2K
9xcellent coaching for income tax with detailed notes& with supporting examples on each point#
The excellent @uery handling procedure undertaken here helps immensely#
36. /H4U8 AGGA46AL 218(2008 A4'$$ 2'. 66187B 26
!C
4A2K
Well what should I say about :#;# >B6T% 3ir& he is a mobile encyclopedia in Taxation# 0e has vast and
exhaustive knowledge about Taxation which he always tries to pass on to the students# Jou can!t forget 3ir!s
sense of humor# 0e is one of the most dedicated teachers I have ever seen# 9xtremely punctual unlike usFF I
truly dedicate my achievements to 3ir#
37. MA/HU4 AGGA46AL 218(2009 A4'$$ 2'. 73009B 26
!C
4A2K
3ir made Tax look a simple sub?ect# ,lasses were full of fun and the book is very comprehensive yet easy to
study# Heel lucky to have chosen :# ;# >upta 3ir as my Tax teacherFF 0is coaching is very good& knowledge
is excellent and @ueries taken are excellent#
38. 940<ESH AGGA46AL MA5(2010 A4'$$ 2'. 79234B 26
!C
4A2K
The best tax faculty in India# Thanks to :#;# >upta 3ir& and his staff for providing me such environment
which help me get such marks#
39. H0MA2SHU GUPTA 218(2009 A4'$$ 2'. 77960B 27
!C
4A2K
In my knowledge till date I have not seen such a brilliant teacher full with enthusiasm& energy K vast pool of
knowledge K experience# 0is nature is very good# The way 3ir attends our @ueries is ?ust fantastic# :aterial
given by 3ir is more than enough# B don!t need to refer any other book# 0e is the best teacher for Taxation#
40. SAMEE4 41USHA2 MA5(2011 A4'$$ 2'.192774B 27
!C
4A2K
I was simply enthralled by :#;# >upta 3ir!s way of teaching# The conceptual clarity is awesome# The study
material is comprehensive and the management is excellent# Averall& it was a life changing experience and
the dedication of 3ir cannot be ever forgotten# Thank you very much 3irFF
41. 20T02 KUMA4 <A02 <U2E(2009 A4'$$ 2'. 47826B 28
!C
4A2K
1
There is no match of :#;# >upta 3ir his knowledge is so vast that is beyond our thinking# The topic wise
modules provided by 3ir covers each K everything that one re@uires to get good marks in taxation# The
atmosphere of the class is so great that I was proud to be a student of :#;# >upta 3ir& also 3ir!s personality
always inspire the students and motivate them#
Thank you 3ir#
42. KUSHAL A414A 218(2010A4'$$ 2'.36718B 29
!C
4A2K
:# ;# >upta 3ir is a very knowledgeable person and he has a very uni@ue style of teaching which keeps the
students glued to the explanations# The coaching staff is friendly and co-operative#
The book covers all the aspects re@uired for the exams# It is detailed and exhaustive#
43. SA2T1SH G040 218(2011 A4'$$ 2'.227904B 30
!C
4A2K
:#;# >upta 3ir is the best teacher in taxation# )est faculty and good study material#
44. A9H0SHEK <A02 MA5(2011 A4'$$ 2'.184087B 30
!C
4A2K
:#;# >upta 3ir is not only a brilliant teacher& but also extremely helpful person# 0is simplicity and style of
teaching makes him different from other teachers# Thank you 3ir for all your efforts& that you have given for
ordinary students like me to make us shine like stars#
47. 8A4U2 8 KALE MA5(2011 A4'$$ 2'.182349B 31
%!
4A2K
:y experience as an student of :#;# >upta 3ir has been wonderful# 3ir not only explains the provisions of
the %ct but also the reason behind those provisions# 3ir has ama<ing ways of taking @ueries from his
students where students can ask their doubts during the class or after the class or even by message service# I
feel that the way 3ir motivates his students in the form of incentives is ama<ing# 3ir is very particular
regarding time which I feel adds to his greatness as a teacher#
46. 41H0T MU4MU40A 218(2011 A4'$$ 2'. 216642B 31
%!
4A2K
:#;# >upta 3ir is wi<ard of taxation# 0e is really brilliant# 0e makes conceptual clearance of every
provision to provide us insightful knowledge of tax#
47. A9H0SHEK 9AT4A 218=2011 A4'$$ 2'.407692B 32
:*
4A2K
3ir is very motivating and the class notes given by him in classes are very good and knowledgeable for the
exam purposes# It is advised for every student that ?ust go through the books and class notes of 3ir# They are
much sufficient for scoring better in exams#
48. A4U2 SET0A 218(2008 A4'$$ 2'. 21201B 32
:*
4A2K
I think :#;# >upta 3ir is best faculty I have ever seen# 0e is having a tremendous knowledge K command
in taxation# The way he carries his class is unbelievable# %fter coming to his class& I always get encouraged
from him# Thanks to 3ir& for being so nice to us#
49. HEL02A MALA20 MA5(2011 A4'$$ 2'.47662B 32
:*
4A2K
I am grateful to the institute and :#;# >upta 3ir for his excellent teaching and knowledge which he has
shared with students like me#
Thank Jou 3irFF
70. SAH0L CHA/HA MA5(2011 A4'$$ 2'.183769B 32
:*
4A2K
:#;# >upta 3ir is one of the best teachers that we have in this ,% profession# 0is calm K composed
explanations make the student understand the concept in depth#
0is @uery resolving techni@ues are beyond comparison and also he try to exhibit positive energy among the
students which is commendable#
Their study material and notes are more than sufficient#
I would like to thank and congratulate 3ir for my +2
nd
*ank#
Thank Jou 3ir#
71. KU2AL ME2/04ATTA MA5(2011 A4'$$ 2'.48976B 32
:*
4A2K
I am extremely grateful to :#;# >upta 3ir for helping me in getting exemption in tax and for raising my
hopes of my passing ,%-6,, 9xam#
Hurther to add more& the books that 3ir offered to us contained all the relevant @uestions that we are asked in
,% examination#
71. M120SHA P4UTH0 <U2E(2009 A4'$$ 2'. 48007B 33
-*
4A2K
2
The motivation provided by our dear 3ir led me into the path where I never felt down# There was always a
hand on us who guided towards the correct path# :oreover& the knowledge provided by :#;# >upta 3ir is
unbeatable and more than sufficient#
I really respect him for the whole life and thanks him for whatever I am today#
73. 8ASU/HA A414A MA5(2010 A4'$$ 2'.77877B 33
-*
4A2K
:# ;# >upta 3ir is a very good teacher# 0is way of teaching every single topic in a detailed way is one thing
that I like the most# With this it builds up a lot of confidence K clarity in mind relating to concept of the
topic concerned#
74. 2UPU4 <A02 218(2009 A4'$$ 2'. 63267B 34
!C
4A2K
:# ;# >upta 3ir is a brilliant teacher# Cot only that& he is a very good human being and is always there to
help the students# 0e has always motivated me and has been a source of inspiration# The coaching classes
suited me really well# The way 3ir handle the @ueries is worth appreciation# I truly owe my success to :# ;#
>upta 3irF Thank you 3o much 3ir for your continuous guidance and support#
Thank youF
77. 2EHA AGGA46AL 218(2010 A4'$$ 2'.171847B 34
!C
4A2K
In I6,,& tax seems to be the toughest but when you are trained under :# ;# >upta 3ir& the fact becomes a
myth# The classes are made so spontaneously interesting that no point can be missed out# Incentives given by
the 3ir are a boost to study hard and brings in the sense of competitiveness among students# The study
material and the notes given by 3ir are enough to score excellent marks in exams# Thank you 3ir for your
blessings#
76. M1H0T SA911 218(2011 A4'$$ 2'.233293B 37
!C
4A2K
:#;# >upta 3ir has excellent teaching skills# I sincerely thank 3ir for his guidance# :#;# >upta 3ir!s simple
and easy approach towards every topic makes the sub?ect easier to understand# The study material that is
provided has all the concepts covered# Averall it was a very good experience#
77. ;U40CA AGA46AL 218(2011 A4'$$ 2'.200078B 37
!C
4A2K
:ere words cannot explain my gratitude towards our honourable teacher :#;# >upta 3ir# The study material
is the ultimate one# The way of his teaching is really commendable# 0e enhanced our practical knowledge
immensely# Thank Jou 3ir#
78. P0TAM G1EL 218(2008 A4'$$ 2'. 66077B 37
!C
4A2K
The book given by :#;# >B6T% 3ir is more than enough to score good marks# It was due to the hard work
and due efforts of :#;# >B6T% 3ir that I am able to score good marks in 6,9#
Thanks a lot 3ir for your cooperation and sincerity#
;996 *A,;IC>FF
79. H0MA2SHU KUMA4 MA5(2011 A4'$$ 2'.47698B 37
!C
4A2K
0e is very good teacher# 0e is very helpful# 0e is always motivating students by providing gifts#
60. 20HA40KA GUPTA 218(2011 A4'$$ 2'.222611B 36
!C
4A2K
9very aspect was taken care by :#;# >upta 3ir from books to class interaction# The style of teaching was
very good and easily understandable# Eueries were always solved on the spot without delay# I was very
satisfied by the coaching as it helped me to improve my capability and the classes provided a very nurturing
environment# ,oaching was excellent#
61. A2A2/ GUTGUT0A MA5(2010A4'$$ 2'.67223B 36
!C
4A2K
It was great overall experience and evoked interest in tax# I always looked forward to my tax classes#
62. P405A S02GHAL 218(2009 A4'$$ 2'. 39736B 37
!C
4A2K
In my view& :# ;# >upta 3ir is a fabulous teacher# 0is knowledge regarding the sub?ect is ultimate# 0e is
very devoted K frank to the student# We can ask any number of doubts in the class or after the class without
any hesitation# :ost important things I liked about him 8
($) 0e calls the student on stage to solve the @uestion that help to boost the confidence in student
(2) 0is view of encouraging students by providing various incentives.rewards#
%bout books& I can say his books are very good covering whole syllabus K written in very easy language#
63. 4AHUL 5A/A8 218(2009 A4'$$ 2'. 72981B 37
!C
4A2K
'
:#;# >upta 3ir is simply a Tax >uru# 0is knowledge about his sub?ect is complete# The way he teach us is
very simple K short# Jou need not read any other books# 9ven the classroom notes are enough to score good
marks# 0is coaching is excellent& knowledge is excellent and @ueries taken are excellent#
64. AA4USH0 GA4G MA5(2010 A4'$$ 2'. 66027B 37
!C
4A2K
:# ;# >upta 3ir is a vast reservoir of knowledge# 0is style of teaching is good with a combination of
excellent and very helpful notes# )ooks provided by :# ;# >upta 3ir are sufficient in themselves to help any
student achieve a good rank# 0eartiest Thanks to :# ;# >upta 3ir FFF
67. L1KESH AGGA46AL 218(2010 A4'$$ 2'.189271B 37
!C
4A2K
3ir& is excellent in each K every area of taxation# 0is knowledge and teaching style is superb# When I started
my tax classes from him& I find this sub?ect easiest among all sub?ects# *eally 3ir& B r awesome# %ll I can
say is east or west& :#;# >upta 3ir is the best#
66. /H6A20 SEHGAL 218(2010 A4'$$ 2'.174743B 37
!C
4A2K
:# ;# >upta 3ir is intelligent& ?olly and knows the sub?ect very well# The classes were enriching since he
linked the law with our day-to-day lives explaining the reason exactly why the law was enacted# This gave
us a deep knowledge of the sub?ect and clear understanding# The book has a good variety of @uestions& easy
language and case laws#
67. 804E2/4A /A5AMA MA5(2011 A4'$$ 2'.47423B 37
!C
4A2K
)est thing about :#;# >upta 3ir is that& he repeats every provision at least two times& which helps a lot# 0e
is very knowledgeable person and keeps the class environment& students friendly# 0e has sound knowledge
of the sub?ect#
The )ooks are very good and student does not re@uire anything else for preparation# Thank you 3ir& for your
motivation and being an inspiration to us# Thank Jou 3ir#
68. P4A902 9A4AL 218(2011A4'$$ 2'.22849B 38
!C
4A2K
,onceptual clarity is the most remarkable feat of :#;# >upta 3ir# 0is notes are magnificent and books are
self-sufficient#
69. K04T0 A2E<A 218(2009 A4'$$ 2'. 71444B 38
!C
4A2K
9xcellent teacher with excellent knowledge# 0is way of teaching is very good# What I liked about :# ;#
>upta 3ir is that he thinks from the point of view of students# 0is book is ?ust great and was sufficient for
getting good marks in taxation# 0is book has a variety of @uestions#
Thanx a lot 3ir#
70. AASH0SH GUPTA 218(2009 A4'$$ 2'. 73088B 38
!C
4A2K
It!s been an honor to be a student of :# ;# >upta 3ir# 0e is a superb teacher and has a very vast knowledge
of the sub?ect# 0e is one of the best teacher I have come across my life till date# 3ir Thank you very much
and I owe a part of my success to you# 0is coaching is excellent& knowledge is excellent and @ueries taken
are excellent#
71. 9A90TA M0TTAL 218(2009 A4'$$ 2'. 72776B 38
!C
4A2K
:# ;# >upta 3ir is the best teacher in tax& very helping and give due care to every student individually# 0e
has the answer for every @uery# I respect him a lot# 0is coaching is very good& knowledge is very good and
@ueries taken are excellent#
72. 40SHA9H KUMA4 GUPTA 218(2010 A4'$$ 2'.174748B 38
!C
4A2K
:# ;# >upta 3ir is a very brilliant teacher# 0e has got a very positive attitude and he keeps motivating his
students to perform well and clearing their @ueries in a timely manner as well# The books provided by 3ir are
also very good containing very good @uestions as well# Wish he could teach me in ,% finals also# Thank you
3ir for all your guidance to achieve such a result#
73. AA5USH0 KAT5AL 218(2011 A4'$$ 2'.271628B 39
!C
4A2K
:#;# >upta 3ir is the best tax teacher and taking his classes has always been an exciting affair# 0is
knowledge about tax and especially the way things are handled practically has been @uite enlightening# 0e
has made the most feared sub?ect(usually)& the most fun filled and easy# Thank Jou so much 3ir and I wish
everyone has an opportunity to sit in your class# The book& notes and all the management is done very
properly and in a smooth manner# %ll in all& the best way to study tax#
$5
74. SUME/HA 4A20 AGGA46AL 218(2011A4'$$ 2'.222716B 39
!C
4A2K
:#;# >upta 3ir made Tax look a simple sub?ect& despite of the fact that Tax is the most difficult K
complicated sub?ect in I6,, having number of provisions# 0e made all the concepts crystal clear by
explaining each concept atleast twice# 9ven the ,%!s employed by 3ir for solving the doubts and guiding the
students were very helpful# %ll I could say is that it was an ama<ing experience to study at :#;# >upta
,lasses# The relationship between us started in ,6T with 7aibhav 3ir K Ceha :am& it continued in I6,,
with :#;# >upta 3ir K I hope it will last long forever#
77. P05USH GUPTA 218(2008 A4'$$ 2'. 67203B 39
!C
4A2K
3ir is excellent in his way of teaching and revision& $55O coverage of his syllabus& personal attention&
flexible timings student friendly attitude are some of the attributes of these classes#
76. 8A2/A2A KAUSH0K <U2E(2009 A4'$$ 2'. 48100B 39
!C
4A2K
:# ;# >upta 3ir is a best teacher# 0is way of teaching is very good K makes us to learn the sub?ect very
easily# 0is knowledge about the sub?ect is ultimate#
77. SUMA2T GUPTA 218(2009 A4'$$ 2'. 70073B 39
!C
4A2K
I think he is the best person in the ?ob# 0is excellence in Taxation and his friendly relations with students and
his coolness and calmness and further encouragement to his students& ?ust lifts off the burden of the course# I
thank 3ir for being there and helping me to achieve this feat in my life#
78. MEGHA A414A 218(2009 A4'$$ 2'. 72763B 39
!C
4A2K
:# ;# >upta 3ir has always been a support to all the students while their teaching sessions# 0e has always
boosted our morale to achieve great heights and great score not only in taxation but also in every other
sub?ect# 0e laid e@ual importance to both theory and practical which helps the students to apply whatever
they are studying in their practical training# %t the end I would like to thank him for being such a good
teacher and a friend#
79. SU225 G04/HA4 218(2010 A4'$$ 2'.60724B 39
!C
4A2K
,oaching by 3ir gave me an insight into practical aspects of taxation with the help of which I was able to
co-relate my studies with practical training i#e# articleship# %lso study material provided was good and
compact enough to be revised in exams# I thanks 3ir for providing me such guidance#
80. 8A09HA8 AGGA46AL 218(2010 A4'$$ 2'.76278B 39
!C
4A2K
:# ;# >upta 3ir is the lifeline of 6,, Tax# % teacher with abundant knowledge# In serious terms& a perfect
Tax >uru#
81. 8A4A/ 8 KALE MA5(2011 A4'$$ 2'.182310B 39
!C
4A2K
:y experience of being a student here at :#;# >upta Tax ,lasses has been an unforgettable one# I had
attended the batch (:onday-3unday) with little hopes of understanding the tax laws in such a small time
frame# )ut the manner in which 3ir taught gradually made me reali<e that I was wrong# 3ir taught each and
every provision in a manner that a person who listens carefully in the class would understand it 1/O-25O
then and there# 3ir!s techni@ue of taking up doubts is also ama<ing# ,ash incentives for answering classroom
@uestions correctly @uicker than anyone else improves speed& fosters sense of competition and also attracts
one to listen to what is being taught so that he.she would get a chance to earn that incentive# Thank you 3ir
for everything#
82. <51T0 G15AL <U2E(2009 A4'$$ 2'. 46348B 40
!C
4A2K
In my opinion :# ;# >upta 3ir is one of the best teacher# 0is method of teaching is excellent specially the
repetition of sections again and again in the class#
0is way of taking up @ueries is unmatchable#
0e makes the Tax concept crystal clear among the students through well explained examples#
%ll students of 6,, are blessed with such a good teacher# Thank to you 3ir because of you Tax has been
very easy sub?ect for me#
83. A2K0T G1EL 218(2010 A4'$$ 2'.176437B 40
!C
4A2K
:# ;# >upta 3ir is an excellent faculty in tax and his books are very nice and way of taking @ueries is very
nice# 9very aspect of tax is covered in his books# Averall it was a very good experience#
84. S120A AGGA46AL 218(2008A4'$$ 2'. 69173B 41
%!
4A2K
$$
3ir is a pool of knowledge& the only thing you need is to learn us how to swim K gain as much as you can#
The book given by 3ir covers the whole module# The overall environment of class is very good for studies#
87. 40SHU G15AL MA5(2010A4'$$ 2'. 77632B 41
%!
4A2K
)ook is the )est& Teacher is the )est& @ueries are taken in the )est way by 3ir# Jou appear before me as god
and only because of you I was able to secure.got rank# Thank Jou 3ir#
86. M1H0T G1EL 218(2010 A4'$$ 2'.49010B 41
%!
4A2K
:# ;# >upta 3ir is the best teacher for tax according to me# The ?ourney is more appropriate word for me
rather than studying tax with him# What he gives in tax is commendable and uncomparable for me# *ather
than making students preparing for studies& he tells them what it is and gives them a broad view of how the
provisions come into effect and their applications# If you want to enrich yourself with tax knowledge :# ;#
>upta 3ir is best#
Thank Jou 3ir for giving me the pearls of wisdom from the sea of your knowledge#
87. KHUSH911 TEKCHA2/A20 218(2011 A4'$$ 2'.270637B 42
:*
4A2K
I had an excellent time in the coaching# I learnt a lot even the things which are not covered in the course#
:#;# >upta 3ir has a vast knowledge in all fields and specially taxation# The material provided by the center
was extremely useful# The )are Text helped in clearing all the concepts# I would like to thank 3ir for giving
me such an immense experience and knowledge# The tests which were hold regularly were also helpful in
studying the sub?ect#
Thank you 3irFFF
88. P05USH SHA4MA 218(2010 A4'$$ 2'.174793B 42
:*
4A2K
The classes were excellently managed# 3ir repeats all the sections atleast two times& which helps a lot#
:#;# >upta 3ir is best for Tax# Thanks 3ir#
89. MA20SHA <02/AL 218(2011 A4'$$ 2'.227474B 43
-*
4A2K
:#;# >upta 3ir teaches very well# :ost importantly& he focuses on practical application of tax provisions
which makes understanding of the provisions very easier# %lso his books are very good and are in easy
language# Thank Jou 3irFF
90. MEGHA AGA46AL 218(2011 A41LL 21.267718B 43
-*
4A2K
>oing to 3ir!s coaching was the best part of the day# 3ir!s style of teaching is ?ust fabulous# 3ir is very
punctual and the staff is so cooperative and ad?usting# The books covered all the provisions successfully#
91. M1H0T GA4G 218(2008 A4'$$ 2'. 67676B 43
-*
4A2K
:#;# >upta 3ir!s approach is not short term but long term# 0e not only wants a child to clear but also wants
him.her to excel in the field of taxation by providing his knowledge# 0is approach of calling students to
solve @uestions on board has worked to a great extent#
92. K0SHA2 KUMA4 218(2010A4'$$ 2'.179173B 43
-*
4A2K
3tudying taxation with :# ;# >upta 3ir is truly a fun and an enriching experience# 0is simplicity& manner of
conducting class and @uery session is indeed gratifying and awesome# 0owever& the best thing is the
emphasis on practical @uestions which is indispensable for securing decent marks# The notes given during
the class by 3ir is excellent and covers entire syllabus in a precise K crisp manner which is very helpful
especially during the examination time# Hinally& a heartfull thanks to you 3ir# Jou really rockFFF
93. T40PT0 GUPTA <U2E(2009 A4'$$ 2'. 47936B 44
!C
4A2K
3ir is really a very good teacher# 0is knowledge about tax is great# The way he links practical life with
theory life is really very good#
The study modules provided by 3ir is more than sufficient with full knowledge of course and easy language#
3ir has really cooperated with us# I really want to thank him for his contribution in my life# Thanks 3irFF
94. KA2HA05A M0TTAL MA5(2010A4'$$ 2'. 77773B 44
!C
4A2K
:# ;# >upta 3ir is a very good teacher# We did not re@uire to refer any other book# 3ir!s notes were more
than sufficient# 0e is a very @ualified teacher and his teaching skills are unmatchable#
97. A9H0SHEK SACH/E8A 218(2011A4'$$ 2'.228089B 47
!C
4A2K
:#;# >upta 3ir is one the most knowledgeable person I have ever met# )ooks provided by them are best and
so is the coaching# :#;# >upta 3ir motivate each K every student by giving the rewards#
I would like to thank 3ir from the bottom of my heart# T0%C; JAB 3I*FFF
$2
96. SAH0L MA2GLA MA5(2010A4'$$ 2'.78798B 46
!C
4A2K
The books given by 3ir and the knowledge provided in the classes is uncomparable and more than sufficient#
I thank :# ;# >upta 3ir& whole heartedly for the knowledge he provided by his sincere efforts#
97. MAHESH AGGA46AL MA5(2011 A4'$$ 2'.72164B 46
!C
4A2K
W9==& 69*3AC%==J I am a big admirer of :# ;# >upta 3ir# 0e is truly the )93T T9%,09* and his
teaching is the best of all& I have ever experienced& 0is way of imparting knowledge and clarifying sub?ect is
so good that students gain complete knowledge without much personal efforts#
I would call :# ;# >upta 3ir classes not only teaching but a full training programme for students# Teaching
is not a business for 3ir& rather it is more of social welfare that he is doing by giving brilliant minds full of
knowledge to the society# 0e motivates students by excellent means and enhance their knowledge to another
level#
I must say class notes are more than sufficient to get good marks# I heartily dedicate my achievement to 3ir#
0ighly grateful to you 3ir# Thank you so much#
98. AKH0L SEHGAL 218(2011 A4'$$ 2'.211727B 46
!C
4A2K
:#;# >upta 3ir teaches the course very brightly# *eally 3ir& you are the god in the industry of teaching# 3ir
you are the best#
99. AMA2 M0TTAL 218(2011 A4'$$ 2'.274222B 47
!C
4A2K
In my opinion& no teacher can teach the tax better than the :#;# >upta 3ir# 0e is very good by heart# 0e
teaches in such a manner that no student can face problems#
100. 41U2AK SA6A40A 218(2011 A4'$$ 2'.236371B 47
!C
4A2K
:#;# >upta 3ir has a very deep knowledge about the sub?ect and his practical approach towards the sub?ect
helps understand the concepts very easily# :#;# >upta 3ir repeats every section atleast twice and makes us
learn them in the class itself# The notes provided in the class are more than enough for I6,, and the
@uestions in his book ranges from simple problems to difficult ones# =ast but not the least& :#;# >upta 3ir is
very kind hearted and generous person and he is so hardworking which is highly motivational for all of us#
101. PA2CHA2A2 AGGA46AL 218(2009 A4'$$ 2'. 72360B 47
!C
4A2K
In my personal opinion& he is a very good teacher and also very friendly in nature while teaching# 0e always
give the right way to success# 0is coaching is excellent& knowledge is excellent and @ueries taken up are
excellent#
102. /E8E2/E4 PA2/E5 218(2009 A4'$$ 2'. 60647B 47
!C
4A2K
The best thing about :# ;# >upta 3ir is that he explains each and everything related to the topic# ,lass notes
are sufficient for getting good marks# 0is coaching is excellent& knowledge is excellent and @ueries taken up
are excellent#
103. ASH0SH <A02 218(2009 A4'$$ 2'. 73180B 47
!C
4A2K
I think :# ;# >upta 3ir should be greeted with the title of MTax >uruN# 0is knowledge about the sub?ect is
outstanding and matchless# The method of teaching is uni@ue# The material provided by the 3ir is a package
in itself# The style of taking up the @uery is excellent# I suggest every ,% aspirant to ?oin :# ;# >upta 3ir
classes# 3ir put enough efforts for the success of students# Ance you ?oin Tax classes of 3ir leave everything
on him and ?ust concentrate in the class K have belief in him#
104. PA2KA< 9A2SAL 218(2009 A4'$$ 2'. 72640B 47
!C
4A2K
;nowledge coupled with experience make :# ;# >upta 3ir a great teacher# 0e is down to earth man who
always guided and encouraged us to achieve the success#
)ook is @uite good involving plenty of @uestions with solutions which helped me out very much# 0is
coaching is excellent& knowledge is excellent and @ueries taken up are excellent#
107. P05USH 914A20A 218(2009 A4'$$ 2'.40193B 47
!C
4A2K
:# ;# >upta 3ir is the best teacher for availing tax coaching#
3ir responds to @ueries in an excellent manner#
The incentive scheme of 3ir for encouraging students is awesome# The study material of :# ;# >upta 3ir is
excellent and the problems in the books are very comprehensive#
$+
106. 20T02 KUMA4 218(2010 A4'$$ 2'.184364B 47
!C
4A2K
:# ;# >upta 3ir is very knowledgeable person# 0e has vast experience of teaching# 0is book is very helpful
and cover all concepts#
107. S0//HA4TH <A02 218(2010 A4'$$ 2'.183071B 47
!C
4A2K
3ir!s knowledge was excellent& his motivation in class did wonders& it was always interesting because 3ir
made class very interesting# I really en?oyed the practical @uestions in class& especially his notes that he
made us write in class# The book was helpful& especially the service tax.vat book& I en?oyed the summari<ed
portion of service tax# Averall an excellent experienceF
108. CHETA2 MAL0K MA5(2011A4'$$ 2'.47892B 47
!C
4A2K
The teacher is really good# It was a really good experience# )ooks are the best and so as the coaching
provided by the 3ir#
109. 808EK SUGA2/H 218(2011 A4'$$ 2'.222907B 48
!C
4A2K
:#;# >upta 3ir& in my opinion is a vast storehouse of knowledge in the field of taxation# 0e& apart from
being a great teacher is also an awesome human being# 0is coaching classes provides a great amount of
competitive environment and I feel myself blessed to be his student#
110. AMA2/EEP S02GH 9HAT0A 218(2008 A4'$$ 2'. 66060B 48
!C
4A2K
:#;# >upta 3ir is a good teacher# 0e knows each and every aspect of T%D%TIAC and also gives his
precious knowledge to students# 0e is very helpful teacher# 0e is always ready to solve the problems of
every student# I must say that I ?ust got rank because of 3ir# 0e motivates every students to study hard#
111. 20M0SHA SA4/A 218(2011A4'$$ 2'.271629B 49
!C
4A2K
:#;# >upta 3ir is an awesome teacher# The way he explains us the sub?ect& it is not ?ust understandable but
becomes so interesting# Cot ?ust this& :#;# >upta 3ir!s incentives also show how much he wants his
students to excel# There comes a lot of confusion regarding completeness of syllabus& especially of indirect
tax& but when it comes to 3ir!s notes and books combined- there remains not a single doubt# Thank Jou so
much 3ir#
112. SH08AM MA46AH 218(2011A4'$$ 2'. 406941B 49
!C
4A2K
:#;# >upta 3ir is an ama<ing teacher having excellent knowledge of the sub?ect# 0e is always ready to
solve @ueries# 0is techni@ues of motivating students uncomparable# :#;# >upta 3ir is )est# 3tudy material
is excellent# 9xamples are very good in the books# Thank you#
113. KESHA8 9HA4/6A< 218(2011 A4'$$ 2'.421167B 70
!C
4A2K
:#;# >upta Tax ,lasses are a perfect blend of studies as well as innovation and skill development# Ane can
not only gain in academic arena but studying grooms personality and professional attitude# Talking about
:#;# >upta 3ir& he is not only a good teacher but also a good motivator# The apt and appropriate
presentation of the relevant @uestion and answer have helped a lot in reaching a new height of success# >reat
teacher& >reat human being# Thanks a lot 3ir# Thank Jou so much#
114. PA2KA< GULAT0 218(2009 A4'$$ 2'. 72267B 70
!C
4A2K
The knowledge given by 3ir is excellent# :#;# >upta 3ir motivate each and every student by giving them
various rewards# 0e is available all time to solve the Eueries of the students# The books provided by 3ir are
enough to score good marks# Thank you 3ir#
117. HEE2A GUPTA MA5(2010 A4'$$ 2'.73424B 70
!C
4A2K
The :# ;# >upta 3ir classes were fabulous# The way 3ir mixes classroom knowledge with practical work is
unexplainable# ;nowledge of 3ir is incomparable# The study environment of his classes was so comfortable
that I was able to concentrate in classes# I would like to thank 3ir from the bottom of my heart for his kind
contribution in my studies# Thank you 3ir#
$-
DEEPAK PAREKH
9'-: 1:: $2th Actober& $'--
C"-&&-: ,hairman of 04H,
4eepak 6arekh is the ,hairman of 04H, (0ousing 4evelopment
Hinance ,orporation)& which is a top mortgage finance company#
)esides being the ,hairman& he is also the unofficial crisis consultant
of the Indian >overnment# 0e& with his hard work and intelligence
developed 04H, into the huge financial multinational firm that it is
today# 0e also served 3atyam ,omputer 3ervices as an independent director from $$th Panuary to $1th Puly&
255'# 0e believes in hard work& great <eal and perfection# %ccording to him& it is very important to stick on
to moral values and ethics& only then can one become a great businessman# Hollowing immoral methods will
lead only to the loss of reputation# If a personQs reputation is gone it is very difficult to get it back# *ead on
to know more about 4eepak 6arekh& a prominent )anker and a well-known expert of finance in India#
E"-$E L).&
4eepak 6arekh was born on $2th Actober& $'-- in India# 0e pursued his )achelor of ,ommerce degree
from the 3ydenham ,ollege of )ombay Bniversity and ac@uired a Hinancial ,hartered %ccountant degree
from 9ngland and Wales# %t present& he lives in :umbai#
C"-&&-
:r# 6arekh started his career as a chartered accountant in 9rnst K Joung :anagement ,onsultancy 3ervices
in Cew Jork# When he came to back to India& he worked with >rindlays )ank and ,hase :anhattan )ank
as the assistant representative for 3outh %sia# In $'12& he ?oined 04H, and was promoted as the :anaging
4irector in $'2/ and thus became the ,hairman in $''+# )esides this& in $''1& he became the Con-
9xecutive ,hairman of I4H, (Infrastructure 4evelopment Hinance ,ompany =td#) which is a >overnment
enterprise for pro?ects of infrastructure# 0e also served as the Con-9xecutive ,hairman of >laxo India =td#
till 2552 and is the ,hairman of )urroughs Wellcome (India) =td# and worked on the )oard of ,astrol India
=imited& 0industan Bnilever (since $''1)& 3iemens =td& :ahindra K :ahindra (since $''5) and Indian
0otels ,ompany (since 2555)# 0e is a member of the proactive advisory board of the worldQs biggest student
determined organi<ation %I939, India# %long with this& he has also been a part of several ,ommittees made
by Indian >overnment# In $'(-& he was made the ,hairman of the high level of expert committee which was
formed to suggest the ideas for the growth of the Bnit 3cheme# 0e was appointed the ,hairman of the
%dvisory >roup for 3ecurities :arket *egulation by the *eserve )ank of India# =ater on& he became the
,hairman of the Cational Thermal 6ower ,orporation =td# 0e has served the 3ingapore
Telecommunications =td# as a Con-9xecutive Independent 4irector& has been a 4irector of WC3 >lobal
3ervices 6vt# =td# and a 4irector of 3teel %uthority of India =td#& %irports %uthority of India and =afarge
India 6vt# =td# 0e serves the 9xide Industries =td# as an %lternate 4irector and as a 4irector of Indo-
>erman ,hamber Af ,ommerce#
Aw"-*% ":* A##'$"*&%
4eepak 6arekh was honored as the )usinessman of the Jear $''( by )usiness India# 0e was also given the
P*4 Tata ,orporate =eadership %ward by %ll India :anagement %ssociation (%I:%) and was the first to
receive the Eimpro 6latinum %ward# :r# 6arekh was the youngest man to get the respected ,orporate %ward
for the =ife Time %chievement by the 9conomic Times# 0e was also honored with the 6adma )hushan in
255( and in 255' he attended the state dinner at the White 0ouse hosted by B3 6resident )arack Abama in
$/
honor of the Indian 6rime :inister :anmohan 3ingh# )esides this& he received the Autstanding )usiness
=eader %ward from ,C),-T7$2# In 25$5& for his input to the finance and accountancy profession from
many years& the Institute of ,hartered %ccountants in 9ngland and Wales honored him with an Autstanding
%chievement %ward#
C':!-)?u!)':
4eepak 6arekh has played a very significant role in developing the financial sector of India and has also
contributed in establishing Hrench firms in India# %ccording to the >overnment of Hrance& :r# 6arekh has
improved the relations of India and Hrance in the economic sector# :r# 6arekh made it possible for the
middle class people of India to own their houses or flats by providing them with loans at affordable rates#
T)m&$):&
1944: )orn in India#
1978: Poined 04H,#
1987: )ecame the :anaging 4irector of 04H,#
1993: )ecame the ,hairman of 04H,#
1996: )usinessman of the Jear by )usiness India#
1997: )ecame the Con-9xecutive ,hairman of I4H,#
2006: 0onored with 6adma )hushan#
2009: %ttended a state dinner at the White 0ouse hosted by B3 6resident )arack Abama in honor of the
Indian 6rime :inister :anmohan 3ingh and received the Autstanding )usiness =eader %ward from ,C),-
T7$2#
2010: *eceived the Autstanding %chievement %ward from the Institute of ,hartered %ccountants in 9ngland
and Wales#
$(
INDRA NOOYI
A#C)&>&m&:!%: ,9A of 6epsi,o" *anked Co#- on Horbes maga<ineQs
annual survey of the $55 most powerful women in the world#
Indra Cooyi is the newly appointed ,9A of 6epsi,o-the worldQs
second-largest soft drink maker# 3he ?oins the select band of women
who head Hortune /55 companies# 6resently& there are only $5 Hortune
/55 companies that are run by women& and Indra Cooyi is the $$th to
break into the top echelons of power# 6rior to becoming ,9A& Indra
Cooyi was 6resident& ,hief Hinancial Afficer and a member of the
)oard of 4irectors of 6epsi,o Inc#
Indra Cooyi spent her childhood in ,hennai# 0er father worked at the
3tate )ank of 0yderabad and her grandfather was a district ?udge# 3he
did her )3c# in ,hemistry from :adras ,hristian ,ollege and
subse@uently earned a :asterQs 4egree in Hinance and :arketing from
II: ,alcutta# Indra Cooyi also holds a :asterQs 4egree in 6ublic and 6rivate management from the Jale
3chool of :anagement#
)efore ?oining 6epsi,o in $''-& Indra Cooyi was 3enior 7ice 6resident of 3trategy and 3trategic :arketing
for %sea )rown )overi& and 7ice 6resident and 4irector of ,orporate 3trategy and 6lanning at :otorola#
3he also had stints at :ettur )eardsell and Pohnson K Pohnson# %t 6epsi,o& Indra Cooyi played key roles in
the Tricon spin-off& the purchase of Tropicana& the public offering of 6epsi ,ola bottling group and the
merger with Euaker Hoods#
Indra Cooyi has been ranked Co#- on Horbes maga<ineQs annual survey of the $55 most powerful women in
the world#
$1
CHA2/4A K1CHHA4
Hrom trainee to I,I,I ,9A
Trainee to ,9AG ;ochhar!s story G 3uccess like her!s is the
staple of dreams that school children dream& but ,handa
;ochhar is one that would have hardly had the time for such
fantasies# % diligent student& ;ochhar was busy collecting
gold medals in management studies and cost accountancy
when others were wiling away time R all of which she
channelised to get to the top post of India!s largest private
sector bank I,I,I )ank#
;ochhar spent her college years playing badminton and
polishing her elocution skills# 3oon after completing her
masters in management studies (finance) and cost
accountancy& this Podhpur girl ?oined the erstwhile industrial
finance company I,I,I in $'2- as a management trainee#
In $''+& when the I,I,I decided to enter commercial banking business& ;ochhar was deputed to I,I,I
)ank as a part of the core team to set up the operations# 3he was instrumental in setting up& as well as
scaling up& the retail business for I,I,I# In 2555& by when ;ochhar had already started rising from the ranks
to become a key player in the top management& I,I,I )ank formally entered retail banking business and
within five years became the largest private sector financer in the country#
;ochhar played a key role in shaping the retail finance industry in the country& where funds were hard to
come by for individual borrowers# Bnder her leadership& the bank won the best retail bank award for four
years& thrice in a row (255+& 5- and 5/)& from The %sian )anker# 3he has been steadily climbing up the
lists of most influential people brought out by domestic and global publications# Hortune maga<ine ranked
her as 2551!s ++rd most powerful woman in business R compared with -1th place in 255/#
Hrom a management trainee to the post of the I,I,I )ankQs chief executive officer& it has been a winning
?ourney for ,handa ;ochhar# Work is passion for ;ochhar who believes that there is no substitute to hard
work# ,handa ;ochhar will be I,I,I )ankQs new chief executive officer and managing director with effect
from :ay $& 255' for a period of five years#
The -1-year old ,handa ;ochhar is currently ?oint managing director of I,I,I )ank# ;ochhar heads the
corporate centre of the )ank& is the chief financial Afficer (,HA) and is also the official spokesperson for
I,I,I )ank# ,handa ;ochhar recently ranked 2/th in Hortune International 6ower /5 list& thanked the I,I,I
)oard for its confidence in her#
;ochhar said SI would like to thank the board for the confidence they have reposed in me& and ;amath for
his inspiring leadership# I am committed to working with our team and with all our stakeholders to leverage
the I,I,I groupQs strengths and capitali<e on the opportunities before us# We look forward to ;amathQs
continued mentoring and guidance in the years ahead#S
$2
2.4. 2A4A5A2A MU4TH5
CC")-m": '. 0:.'%E% T&#C:'$'g)&%
C* Carayana :urthy& chairman of Infosys Technologies one of the
biggest IT empire in India& was born on %ugust 25& $'-( in ;arnataka#
:urthy obtained his )achelor of 9lectrical 9ngineering ()#9#) from
Bniversity of :ysore in $'(1 and his :aster of Technology (:#Tech#)
from Indian Institute of Technology (IIT)& ;anpur in $'('#
In the early seventies& Carayana :urthy took up employment with
393% in 6aris# 0e worked with a team to design a real time operating
system for handling air cargo for ,harles de >aulle airport# 0e came
back to India after + years and took up a ?ob with 6atni ,omputer
3ystems in 6une# In $'2$& :urthy founded Infosys Technologies along
with six software professionals which later became one of the leading
software company# In :arch $'''& Infosys became the first India-registered company to be listed on an
%merican stock exchange#
6ersonally& :urthy is known for his simplicity and helping mentality# 0e founded the Infosys Houndation& a
social welfare trust for helping the needy# 0e has a liking for Western ,lassical music and has liberal ideas#
:urthyQs ability to put forth his viewpoints and all his other @ualities make him a uni@ue personality#
:urthy holds several coveted positions# 0e was the 6resident of Cational %ssociation of 3oftware and
3ervice ,ompanies (C%33,A:) from $''2 to $''-# 0e is a member of the Cational Information
Technology Task Horce of India& the 6rime :inisterQs ,ouncil on Trade and Industry& %sia 3ocietyQs
International ,ouncil and )oard of ,ouncilors of the Bniversity of 3outhern ,alifornia 3chool of
9ngineering# 0e is a 4irector on the board of the *eserve )ank of India (*)I) and is also on the Wharton
)usiness 3choolQs %sian 9xecutive )oard#
:urthy was honoured by QP*4 Tata ,orporation =eadership %wardQ in $''(-'1& Q%lumni %wardQ in $''2&
QThe 9T )usinessperson of the Jear %wardQ in 2555-255$ and QThe :ax 3chmidheiny %wardQ in 255$# 0e
was chosen as the )usiness IndiaQs Q)usinessman of the Jear $'''Q& the Indian corporate worldQs most
coveted award# The credit goes to :r# :urthy for making India one of the known names in the IT world#
$'
4AMESH6A4 THAKU4
G18E4214 13 MP
3hri *ameshwar Thakur (born 22 Puly $'21 in 7illage Thakur >angti&
>odda 4istrict& Pharkhand)& a senior Indian Cational ,ongress
politician and former union minister of India& is the former >overnor of
:adhya 6radesh from 255' to 25$$ and a former >overnor of Arissa
from 255- to 255(& %ndhra 6radesh from 255( to 2551 and ;arnataka
from 2551 to 255'# 0e is a chartered accountant# 0e was also 6resident
of the Institute of ,hartered %ccountants of India from $'(( to $'(1#
Thakur was sworn-in as the $/th >overnor of ;arnataka on %ugust 2$&
2551#
0e served as 6resident of the )harat 3couts and >uides from
Covember $''2 to Covember 255$& and again after Covember 255-#
0e was transferred as >overnor :adhya 6radesh for the remainder of his gubernatorial term on Pune 2-&
255'# Thakur took over from 4r# )alram Pakhar on the expiry of the latterQs term on Pune +5# 0e left office
on 3eptember 1& 25$$#
4eduction of Tax %t 3ource 25
/E/UCT012 13 TAX AT S1U4CE
SECT012 190 T1 206AA
S&#!)': 190 = /&*u#!)': "! %'u-#& ":* "*>":#& "Em&:!
S&#!)': 191 = /)-&#! "Em&:!
S&#!)': 192 = /&*u#!)': '. !"+ .-'m %"$"-E ):#'m&
S&#!)': 193 = /&*u#!)': '. !"+ .-'m ):!&-&%! ': %&#u-)!)&%
S&#!)': 194 = /&*u#!)': '. !"+ .-'m /)>)*&:* ):#'m&
S&#!)': 194A = /&*u#!)': '. !"+ .-'m ):!&-&%! '!C&- !C": F):!&-&%! ': %&#u-)!)&%G
S&#!)': 1949 = /&*u#!)': '. !"+ .-'m w)::):g% .-'m $'!!&-EH #-'%%w'-* uII$&H #"-* g"m&H &!#.
S&#!)': 19499 = /&*u#!)': '. !"+ .-'m w)::):g% .-'m C'-%& -"#&%
S&#!)': 194C = /&*u#!)': '. !"+ .-'m "Em&:! !' #':!-"#!'-% A8. 0m.B
S&#!)': 194/ = /&*u#!)': '. !"+ .-'m ):%u-":#& #'mm)%%)':
S&#!)': 194G = /&*u#!)': '. !"+ .-'m #'mm)%%)':H &!#. ': %"$& '. $'!!&-E !)#k&!%
S&#!)': 194H = C'mm)%%)': '- ?-'k&-"g&
S&#!)': 194(0 = /&*u#!)': '. !"+ .-'m -&:! A8. 0m.B
S&#!)': 194< = /&*u#!)': '. !"+ .-'m .&&% .'- -'.&%%)':"$ '- !&#C:)#"$ %&->)#&%
S&#!)': 194LA = P"Em&:! '. #'m&:%"!)': ': "#Ju)%)!)': '. #&-!"): )mm'>"?$& -'&-!E
S&#!)': 194L9 = 0:#'m& ?E w"E '. ):!&-&%! .-'m 0:.-"%!-u#!u-& /&?! 3u:*
S&#!)': 196 = 0:!&-&%! '- *)>)*&:* '- '!C&- %um% "E"?$& !' G'>&-:m&:!H 4&%&->& 9":k '-
#&-!"): #'-'-"!)':%
S&#!)': 197 = C&-!).)#"!& .'- *&*u#!)': "! $'w&- -"!& A8. 0m.B
S&#!)': 200 = /u!E '. &-%': *&*u#!):g !"+ A8. 0m.B
S&#!)': 201 = C':%&Ju&:#&% '. .")$u-& !' *&*u#! '- "E A8. 0m.B
S&#!)': 203 = C&-!).)#"!& .'- !"+ *&*u#!&*
S&#!)': 203A = T"+ *&*u#!)': ":* #'$$&#!)': "##'u:! :um?&-
S&#!)': 203AA = 3u-:)%C):g '. %!"!&m&:! '. !"+ *&*u#!&*
S&#!)': 204 = M&":):g '. F&-%': -&%':%)?$& .'- "E):gG
S&#!)': 206AA = 4&Ju)-&m&:!% !' .u-:)%C P&-m":&:! A##'u:! 2um?&-
/&*u#!)': "! S'u-#& ":* A*>":#& P"Em&:! S&#!)': 190
Cotwithstanding that the regular assessment in respect of any income is to be made in a later assessment
year& the tax on such income shall be payable by deduction or collection at source or by advance payment#

/)-&#! P"Em&:! S&#!)': 191
In the case of income in respect of which provision is not made for deducting income-tax at the time of
payment& and in any case where income-tax has not been deducted income-tax shall be payable by the
assessee direct#
If any person referred to in section 255 and in the cases referred to in section $'-& the principal officer and
the company of which he is the principal officer does not deduct the whole or any part of the tax and such
tax has not been paid by the assessee direct& then& such person& the principal officer and the company shall be
deemed to be an assessee in default#
4eduction of Tax %t 3ource 2$
/&*u#!)': '. T"+ "! S'u-#& w)!C -&g"-* !' S"$"-E 0:#'m& S&#!)': 192
9very person responsible for payment of salary income shall estimate the tax liability of the recipient and
the tax so estimated shall be deducted in $2 monthly installment# 0owever& while estimating the tax liability
assessee shall be allowed deduction under section 25, to 25B but only the notified deductions like 25,&
25,,,& 25,,4& 254& 2544&259& 25>>& 25B and some part of 25> shall be considered#
0$$u%!-"!)': 1: :r# D is employed in %), =td# getting basic pay `/5&555 p#m# and he has invested `/5&555
in C3,# In this case& tax to be deducted at source at the time of payment of salary shall beG
`
)asic salary (/5&555 x $2) (&55&555#55
Income under the head 3alary (&55&555#55
>ross Total Income (&55&555#55
=essG 4eduction u.s 25, TC3,U /5&555#55
Total Income /&/5&555#55
Tax on `/&/5&555 at slab rate -2&555#55
%ddG 9ducation cess V 2O 2-5#55
%ddG 309, V $O -25#55
Tax =iability -+&2(5#55
6er installment +&(5/#55
If any employer has failed to deduct tax at source& in such cases penalties may be imposed on the employer
e@ual to the amount of tax which he has failed to deduct#
If any person is working with two or more employers& in that case he should submit the particulars of his
salary income from all the employers to one of the employer who will deduct tax at source taking into
consideration income from all employers# (Information has to be given in Horm $2))
Example
:r# D is working with two employer % =td# and ) =td# and is getting basic pay of `$/&555 p#m# from each of
the employer# In this case& he must inform one of the employer regarding his salary income from other
employer and such employer shall deduct tax at source taking into consideration income from other
employer#
If any employee has income under any other head& the employee shall be allowed even to report such
incomes to the employer and the employer shall deduct the amount of tax accordingly#
If any employee has loss under the head house property& the employee shall be allowed even to report such
loss and the employer shall take it into consideration#
0%%u& '. #&-!).)#"!& .'- :'! *&*u#!):g !"+ "! %'u-#&
A% &- %&#!)': 197H if any employee finds that his tax liability shall be less than the amount of tax deducted
at source& in that case he may apply to the %ssessing Afficer to issue him a certificate for not deducting the
tax at source or for deducting the tax at a lower rate#
A% &- 4u$& 28H "$)#"!)': %C'u$* ?& g)>&: ): 3'-m 2'.13.
%s per section 25(%%& if the person receiving the payment has not submitted 6%C& T43 shall be at the
applicable rate or 25O& whichever is higher#
0:!&-&%! ': S&#u-)!)&% S&#!)': 193
S&#!)': 2A289B F):!&-&%! ': %&#u-)!)&%G means&R
(i) interest on any security of the C&:!-"$ G'>&-:m&:! or a S!"!& G'>&-:m&:!#
(ii) interest on debentures or other securities of a $'#"$ "u!C'-)!E or a #'m":E or a #'-'-"!)':
&%!"?$)%C&* ?E " C&:!-"$H S!"!& '- P-'>):#)"$ A#!.
The person responsible for paying to a resident any interest on securities shall deduct income-tax V 10K#
Co tax shall be deducted from 8
1. %ny interest payable on any security of the ,entral >overnment or a 3tate >overnment#
2. %ny interest payable to a resident individual& on listed debentures issued by a company in which the
public are substantially interested and the interest is paid by the company by an account payee che@ue and
amount of interest paid or likely to be paid during the financial year by the company to such individual does
not exceed ` 2H700#
3. %ny other interest income notified under section $'+#
Example
(i) %), =td# has to pay interest of `2&55&555 to :r# D in connection with listed debentures& amount of
T43 shall be ` 25&555#
(ii) %), =td# has to pay interest of `$2&55&555 to :r# D in connection with listed debentures& amount of
T43 shall be `$&25&555
C-&*)!):g !C& "m'u:! !' %u%&:%& "##'u:! '- ":E '!C&- %)m)$"- "##'u:!
Where any income by way of interest on securities is credited to any account& whether called MInterest
payable accountN or M3uspense accountN or by any other name& in the books of account of the person liable
to pay such income& such crediting shall be deemed to be credit of such income to the account of the payee
and it will be liable to T43#
0%%u& '. #&-!).)#"!& .'- :'! *&*u#!):g !"+ "! %'u-#&
A% &- %&#!)': 197H if the person receiving the payment finds that his tax liability shall be less than the
amount of T43& he may apply to the %ssessing Afficer to issue him a certificate not to deduct tax at source
or to deduct tax at a lower rate and such certificate shall be submitted to the person making the payment and
he shall be bound to comply with#
A% &- %&#!)': 197AH if any individual or 0indu Bndivided Hamily has interest income (including income
covered under section $'- and $'-%) not exceeding the exemption limit and also his tax liability is nil& such
individual or 0BH can furnish a declaration in Horm Co# $/> to the person making payment of interest and
in that case no tax shall be deducted at source# % senior citi<en can give a declaration in Horm Co $/0 if his
tax liability is nil#
0$$u%!-"!)': 2: :r# 6uneet ;umar has invested some amount in %), =td# and the company has paid him
interest of `2&15&555 after deducting tax at source V $5O# The che@ue was collected by the bank and the
4eduction of Tax %t 3ource 2+
bank charges were $O# 0e has also received dividend from domestic company of `(/&555 and bank charges
are $O#
,ompute his tax liability and tax refund for assessment year 25$2-$+#
S'$u!)':: `
>ross interest (2&15&555 x $55 .'5) +&55&555#55
=essG bank charges u.s /1 ($O of 2&15&555) 2&155#55
Income under the head Ather 3ources 2&'1&+55#55
Total Income 2&'1&+55#55
Computation of Tax Liability
Tax on `2&'1&+55 at slab rate $$&1+5#55
%ddG 9ducation cess V 2O 2+-#(5
%ddG 309, V $O $$1#+5
Tax =iability $2&52$#'5
=essG T43 +5&555#55
*efund $1&'$2#$5
*ounded off u.s 222) $1&'25#55
0$$u%!-"!)': 3: :r# =alit )ose has borrowed `$&55&555 from the market# The amount was invested in some
company and the assessee has received a che@ue for ` +(&555 (after T43 V $5O) being the amount of
interest and assessee has paid interest of ` $$&555#
The che@ue was given for collection to a bank and the bank has deducted collection charges of 2O#
:r# =alit )ose has income under the head house property ` 2&55&555#
,ompute his tax liability . tax payable for assessment year 25$2-$+#
S'$u!)':: `
Income under the head 0ouse 6roperty 2&55&555#55
Income under the head other sources 22&225#55
(+(&555 x $55 . '5) -$$&555-125U
(-5&555 8 $$&555 8 125)
>ross Total Income 2&22&225#55
=essG 4eduction u.s 25, to 25B Cil
Total Income 2&22&225#55
Tax on `2&22&225 at slab rate -&222#55
%ddG 9ducation cess V 2O '(#/(
%ddG 309, V $O -2#22
Tax =iability -&'12#2-
=essG T43 -&555#55
Tax 6ayable '12#2-
*ounded off u.s 222) '15#55
0:!&-&%! '!C&- !C": F0:!&-&%! ': S&#u-)!)&%G S&#!)': 194A
%ny person& who is paying to a resident any interest other than interest on securities& shall at the time of
payment shall *&*u#! !"+ "! %'u-#& , 10K.
4eduction of Tax %t 3ource 2-
T/S ): #"%& '. "Em&:! ?E ": ):*)>)*u"$ '- H):*u U:*)>)*&* 3"m)$E
%n individual or 0indu Bndivided Hamily shall be re@uired to deduct tax at source only if they are liable to
auditing under section --%) during the financial year immediately preceding the relevant year#
Co tax shall be deducted at source where the amount of such income or the aggregate of the amounts of such
income credited or paid or likely to be credited or paid during the financial year does not exceedG
(a) ` 10H000& where the payer is a bank.co-operative bank or post office#
(b) ` 7H000 in any other case#
Example
(i) 6un?ab Cational )ank has to pay interest of `$&55&555 to :r# D# In this case& amount of T43 shall be
`$5&555#
(ii) 6un?ab Cational )ank has to pay interest of `$5&55&555 to :r# D# In this case& amount of T43 shall be
`$&55&555#
(iii) 6un?ab Cational )ank has to pay interest of `$&55&555 to D =td# In this case& amount of T43 shall be
`$5&555#
(iv) 6un?ab Cational )ank has to pay interest of `$&55&555 to an 0indu Bndivided Hamily# In this case&
amount of T43 shall be `$5&555#
(v) 6un?ab Cational )ank has to pay interest of `$&555 to an 0indu Bndivided Hamily# In this case& amount
of T43 shall be Cil#
(vi) 6un?ab Cational )ank has to pay interest of `'&'55 to :r# D# In this case& amount of T43 shall be Cil#
0%%u& '. #&-!).)#"!& .'- :'! *&*u#!):g !"+ "! %'u-#&
A% &- %&#!)': 197& if the person receiving the payment finds that his tax liability shall be less than the
A% &- %&#!)': 197AH if any individual or 0indu Bndivided Hamily has interest income (including income
covered under section $'+ and $'-) not exceeding the exemption limit and also his tax liability is nil& such
The provisions of section $'-% will not apply in the following cases where the 8
($) interest paid by a firm to a partner of the firm"
(2) interest paid to any )anking ,ompany or any Hinancial ,orporation or =ife Insurance ,orporation of
India or Bnit Trust of India or any %ssociations or )odies notified by the ,entral >overnment"
(+) interest paid by a co-operative society to their member"
4eduction of Tax %t 3ource 2/
(-) interest paid in respect of deposits under any scheme framed by the ,entral >overnment and notified by
it"
(/) interest income credited or paid by the ,entral >overnment under any provision of the Income-tax %ct&
the Wealth-tax %ct etc#"
(() income paid in relation to a Wero ,oupon )ond#
/)>)*&:*% S&#!)': 194
9very domestic company responsible for making payment of dividend covered under section 2(22)(e) shall
deduct income-tax at the rate of 10K#
Co such deduction shall be made in the case of a shareholder& being an individual& ifR
(a) the dividend is paid by the company by an account payee che@ue" and
(b) the amount of such dividend or& as the case may be& the aggregate of the amounts of such dividend
distributed or paid or likely to be distributed or paid during the financial year by the company to the
shareholder& does not exceed ` 2H700#
The provisions of this section shall not apply to such income credited or paid toR
(a) the =ife Insurance ,orporation of India#
(b) the >eneral Insurance ,orporation of India#
(c) any other insurer#
0%%u& '. #&-!).)#"!& .'- :'! *&*u#!):g !"+ "! %'u-#&
A% &- %&#!)': 197AH if any individual or 0indu Bndivided Hamily has dividend income (including income
covered under section $'+ and $'-%) not exceeding the exemption limit and also his tax liability is nil& such
6)::):g% .-'m L'!!&-E '- C-'%%w'-* PuII$& &!#. S&#!)': 1949
The person responsible for paying to any person any income by way of w)::):g% .-'m ":E $'!!&-E or
#-'%%w'-* uII$& or #"-* g"m& and '!C&- g"m& '. ":E %'-! in an amount exceeding ` 10H000 shall& at the
time of payment thereof& *&*u#! ):#'m&(!"+ !C&-&': , 30K#
P-'>)*&* that in a case where the winnings are wholly in kind or partly in cash and partly in kind but the
part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of the winnings& the
person responsible for paying shall& before releasing the winnings& ensure that tax has been paid in respect of
4eduction of Tax %t 3ource 2(
the winnings#
Example
(i) %), =td# has to pay winnings of a lottery `+&55&555 to :r# D& amount of T43 shall be `'5&555#
(ii) W =td# has to pay winnings of lottery `1&55&555 to :r# J& amount of T43 shall be `2&$5&555#
S&#!)': 197 )% :'! "$)#"?$&
Example
:r# 3ushil ;umar a computer operator won ` / ,rore in the ;aun )anega ,rorepati (;),)#,alculate the
amount of T43 re@uired to be deducted by ;), under section $'-)#
S'$u!)'::
T/S u:*&- %&#!)': 1949 X /&55&55&555 x +5O X $&/5&55&555#
6)::):g% .-'m H'-%& 4"#& S&#!)': 19499
%ny person& being a bookmaker or a person to wC'm " $)#&:#& C"% ?&&: g-":!&* ?E !C& G'>&-:m&:!
u:*&- ":E $"w .'- !C& !)m& ?&):g ): .'-#& .'- C'-%& -"#):g ): ":E -"#& #'u-%& '- .'- "--":g):g .'-
w"g&-):g '- ?&!!):g ): ":E -"#& #'u-%&H who is responsible for paying to any person any income by way of
winnings from any C'-%& -"#& in an amount exceeding ` 7H000 shall& at the time of payment thereof& *&*u#!
):#'m&(!"+ !C&-&': , 30K#
Example
%), =td# has to pay winnings of horse race `+&55&555 to :r# D& amount of T43 shall be `'5&555 but if the
amount to be paid is `2&555& amount of T43 shall be Cil#
S&#!)': 197 )% 21T "$)#"?$&
0$$u%!-"!)': 4: :r# D purchased 25 lottery tickets of ` 2/5 each with a winning of `+#/ lakhs (>ross)# 0e
has also received dividend of ` $#2/ lakh from %), =td& an Indian company and dividend of `/1&555 from a
foreign company# 0e has incurred expenditure of `+&555 and `/&555 respectively in connection with
dividend income# 0e has also received interest of `12&555 after deducting tax at source of `2&555 and the
che@ue was collected by bank and service charges V 2O was deducted# 0e has income from subletting of
house property `1&555 p#m# 0e has received family pension of ` -&555 p#m#
,ompute his tax liability for assessment year 25$2-$+#
S'$u!)':: ` `
Income from lottery +&/5&555#55
4ividend from Indian company (exempt u.s $5(+-)) Cil
4ividend from Horeign company /1&555
=essG 9xpenses u.s /1 /&555 /2&555#55
Interest 25&555
=essG )ank charges u.s /1 (2O of `12&555) $&--5 12&/(5#55
3ub-letting of house property (1&555 x $2) 2-&555#55
Hamily pension -2&555
=essG $.+ of income or `$/&555 whichever is less $/&555 ++&555#55
Income under the head Ather 3ources /&'1&/(5#55
Tax on casual income `+&/5&555 V +5O u.s $$/)) $&5/&555#55
Tax on `2&-1&/(5 at slab rate (&1/(#55
Tax before education cess $&$$&1/(#55
%ddG 9ducation cess V 2O 2&2+/#$2
%ddG 309, V $O $&$$1#/(
Tax =iability $&$/&$52#(2
*ounded off u.s 222) $&$/&$$5#55
P"Em&:!% !' C':!-"#!'-% S&#!)': 194C A8. 0m.B
1. %ny person responsible for making payment to a resident contractor for carrying out any work including
supply of labour for carrying out any work shall deduct tax at source V 2K and in case of payment to
individual or 0indu Bndivided Hamily& the rate of T43 shall be 1K provided the amount being paid is
exceeding ` 30H000 or the amount paid or payable during the financial year exceeds ` 77H000#
Example
(i) If 44% has to pay a sum of `/&55&555 to :r# D in connection with a particular contract& amount of T43
shall be `/&555#
(ii) If in the above case amount is to be paid to D =td# %n Indian company& amount of T43 shall be `$5&555#
2. T/S ): #"%& '. "Em&:! ?E ):*)>)*u"$ '- H):*u U:*)>)*&* 3"m)$E
%n individual or 0indu Bndivided Hamily or body of individuals or association of persons shall be re@uired
to deduct tax at source only if they are liable to auditing under section --%) during the financial year
immediately preceding the relevant year#
Example
If :r# D is engaged in a business and turnover of business is `-$&55&555 in the previous year 25$5-$$ and he
has to pay `$&55&555 to :r# J in the previous year 25$$-$2 in connection with a contract& amount of T43
shall be Cil but if his turnover in previous year 25$5-$$ was `(/&55&555& amount of T43 shall be `$&555 but
if payment is to given to J =td#& amount of T43 shall be `2&555#
3. Co individual or 0BH shall deduct tax at source if the amount is paid for personal purpose of such
individual or 0BH#
Example
If in the above case& :r# D has to pay `$&55&555 to :r# J in connection with a contract which is for personal
purpose of :r# D& T43 shall be Cil#
4. ,ontract for this purpose shall include every type of contract e#g#
(a) advertising contract
(b) broadcasting and telecasting including production of programmes for such broadcasting or
telecasting
(c) carriage of goods and passengers by any mode of transport other than by railways
(d) catering
(e) contract for construction
(f) manufacturing or supplying a product according to the re@uirement or specification of a customer by
using material purchased from such customer& but does not include manufacturing or supplying a
product according to the re@uirement or specification of a customer by using material purchased
from a person& other than such customer#
(g) contract for courier services
(h) contract of maintenance of plant and machinery etc#
(i) any other contract
7. Co tax shall be deducted at source in case of payment to a contractor in connection with transportation of
goods provided the person receiving the payment has furnished permanent account number#
6. While making payment under contract& tax shall be deducted at source including the amount of service
tax#
7. %s per section 25(%%& if the person receiving the payment has not submitted 6%C& T43 shall be at the
8. 0%%u& '. #&-!).)#"!& .'- :'! *&*u#!):g !"+ "! %'u-#&
A% &- %&#!)': 197& if the person receiving the payment finds that his tax liability shall be less than the
amount of T43& he may apply to the %ssessing Afficer to issue him a certificate for not deducting tax at
source or for deducting tax at a lower rate and such certificate shall be submitted to the person making the
payment and he shall be bound to comply with#
E+"m$& 1
%), =imited provides $5 labour to DJW =imited on :onthly )asis V $&55&555.- plus service tax and
raised bill on +$
st
Puly& 25$$# DJW =imited makes the payment on $2#52#25$$# ,ompute the amount of tax to
be deducted at source by DJW =imited under section $'-,# %lso mention the due date of deposit of T43
amount #
S'$u!)'::
Tax shall be deducted at source including the amount of service tax& hence amount of T43 shall be
X Y$&55&555 I $5&+55Z x 2O X 2&25(.-
T43 is re@uired to be deducted on $2#52#25$$ by DJW =imited and is re@uired to be deposited to the credit
of ,entral >overnment upto 1
th
3eptember& 25$$#
E+"m$& 2
:r# D purchases cloth from *aymonds for `(5&55&555# 0e stitches shirts as per specification of )lackberry
=td# and supplies to )lackberry =imited and raised the invoice as followsG
:aterial 6urchased `(5&55&555
3titching ,harges `+5&55&555
'5&55&555
,alculate the amount of tax to be deducted at source by )lackberry =imited under section $'--,#
S'$u!)'::
4eduction of Tax %t 3ource 2'
The transaction given in the @uestion are in the nature of sale and not covered under the definition of work
as given under section $'--,# T43 is not applicable since material has been purchased from other than
customer#
E+"m$& 3.
D! Transport ,o# 6rovides transport services to :r# ) who sends goods to :r# , from 4elhi to ,hennai# D!
raised a bill of `/&55&555 plus service tax for the service in the name of :r# )# D! Transport ,o# does not
furnishes its 6%C to :r# )# ,alculate the amount of T43 re@uired to be deducted by :r# ) under section
$'--,# (6resume :r# ) is liable for tax audit in the preceding financial year)
(b) 6resume :r# ) is not liable for tax audit in the preceding financial year#
(c) 6resume in the above example transport company furnished its 6%C to :r# )#
S'$u!)'::
%s per section $'-,& T43 is not re@uired to be deducted on payments made or credited to transport operator
provided the transporting co furnishes the 6%C& If transporter does not furnishes his 6%C than T43 shall be
deducted V 25O as per section 25(%%#
In the given case& since the D! transport ,o# does not furnish its 6%C to :r# )& 3o T43 shall be deducted V
25O on the invoice value at the time of payment#
T43 X Y/&55&555 I (/&55&555 x $5#+O)Z x 25O X $&$5&+55.-
(b) %s per section $'-,& %n individual or 0BH shall be re@uired to deduct T43 only if they are liable to
In the given case& :r# ) is not liable for Tax %udit under section --%) in the preceding year so no T43 is
re@uired to be deducted by :r# )#
(c) %s per section $'--,& T43 is not re@uired to be deducted on payments made or credited to transport
operator provided the transporter furnishes the 6%C# In the given case& T43 is not re@uired to be deducted
by :r# )#
E+"m$& 4.
3uppose in the above example T43 was re@uired to be deducted by :r# ) on 5$#5(#25$$ but was deducted
on 2/#5(#25$$ and paid by :r# ) on 21#51#25$$# ,alculate the amount of interest payable under section 25$#
S'$u!)'::
Interest under section 25$
6eriod of default X 5$#5(#25$$ to 2/#5(#25$$X 2/ days
$&$5&+55 x $O x $ X `$&$5+
6eriod of default X 2/#5(#25$$ to 21#51#25$$X ++ days
$&$5&+55 x $#/O x 2 X `+&+5'
0:%u-":#& C'mm)%%)': S&#!)': 194/
%ny person responsible for paying to a resident any income by way of remuneration or reward& whether by
way of commission or otherwise& for soliciting or procuring insurance business (including business relating
to the continuance& renewal or revival of policies of insurance) shall& at the time of credit of such income to
the account of the payee or at the time of payment thereof in cash or by issue of a che@ue or draft or by any
4eduction of Tax %t 3ource +5
other mode& whichever is earlier& deduct income-tax V 10K#
P-'>)*&* .u-!C&- that no deduction shall be made under this section in a case where the amount of such
income or& as the case may be& the aggregate of the amounts of such income credited or paid or likely to be
credited or paid during the financial year does not exceed ` 20H000#
0%%u& '. #&-!).)#"!& .'- :'! *&*u#!):g !"+ "! %'u-#&
While making payment of commission by the insurance company& tax shall be deducted at source excluding
the amount of service tax#
P"Em&:!% !' :':(-&%)*&:! %'-!%m&: '- %'-!% "%%'#)"!)': S&#!)': 194E
($) This 3ection provides for deduction of tax at source in respect of any income referred to in section
$$/))% payable to a non-resident sportsman (including an athlete) who is not a citi<en of India or a non-
resident sports association or institution#
(2) 4eduction of tax at source V $5O should be made by the person responsible for making the payment#
(+) The following are the income referred to in section $$/))% 8
(i) income received or receivable by a non-resident sportsman (including an athlete) by way of 8
(a) participation in any game or sport in India (0owever& games like crossword pu<<les& horse
races etc& taxable under section $$/)) are not included herein)" or
(b) advertisement" or
(c) contribution of articles relating to any game or sport in India in newspapers& maga<ines or
?ournals#
C'mm)%%)':H &!#.H ': !C& S"$& '. L'!!&-E T)#k&!% S&#!)': 194G
%ny person who is responsible for paying to any person& who is or has been stocking& distributing&
purchasing or selling lottery tickets& any income by way of commission& remuneration or pri<e on such
tickets in an amount exceeding `$&555 shall& at the time of credit of such income to the account of the payee
or at the time of payment of such income in cash or by the issue of a che@ue or draft or by any other mode&
whichever is earlier& deduct income-tax thereon at the rate of 10K#
0%%u& '. #&-!).)#"!& .'- :'! *&*u#!):g !"+ "! %'u-#&
While making payment of commission& tax shall be deducted at source excluding the amount of service tax#
4eduction of Tax %t 3ource +$
C'mm)%%)': 1- 9-'k&-"g& S&#!)': 194H
%ny person& not being an individual or a 0indu Bndivided Hamily& who is responsible for paying& to a
resident& any income by way of commission (not being insurance commission referred to in section $'-4) or
brokerage& shall& deduct income-tax thereon at the rate of 10K#
If the amount paid or payable during a particular year to a particular person is not exceeding ` 7H000& in that
case no tax shall be deducted at source#
T/S ): #"%& '. "Em&:! ?E ):*)>)*u"$ '- H):*u U:*)>)*&* 3"m)$E
S&#!)': 197 )% "$)#"?$&.
While making payment of commission& tax shall be deducted at source excluding the amount of service tax#
E+"m$&
:ano? trading limited rendered services in relation to sale of mustard oil to %shish oils limited and
commission charged is `1&55&555 plus service tax& in this case& tax to be deducted at source by %shish oils
limited shall be 1&55&555 x $5O X `15&555 and amount payable to :ano? trading limited shall be
,ommission 1&55&555
%ddG 3ervice Tax V $5#+O 12&$55
Total 1&12&$55
=essG T43(1&55&555 x $5O) 15&555
%mount 6ayable 1&52&$55
4&:! S&#!)': 194(0 A8. 0MP.B
1. %ny person who is responsible for paying to a resident any income by way of rent& shall& at the time of
credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of
a che@ue or draft or by any other mode& whichever is earlier& deduct income-tax thereon at the rate ofR
(a) 2K for the use of any machinery or plant or e@uipment#
(b) 10K for the use of any land or building (including factory building) or land appurtenant to a building
(including factory building) or furniture or fittings#
2. Co deduction shall be made under this section where the amount of such income or& as the case may be&
the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the
financial year by the aforesaid person to the account of& or to& the payee& does not exceed `$&25&555#
3. T/S ): #"%& '. "Em&:! ?E ):*)>)*u"$ '- H):*u U:*)>)*&* 3"m)$E
Example
(i) %mount of T43 in the following cases shall beG
6erson receiving the payment :r# J :r# D DJ Hirm D =td# (Indian
company)
6erson making the payment Individual (not
having audit in
6#J# $5-$$)
Individual
(having audit in
6#J# $5-$$)
6artnership firm ,ompany
(Indian
company)
*ent for house property
%mount of T43
`2&55&555
Cil
`2&55&555
`25&555
`2&55&555
`25&555
`2&55&555
`25&555
*ent for plant and machinery
%mount of T43
`2&55&555
Cil
`2&55&555
`-&555
`2&55&555
`-&555
`2&55&555
`-&555
*ent for house property
%mount of T43
`$&55&555
Cil
`$&55&555
Cil
`$&55&555
Cil
`$&55&555
Cil
*ent for plant and machinery
%mount of T43
`$&55&555
Cil
`$&55&555
Cil
`$&55&555
Cil
`$&55&555
Cil
4. F4&:!G means any payment& by whatever name called& under any lease& sub-lease& tenancy or any other
agreement or arrangement for the use of (either separately or together) any& 8
(a) land" or
(b) building (including factory building)" or
(c) land appurtenant to a building (including factory building)" or
(d) machinery" or
(e) plant" or
(f) e@uipment" or
(g) furniture" or
(h) fittings&
whether or not any or all of the above are owned by the payee#
7. 0%%u& '. #&-!).)#"!& .'- :'! *&*u#!):g !"+ "! %'u-#&
%s per ,ircular Co# -.2552 dated 22#5-#2552& if any payment is being made by the tenant& tax shall be
deducted at source excluding the amount of service tax#
E+"m$& 1.
IT 9nfra 3ervices 6rivate =imited raised an invoice of `+&55&555.-(excluding service tax) to %,= =imited
for renting of commercial building# The above figure includes `/5&555.-(excluding service tax) of parking
4eduction of Tax %t 3ource ++
charges per month# The bill is raised on +5
th
Pune& 25$$ and %,= =imited made the payment on the same
date#
,ompute the %mount of T43 re@uired to be deducted by %,= =imited and the due date of deposit of T43
amount and last date of filing of @uarterly 3tatement[
S'$u!)'::
3ervice tax amount X +55555 x $5#+O X +5&'55
T43 X +& 55&555 x $5O X +5&555.- to be deducted on +5
th
Pune& 25$$ under section $'--I#
=ast date of deposit X 1
th
Puly& 25$$#
=ast date of filing of @uarterly 3tatement X $/
th
Puly& 25$$#
E+"m$& 2
4=H limited has let out one commercial building to Idea cellular limited at >urgaon and rent charged is
`2&/5&555 per month plus service tax & in this case& tax to be deducted at source by Idea cellular limited shall
be 2&/5&555 x $2 x $5O X `+&55&555 and amount payable to 4=H limited shall be
S'$u!)'::
*ent +5&55&555
%ddG 3ervice Tax V $5#+O +&5'&555
Total ++&5'&555
=essG T43(+5&55&555 x $5O) +&55&555
%mount payable +5&5'&555
3&&% .'- P-'.&%%)':"$ '- T&#C:)#"$ S&->)#&% S&#!)': 194<
1. 9very person responsible for making payment to any resident in connection with professional services or
technical services or royalty or any sum for not pursuing any business or profession& shall deduct tax at
source at the time of making the payment at the rate of 10K of the sum payable# Co tax shall be deducted at
source where the amount paid or payable during the year do not exceed ` 30H000#
2. T/S ): #"%& '. "Em&:! ?E ):*)>)*u"$ '- H):*u U:*)>)*&* 3"m)$E
3. FP-'.&%%)':"$ %&->)#&%G means services rendered by a person in the course of carrying on legal& medical&
engineering or architectural profession or the profession of accountancy or technical consultancy or interior
decoration or advertising or such other profession as is notified by the )oard for the purposes of section
--%% or of this section#
4. F3&&% .'- !&#C:)#"$ %&->)#&%G '- -'E"$!E shall have the same meaning as given in section '#
Example
(i) If %), =td# has to pay a sum of `2&55&555 to an architect& amount of T43 shall be `25&555#
(ii) If %), =td# has to pay `$5&55&555 to a ,hartered %ccountant& amount of T43 shall be `$&55&555#
(iii) If :r# D has to pay `/5&555 to an advocate& amount of T43 shall be Cil and if :r# D was re@uired to get
his accounts audited during 25$5-$$& amount of T43 shall be `/&555#
(iv) If W =td# has to pay `$/&555 in connection with technical services& amount of T43 shall be Cil#
7. If individual or 0BH is making payment for -'.&%%)':"$ %&->)#&% and it is for personal purpose& no tax
shall be deducted at source#
4eduction of Tax %t 3ource +-
6. 0%%u& '. #&-!).)#"!& .'- :'! *&*u#!):g !"+ "! %'u-#&
While making payment for professional . technical services& tax shall be deducted at source including the
amount of service tax#
E+"m$& 1
3C) K ,o# is a =eading 6racticing ,% Hirm in India and it has provided following services to their clients
during the month of Panuary 25$2#
$# %udit fees *eceived from %,= Wireless limited of ` +&55&555.-
2# %ccounting ,harges *eceived from %), =imited `/&55&555.-
+# `/&555.- *eceived for the preparation and filing of Income Tax *eturn for the %#J# 25$$-$2#
-# % 6artner of 3C) K ,o# represents before Income Tax Afficer& a client and received an amount of
`+&55&555.- for the services#
/# *eceived `$5&55&555 for editing a ?ournal published by Taxman#
3ervice tax has been charged in addition to the above amounts wherever it was applicable#

,ompute the service tax payable by 3C) K ,o# %lso compute T43 under 3ection $'--P of the Income Tax
%ct to be deducted in each above case#
S'$u!)'::
C'mu!"!)': '. S&->)#& T"+ L)"?)$)!E '. S29 L C'.
P"-!)#u$"-% 8ALUE S.TAX T1TAL
$# %udit fees from %,= Wireless =imited +&55&555 +5&'55 +&+5&'55
2# %ccounting charges from %), =td# /&55&555 /$&/55 /&/$&/55
+# Hees for filing of Income Tax *eturn /&555 /$/ /&/$/
-# *epresentation before Income Tax Afficer +&55&555 +5&'55 +&+5&'55
/# 9diting a ?ournal published by Taxman $5&55&555 Cil $5&55&555
T'!"$ 21H07H000 1H13H817 22H18H817
T-&"!m&:! '. T/S A%&#!)': 194(<B
1. %,= 3hall deduct T43 on `+&+5&'55 V $5O as per section $'--P#
T43 X +&+5&'55 x $5O X ++&5'5
2. %), =td# shall deduct T43 on `/&/$&/55 V $5O as per section $'--P#
T43 X /&/$&/55 x $5O X //&$/5
3. T43 is not applicable as the amount does not exceed the limit of section $'--P (i#e# `+5&555.- in a year)
4. ,lient shall deduct T43 on `+&+5&'55 V $5O as per section $'--P
4eduction of Tax %t 3ource +/
T43 X +&+5&'55 x $5O X ++&5'5
7. Taxman shall deduct T43 on `$5 lakh V $5O as the service is covered under $'--P
T43 X $5&55&555 x $5O X $&55&555
2'!&%:
$# 9diting a ?ournal by a 6racticing ,hartered %ccountant is not covered under 6racticing ,hartered
%ccountant 3ervices and not taxable#
E+"m$& 2.
:r# D& a ,hartered %ccountant raised a bill of `2&55&555 plus 3ervice Tax for audit fees on +5
th
Pune& 25$$
for the first @uarter in the name of :.s %nshul %ssociates (proprietary concern)#
>ross Turnover of :.s %nshul %ssociates was `(/&55&555 during the preceding financial year# :.s# %nshul
%ssociates made the payment was made on +$
st
Puly& 25$$#
,alculate the amount of T43 re@uired to be deducted under section $'--P and the last date of deposit of T43
%mount #
,alculate the amount of service tax to be charged by :r# D and the last date of deposit#
S'$u!)'::
%s per *ule 1 of 6AT& a ,hartered %ccountant has to pay service tax on actual receipt basis and it will be as
given belowG
,alculation of service tax amount X 2&55&555 x $5#+O X 25&(55
=ast date of deposit of service tax to >overnment is /
th
Actober&25$$(payment received on +$
st
?uly&25$$)
In the given case& :.s %nshul %ssociates is liable to tax %udit and is liable to deduct T43 under section
$'--P of the Income Tax %ct#
T43 to be deducted on +$
st
Puly 25$$
3ervice ,harges 2&55&555
3ervice tax V $5#+O 25&(55
Total 2&25&(55
T43 V $5O 22&5(5
T43 shall be deposited up to 1
th
%ugust& 25$$ and if the amount is not deposited then interest should be paid
as per section 25$#
E+"m$& 3.
%), =imited is a consulting engineer and rendered a technical assistance to *eserve )ank of India and
raised a bill of `+&55&555 on $
st
%ugust& 25$$ and completed the service on $-
th
Puly&25$$# *eserve )ank of
India made payment on +$
st
%ugust& 25$$ for the above service#
,ompute the amount of T43 re@uired to be deducted under section $'--P
,ompute the amount of service tax to be charged by %), =imited#
S'$u!)'::
3ervice tax amount (6AT $-
th
Puly) X +&55&555 x $5#+O X ` +5&'55
=ast date of deposit of service tax amount is /
th
%ugust& 25$$
4eduction of Tax %t 3ource +(
%s per section $'(& notwithstanding anything contained in the foregoing provision of this chapter& Co
deduction of tax shall be made by any person from any sum "E"?$& !' *eserve )ank of India#
In the present case& 3um is payable by *eserve )ank of India to %), =imited and T43 is re@uired to be
deducted under section $'--P and section $'( shall not be attracted in the present case#
T43 to be deducted V $5O on `+&+5&'55 X `++&5'5.- on +$
st
%ugust& 25$$ by *)I and to be deposited up to
1
th
3eptember& 25$$#
E+"m$& 4.
*ohit )ansal providing technical services to %), 6rivate =imited in relation to feasibility of a pro?ect of
`+&55&555 plus service tax& in this case& tax to be deducted at source u.s $'-P by %), private limited shall
be +&+5&'55 x $5O X `++&5'5 and amount payable to :r# *ohit )ansal shall be
Technical charges +&55&555
%ddG 3ervice Tax V $5#+O +5&'55
Total +&+5&'55
=essG T43 (+&+5&'55 x $5O) ++&5'5
%mount 6ayable 2&'1&2$5
P"Em&:! '. C'm&:%"!)': ': A#Ju)%)!)': '. #&-!"): 0mm'>"?$& P-'&-!E S&#!)': 194LA
%ny person responsible for paying to a resident any compensation or the enhanced compensation on account
of compulsory ac@uisition of any immovable property& deduct an amount e@ual to 10K of such sum#
0owever no deduction shall be made if the aggregate amount of such payment to a resident during the
financial year does not exceed ` 1H00H000#
S&#!)': 197 )% "$)#"?$&.
0:#'m& ?E w"E '. ):!&-&%! .-'m ):.-"%!-u#!u-& *&?! .u:* S&#!)': 194L9
Where any income by way of interest is payable to a non-resident& not being a company& or to a foreign
company& by an infrastructure debt fund referred to in clause (-1) of section $5& the person responsible for
making the payment shall& at the time of credit of such income to the account of the payee or at the time of
payment thereof in cash or by issue of a che@ue or draft or by any other mode& whichever is earlier& deduct
income-tax thereon at the rate of five per cent#
0:!&-&%! '- /)>)*&:* '- '!C&- %um% "E"?$& !' G'>&-:m&:!H 4&%&->& 9":k '- C&-!"): C'-'-"!)':%
S&#!)': 196
Co deduction of tax shall be made by any person from any sums payable toR
(i) the >overnment& or
(ii) the *eserve )ank of India& or
(iii) a corporation established by or under a ,entral %ct which is& under any law for the time being in
force& exempt from income-tax on its income& or
(iv)a :utual Hund specified under clause (2+4) of section $5&
where such sum is payable to it by way of interest or dividend in respect of any securities or shares owned
by it or in which it has full beneficial interest& or any other income accruing or arising to it#
C&-!).)#"!& .'- /&*u#!)': "! L'w&- 4"!& S&#!)': 197 A8. 0m.B
If on income of any person& income-tax is re@uired to be deducted at the time of payment under section $'2&
$'+& $'-& $'-%&$'-,& $'-4&$'->& $'-0& $'--I& $'-P& $'-;& $'-=%& and $'/ and the %ssessing Afficer is
satisfied that the total income of the recipient ?ustifies the deduction of income-tax at any lower rates or no
deduction of income-tax& as the case may be& the %ssessing Afficer shall& on an application made by the
assessee in this behalf& give to him such certificate as may be appropriate#
%pplication should be given in Horm Co# $+#
AS&#!)': 197 )% :'! "$)#"?$& ): #"%& '. T/S u:*&- %&#!)': 1949H 19499B
/u!E '. P&-%': /&*u#!):g T"+ S&#!)': 200 A8. 0m.B
P"Em&:! '. T/S !' !C& G'>&-:m&:! S&#!)': 200 / 4u$& 30
%ny person deducting any sum in accordance with the foregoing provisions of this ,hapter shall pay within
the prescribed time& the sum so deducted to the credit of the ,entral >overnment or as the )oard directs#
A% &- 4u$& 30H !C& "Em&:! )% !' ?& m"*& ): g&:&-"$ w)!C): 7 *"E% .-'m !C& $"%! *"E '. !C& m':!C ):
wC)#C !C& *&*u#!)': )% m"*&.
If the tax has been deducted in the month of :arch& tax should be deposited on or before +5
th
%pril#
In certain cases& %ssessing Afficer may permit the payments on @uarterly basis#
;u"-!&-$E S!"!&m&:! '. T"+ /&*u#!&* "! S'u-#& S&#!)': 200 / 4u$& 31A
9very person deducting tax at source has to submit @uarterly statement containing details of the tax deducted
at source# The statement should be submitted latest by $/
th
of the month succeeding the relevant @uarter but
statement for the @uarter ending :arch can be submitted upto $/
th
:ay# e#g# 3tatement for @uarter ending
:arch& 25$2 can be submitted upto $/
th
:ay& 25$2#
If there is any delay in submitting the statement& penalty shall be charged V ` 100 per day but maximum to
the extent of tax deducted at source#
(Horm Co# 2-E Euarterly statement for salary)
(Horm Co# 2(E Euarterly statement for others)
C':%&Ju&:#&% '. 3")$u-& !' /&*u#! '- P"E S&#!)': 201 A8. 0m.B
If any person does not deduct the tax or after deducting fails to pay the tax as& he shall be deemed to be an
assessee in default in respect of the tax G
P-'>)*&* that no penalty shall be charged under section 22$ from such person& principal officer or company
unless the %ssessing Afficer is satisfied that such person or principal officer or company& as the case may be&
has without good and sufficient reasons failed to deduct and pay the tax#
If any such person& principal officer or company does not deduct the whole or any part of the tax or after
deducting fails to pay the tax as re@uired by or under this %ct& he or it shall be liable to pay simple interest&
R
(i) at one per cent for every month or part of a month on the amount of such tax from the date on which such
tax was deductible to the date on which such tax is deducted" and
(ii) at one and one-half per cent for every month or part of a month on the amount of such tax from the date
on which such tax was deducted to the date on which such tax is actually paid& and such interest shall be
paid before furnishing the @uarterly statement for each @uarter in accordance with the provisions of section
255#
Example
%sseessee deducts the T43 on $5#$5#25$$ but pays T43 on +$#$2#25$$# Cow as amendment by Hinance %ct&
25$5 interest under section 25$ shall be charged from $5#$5#25$$ to +$#$2#25$$ V $#/O per month i#e#& for
+ months#
Example
%ssessee failed to deduct T43 and deduct T43 on +$#$2#25$$# %ssessee pays T43 on $1#5$#25$2#
(i) Interest under section 25$ shall be charged for + months V $O for the period $5#$5#25$$ to
+$#$2#25$$#
(ii) Interest under section 25$ shall be charged V $#/O per month for one month from +$#$2#25$$ to
$1#5$#25$2#
C&-!).)#"!& .'- T"+ /&*u#!&* S&#!)': 203 / 4u$& 31
T/S C&-!).)#"!&
9very person deducting tax at source shall issue a certificate to the person with regard to whom tax has been
deducted at source# In case of payment of salary& certificate shall be issued in Horm Co# $( and in other cases
it will be in Horm Co# $(%#
The certificate in Horm Co# $( should be given upto +$
st
:ay of the succeeding year in case of a employee
and it will be an annual certificate#
In other cases certificate in Horm Co# $(% should be issued on @uarterly basis and it should be issued within
$/ days from the last date of submitting the @uarterly statement under section 255#
T"+ /&*u#!)': A##'u:! 2um?&- ATA2B S&#!)': 203A
9very person& deducting tax or collecting tax& who has not been allotted a tax deduction account number
shall& within such time as may be prescribed& apply to the %ssessing Afficer for the allotment of a Mtax
deduction and collection account numberN#
A% &- 4u$& 114AH "$)#"!)': %C'u$* ?& g)>&: ): 3'-m 2'.499 w)!C): ':& m':!C .-'m !C& &:* '. !C&
m':!C ): wC)#C !"+ w"% *&*u#!&* .'- !C& .)-%! !)m&.
3u-:)%C):g '. S!"!&m&:! '. T"+ /&*u#!&* S&#!)': 203AA / 4u$& 31A9
Income Tax %uthorities shall prepare annual statement for every person with regard to whom tax has been
deducted at source and such statement shall be prepared in the Horm Co# 2(%3 on the basis of @uarterly
return filed by the person deducting tax at source# 3uch statement shall be sent to every person upto +$
st
Puly
of assessment year# Tax credit can be claimed on the basis of such statement# In case of any discrepancy&
such person shall report it to the Income Tax 4epartment#

M&":):g '. FP&-%': 4&%':%)?$& .'- P"E):gG S&#!)': 204
4eduction of Tax %t 3ource +'
The person responsible for paying means 8
(i) In case of salary payments& the employer and if the employer is a company& it will include the company
and also its principal officer#
(ii) In case of interest on securities& the local authority& corporation or the company including its principal
officer#
(iii) In any other case the person making the payment#
4&Ju)-&m&:! !' 3u-:)%C P&-m":&:! A##'u:! 2um?&- S&#!)': 206AA
9very person on whose behalf& tax is being deducted at source shall submit his 6%C to the person deducting
tax at source otherwise rate of T43 shall be the actual rate or 25O whichever is higher# The person
deducting tax at source has to mention such 6%C in the @uarterly statement#
;u&%!)':: E+$"): -'>)%)':% '. T"+ /&*u#!)': "! S'u-#& AT/SB w)!C -&g"-* !' S&->)#& T"+.
A:%w&-:
If any service recipient has to make the payment to the service provider and tax has to be deducted at source&
in that case& while deducting tax at source& service tax shall also be included in some of the cases and it will
not be included in some other cases and is as given belowG
T/S &+#$u*):g S&->)#& T"+
$# If the service recipient is making payment of 4&:!& tax shall be deducted at source under section $'--I V
$5O and tax shall be deducted excluding service tax#
Example
%), =td# has let out one commercial building to DJW =td# and rent charged is `25&55&555 plus service tax&
in this case& tax to be deducted at source by DJW =td# shall be 25&55&555 x $5O X `2&55&555 and amount
payable to %), =td# shall be
*ent 25&55&555
%ddG 3ervice Tax V $5#+O 2&5(&555
Total 22&5(&555
=essG T43 (25&55&555 x $5O) 2&55&555
%mount 6ayable 25&5(&555
2# If the service recipient is making payment of C'mm)%%)': / 9-'k&-"g&& tax shall be deducted at source
under section $'--0 V $5O and tax shall be deducted excluding service tax#
Example
:r# D a property dealer has rendered services for getting one commercial building on rent to DJW =td# and
,ommission charged is `/&55&555 plus service tax& in this case& tax to be deducted at source by DJW =td#
shall be /&55&555 x $5O X `/5&555 and amount payable to %), =td# shall be
,ommission /&55&555
%ddG 3ervice Tax V $5#+O /$&/55
Total /&/$&/55
=essG T43 (/&55&555 x $5O) /5&555
%mount 6ayable /&5$&/55
4eduction of Tax %t 3ource -5
+# If the service recipient is making payment of C'mm)%%)': .'- S"$& '. L'!!&-E T)#k&!%& tax shall be
deducted at source under section $'--> V $5O and tax shall be deducted excluding service tax#
Example
0aryana >overnment has given contract for sale of lottery Tickets to DJW =td# and DJW =td# has charged
commission of `25&55&555 plus service tax from 0aryana >overnment& in this case& tax to be deducted at
source by 0aryana >overnment shall be 25&55&555 x $5O X `2&55&555 and amount payable to %), =td#
shall be
,ommission 25&55&555
Total 22&5(&555
=essG T43 (25&55&555 x $5O) 2&55&555
%mount 6ayable 25&5(&555
-# If the service recipient is making payment of C'mm)%%)': .'- 0:%u-":#& 9u%):&%%& tax shall be deducted
at source under section $'--4 V $5O and tax shall be deducted excluding service tax# There is a *everse
,harge and service tax has to be paid by the Insurance ,ompany (3uch services are called Insurance
%uxiliary 3ervices)
Example
If =I, has to commission of `2&55&555 to their agent :r# D in connection with insurance business& amount
of T43 shall be `2&55&555 x $5O X `25&555 and service tax of `25&(55 shall be paid directly by =I, to the
>overnment under *everse ,harge under *ule 2($)(d)#

T/S ):#$u*):g S&->)#& T"+
$# If the service recipient is making payment for P-'.&%%)':"$ / T&#C:)#"$ services& tax shall be deducted at
source under section $'--P V $5O and tax shall be deducted including service tax#
Example
:r# D& a ,hartered %ccountant has given professional services to DJW =td# and charged `25&55&555 plus
service tax& in this case& tax to be deducted at source by DJW =td# shall be 22&5(&555 x $5O X `2&25&(55 and
amount payable to :r# D shall be
6rofessional ,harges 25&55&555
Total 22&5(&555
=essG T43 (22&5(&555 x $5O) 2&25&(55
%mount 6ayable $'&2/&-55
2# If the service recipient is making payment for any C':!-"#! e#g# A*>&-!)%):g C':!-"#! or C"!&-):g
C':!-"#! etc tax shall be deducted at source under section $'--, V 2O but if payment is being given to any
individual or 0BH& tax shall be deducted at source V $O and tax shall be deducted including service tax#
Example
%), =td# has rendered advertising services to DJW =td# and charged `25&55&555 plus service tax& in this
case& tax to be deducted at source by DJW =td# shall be 22&5(&555 x 2O X `--&$25 and amount payable to
%), =td# shall be
%dvertising ,harges 25&55&555
4eduction of Tax %t 3ource -$
Total 22&5(&555
=essG T43 (22&5(&555 x 2O) --&$25
%mount 6ayable 2$&($&225
0PCC 218 = 2011
;u&%!)': 7 A4 M"-k%B
3tate the applicability of T43 provisions and T43 amount in the following casesG
(a) *ent paid for hire of machinery by ) =td# to :r# *aman `2&$5&555#
(b) Hee paid to 4r# 3rivatsan by 3undar (0BH) `+/&555 for surgery performed to a member of the family#
A:%w&-:
(a) 3ince the rent paid for hire of machinery by ) =td# to :r# *aman exceeds `$&25&555& the provisions of
section $'--I for deduction of tax at source are attracted#
The rate applicable for deduction of tax at source under section $'--I on rent paid for hire of plant and
machinery is 2O assuming that :r# *aman had furnish his permanent account number to ) =td#
Therefore& the amount of tax to be deducted at sourceG
X `2&$5&555 x 2O X `-&255
2'!&: In case :r# *aman does not furnish his permanent account number to ) =td#& tax shall be deducted V
25O on `2&$5&555& by virtue of provisions of section 25(%%#
(b) %s per the provisions of section $'-P& a 0indu Bndivided Hamily is re@uired to deducted tax at source on
fees paid for professional services only if it is sub?ect to tax audit under section --%) in the financial year
preceding the current financial year#
0owever& if such payment made for professional services is exclusively for the personal purpose of any
member of 0indu Bndivided Hamily& then& the liability to deducted tax is not attracted#
Therefore& in the given case& even if 3undar (0BH) is liable to tax audit in the immediately preceding
financial year& the liability to deducted tax at source is not attracted in this case since& the fees for
professional service to 4r# 3rivatsan is paid for personal purpose i#e# the surgery of a member of the family#
PCC 218 = 2011
;u&%!)': 6 A6 M"-k%B
,ompute amount of tax deduction at source on the following payments made by :.s 3 =td# during the
financial year 25$$-$2 as per the provisions of the Income-Tax %ct& $'($#
S-. 2'. /"!& 2"!u-& '. P"Em&:!
(i) 5$#$5#25$$ 6ayment of `2&55&555 to :r# M*N a transporter who is having 6%C#
(ii) 5$#$$#25$$ 6ayment of fee for technical services of `-/&555 to :r# 3hyam who
is having 6%C#
(iii) +5#5(#25$$ 6ayment of `2/&555 to :.s D =td# for repair of building#
(iv) 5$#5$#25$2 6ayment of `2&55&555 made to :r# % for purchase of diaries made
according to specifications of :.s 3 =td# 0owever& no material was
supplied for such diaries to :r# % by :.s 3 =td#
(v) 5$#5$#25$2 6ayment made `25&555 to :r# )harat for compulsory ac@uisition of
his house as per =aw of the 3tate >overnment#
(vi) 5$#52#25$2 6ayment of commission of (&555 to :r# J#
(:odified)
A:%w&-:
(i) Co tax shall be deducted at source in case of payment to a transporter who has submitted his 6%C#
(ii) Tax shall be deducted at source under section $'-P V $5O because the total amount payable is
exceeding `+5&555 and amount of T43 shall be X -/&555 x $5O X `-&/55
(iii) It is covered under section $'-, but payment is not exceeding `+5&555 hence no tax shall be deducted
at source#
(iv) Tax shall not be deducted at source in case of sale of goods#
(v) 3ince payment is not exceeding `$&55&555 hence no tax shall be deducted at source under section $'-=%#
(vi) Tax shall be deducted at source u.s $'-0 and shall be X (&555 x $5O X `(55
PCC MA5 = 2011
;u&%!)': 7 A7 M"-k%B
=ist any / instances where the tax deductible at source in terms of section $'-% will not apply#
A:%w&-.
The provisions of section $'-% will not apply in the following cases where the 8
($) interest paid by a firm to a partner of the firm"
(2) interest paid to any )anking ,ompany or any Hinancial ,orporation or =ife Insurance ,orporation of
India or Bnit Trust of India or any %ssociations or )odies notified by the ,entral >overnment"
(+) interest paid by a co-operative society to their member"
(-) interest income credited or paid by the ,entral >overnment under any provision of the Income-tax %ct&
the Wealth-tax %ct etc#"
(/) income paid in relation to a Wero ,oupon )ond#
;u&%!)': 7 A4 MA4KSB
%shwin doing manufacture and wholesale trade furnishes you the following informationG
Total turnover for the financial year `
25$5-$$ (/&55&555
25$$-$2 1/&55&555
3tate whether tax deduction at source provisions are attracted for the below said expenses incurred during
the financial year 25$$-$2G `
Interest paid to B,A )ank -$&555
,ontract payment to *a? (2 contracts of `$2&555 each) 2-&555
3hop rent paid (one payee) $&'5&555
,ommission paid to )alu 1&555
4eduction of Tax %t 3ource -+
(:odified)
A:%w&-:
%s the turnover of %shwin for H#J#25$5-$$& i#e# ` (/ lakh& has exceeded the monetary limit of ` (5 lakh
prescribed under section --%)& he has to comply with the tax deduction provisions during the financial year
25$$-$2& sub?ect to however the exemptions provided for under the relevant sections for applicability of
T43 provisions#
0:!&-&%! ")* !' UC1 9":k
T43 under section $'-% is not attracted in respect of interest paid to a banking company#
C':!-"#! "Em&:! '. ` 24H000 !' 4"@ .'- 2 #':!-"#!% '. ` 12H000 &"#C
T43 provisions under section $'-, would not be attracted if the amount paid to a contractor does not
exceed ` +5&555 in a single payment or `1/&555 in the aggregate during the financial year# Therefore& T43
provisions under section $'-, are not attracted in this case#
SC' 4&:! ")* !' ':& "E&& 8 Tax has to be deducted under section $'--I as the rental payment exceeds
`$&25&555#
C'mm)%%)': ")* !' 9"$u 8 Tax has to be deducted under section $'--0 as the commission exceeds `/&555#
0PCC 218 = 2010
;u&%!)': 4 A4 M"-k%B
9xplain the conse@uences of not deducting tax and paying to >ovt# account under section 25$ of the Income
Tax %ct& $'($#
A:%w&-.
If any person does not deduct the tax or after deducting fails to pay the tax as& he shall be deemed to be an
assessee in default in respect of the tax G
P-'>)*&* that no penalty shall be charged under section 22$ from such person& principal officer or company
unless the %ssessing Afficer is satisfied that such person or principal officer or company& as the case may be&
has without good and sufficient reasons failed to deduct and pay the tax#
If any such person& principal officer or company does not deduct the whole or any part of the tax or after
deducting fails to pay the tax as re@uired by or under this %ct& he or it shall be liable to pay simple interest&
R
(i) at one per cent for every month or part of a month on the amount of such tax from the date on which such
tax was deductible to the date on which such tax is deducted" and
(ii) at one and one-half per cent for every month or part of a month on the amount of such tax from the date
on which such tax was deducted to the date on which such tax is actually paid& and such interest shall be
paid before furnishing the @uarterly statement for each @uarter in accordance with the provisions of section
255#
Example
%sseessee deducts the T43 on $5#$5#25$$ but pays T43 on +$#$2#25$$# Cow as amendment by Hinance %ct&
25$5 interest under section 25$ shall be charged from $5#$5#25$$ to +$#$2#25$$ V $#/O per month i#e#& for
+ months#
Example
%ssessee failed to deduct T43 and deduct T43 on +$#$2#25$$# %ssessee pays T43 on $1#5$#25$2#
(i) Interest under section 25$ shall be charged for + months V $O for the period $5#$5#25$$ to
+$#$2#25$$#
4eduction of Tax %t 3ource --
(ii) Interest under section 25$ shall be charged V $#/O per month for one month from +$#$2#25$$ to
$1#5$#25$2#
0PCC MA5 = 2010
;u&%!)': 4 A2 M"-k%B
3tate the concessions granted to transport operators in the context of deduction of tax at sources under
section $'--,#
A:%w&-.
Co deduction is re@uired to be made from any sum credited or paid or likely to be credited or paid during the
previous year to the account of a contractor& during the course of the business of plying& hiring or leasing
goods carriages& if the contractor furnishes his permanent account number (6%C) to the person paying or
crediting such sum#
PCC MA5 = 2010
;u&%!)': 4 A8 M"-k%B
3tate with reasons& whether tax deduction at source provisions are applicable to the following transactions
and if so& the rate of tax deductionG
(i) D K ,o# (Hirm) engaged in wholesale business assigned a contract for construction of its godown
building to :r# *avi& a contractor# It paid `2/&55&555 to :r# *avi as contract payment#
(ii) J K ,o# engaged in real estate business conducted a lucky dip and gave :aruti car to a pri<e winner#
(iii) %n Insurance ,ompany paid `-/&555 as Insurance ,ommission to its agent :r# 0ari#
(iv) %) =td# allowed a discount of `/5&555 to DJ K ,o# (a firm) on prompt (immediate) payment towards
supply of automobile parts#
A:%w&-.
(i) 3ection $'-, provides for deduction of tax at source from the payment made to resident contractors and
sub-contractors# Therefore& tax is deductible at source under section $'-, for the contract payments made
for the construction of godown building# The rate of T43 under section $'-, on payments made to
contractors who are individuals or 0BH shall be V $O# 0ence& D K ,o# (firm) must deduct tax at source on
the contract payments made to :r# *avi#
(ii) In respect of lucky dip conducted by J K ,o#& the provisions of 3ection $'-) would apply# %s per
3ection $'-)& winning from lottery or crossword pu<<le or card game of any sort exceeding `$5&555
payable by any person to any other person& sub?ect to tax deduction at the rate of +5O# 3ince the value of
pri<e i#e# :aruti car would exceed `$5&555 tax is deductible at source V +5O# %s the winning is in kind& the
winner must deposit +5O of the pri<e value to J K ,o# for remitting the same as tax# Anly after such
deduction . recovery& the :aruti car is to be delivered to the pri<e winner#
(iii) %s per section $'-4& any person paying insurance commission payable in excess of `25&555 to any
resident person is liable to deduct tax at the rate of $5O in case of all assesses# Therefore& the insurance
company must deduct tax at source V $5O in respect of the insurance commission paid to :r# 0ari#
(iv) 4iscount allowed to a customer for prompt payment is not covered by any of the tax deduction at source
provisions of the Income tax %ct& $'($# Therefore& %) =td# need not deduct any tax at source since no
payment was involved in allowing discount to its customer vi<# (namely) DJ K ,o#
0PCC 218 = 2009
;u&%!)': 4 A4 M"-k%B
4eduction of Tax %t 3ource -/
9xplain the conse@uences of not deducting tax and paying to >ovt# account under section 25$ of the Income
Tax %ct& $'($#
A:%w&-.
*efer to %nswer given in I6,, CA7 8 25$5 Euestion Co#-
PCC 218 = 2009
;u&%!)': 1 A2 M"-k%B
3tate with reasons& whether the following statements are true or false having regard to the provisions of the
Income-tax %ct& $'($& for the assessment year 25$2-$+G
%n %A6 having gross receipts of `15 lacs during the financial year 25$5-$$ is not re@uired to deduct tax at
source under section $'-, of the Income-tax %ct& $'($& on payment made to contractors during the financial
year 25$$-$2#
A:%w&-.
3"$%&: The Hinance %ct& 2552 has now included within the scope of section $'-($)& %ssociation of persons
and )ody of Individuals whose total sales.gross receipts.turnover from the business or profession exceeds
the monetary limits specified in section --%) during the financial year immediately preceeding the financial
year in which such sum is credited or paid to the account of the contractor# Thus& such %A6s and )AIs are
sub?ect to tax audit in the immediately preceeding financial year and are liable to deduct tax at source from
payments to resident contractors#
;u&%!)': 3 A4 M"-k%B
:rs# Indira& a landlord& derived income from rent from letting a house property to :.s 7aibhav ,orporation
=td# of `$&55&555 per month# 3he charged the service tax V $5#+O on lease rent charges# ,alculate the
deduction of tax at source (T43) to be made by :.s 7aibhav ,orporation =td# on payment made to :rs#
Indira and narrate related formalities in relation to T43# What are the conse@uences of failure to deduct or
pay T43[ (:odified)
A:%w&-.
($) %s per ,ircular Co# -.2552 dated 22
th
%pril& 2552 by the ,)4T& the service tax paid by the tenant does
not partake the nature of income of the landlord# The landlord only acts as a collecting agency for collection
of 3ervice tax# Therefore& tax deducted at source under section $'--I would be re@uired to be made on the
amount of rent i#e# on `$2&55&555 only excluding the amount of service tax#
(2) T43 shall be applicable V $5O#
(+) 0ence& in the given case& T43 under section $'--I V $5O on `$2&55&555 comes to `$&25&555 i#e#
`$5&555 will be deducted every month and che@ue for net amount of `'5&555 will be issued by :.s# 7aibhav
,orporation =td# to :rs# Indira#
(-) Tax deducted will be deposited within one week from the last day of the month in which deduction is
made#
(/) Horm Co# $(-% has to be issued by :.s# 7aibhav ,orporation =td# to :rs# Indira within $/ days from the
last date of submitting the @uarterly return under section 255#
C':%&Ju&:#&% '. .")$u-& !' *&*u#! '- "E !"+ AS&#!)': 201B
;u&%!)': 7 A4 M"-k%B
9xplain the difference between tax deduction at source and tax collection at source#
A:%w&-:
T"+ *&*u#!)': '. %'u-#& means any tax which has been deducted while paying sum to someone# 6ersons
responsible for making payment of income covered by the scheme of tax deduction are re@uired to be
4eduction of Tax %t 3ource -(
deducting tax at source at the prescribed rates# Tax so deducted should be deposited within the prescribed
time# Tax is always deducted on expense and not supply of goods#
T"+ #'$$&#!)': "! %'u-#& arises on the part of the seller# ,ertain specified goods when sold must be
sub?ected to tax collection at source and taxes collected thereon must be remitted into governmentQs accounts
as done in the case of T43# %s per section 25(,& rate of collection of tax at source shall be
T%)=9
Sl. No. Nature of goods Percentage
(1) (2) ()
(!) %lcoholic =i@uor for human consumption Ane per cent
(!!) Tendu leaves Hive per cent
(!!!) Timber obtained under a forest lease Two and one-half per cent
(!") Timber obtained by any mode other than under a forest lease Two and one-half per cent
(") %ny other forest produce not being timber or tendu leaves Two and one-half per cent
("!) 3crap Ane per cent
("!!) 6arking lot Two per cent
("!!!) Toll pla<a Two per cent
(!#) :ining and @uarrying Two per cent
PCC <U2E = 2009
;u&%!)': 1 A2 M"-k%B
When will tax not re@uired to be deducted at source on interest payable to a resident on any bond or security
issued by a company though the aggregate amount of interest exceeds `2&/55& the basic exemption limit
under section $'+ of the %ct[
A:%w&-.
%s per section $'+ of the %ct& no tax is re@uired to be deducted at source on any interest payable to a
resident on any bond or security issued by a company& where the following conditions are satisfied 8
(i) where such security is in dematerialised form and
(ii) is listed on a recognised stock exchange in India#
PCC MA5 = 2008
;u&%!)': 1 A2 M"-k%B
:rs# 0emalatha has made payments of ` / lacs to a contractor (for business purposes) during the last two
@uarters of the year ended +$#5+#25$2# 0er turnover for the year ended +$#5+#25$$ was ` (/ lacs# Is there
any obligation to deduct tax at source[
A:%w&-.
In the case of an individual& the provisions of section $'-, shall apply& where the turnover from business has
exceeded ` (5 lakhs during the financial year immediately preceding the financial year in which such
payment is made and payment is made for a purpose other than the personal purpose# In the given case&
since the turnover of :rs# 0emalatha has exceeded ` (5 lakhs for the year ended +$
st
:arch 25$$ and the
payment is relating to business activities& she shall be liable to deduct tax at source in respect of payment
made to a contractor at the applicable rate#
PCC 218 = 2007
;u&%!)': 7 A4 M"-k%B
)riefly explain the provisions of section $'1 in respect of obtaining certificate for deduction of tax at a
lower rate#
A:%w&-.
3ection $'1 applies where& in the case of any income of any person or sum payable to any person& income-
tax is re@uired to be deducted at the time of credit or payment& as the case may be& at the rates in force as per
the provisions of sections $'2& $'+& $'-& $'-%& $'-,& $'-4& $'->& $'-0& $'--I& $'-P& $'-;& $'-=% and
$'/ of the %ct#
The assessee can make an application to the %ssessing Afficer for deduction of tax at a lower rate or for non-
deduction of tax#
If the %ssessing Afficer is satisfied that the total income of the recipient ?ustifies the deduction of income-tax
at lower rates or no deduction of income-tax& as the case may be& he may give to the assessee a certificate to
this effect#
The person responsible for paying the income shall deduct income-tax at such lower rates or deduct no tax
as specified in the certificate until such certificate is cancelled by the %ssessing Afficer#
PCC MA5 = 2007
;u&%!)': 7 A4 M"-k%B
What are the conse@uences of failure to deduct tax at source or pay the tax deducted at source to the credit of
,entral >overnment[
A:%w&-.
314M 21. 16
YSee rule +$($)(a)Z
PA4T A
C&-!).)#"!& u:*&- %&#!)': 203 '. !C& 0:#'m&(!"+ A#!H 1961 .'- !"+ *&*u#!&* "! %'u-#& ': S"$"-E
2"m& ":* "**-&%% '. !C& Em$'E&- 2"m& ":* *&%)g:"!)': '. !C& Em$'E&&
PA2 2'. '. !C&
/&*u#!'-
TA2 2'. '. !C&
/&*u#!'-
PA2 2'. '. !C& Em$'E&&

C0T AT/SB
A**-&%%MMMMMMMMMMMMMMM
MMMMMMMMMMMMMMMMMM..
C)!EMMMMMMMM..P): #'*&MMMM..
A%%&%%m&:! E&"- P&-)'*
3-'m T'
Summ"-E '. !"+ *&*u#!&* "! %'u-#&
;u"-!&-
4&#&)! 2um?&-% '.
'-)g):"$ %!"!&m&:!% '.
T/S u:*&- %u?(%&#!)':
A3B '. %&#!)': 200.
Am'u:! '. !"+ *&*u#!&* ):
-&%&#! '. !C& &m$'E&&
Am'u:! '. !"+
*&'%)!&*/-&m)!!&* ):
-&%&#! '. !C& &m$'E&&
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Total
PART B (Refer Note 1)
/&!")$% '. S"$"-E ")* ":* ":E '!C&- ):#'m& ":* !"+ *&*u#!&*
1. >ross 3alary
(a) 3alary as per provisions contained in sec#$1($) `
(b)
7alue of per@uisites u.s $1(2) (as per Horm
Co#$2)%& wherever applicable)
`
(c)
6rofits in lieu of salary under section $1(+)(as per
Horm Co#$2))& wherever applicable)
`
(d) Total `
2.
=essG %llowance to the extent exempt u.s $5
%llowance `

`
3. )alance($-2) `
4eduction of Tax %t 3ource -'
4. 4eductions G
(a) 9ntertainment allowance `
(b) Tax on employment `
7. %ggregate of -(a) to (b) `
6. Income chargeable under the head QsalariesQ (+-/) `
7.
%ddG %ny other income reported by the employee
Income `

8. >ross total income ((I1) `
9. 4eductions under ,hapter 7I-% `
(%) sections 25,& 25,,, and 25,,4
>ross amount
4eductible
amount
(a) section 25,
(i) `
(ii) `
(iii) `
(iv) `
(v) `
(vi) ` ` `
(b) section 25,,, ` `
(c) section 25,,4 ` `
2'!&%: $# %ggregate amount deductible under section
25, shall not exceed one lakh rupees#
2# %ggregate amount deductible under the three
sections& i#e#& 25,& 25,,, and 25,,4& shall
not exceed one lakh rupees#
()) other sections (e#g#& 259& 25> etc) under ,hapter
7I-%

>ross
%mount
Eualifying
%mount
4eductible
%mount
(a) section \\\\ ` ` `
(b) section \\\\ ` ` `
(c) section \\\\ ` ` `
(d) section \\\\ ` ` `
(e) section \\\\ ` ` `
4eduction of Tax %t 3ource /5
10. %ggregate of deductible amount under ,hapter 7I-% `
11. Total Income (2-$5) `
12. Tax on total income `
13. 9ducation ,ess V +O (on tax at 3# Co# $2) `
14. Tax payable ($2 I $+) `
17. =essG *elief under section 2' (attach details) `
16. Tax payable ($--$/) `
8&-).)#"!)':
I& \\\\\\\\\\\##& son.daughter of \\\\\\\\\\\\\\\#working in the
capacity of #\\\\\\\\\######### (designation) do hereby certify that a sum of `\\\\\\\#Y`
\\\\\\\\\\#(in words)Z has been deducted and deposited to the credit of the ,entral
>overnment# I further certify that the information given above is true& complete and correct and is based on
the books of account& documents& T43 statements& T43 deposited and other available records#
6lace
4ate 3ignature of person responsible for collection of tax
4esignationG Hull CameG
2'!&%:

1. 0. ": "%%&%%&& )% &m$'E&* u:*&- m'-& !C": ':& &m$'E&- *u-):g !C& E&"-H &"#C '. !C& &m$'E&-%
%C"$$ )%%u& P"-! A '. !C& #&-!).)#"!& ): 3'-m 2'. 16 &-!"):):g !' !C& &-)'* .'- wC)#C %u#C "%%&%%&&
w"% &m$'E&* w)!C &"#C '. !C& &m$'E&-%. P"-! 9 m"E ?& )%%u&* ?E &"#C '. !C& &m$'E&-% '- !C&
$"%! &m$'E&- "! !C& '!)': '. !C& "%%&%%&&.
2. G'>&-:m&:! *&*u#!'-% !' &:#$'%& A::&+u-&(A ). !"+ )% ")* w)!C'u! -'*u#!)': '. ": ):#'m&(!"+
#C"$$": ":* A::&+u-&(9 ). !"+ )% ")* "##'m":)&* ?E ": ):#'m&(!"+ #C"$$":.
3. 2':(G'>&-:m&:! *&*u#!'-% !' &:#$'%& A::&+u-&(9.
4. TC& *&*u#!'- %C"$$ .u-:)%C !C& "**-&%% '. !C& C'mm)%%)':&- '. 0:#'m&(!"+ AT/SB C">):g
@u-)%*)#!)': "% -&g"-*% T/S %!"!&m&:!% '. !C& "%%&%%&&.
7. TC)% 3'-m %C"$$ ?& "$)#"?$& ':$E ): -&%&#! '. !"+ *&*u#!&* ': '- ".!&- 1
%!
*"E '. A-)$H 2010.
4eduction of Tax %t 3ource /$
A22EXU4E(A
/ETA0LS 13 TAX /E/UCTE/ A2/ /EP1S0TE/ 02 THE CE2T4AL G18E42ME2T
ACC1U2T TH41UGH 911K E2T45
(The Employer to provide payment wise details of tax deduted and deposited with respet
to the employee)

S. 2'. T"+ /&'%)!&*
): -&%&#! '. !C&
&m$'E&& A`B
9''k )*&:!).)#"!)': :um?&- A902B
4&#&)! :um?&-% '.
3'-m 2'.24G

//1 S&Ju&:#&
2um?&- ): !C& 9''k
A*@u%!m&:! M):)
S!"!&m&:!
/"!& ': wC)#C !"+
*&'%)!&*
A**/mm/EEEEB

T'!"$

2'!&:

$# In the column for T43& give total amount for T43& 3urcharge (if applicable) and education cess#
A22EXU4E(9
/ETA0LS 13 TAX /E/UCTE/ A2/ /EP1S0TE/ 02 THE CE2T4AL G18E42ME2T
ACC1U2T TH41UGH CHALLA2
(The Employer to provide payment wise details of tax deduted and deposited with respet
to the employee)
S. 2'. T"+ /&'%)!&* ):
-&%&#! '. !C&
&m$'E&& A`B
CC"$$": )*&:!).)#"!)': :um?&- AC02B
9S4 C'*& '. !C& 9":k
9-":#C

/"!& ': wC)#C !"+
*&'%)!&*
A**/mm/EEEEB
CC"$$": S&-)"$
2um?&-


T'!"$

2'!&:

1. 0: !C& #'$um: .'- T/SH g)>& !'!"$ "m'u:! .'- T/SH Su-#C"-g& A). "$)#"?$&B ":* &*u#"!)': #&%%.
4eduction of Tax %t 3ource /+
314M 21.16A
NS&& -u$& 31A1BA?BO
C&-!).)#"!& u:*&- %&#!)': 203 '. !C& 0:#'m&(!"+ A#!H 1961 .'- T"+ *&*u#!&* "! %'u-#&
2"m& ":* "**-&%% '. !C& /&*u#!'- 2"m& ":* "**-&%% '. !C& /&*u#!&&
PA2 '. !C&
/&*u#!'-
TA2 '. !C& /&*u#!'- PA2 '. !C& /&*u#!&&

C0TAT/SB
A**-&%%MMMMMMMMMMMMMMMMM.
MMMMMMMMMMMMMMMMMMMMM
C)!EMMMMMMMM..P): #'*&MMMMMMM
A%%&%%m&:! 5&"- P&-)'*
3-'m T'

Summ"-E '. "Em&:!
Am'u:! ")*/#-&*)!&* 2"!u-& '.
"Em&:!
/"!& '. "Em&:!/#-&*)!

Summ"-E '. !"+ *&*u#!&* "! %'u-#& ): -&%&#! '. *&*u#!&&
;u"-!&- 4&#&)! 2um?&-% '.
'-)g):"$ Ju"-!&-$E
%!"!&m&:!% '. T/S u:*&-
%u?(%&#!)': A3B '. %&#!)':
200
Am'u:! '. !"+
*&*u#!&* ):
-&%&#! '. !C&
*&*u#!&&
Am'u:! '. !"+
*&'%)!&*/-&m)!!&* ): -&%&#!
'. !C& *&*u#!&&

0. /ETA0LS 13 TAX /E/UCTE/ A2/ /EP1S0TE/ 02 THE CE2T4AL G18E42ME2T
ACC1U2T TH41UGH 911K E2T45
ATC& /&*u#!'- !' -'>)*& "Em&:! w)%& *&!")$% '. !"+ *&*u#!&* ":* *&'%)!&* w)!C -&%&#! !' !C&
*&*u#!&&B
S. 2'. T"+
/&'%)!&*
): -&%&#!
'. !C&
*&*u#!&&
A`B
9''k )*&:!).)#"!)': :um?&- A902B
4&#&)! :um?&-% '. 3'-m
2'.24G

//1 S&Ju&:#&
2um?&- ): !C& 9''k
A*@u%!m&:! M):)
S!"!&m&:!
/"!& ': wC)#C !"+ *&'%)!&*
A**/mm/EEEEB

T'!"$
00. /ETA0LS 13 TAX /E/UCTE/ A2/ /EP1S0TE/ 02 THE CE2T4AL G18E42ME2T
ACC1U2T TH41UGH CHALLA2
ATC& /&*u#!'- !' -'>)*& "Em&:! w)%& *&!")$% '. !"+ *&*u#!&* ":* *&'%)!&* w)!C -&%&#! !' !C&
*&*u#!&&B
4eduction of Tax %t 3ource /-
S.
2'.
T"+ /&'%)!&* ): -&%&#!
'. !C& *&*u#!&& A`B
CC"$$": )*&:!).)#"!)': :um?&- AC02B

9S4 C'*& '. !C& 9":k
9-":#C
/"!& ': wC)#C !"+
*&'%)!&*
A**/mm/EEEEB
CC"$$": S&-)"$
2um?&-

T'!"$

8&-).)#"!)':
0H MMMMMMMMMMM..H %':/*"ugC!&- '. MMMMMMMMMMMMMMM.w'-k):g ): !C&
#""#)!E '. .MMMMMMMMM......... A*&%)g:"!)':B *' C&-&?E #&-!).E !C"! " %um '. `MMMMMMM.
N` MMMMMMMMMM.A): w'-*%BO C"% ?&&: *&*u#!&* ":* *&'%)!&* !' !C& #-&*)! '. !C& C&:!-"$
G'>&-:m&:!. 0 .u-!C&- #&-!).E !C"! !C& ):.'-m"!)': g)>&: "?'>& )% !-u&H #'m$&!& ":* #'--&#! ":* )%
?"%&* ': !C& ?''k% '. "##'u:!H *'#um&:!%H T/S %!"!&m&:!%H T/S *&'%)!&* ":* '!C&- ">")$"?$& -&#'-*%.
P$"#&
/"!& S)g:"!u-& '. &-%': -&%':%)?$& .'- #'$$&#!)': '. !"+
/&%)g:"!)':: 3u$$ 2"m&:
2'!&%:
$# >overnment deductors to fill information in item 0 if tax is paid without production of an income-tax
challan and in item 00 if tax is paid accompanied by an income-tax challan#
2# Con->overnment deductors to fill information in item 00#
+# In item I and II& in the column for T43& give total amount for T43& 3urcharge (if applicable) and
education cess#
-# The deductor shall furnish the address of the ,ommissioner of Income-tax (T43) having ?urisdiction as
regards T43 statements of the assessee#
/# This Horm shall be applicable only in respect of tax deducted on or after $
st
day of %pril& 25$5#
(# 3eparate annexure may be attached for summary of payment in case number of payment.credit during
the relevant @uarter is more than one" and
4eduction of Tax %t 3ource //
314M 21. 24;
(See section $'2 and rule +$%)
;u"-!&-$E %!"!&m&:! '. *&*u#!)': '. !"+ u:*&- %u?(%&#!)': A3B '. %&#!)': 200 '. !C& 0:#'m&(!"+ A#!H
1961 ): -&%&#! '. %"$"-E .'- !C& Ju"-!&- &:*&* <u:&/S&!&m?&-//&#&m?&-/M"-#C A!)#k wC)#C&>&-
PPPPPPPP "$)#"?$&B AE&"-B
1. (a) Tax 4eduction %ccount Co#
(b) 6ermanent %ccount Co#
(c) Hinancial year
(d) %ssessment year
(e) 0as any statement been filed earlier for this @uarter (Jes.Co)
(f) If answer to (e) is Jes!& then 6rovisional *eceipt Co# of
original statement
2. 6articulars of the deductor (employer)
(a) Came
(b) Type of deductor
$
(c) )ranch.4ivision (if any)
(d) %ddress
Hlat Co#
Came of the premises .
)uilding
*oad.street.lane
%rea.location
Town.,ity.4istrict
3tate
6in code
Telephone Co#
9-mail
4eduction of Tax %t 3ource /(
3. 6articulars of the person responsible for deduction of tax
(a) Came
(b) %ddress
Hlat Co#
building
*oad.street.lane
%rea.location
Town.,ity.4istrict
3tate
6in code
Telephone Co#
9-mail
4. 4etails of tax deducted and paid to the credit of ,entral >overnmentG
Sr. No. T$S
`
Surcharge
`
%ducat!on &ess
`
'nterest
`
Others
`
(01) (02) (0) (0() (0)) (0*)
Sr. No. Total ta#
depos!ted
(02+0+
0(+0)+0*)
`
&he,ue-$$
No. (!f an.)
/S0 code $ate on
1h!ch
ta#
depos!ted
Transfer
"oucher-
&hallan
ser!al No.
2
2hether
T$S
depos!ted 3.
3ook entr.4
5es-No
(01) (06) (07) (08) (10) (11) (12)

7. 4etails of salary
-
paid and tax deducted thereon from the employees Y(i) 9nclose %nnexure I along with
each @uarterly statement having details for the relevant @uarter" (ii) 9nclose %nnexure II along with the last
@uarterly statement& i#e#& for the @uarter ending +$
st
:arch& having the details for the whole Hinancial Jear#
Verification
I& ]]]]]]]]]]]]]]]]]]]]]& hereby certify that all the particulars furnished above are correct and complete#
Place 9 :::::::::::::::::#
S!gnature of person respons!3le for deduct!ng ta# at source
$ate 9 :::::::::::::::::#
Na;e and des!gnat!on of person respons!3le for deduct!ng ta# at source
Notes 9
($) Indicate the type of deductor M>overnmentN.MAthersN#
(2) >overnment deductors to give particulars of transfer vouchers" other deductors to give particulars of
challan Co# regarding deposit into bank#
(+) ,olumn is relevant only for >overnment deductors#
(-) 3alary includes wages& annuity& pension& gratuity Yother than exempted under section $5($5)Z& fees&
commission& bonus& repayment of amount deposited under the %dditional 9moluments (,ompulsory
4eposit) %ct& $'1-& per@uisites (including value of any other fringe benefit or amenity not covered under
,hapter DII-0 of the Income-tax %ct& $'($)& profits in lieu of or in addition to any salary or wages including
payments made at or in connection with termination of employment& advance of salary& any payment
received in respect of any period of leave not availed Yother than exempted under section $5($5%%)Z& any
annual accretion to the balance of the account in a recognised provident fund chargeable to tax in accordance
with rule ( of 6art % of the Hourth 3chedule of the Income tax %ct& $'($& any sums deemed to be income
received by the employee in accordance with sub-rule (-) of rule $$ of 6art % of the Hourth 3chedule of the
Income tax %ct& $'($& any contribution made by the ,entral >overnment to the account of the employee
under a pension scheme referred to in section 25,,4 or any other sums chargeable to income-tax under the
head 3alaries!#
(/) Where an employer deducts from the emoluments paid to an employee or pays on his behalf any
contributions of that employee to any approved superannuation fund& all such deductions or payments
should be included in the statement#
(/%) 4etails to be furnished at serial number - of the Horm and %nnexure I shall contain the figures of salary
paid and T43 thereon for the relevant @uarter#
(() 6lease record on every page the totals of each of the columns#
A22EXU4E 0
/&*u#!&& w)%& ?-&"k(u '. T/S
(6lease use separate %nnexure for each line - item in the table at 3# Co# 5- of main Horm 2-E)
4etails of salary paid and tax deducted thereon from the employees
)3* code of the branch where tax is deposited ]]]]]]]]]]]]]] Came of 9mployer ]]]]]]]]]]]]]]]
4ate on which tax deposited (dd-mm-yyyy) ]]]]]]]]]]]]]]]
,hallan 3erial Co# ]]]]]]]]]]]]]]]
3ection under which payment made T%C ]]]]]]]]]]]]]]
Total T43 to be allocated among deductees as
in the vertical total of ,ol# +2+ ]]]]]]]]]]]]]]]
Interest ]]]]]]]]]]]]]]]
Athers ]]]]]]]]]]]]]]]
Total of the above ]]]]]]]]]]]]]]]
Sr. No. %;plo.ee
reference No.
pro"!ded 3.
e;plo.er
P<N of the
e;plo.ee
Na;e of the
e;plo.ee
$ate of
pa.;ent-cred!
t
Ta#a3le
a;ount
or 1h!ch
ta#
deducted
`
T$S
(1) (1() (1)) (1*) (16) (17) (18)
Total

Sr. No. Surcharge %ducat!on
&ess
Total Ta#
$educted
(18+20+21
)
`
Total ta#
depos!ted
`
$ate of
deduct!on
$ate of
depos!t
0eason for
non=
deduct!on-
lo1er
deduct!on>
(1) (20) (21) (22) (2) (2() (2)) (2*)
Total
Verification
I& ]]]]]]]]]]]]]]]]]]]]]& hereby certify that all the particulars furnished above are correct and complete#
Place 9 ::::::::::: .
S!gnature of person respons!3le for deduct!ng ta# at source
$ate 9 :::::::::::: .
Na;e and des!gnat!on of person respons!3le for deduct!ng ta# at source
Note 9
^Write M%N if Mlower deductionN or Write M)N if Mno deductionN is on account of a certificate under section
$'1#
4eduction of Tax %t 3ource /'
A22EXU4E 00
4etails of salary paid.credited during the Hinancial Jear]]]]]]]]]]]]]]]] and net tax payable
3erial
Cumber
6ermanent
%ccount
Cumber (6%C)
of the employee
Came of the
9mployee
Write W! for
woman& 3!
for senior
citi<en and
>! for others
4ate from which employed
with current employer
Total amount of
salary (3ee note
- appearing at
the end of the
main Horm)
4ate from 4ate To
+21 +22 +2' ++5 ++$ ++2
3erial
Cumber
Total deduction
under section
$((ii) and $((iii)
(specify each
deduction
separately)
Income
chargeable
under the head
M3alariesN
(,olumn ++2
minus +++)
Income
(including
loss from house
property) under
any head other
than the head
M3alariesN
offered for T43
Ysection
$'2(2))Z
>ross total
income (Total of
columns ++- and
++/)
%ggregate amount of
deductions under
sections 25,& 25,,,
and 25,,4 (Total to be
limited to amount
specified in section
25,,9)
+21 +++ ++- ++/ ++( ++1
3erial
Cumber
%mount
deductible
under any other
provision(s) of
,hapter 7I-%
Total %mount
deductible under
,hapter 7I-%
(Total of
columns ++1
and ++2)
Total taxable
income
(columns ++(
minus
column ++')
Total tax 8 (i) income-tax
on total income
(ii) surcharge
+21 ++2 ++' +-5 +-$ +-2
3erial
Cumber
(iii) education
cess
(Income tax
*elief under
section 2'&
when salary
etc#& is paid in
arrear or
Cet tax
payable(column
s
+-$I+-2I+-+-
+--)
Total amount of tax
deducted at source for the
whole year Yaggregate of
the amount in column
+22 of %nnexure I for all
the four @uarters in
3hortfall in tax
deduction(I).9xcess
tax deduction(-)
Ycolumn +-/ minus
column +-(Z
4eduction of Tax %t 3ource (5
in advance respect of each
employeeZ
+21 +-+ +-- +-/ +-( +-1
6lace G ]]]]]]]]]]
Came and signature of employer.person responsible for paying salary
4ate G ]]]]]]]]]]]# 4esignation
3'-m 2'. 26;
4eduction of Tax %t 3ource ($
Y3ee sections $'+& $'-& $'-%& $'-)& $'-))& $'-,& $'-4& $'-99& $'-H& $'->& $'-0& $'--I& $'-P& $'-=% and rule +$%Z
;u"-!&-$E %!"!&m&:! '. *&*u#!)': '. !"+ u:*&- %u?(%&#!)': A3B '. %&#!)': 200 '. !C& 0:#'m&(!"+ A#!H
1961 ): -&%&#! '. "Em&:!% '!C&- !C": S"$"-E .'- !C& Ju"-!&- &:*&* <u:&/S&!&m?&-//&#&m?&-/
M"-#C A!)#k wC)#C&>&- "$)#"?$&B PPPPPPPAE&"-B
1. (a) Tax 4eduction %ccount Co#
(b) 6ermanent %ccount Co#
(c) Hinancial year
(d) %ssessment year
(e) 0as any statement been filed earlier for this @uarter (Jes.Co)
(f) If answer to (e) is Jes!& then
6rovisional *eceipt Co# of original statement
2. 6articulars of the deductor
(a) Came
(b) Type of deductor
$^
(c) )ranch.4ivision (if any)
(d) %ddress
Hlat Co#
)uilding
*oad.street.lane
%rea.location
Town.,ity.4istrict
3tate
6in code
Telephone Co#
9-mail
3. 6articulars of the person responsible for deduction of tax
4eduction of Tax %t 3ource (2
(a) Came
(b) %ddress
Hlat Co#
)uilding
*oad.street.lane
%rea.location
Town.,ity.4istrict
3tate
6in code
Telephone Co#
9-mail
4. 4etails of tax deducted and paid to the credit of ,entral >overnmentG
Sr. No. Sect!on
&ode
T$S
`
Surcharge
`
%ducat!on
&ess
`
'nterest
`
Others
`
(01 (02 (0 (0( (0) (0* (06
Sr. No. Total ta# depos!ted
`
(-5+I-5-I-5/I-5(I-51)
&he,ue-$$
No. (!f an.)
/S0 code $ate on
1h!ch ta#
depos!ted
Transfer
"oucher-
&hallan
ser!al No.
2
2hether
T$S
depos!ted
3. 3ook
entr.4 5es-
No
(01 (07 (08 (10 (11 (12 (1

7. 4etails of amounts paid and tax deducted thereon from the deductees (3ee %nnexure)
Verification
4eduction of Tax %t 3ource (+
I& ]]]]]]]]]]]]]]]]]& hereby certify that all the particulars furnished above are correct and complete#
6lace G
3ignature of the person responsible for deducting tax at source
4ate G
Came and designation of person responsible for deducting tax at source
Cotes
$# Îndicate the type of deductor M>overnmentN.MAthersN
2# >overnment deductors to give particulars of transfer vouchers" other deductors to give particulars of
,hallan Co# regarding deposit into bank#
+# ,olumn is relevant only for >overnment deductors#
A::&+u-&
4eduction of Tax %t 3ource (-
/&*u#!&&(w)%& ?-&"k(u '. T/S
(6lease use separate %nnexure for each line - item in the table at 3# Co# - of main Horm 2(E)
4etails of amount paid.credited during the @uarter ended (44-::-JJJJ) and of tax deducted at source
)3* code of branch where tax is deposited] ]]]]]]]]]]]]]] Came of 4eductor ]]]]]]]]]]]]]]
4ate on which tax deposited (dd-mm-yyyy) ]]]]]]]]]]]]]]]
,hallan 3erial Co# ]]]]]]]]]]]]]]]
3ection under which payment made ]]]]]]]]]]]]]]] T%C ]]]]]]]]]]]]]]
Total T43 to be allocated among deductees as
in the vertical total of col# -2/ ]]]]]]]]]]]]]]]
Interest ]]]]]]]]]]]]]]]
Athers ]]]]]]]]]]]]]]]
Total of the above ]]]]]]]]]]]]]]]
Sr.
No.
4educt
ee code
(5$-
,om-
pany
52-
Ather
than
,ompa
ny)
6%C
of
the
deduct
ee
Came
of
the
deduct
ee
4ate
of
payme
nt.
credit
%mo
unt
paid.
credit
ed
`
6aid
by
book
entry
or
otherw
ise
T4
3
`
3urcha
rge
*s&
9ducati
on
,ess
`
Total
tax
deduct
ed
(-2$ I
-22 I
-2+)
`
Total
tax
deposit
ed
`
4ate
of
deducti
on
*ate
at
which
deduct
ed
*ea-son
for
nondeduct
ion
.
lower
deduction
^
-$- -$/ -$( -$1 -$2 -$' -25 -2
$
-22 -2+ -2- -2/ -2( -21 -22
$
2
+
-
/
Tot
al
8&-).)#"!)':
I& ]]]]]]]]]]]]]]]& hereby certify that all the particulars& furnished above are correct and complete#
6laceG
3ignature of person responsible for deducting tax at source
4ateG
Came and designation of person responsible for deducting tax at source
Cote#R ^ Write S%S if Slower deductionS or Sno deductionS is on account of a certificate under section $'1#
Write S)S if no deduction is on account of declaration under section $'1%#
3et Aff %nd ,arry Horward Af =osses (/
SET 133 A2/ CA445 3146A4/ 13
L1SSES
SECT012 70 T1 80
PA4T0CULA4S SECT012S
S&! '.. '. $'%% .-'m ':& %'u-#& "g"):%! ):#'m& .-'m ":'!C&- %'u-#& u:*&- !C& %"m&
C&"* '. ):#'m&
70
S&! '.. '. $'%% .-'m ':& C&"* "g"):%! ):#'m& .-'m ":'!C&- C&"* 71
C"--E .'-w"-* ":* %&! '.. '. $'%% .-'m C'u%& -'&-!E 719
C"--E .'-w"-* ":* %&! '.. '. ?u%):&%% $'%%&% 72
C"--E .'-w"-* ":* %&! '.. '. "##umu$"!&* $'%% ":* u:"?%'-?&* *&-&#)"!)':
"$$'w":#& ): "m"$g"m"!)': '- *&m&-g&-H &!#.
72A
L'%%&% ): %&#u$"!)': ?u%):&%% 73
L'%%&% ?E %&#).)&* ?u%):&%% 73A
L'%%&% u:*&- !C& C&"* FC")!"$ g"):%G 74
L'%%&% .-'m #&-!"): %&#).)&* %'u-#&% u:*&- !C& C&"* F0:#'m& .-'m '!C&- %'u-#&%G 74A
THE145 ;UEST012S
;1 N8. 0m.O. 6-)!& " :'!& ': %&! '.. ":* #"--E .'-w"-* '. $'%%&% u:*&- !C& C&"* H'u%& P-'&-!E.
;2 N0m.O. 6-)!& " :'!& ': %&! '.. ":* #"--E .'-w"-* '. $'%%&% u:*&- !C& C&"* 9u%):&%%/ P-'.&%%)':.
;3 N8. 0m.O. 6-)!& " :'!& ': U:"?%'-?&* /&-&#)"!)':.
;4 N8. 0m.O. 6-)!& " :'!& ': %&! '.. ":* #"--E .'-w"-* '. $'%% .-'m S&#u$"!)>& 9u%):&%%.
;7 N8. 0m.O. 6-)!& " :'!& ': %&! '.. ":* #"--E .'-w"-* '. $'%% u:*&- !C& C&"* C")!"$ G"):%.
;6. 6-)!& " :'!& ': %&! '.. ":* #"--E .'-w"-* '. $'%%&% u:*&- !C& C&"* F0:#'m& .-'m '!C&- %'u-#&%G.
;7. 6-)!& " :'!& ': %&! '.. ":* #"--E .'-w"-* '. $'%%&% ): #"%& '. Am"$g"m"!)':.
;8. 6-)!& " :'!& ': %&! '.. ":* #"--E .'-w"-* '. $'%%&% ): #"%& '. /&m&-g&-
;9. 6-)!& " :'!& ': %&! '.. ":* #"--E .'-w"-* '. $'%%&% ): #"%& '. C':>&-%)': '. P-'-)&!"-E C':#&-:
'- P"-!:&-%C) 3)-m ):!' " C'm":E.
;10. 6-)!& " :'!& ': #"--E .'-w"-* ":* %&! '.. '. $'%%&% ): #"%& '. #C":g& ): C':%!)!u!)': '. 3)-m '-
': Su##&%%)':.
;11. 6-)!& " :'!& ': %&! '.. ":* #"--E .'-w"-* '. $'%%&% ): #"%& '. C':>&-%)': '. P-)>"!& C'm":E '-
U:$)%!&* Pu?$)# C'm":E ):!' L)m)!&* L)"?)$)!E P"-!:&-%C) 3)-m.
;12: FL'%% #": ?& #"--)&* .'-w"-* ':$E ?E !C& &-%':H wC' C"% ):#u--&* !C& $'%%G. = /)%#u%%.
;u&%!)': 1 N8. 0m.O: 6-)!& " :'!& ': S&! 1.. ":* C"--E 3'-w"-* '. L'%%&% u:*&- !C& C&"* H'u%&
P-'&-!E.
A:%w&-:
%s per section 15& if any person has loss from any house property& such loss can be set off from income of
any other house property and it is called inter-source ad?ustment or intra-head ad?ustment# 9#g# :r# D has
two housesG there is loss of `+-&555 from one house and income of `25&555 from the other house& in this
case& loss of one source (house) can be set off from income of the other source (house)#
%s per section 1$& unad?usted loss can be set off from incomes of other heads but as per section /2(-)& such
loss can not be set off from casual income and it is called inter-head ad?ustment# 9#g# :r# D has loss from
house property `+&55&555 and income from business.profession `/&55&555& in this case& loss is allowed to be
3et Aff %nd ,arry Horward Af =osses ((
set off but if he has any casual income& loss can not be set off from casual income#
%s per section 1$)& unad?usted loss is allowed to be carried forward to the subse@uent years but for a
maximum period of 2 years starting from the year subse@uent to the year in which the loss was incurred and
in the subse@uent years& loss can be set off only from income under the head house property# 9#g# :r# D has
incurred loss under the head house property in the previous year 25$$-$2.assessment year 25$2-$+ and it
could not be set off in the same year& it can be carried forward upto previous year 25$'-25.assessment year
2525-2$ (as shown below)
Jear $ 6revious year 25$2-$+ %ssessment Jear 25$+-$-
Jear 2 6revious year 25$+-$- %ssessment Jear 25$--$/
Jear + 6revious year 25$--$/ %ssessment Jear 25$/-$(
Jear - 6revious year 25$/-$( %ssessment Jear 25$(-$1
Jear / 6revious year 25$(-$1 %ssessment Jear 25$1-$2
Jear ( 6revious year 25$1-$2 %ssessment Jear 25$2-$'
Jear 1 6revious year 25$2-$' %ssessment Jear 25$'-25
Jear 2 6revious year 25$'-25 %ssessment Jear 2525-2$
9#g# :r# D has loss under the head house property of the previous year 255+-5-.assessment year 255--5/
`/&55&555 and income under the head house property `/&55&555 in previous year 25$$-$2.assessment year
25$2-$+& in this case& loss shall be allowed to be set off because it will be allowed to be carried forward upto
a period of 2 years starting from previous year 255--5/.assessment year 255/-5( and is as shown belowG
Jear $ 6revious year 255--5/ %ssessment Jear 255/-5(
Jear 2 6revious year 255/-5( %ssessment Jear 255(-51
Jear + 6revious year 255(-51 %ssessment Jear 2551-52
Jear - 6revious year 2551-52 %ssessment Jear 2552-5'
Jear / 6revious year 2552-5' %ssessment Jear 255'-$5
Jear ( 6revious year 255'-$5 %ssessment Jear 25$5-$$
Jear 1 6revious year 25$5-$$ %ssessment Jear 25$$-$2
Jear 2 6revious year 25$$-$2 %ssessment Jear 25$2-$+
If the loss can be set off& it has to be set off compulsorily i#e# it is not voluntary# 9#g# :r# D has loss under the
head house property `$&25&555 in previous year 25$$-$2.assessment year 25$2-$+ and income under the
head business.profession `$&25&555 in the same year& in this case loss has to be set off#
;u&%!)': 2 N0m.O: 6-)!& " :'!& ': S&! 1.. ":* C"--E 3'-w"-* '. L'%%&% u:*&- !C& C&"* 9u%):&%%/
P-'.&%%)':.
A:%w&-:
%s per section 15& if any person has loss from any business.profession& such loss can be set off from income
of any other business.profession and it is called inter-source ad?ustment or intra-head ad?ustment# 9#g# :r# D
has two businessG there is loss of `+-&555 from one business and income of `25&555 from the other business&
in this case& loss of one source (business) can be set off from income of the other source (business)#
%s per section 1$& unad?usted loss can be set off from incomes of other heads except salary but as per section
/2(-)& such loss can not be set off from casual income and it is called inter-head ad?ustment# 9#g# :r# D has
loss from business.profession `+&55&555 and income from house property `/&55&555& in this case& loss is
allowed to be set off but if he has any casual income& loss can not be set off from casual income# 3imilarly it
can not be set off from income under the head salary#
%s per section 12& unad?usted loss is allowed to be carried forward to the subse@uent years but for a
maximum period of 2 years starting from the year subse@uent to the year in which the loss was incurred and
in the subse@uent years& loss can be set off only from income under the head business.profession# 9#g# :r# D
3et Aff %nd ,arry Horward Af =osses (1
has incurred loss under the head business.profession in the previous year 25$$-$2.assessment year 25$2-$+
and it could not be set off in the same year& it can be carried forward upto previous year 25$'-25.assessment
year 2525-2$ (as shown below)
Jear $ 6revious year 25$2-$+ %ssessment Jear 25$+-$-
Jear 2 6revious year 25$+-$- %ssessment Jear 25$--$/
Jear + 6revious year 25$--$/ %ssessment Jear 25$/-$(
Jear - 6revious year 25$/-$( %ssessment Jear 25$(-$1
Jear / 6revious year 25$(-$1 %ssessment Jear 25$1-$2
Jear ( 6revious year 25$1-$2 %ssessment Jear 25$2-$'
Jear 1 6revious year 25$2-$' %ssessment Jear 25$'-25
Jear 2 6revious year 25$'-25 %ssessment Jear 2525-2$
=oss of the current year shall be ad?usted first and only after that brought forward loss can be ad?usted# 9#g#
:r# D has loss under the head house property `/&55&555 and income from business.profession `/&55&555 in
previous year 25$$-$2 and also brought forward loss of business.profession `/&55&555 of previous year
255+-5-& in this case& loss of house property shall be ad?usted from income of business.profession and loss
of previous year 255+-5- shall lapse#
0$$u%!-"!)': 1: :r# D has loss under the head 0ouse 6roperty `/&55&555 and income under the head 3alary
`+&55&555 and income under the head )usiness.6rofession `$5&55&555 and =T,> `(&55&555 and ,asual
income `2&55&555 and unad?usted loss of )usiness.6rofession `-&55&555 of %ssessment Jear 2551-52 and
loss of )usiness.6rofession `+&55&555 of %ssessment Jear 2552-5'#
S'$u!)'::
`
The assessee has the option to ad?ust loss of house property from normal income or from =T,>#
1!)': 0
L'%% '. C'u%& -'&-!E )% %&! '.. .-'m :'-m"$ ):#'m&
Income under the head 3alary +&55&555#55
=essG loss of house property +&55&555#55
Income under the head 3alary Cil
Income under the head )usiness.6rofession $5&55&555#55
=essG )rought forward business loss of %#J# 2551-52 -&55&555#55
=essG )rought forward business loss of %#J# 2552-5' +&55&555#55
=essG =oss of house property 2&55&555#55
Income under the head )usiness.6rofession $&55&555#55
=ong term capital gain (&55&555#55
,asual Income 2&55&555#55
>ross Total Income '&55&555#55
Total Income '&55&555#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on =T,> `/&25&555 (`(&55&555 8 `25&555) V 25O $&5-&555#55
Tax on ,asual income `2&55&555 V +5O (5&555#55
Tax on Cormal income `$&55&555 at slab rate Cil
3et Aff %nd ,arry Horward Af =osses (2
Tax before education cess $&(-&555#55
%ddG 9ducation cess V 2O +&225#55
%ddG 309, V $O $&(-5#55
Tax =iability $&(2&'25#55
1!)': 00
L'%% '. C'u%& -'&-!E )% %&! '.. .-'m LTCG
Income under the head 3alary +&55&555#55
=essG )rought forward business loss of %#J# 2551-52 -&55&555#55
=essG )rought forward business loss of %#J# 2552-5' +&55&555#55
Income under the head )usiness.6rofession +&55&555#55
=essG loss of house property /&55&555#55
=ong term capital gain $&55&555#55
,asual Income 2&55&555#55
>ross Total Income '&55&555#55
Total Income '&55&555#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on =T,> `$&55&555 V 25O 25&555#55
Tax on ,asual income `2&55&555 V +5O (5&555#55
Tax on Cormal income `(&55&555 at slab rate /2&555#55
Tax before education cess $&+2&555#55
%ddG 9ducation cess V 2O 2&(-5#55
%ddG 309, V $O $&+25#55
Tax =iability $&+/&'(5#55
Aption II is better#
0$$u%!-"!)': 2: :rs# D has income and losses as given belowG
$# Income under the head 3alary `
/&55&555
2# =oss under the head 0ouse 6roperty `$5&55&555
+# Income under the head )usiness.6rofession `$2&55&555
-# Income from 3T,> `
2&55&555
/# Income from 3T,> u.s $$$%
`$5&55&555
(# ,asual Income ` +&55&555
4eduction under section 25, to 25B `
$&55&555
)rought forward )usiness.6rofession loss for
- 6revious year 2552-5+ `
+&55&555
- 6revious year 255--5/ `
(&55&555
3et Aff %nd ,arry Horward Af =osses ('
- 6revious year 255/-5( `
+&55&555
,ompute tax liability of :rs# D for %ssessment Jear 25$2-$+#
S'$u!)'::
`
1!)': 0
L'%% '. C'u%& -'&-!E )% %&! '.. .-'m :'-m"$ ):#'m&
Income under the head 3alary /&55&555#55
=essG =oss of house property /&55&555#55
Income under the head 3alary Cil
=essG )rought forward business.profession loss 6#J# 255--5/ (&55&555#55
=essG )rought forward business.profession loss 6#J# 255/-5( +&55&555#55
=essG loss of house property +&55&555#55
Income under the head )usiness.6rofession Cil
3hort term capital gain 2&55&555#55
=essG loss of house property 2&55&555#55
3hort term capital gain Cil
3hort term capital gain u.s $$$% $5&55&555#55
,asual Income +&55&555#55
>ross Total Income $+&55&555#55
Total Income $+&55&555#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on 3T,> u.s $$$% `2&$5&555 (`$5&55&555 8 `$&'5&555) V $/O $&2$&/55#55
Tax on ,asual income `+&55&555 V +5O '5&555#55
Tax on Cormal income at slab rate Cil
Tax before education cess 2&$$&/55#55
%ddG 9ducation cess V 2O -&2+5#55
%ddG 309, V $O 2&$$/#55
Tax =iability 2&$1&2-/#55
*ounded off u.s 222) 2&$1&2/5#55
1!)': 00
L'%% '. C'u%& -'&-!E )% %&! '.. .-'m STCG u/% 111A
Income under the head 3alary /&55&555#55
=essG )rought forward business.profession loss 6#J# 255--5/ (&55&555#55
=essG )rought forward business.profession loss 6#J# 255/-5( +&55&555#55
Income under the head )usiness.6rofession +&55&555#55
3hort term capital gain u.s $$$% $5&55&555#55
=essG loss of house property $5&55&555#55
3hort term capital gain u.s $$$% Cil
3et Aff %nd ,arry Horward Af =osses 15
,asual Income +&55&555#55
>ross Total Income $+&55&555#55
=essG 4eduction u.s 25, to 25B $&55&55#55
Total Income $2&55&555#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on 3T,> u.s $$$% Cil
Tax on ,asual income `+&55&555 V +5O '5&555#55
Tax on Cormal income `'&55&555 at slab rate $&2$&555#55
Tax before education cess 2&$$&555#55
%ddG 9ducation cess V 2O -&225#55
%ddG 309, V $O 2&$$5#55
Tax =iability 2&$1&++5#55
Aption II is better#
;u&%!)': 3 N8. 0m.O: 6-)!& " :'!& ': U:"?%'-?&* /&-&#)"!)':.
A:%w&-:
U:"?%'-?&* /&-&#)"!)': S&#!)': 32A2B
%n assessee having business or profession shall debit all expenditures of business.profession before debiting
depreciation i#e# depreciation shall be debited at the end# If there is a loss by debiting other expenditure& it
will be called loss under the head business.profession# 4epreciation shall be debited only if income is
available under the head business.profession and the depreciation which can not be debited shall be called
unabsorbed depreciation and it will be allowed to be ad?usted from any income under any head except casual
income#
If it can not be ad?usted in the same year& its carry forward is allowed for unlimited period and in the
subse@uent years& it can be set off from any income under any head except casual income#
If any assessee has brought forward business loss as well as depreciation& business loss shall be ad?usted first
and depreciation afterwards#
9#g# :r# D has income under the head business.profession `$5&55&555 after debiting all expenditures except
depreciation of `$+&55&555& in this case& depreciation of only `$5&55&555 can be debited to the profit and loss
account and balance `+&55&555 shall be called unabsorbed depreciation and it can be set off from any income
under any head except casual income and even in the subse@uent years& it can be set off from any income
under any head except casual income and such carry forward is allowed for unlimited periods#
;u&%!)': 4 N8. 0m.O: 6-)!& " :'!& ': S&! 1.. ":* C"--E 3'-w"-* '. $'%% .-'m S&#u$"!)>& 9u%):&%%.
A:%w&-:
S&! 1.. ":* C"--E .'-w"-* '. $'%% .-'m S&#u$"!)>& 9u%):&%% S&#!)': 73
If any assessee has loss from speculative business& such loss can not be set off from any income under any
head however& if the assessee has two or more similar business& loss of one such business can be set off from
the income of other such business#
Bnad?usted loss is allowed to be carried forward but for a maximum period of - years starting from the year
subse@uent to the year in which the loss was incurred# 9ven in the subse@uent years& loss can be set off only
from income of speculative business#
=oss under the head house property& loss from normal business& unabsorbed depreciation& loss under the
head other sources can be set off from the income of speculative business#
e#g# :r# D has loss from speculative business `/&55&555 and income from normal business `/&55&555& in this
3et Aff %nd ,arry Horward Af =osses 1$
case& loss is not allowed to be set off however its carry forward is allowed but for a maximum period of -
years and in the subse@uent years its can be set off only from income of speculation business#
e#g# :r# D has loss from house property `/&55&555 and income from speculative business `/&55&555& in this
case& loss can be set off from income of speculative business#
e#g# :r# D has loss of speculative business `/&55&555 and income from some other speculative business
`/&55&555& in this case& loss can be set off from income of such speculative business#
;u&%!)': 7 N8. 0m.O: 6-)!& " :'!& ': S&! 1.. ":* C"--E 3'-w"-* '. $'%%&% u:*&- !C& C&"* C")!"$
G"):%.
A:%w&-:
S&! '.. ":* C"--E .'-w"-* '. L'%% u:*&- !C& C&"* C")!"$ G"): S&#!)': 70H 71 ":* 74
S&! '.. '. $'%% .-'m ':& %'u-#& "g"):%! ):#'m& .-'m ":'!C&- %'u-#& u:*&- !C& %"m& C&"* '. ):#'m&
S&#!)': 70
If any person has short term loss& it can be set off either from short term or from long term gain but if any
person has long term loss& it can be set off only from long term gains i#e# set off from short term is not
allowed#
Example
:r# D has long term loss of `/&55&555 and short term gain of `/&55&555& in this case& long term loss can not
be set off from short term gains and his tax liability shall be `+2&'(5 but if he has long term gain of
`/&55&555 and short term loss of `/&55&555& in this case& set off is allowed and his tax liability shall be nil#
If :r# D has long term loss on sale of e@uity shares on which 3TT has been paid& such loss can not be set off
from any income because loss from an exempt source can not be set off from taxable income#
e#g# If :r# D has short term loss under section $$$% and has long term gain& such loss can be set off from
long term gain and also it can be set off from short term gain under section $$$% or from normal short term
gain#

S&! '.. '. $'%% .-'m ':& C&"* "g"):%! ):#'m& .-'m ":'!C&- S&#!)': 71
Where in respect of any assessment year& the net result of the computation under the head M,apital gainsN is
a loss and the assessee has income assessable under any other head of income& the assessee shall not be
entitled to have such loss set off against income under the other head#
Example
:r# D has short term loss `/&55&555 and business income of `/&55&555& his tax liability shall be `+2&'(5
C"--E .'-w"-* '. $'%%&% u:*&- !C& C&"* FC")!"$ G"):%G S&#!)': 74
If any assessee has short term loss or long term loss which could not be set off& such losses shall be allowed
to be carried forward but for a maximum period of 2 years starting from the year next to the year in which
the loss was incurred#
)rought forward short term loss can be set off either from short term or from long term gain but brought
forward long term loss can be set off only from long term gain and not from short term gain#
;u&%!)': 6: 6-)!& " :'!& ': S&! 1.. ":* C"--E 3'-w"-* '. L'%%&% u:*&- !C& C&"* F0:#'m& .-'m
1!C&- S'u-#&%G.
A:%w&-:
S&! '.. ":* C"--E .'-w"-* '. L'%%&% u:*&- !C& C&"* F0:#'m& .-'m 1!C&- S'u-#&%G
%s per section 15& if the assessee has loss under the head other sources& such loss is allowed to be set off
from any income under the same head except casual income#
%s per section 1$& unad?usted loss can be set off even from incomes of other heads#
,arry forward of the loss is not allowed#
S&! 1.. ":* C"--E 3'-w"-* '. $'%%&% ): #'::&#!)': w)!C 1w:):g ":* M"):!"):):g '. 4"#& H'-%&%
S&#!)': 74A
If any assessee has loss from the business of owning and maintaining race horses& such loss can not be set
off from any income under any head but if the assessee has two or more business of owning and maintaining
race horses& loss of one such business can be set off from the income of other such business#
Bnad?usted loss is allowed to be carried forward but for a maximum period of - years starting from the year
subse@uent to the year in which the loss was incurred and even in the subse@uent year& the loss can be set off
only from income of business of owning and maintaining race horses#
If the assessee has business of owning and maintaining any other race animal& income shall be taxable under
the head business.profession and loss will have the same treatment as in case of loss under the head
business.profession# 9#g# If :r# D has loss from business of owning and maintaining race camels& the loss
will have the same treatment as the loss under the head business.profession#
;u&%!)': 7: 6-)!& " :'!& ': C"--E 3'-w"-* ":* S&! 1.. '. L'%%&% ): #"%& '. #C":g& ): C':%!)!u!)': '.
.)-m '- ': Su##&%%)':.
A:%w&-:
C"--E .'-w"-* ":* S&! '.. '. L'%%&% ): #"%& '. #C":g& ): C':%!)!u!)': '. 3)-m '- ': Su##&%%)':
S&#!)': 78
If any partner is retired or is expired& in such cases his share in the losses of the partnership firm shall be
allowed to be carried forward and set off only to the extent of his share in the profits of the partnership firm&
however such provisions are not applicable for depreciation and partnership firm shall be entitled to carry
forward and set off unabsorbed depreciation#
Example
DJW partnership firm has + partners :r# D& :r# J and :r# W and each one has $.+ share# The partnership
firm had business loss of `(&55&555 and unabsorbed depreciation of `+&55&555 in previous year 25$5-$$# :r#
D is retired w#e#f# 5$#5-#25$$ and the remaining partners :r# J and :r# W have continued the partnership
firm and the firm had business income of `'&55&555 in previous year 25$$-$2& in this case& tax treatment
shall be as given belowG
Income under the head business.profession before ad?usting loss.depreciation '&55&555
=essG )rought forward business loss (-&55&555)
(share of :r# D is not allowed to be ad?usted)
=essG 4epreciation (+&55&555)
(3ection 12 has not put any restriction on depreciation)
Total income of firm 2&55&555
Tax I 9, ($&255
(b) 6resume :r# D is retired w#e#f# 5$#$5#25$$
3hare of :r# D in the profits of partnership firm shall be '&55&555 . 2 x $.+ X $&/5&555
0ence share of :r# D in the losses shall be allowed to be ad?usted to the extent of ($&/5&555)
Total income of firm /5&555
3et Aff %nd ,arry Horward Af =osses 1+
Tax I 9, $/&-/5
(c) 6resume :r# D is retired w#e#f# 5$#5$#25$2
3hare of :r# D in the profits of partnership firm shall be '&55&555 . +.- x $.+ X 2&2/&555
0ence share of :r# D in the losses shall be allowed to be ad?usted to the extent of (2&55&555)
Total income of firm CI=
Tax I 9, CI=
0$$u%!-"!)': 3: % partnership firm %), K ,o# has three partners and profit sharing ratio is $G2G$ and in
6#J# 25$5-$$& the partnership has unad?usted business loss of ` 2 lakhs and unad?usted short term capital
loss of ` 2 lakhs and :r# % is retired w#e#f 5$#5-#25$$ and remaining partners are continuing the firm and
the firm has income under head )usiness 6rofession of ` $$ lakhs and =T,> ` ( lakhs before ad?usting
brought forward losses#
,ompute tax liability for %ssessment Jear 25$2-$+#
(b) 6resume :r# % is retired w#e#f 5$#$5#25$$#
(c) 6resume :r# % is retired w#e#f 5$#5$#25$2#
Solution:
`
Income under head )usiness. 6rofession $$&55&555#55
=essG 3hare of ) K , in b.f business loss ` 2&55&555 x +.- (&55&555#55
=essG 3hare of :r# % to be ad?usted u.s 12 Cil
Income under head )usiness. 6rofession /&55&555#55
=ong Term ,apital >ain (&55&555#55
=essG 3hare of ) K , in b.f short term loss $&/5&555#55
=essG 3hare of :r# % to be ad?usted u.s 12 Cil
=ong Term ,apital >ain -&/5&555#55
>ross Total Income '&/5&555#55
=ess G 4eduction u.s 25, to 25B Cil
Total Income '&/5&555#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on normal income ` /&55&555 V +5 O $&/5&555#55
Tax on =T,> ` -&/5&555 V 25O '5&555#55
Tax before education cess 2&-5&555#55
%ddG 9, V 2O -&255#55
%ddG 309, V $O 2&-55#55
Tax =iability 2&-1&255#55
Solution: (b)
Income from )usiness .6rofession $$&55&555#55
=essG 3hare of ) K , in )usiness loss ` 2&55&555 x +.- (&55&555#55
=essG 3hare of :r# % to be ad?usted u.s 12 (*ef WC $) $&+1&/55#55
Income from )usiness. 6rofession +&(2&/55#55
3et Aff %nd ,arry Horward Af =osses 1-
=essG 3hare of :r# % to be ad?usted u.s 12 (*ef WC 2) /5&555#55
=ong term capital gain -&55&555#55
>ross Total Income 1&(2&/55#55
=essG 4eduction u.s 25, to 25B N Cil
Total Income 1&(2&/55#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on normal income ` +&(2&/55 V +5 O $&52&1/5#55
Tax on =T,> ` -&55&555 V 25O 25&555#55
Tax before 9ducation cess $&22&1/5#55
%ddG 9,V 2O +&11/#55
%ddG 309, V $O $&221#/5
Tax =iability $&'-&-$2#/5
*ounded off u.s 222) $&'-&-$5#55
6'-k):g 2'!& 1.
(a) 3hare of % in current year profit till date of retirement
` $$&55&555 x $.2 x $.- X ` $&+1&/55
A*
(b) 3hare in =oss i#e# ` 2&55&555 x _ X ` 2&55&555
=ower of (a) or (b) can be set off i#e# ` $&+1&/55
6'-k):g 2'!& 2.
(a) 3hare of % in current =T,>
` (&55&555 x ` x _ X ` 1/&555
A*
(b) 3hare in loss i#e# ` 2&55&555 x _ X ` /5&555
=ower of (a) or (b) can be set off i#e# ` /5&555
Solution (c):
Income from )usiness .6rofession $$&55&555#55
=essG 3hare of ) K , in )usiness loss ` 2&55&555 x a (&55&555#55
=essG 3hare of :r# % to be ad?usted u.s 12 (*ef WC +) 2&55&555#55
Income from )usiness. 6rofession +&55&555#55
=essG 3hare of :r# % to be ad?usted u.s 12 (*ef WC -) /5&555#55
=ong term capital gain -&55&555#55
>ross Total Income 1&55&555#55
=essG 4eduction u.s 25, to 25B N Cil
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on normal income ` +&55&555 V +5 O '5&555#55
Tax on =T,> ` -&55&555 V 25O 25&555#55
Tax before education cess $&15&555#55
%ddG 9, V 2O +&-55#55
3et Aff %nd ,arry Horward Af =osses 1/
%ddG 309, V $O $&155#55
Tax =iability $&1/&$55#55
6'-k):g 2'!& 3.
(a) 3hare of % in current year profit till date of retirement
` $$&55&555 x +.- x $.- X ` 2&5(&2/5
A*
(b) 3hare in business loss i#e# ` 2&55&555 x _ X ` 2&55&555
=ower of (a) or (b) can be setoff i#e# ` 2&55&555
6'-k):g 2'!& 4.
(a) 3hare of % in current =T,>
` (&55&555 x +.- x $.- X ` $&$2&/55
A*
(b) 3hare in b.f short term loss i#e# ` 2&55&555 x _ X ` /5&555
=ower of (a) or (b) can be set off i#e# ` /5&555
;u&%!)': 8: 6-)!& " :'!& ': S&! 1.. ":* C"--E 3'-w"-* '. L'%%&% ): #"%& '. Am"$g"m"!)':.
A:%w&-:
S&! '.. ":* #"--E .'-w"-* ): #"%& '. Am"$g"m"!)': S&#!)': 72A
If any company owning an industrial undertaking or a ship or a hotel has been amalgamated with some other
company or a banking company has been amalgamated with specified bank& the unabsorbed depreciation
and the loss under the head business.profession which the amalgamating company is allowed to carry
forward and set off shall be considered to be the depreciation and loss of the amalgamated company incurred
in the year of amalgamation e#g# %), =td# an industrial undertaking has incurred losses as given belowG
(i) 6revious Jear 255--5/ `25&55&555
(ii) 6revious Jear 255/-5( `2/&55&555
(iii) 6revious Jear 255(-51 `22&55&555
(iv) 6revious Jear 2551-52 `2-&55&555
(v) 6revious Jear 2552-5' `2$&55&555
(vi) 6revious Jear 255'-$5 `2+&55&555
(vii) 6revious Jear 25$5-$$ `2(&55&555
If amalgamation has taken place on 5$#$$#25$$ with W =td# and %), =td# has incurred business losses till
5$#$$#25$$ `$2&55&555& all the losses amounting to `$&1'&55&555 shall be considered to be the business
losses of W =td# incurred in the previous year 25$$-$2 and set off and carry forward shall be allowed
accordingly#
;u&%!)': 9: 6-)!& " :'!& ': S&! 1.. ":* C"--E 3'-w"-* '. L'%%&% ): #"%& '. /&m&-g&-
A:%w&-:
S&! 1.. ":* C"--E 3'-w"-* ): #"%& '. /&m&-g&- S&#!)': 72A
In the case of a demerger& unabsorbed depreciation and the loss under the head business.profession of the
demerged company shallR
(a) where such loss or unabsorbed depreciation is directly relatable to the undertakings transferred to the
resulting company& be allowed to be carried forward and set off in the hands of the resulting company"
(b) where such loss or unabsorbed depreciation is not directly relatable to the undertakings transferred to the
resulting company& be apportioned between the demerged company and the resulting company in the same
proportion in which the assets of the undertakings have been retained by the demerged company and
transferred to the resulting company& and be allowed to be carried forward and set off in the hands of the
demerged company or the resulting company& as the case may be#
3et Aff %nd ,arry Horward Af =osses 1(
;u&%!)': 10: 6-)!& " :'!& ': S&! 1.. ":* C"--E 3'-w"-* '. $'%%&% ): #"%& '. C':>&-%)': '.
P-'-)&!"-E C':#&-: '- P"-!:&-%C) 3)-m ):!' " C'm":E.
A:%w&-:
S&! 1.. ":* C"--E 3'-w"-* ): #"%& '. C':>&-%)': S&#!)': 72A
If any proprietary concern or partnership firm has been converted into a company and certain conditions
given under section -1 have been complied with& in that case& the unabsorbed depreciation and the loss
under the head business.profession shall be considered to be the depreciation and loss of the company as if
incurred in the year of conversion and set off and carry forward shall be allowed accordingly#
TC& #':*)!)':% .'- #':>&-%)': '. " -'-)&!"-E #':#&-: %C"$$ ?&
(a) all the assets and liabilities of the sole proprietary concern relating to the business immediately before the
succession become the assets and liabilities of the company"
(b) the shareholding of the sole proprietor in the company is not less than fifty per cent of the total voting
power in the company and his shareholding continues to remain as such for a period of five years from the
date of the succession" and
(c) the sole proprietor does not receive any consideration or benefit& directly or indirectly& in any form or
manner& other than by way of allotment of shares in the company#
TC& #':*)!)':% .'- #':>&-%)': '. " "-!:&-%C) .)-m %C"$$ ?&
(a) all the assets and liabilities of the firm or of the association of persons or body of individuals relating to
the business immediately before the succession become the assets and liabilities of the company"
(b) all the partners of the firm immediately before the succession become the shareholders of the company in
the same proportion in which their capital accounts stood in the books of the firm on the date of the
succession"
(c) the partners of the firm do not receive any consideration or benefit& directly or indirectly& in any form or
manner& other than by way of allotment of shares in the company" and
(d) the aggregate of the shareholding in the company of the partners of the firm is not less than fifty per cent
of the total voting power in the company and their shareholding continues to be as such for a period of five
years from the date of the succession#
;u&%!)': 11: 6-)!& " :'!& ': S&! 1.. ":* C"--E 3'-w"-* '. L'%%&% ): #"%& '. #':>&-%)': '. P-)>"!&
C'm":E '- U:$)%!&* Pu?$)# C'm":E ):!' L)m)!&* L)"?)$)!E P"-!:&-%C) 3)-m.
A:%w&-:
S&! 1.. ":* C"--E 3'-w"-* ): #"%& '. C':>&-%)': S&#!)': 72A
If any private company or unlisted public company has been converted into a =imited =iability 6artnership
Hirm and certain conditions given under section -1 have been complied with& in that case& the unabsorbed
depreciation and the loss under the head business.profession shall be considered to be the depreciation and
loss of the ==6 as if incurred in the year of conversion and set off and carry forward shall be allowed
accordingly#
TC& #':*)!)':% "% &- %&#!)': 47 "-& "% g)>&: ?&$'w:
(a) all the assets and liabilities of the company immediately before the conversion become the assets and
liabilities of the limited liability partnership"
(b) all the shareholders of the company immediately before the conversion become the partners of the
limited liability partnership and their capital contribution and profit sharing ratio in the limited liability
partnership are in the same proportion as their shareholding in the company on the date of conversion"
(c) the shareholders of the company do not receive any consideration or benefit& directly or indirectly& in any
form or manner& other than by way of share in profit and capital contribution in the limited liability
partnership"
(d) the aggregate of the profit sharing ratio of the shareholders of the company in the limited liability
partnership shall not be less than fifty per cent at any time during the period of five years from the date of
conversion"
(e) the total sales& turnover or gross receipts in the business of the company in any of the three previous
years preceding the previous year in which the conversion takes place does not exceed sixty lakh rupees" and
(f) no amount is paid& either directly or indirectly& to any partner out of balance of accumulated profit
standing in the accounts of the company on the date of conversion for a period of three years from the date
of conversion#
A**)!)':"$ '):!%:
1. 3et off and carry forward is mandatory not voluntary# e#g# :r# D has loss under the head house property
`/5&555 and income under the head business.profession `/5&555 during the assessment year 25$2-$+& in this
case& loss of house property has to be set off from business income of assessment year 25$2-$+ and :r# D is
not allowed to carry forward the loss of house property#
2. %ny loss has to be set off first within the same head and only after that under some other heads#
3. If any person has dividend income from shares or units held as stock in trade& such dividend income is
taxable under the head other sources and if there is any brought forward business loss& such loss can be set
off from such dividend income (considering it to be business income)# 6&%!&-: S!"!&% T-"*):g C'. AP.B
L!*. >. C0T A1971B ASCB.
;u&%!)': 12: FL'%% #": ?& #"--)&* .'-w"-* ':$E ?E !C& &-%':H wC' C"% ):#u--&* !C& $'%%G. = /)%#u%%.
A:%w&-:
=oss can be carried forward only by the person who has incurred the loss& however& there are exceptions as
given belowG
(i) %malgamation of a company 3ection 12%
(ii) 4emerger of a company 3ection 12%
(iii) ,onversion of sole proprietary concern into company 3ection 12%
(iv),onversion of firm into company 3ection 12%
(v) ,onversion of private company or unlisted public company into limited liability partnership firm
3ection 12%
(vi)3uccession by inheritance 3ection 12
PCC MA5 = 2012
;u&%!)': 7 A8 M"-k%B
3an?ay engaged in various types of activities gives the following information for the year ended +$#5+#25$2#
`
=oss from automobile business (Total turnover `(&55&555) $&$5&555
6rofit from wholesale trade in furniture items at the prescribed percentage of turnover
as per section --%4 -&55&555
)rought forward loss relating to discontinued textile business
(discontinued w#e#f# 5$#5(#2551) 2&55&555
3hort term capital loss on sale of vacant site during the year 15&555
6rofit from speculation business related to oil seeds $&$5&555
=oss from speculation business brought forward and related to cotton
(brought forward from assessment year 25$$-$2) /5&555
)rought forward unabsorbed depreciation of trade in furniture items related to
assessment year 25$$-$2 (5&555
CoteG %ggregate total business turnover of 3an?ay to be assumed as below limit prescribed under section
--%)#
,ompute the total income of 3an?ay for the assessment year 25$2-$+#
A:%w&-:
C"$#u$"!)': '. T'!"$ 0:#'m& '. M-. S":@"E .'- !C& "%%&%%m&:! E&"- 2012(13
`
0:#'m& u:*&- !C& C&"* 9u%):&%%/P-'.&%%)':
Income from wholesale trade in furniture -&55&555
=essG =oss from automobile business ($&$5&555)
=essG )rought forward loss relating to discontinued textile business (2&55&555)
=essG )rought forward unabsorbed depreciation of trade in furniture
items related to assessment year 25$$-$2 ((5&555)
Income from wholesale trade in furniture +5&555
Income from 3peculation )usiness $&$5&555
=essG =oss from speculation business brought forward and related to cotton (/5&555)
Income from 3peculation )usiness (5&555
Income under the head )usiness.6rofession '5&555
>ross Total Income '5&555
Total Income '5&555
3et Aff %nd ,arry Horward Af =osses 1'
3hort Term ,apital =oss on sale of vacant site %#J# 25$2-$+ `15&555 to be carried forward for 2 years
starting from assessment year 25$+-$-#
PCC 218 = 2011
;u&%!)': 1 A7 M"-k%B
:r# )atra furnishes the following details for year ended +$#5+#25$2#
`
3hort term capital gain $&-5&555
=oss from speculative business (5&555
=ong term capital gain on sale of land +5&555
=ong term capital loss on sale of shares $&55&555
(securities transaction tax not paid)
Income from business of textile (after allowing current year depreciation) /5&555
Income from activity of owning and maintaining race horses $/&555
Income from salary $&55&555
=oss from house property -5&555
Hollowing are the carry forward lossesG
(i) =osses from activity of owning and maintaining race horses-pertaining to %#J# 255'-$5 `2/&555#
(ii) ,arry forward loss from business of textile `(5&555- =oss pertains to %#J# 255--5/#
,ompute gross total income of :r# )atra for the assessment year 25$2-$+#
%lso state the eligible carry forward losses for the assessment Jear 25$2-$+# (:odified)
A:%w&-:
C"$#u$"!)': '. G-'%% T'!"$ 0:#'m& '. M-. 9"!-" .'- !C& "%%&%%m&:! E&"- 2012(13
`
0:#'m& u:*&- !C& C&"* 9u%):&%%/P-'.&%%)':
Income from )usiness of textile /5&555
=essG =oss ,arried forward from textile business (255--5/) (/5&555)
)alance loss of `$5&555 shall lapse
0:#'m& u:*&- !C& C&"* S"$"-E
3alary $&55&555
=essG =oss from house property (-5&555)
Income under the head 3alary after set off (5&555
0:#'m& u:*&- !C& C&"* 1!C&- S'u-#&%
Income from owning and maintaining race horses $/&555
=essG =oss carried forward to be ad?usted (%#J# 255'-$5) ($/&555)
()alance brought forward loss of `$5&555 to be carried forward to next year)
0:#'m& u:*&- !C& C&"* C")!"$ G"):%
3hort Term ,apital >ains $&-5&555
=ong Term ,apital >ains +5&555
=essG =ong term loss (+5&555)
()alance of loss of 15&555 shall be carried forward)
>ross Total Income 2&55&555
=oss from speculative business of %#J# 25$2-$+ `(5&555 to be carried forward for - years starting from
assessment year 25$+-$-#
0PCC MA5 = 2011
;u&%!)': 4 A4 M"-k%B
The following are the details relating to :r# 3rivatsan& a resident Indian& aged /1& relating to the year ended
+$#5+#25$2G A`B
Income from salaries 2&25&555
=oss from house property $&'5&555
=oss from cloth business 2&-5&555
Income from speculation business +5&555
=ong-term capital gains from sale of urban land 2&/5&555
=ong-term capital loss from sale of listed shares in recogni<ed stock exchange (3TT paid) $&$5&555
=oss from card games +2&555
Income from betting -/&555
=ife insurance premium paid $&25&555
,ompute the total income and show the items eligible for carry forward# (:odified)
A:%w&-.
C'mu!"!)': '. !'!"$ ):#'m& '. M-. S-)>"!%": .'- !C& A.5. 2012(13
P"-!)#u$"-% ` `
S"$"-)&%
Income from salaries
?ess9 =oss from house property
P-'.)!% ":* g"):% '. ?u%):&%% '- -'.&%%)':
Income from speculation business
?ess9 =oss from cloth business set off
C")!"$ g"):%
=ong-term capital gains from sale of urban land
?ess9 =oss from cloth business set off
0:#'m& .-'m '!C&- %'u-#&%
Income from betting
G-'%% !'!"$ ):#'m&
2&25&555
$&'5&555
+5&555
+5&555
2&/5&555
2&$5&555
+5&555
Cil
-5&555
-/&555
1H17H000
3et Aff %nd ,arry Horward Af =osses 2$
?ess9 4eduction under section 25, (life insurance premium paid)
T'!"$ ):#'m&
+5&555
87H000
L'%%&% !' ?& #"--)&* .'-w"-* `
($) =oss from cloth business A2H40H000(30H000(2H10H000B Cil
2'!&%
(i) =ong-term capital gains from sale of listed shares in a recogni<ed stock exchange is exempt under section
$5(+2)# =oss from an exempt source cannot be set off against profits from a taxable source# Therefore& long-
term capital loss on sale of listed shares cannot be set-off against long-term capital gains from sale of urban
land#
(ii) )usiness loss cannot be set off against salary income# 0owever& the balance business loss of `2&$5&555
(` 2&-5&555 8 `+5&555 set-off against income from speculation business) can be set-off against long-term
capital gains of ` 2&/5&555 from sale of urban land# ,onse@uently& the taxable long-term capital gains would
be ` -5&555#
(iii) =oss from card games can neither be set off against any other income& nor can it be carried forward#
(iv) Hor providing deduction under ,hapter 7I%& gross total income has to be reduced by the amount of
long-term capital gains and casual income# Therefore& the deduction under section 25, in respect of life
insurance premium paid has to be restricted to `+5&555 Yi#e#& >ross Total Income of `$&$/&555 8 `-5&555
(=T,>) 8 `-/&555 (,asual income)Z#
(v) Income from betting is chargeable at a flat rate of +5O under section $$/)) and no expenditure or
allowance can be allowed as deduction from such income& nor can any loss be set-off against such income#
PCC MA5 = 2011
;u&%!)': 4 A6 M"-k%B
)alamurugan furnishes the following information for the year ended +$#5+#25$2G `
Income from business ($&+/&555)
Income from house property ($/&555)
=ottery winning (>ross) +&55&555
3peculation business income $&55&555
Income by way of salary (5&555
=ong term capital gain 15&555
,ompute his total income& tax liability and advance tax obligations#
A:%w&-.
C'mu!"!)': '. !'!"$ ):#'m& '. 9"$"mu-ug": .'- !C& E&"- &:*&* 31.03.2012
P"-!)#u$"-% ` `
3alaries
?ess9 =oss from house property
Cet 3alary (after set off of loss from house property)
(5&555
($/&555)

-/&555
P-'.)!% ":* g"):% '. ?u%):&%% '- -'.&%%)':
3peculation business income
?ess9 )usiness loss set-off

$&55&555
($&+/&555)
Cet business loss to be set-off against long-term capital gain (+/&555)
C")!"$ G"):%
=ong term capital gain
?ess9 )usiness loss set-off
=ong term capital gain after set off of business loss
15&555
(+/&555)
+/&555
0:#'m& .-'m '!C&- %'u-#&%
=ottery winnings (>ross)

+&55&555
Total Income +&25&555
C'mu!"!)': '. !"+ $)"?)$)!E
P"-!)#u$"-% `
An total income of `25&555 (excluding lottery winning) Cil
An lottery winnings of `+&55&555 V +5O '5&555
<dd9 9ducation ,ess V 2O and 3econdary and higher education cess V $O 2&155
T'!"$ !"+ $)"?)$)!E 92H700
The assessee need not pay advance tax since the total income (excluding lottery income) liable to tax is
below the basic exemption limit# Hurther& in respect of lottery income& tax would have been deducted at
source V +5O under section $'-)# 3ince the remaining tax liability of `2&155 (`'2&155 8 `'5&555) is less
than `$5&555& advance tax liability is not attracted#
Note
($) The basic exemption limit of `$&25&555 has to be first exhausted against salary income of `-/&555# The
unexhausted basic exemption limit of `$&+/&555 can be ad?usted against long-term capital gains of `+/&555
as per section $$2& but not against lottery winnings which are taxable at a flat rate of +5O under section
$$/))#
(2) The first proviso to section 2+-, provides that since it is not possible for the assessee to estimate his
income from lotteries& the entire amount of tax payable (after considering T43) on such income should be
paid in the remaining instalments of advance tax which are due# Where no such installment is due& the entire
tax should be paid by +$
st
:arch& 25$2# The first proviso to section 2+-, would be attracted in case of non-
deduction or short-deduction of tax at source under section $'-)#
0PCC 218 = 2010
;u&%!)': 1 A7 M"-k%B
:r# 3oohan submits the following details of his income for the assessment year 25$2-$+#
Income from salary +&55&555#55
=oss from let out house property -5&555#55
Income from sugar business /5&555#55
=oss from iron ore business b.f (discontinued in 255/-5() $&25&555#55
3hort term capital loss (5&555#55
=ong term capital gain -5&555#55
4ividend /&555#55
3et Aff %nd ,arry Horward Af =osses 2+
Income received from lottery winning (>ross) /5&555#55
Winning in card games (&555#55
%gricultural income 25&555#55
=ong term capital gain from shares (3TT paid) $5&555#55
3hort term capital loss under section $$$% $5&555#55
)ank interest /&555#55
,alculate gross total income and losses to be carried forward# (:odified)
A:%w&-.
C'mu!"!)': '. g-'%% !'!"$ ):#'m& '. M-. S''C": .'- !C& A.5. 2012(13
P"-!)#u$"-% ` `
S"$"-)&%
Income from salary +&55&555
?ess G =oss from house property set-off against salary income (-5&555) 2&(5&555
as per section 1$
P-'.)!% ":* g"):% '. ?u%):&%% '- -'.&%%)':
Income from sugar business /5&555
?ess G )rought forward loss from iron-ore business set-off as per (/5&555) Cil
section 12($)
)alance business loss of `15&555 of 6#J#255/-5( carried
forward to %#J#25$+-$-
C")!"$ g"):%
=ong term capital gain -5&555
?ess9 3hort term capital loss set-off (-5&555) Cil
)alance short-term capital loss of `25&555 to be carried forward
3hort-term capital loss of `$5&555 under section $$$% to be carried forward
0:#'m& .-'m '!C&- %'u-#&%
Winnings from lottery /5&555
Winnings from card games (&555
)ank interest /&555 ($&555
G-'%% T'!"$ 0:#'m& 3H21H000
L'%%&% !' ?& #"--)&* .'-w"-* !' A.5. 2013(14
=oss of iron-ore business 15&555
3hort term capital loss +5&555
2'!&%:
$# The following income are exempt under section $5 8
(i) 4ividend income Y9xempt under section $5(+-)Z& assuming that dividend is received from a domestic
company#
(ii) %gricultural income Y9xempt under section $5($)Z
(iii) =ong-term capital gains on which 3TT is paid Y9xempt under section $5(+2)Z
3et Aff %nd ,arry Horward Af =osses 2-
2# It is presumed that loss from iron-ore business relates to 6#J#255/-5(& the year in which the business was
discontinued#
PCC 218 = 2010
;u&%!)': 1 A7 M"-k%B
4etermine the total income of :r# ,hand from the following information for the %ssessment Jear 25$2-$+G
`
(i) Interest received on enhanced compensation (It relates to transfer of land in the financial
year 255(-51# Aut of the above `(/&555 relates to financial year 25$$-$2 and the balance
relate to preceding years)
-&55&555
(ii) )usiness loss relating to discontinued business of the assessment year 255(-51 brought
forward and eligible for set off#
$&/5&555
(iii) ,urrent year business income (i#e# financial year 25$$-$2) (,omputed) $&$5&555
(:odified)
A:%w&-.
C'mu!"!)': '. !'!"$ ):#'m& '. M-. CC":* .'- A.5. 2012(13
P"-!)#u$"-% Am'u:! Am'u:!
A`B A`B
P-'.)!% ":* g"):% '. ?u%):&%% '- -'.&%%)':
,urrent year business income $&$5&555
?ess9 )rought forward business loss of discontinued business
`$&/5&555 set-off to the extent of current year business
income as per section 12 $&$5&555 Cil
0:#'m& .-'m '!C&- %'u-#&%
Interest on enhanced compensation taxable on receipt basis
under section /((2)(viii) -&55&555
?ess9 4eduction under section /1(iv) V /5O 2&55&555 2&55&555
T'!"$ 0:#'m& 2H00H000
The unabsorbed business loss of `-5&555 (`$&/5&555 8 `$&$5&555) of %#J# 255(-51 relating to discontinued
business will be carried forward for set-off against income from any business in the next year i#e# %#J# 25$+-
$-#
;u&%!)': 7 A4 M"-k%B
4iscuss briefly on carry forward and set off of losses in the case of change in constitution of firm or
succession#
A:%w&-.
C"--E .'-w"-* ":* %&! '.. '. $'%%&% ): #"%&% '. #C":g& ): #':%!)!u!)': '. .)-m '- ': %u##&%%)': NS&#!)':
78O
(i) Where there is a change in the constitution of firm& so much of the loss proportionate to the share of a
retired or deceased partner remaining unabsorbed& shall not be allowed to be carried forward by the firm#
(ii) Where any person carrying on any business or profession has been succeeded in such capacity by
another person otherwise than by inheritance& such other person shall not be allowed to carry forward and set
off against his income& any loss incurred by the predecessor#
(iii) Where there is a succession by inheritance& the legal heirs are entitled to set off the business loss of the
predecessor# 3uch carry forward and set off is possible even if the legal heirs constitute themselves as
partnership firm# In such a case& the firm can carry forward and set off the business loss of the predecessor#
3et Aff %nd ,arry Horward Af =osses 2/
PCC MA5 = 2010
;u&%!)': 4 A6 M"-k%B
:r# )aner?ee furnishes you the following details for the year ended +$#5+#25$2G
Income (loss) from house property `
0ouse 8 $ +(&555
0ouse 8 2 3elf occupied (25&555)
0ouse 8 + (5&555
6rofits and gains from )usiness or 6rofession
Textile )usiness 2&55&555
%utomobile )usiness (+&55&555)
3peculation )usiness 2&55&555
,apital >ains
=ong-term capital gain from sale of shares (3TT paid) $&/5&555
=ong-term capital gain from sale of vacant site 2&55&555
3hort-term capital loss from sale of building $&55&555
(Cote G %ssume that the figures given above are computed and arrived at after considering eligible
deductions)#
Ather sourcesG
>ift from a Hriend (non-relative) on 5/#5(#25$$ (5&555
>ift from :aternal Bncle on 2/#52#25$2 $&55&555
>ift from >randfather!s Jounger )rother on $5#52#25$2 $&55&555
,ompute the total income of :r# )aner?ee for the %ssessment Jear 25$2-$+# (:odified)
A:%w&-.
C'mu!"!)': '. !'!"$ ):#'m& '. M-. 9":&-@&& .'- !C& A%%&%%m&:! E&"- 2012(13
` `
0:#'m& A$'%%B H'u%& -'&-!E
0ouse 8I +(&555
0ouse-2 83elf occupied (25&555)
0ouse-+ (5&555
Income from 0ouse 6roperty 1(&555
P-'.)!% ":* g"):% '. ?u%):&%% ":* -'.&%%)':
Textile business 2&55&555
%utomobile business (+&55&555)
3peculation business 2&55&555
Income from business or profession representing speculation
business profit (after set off of loss of automobile business) $&55&555
C")!"$ G"):%
=ong term capital gain from sale of shares (3TT paid)
` $&/5&555 8 exempt u.s# $5(+2) Cil
=ong term capital gain from sale of vacant site 2&55&555
3hort term capital loss from sale of building ($&55&555)
=ong term capital gain-after set off of short term loss against $&55&555
long term capital gain
3et Aff %nd ,arry Horward Af =osses 2(
0:#'m& .-'m 1!C&- %'u-#&%
>ift from a friend (non relative) on 5/#5(#25$$ (5&555
>ift from maternal uncle (on 2/#52#25$$) ` $&55&555& not taxable Cil
since maternal uncle is covered by the definition of the term! relative!
given in explanation to section /((2)(vi)
>ift from grand father!s younger brother on $#52#25$2# This amount
is taxable as grandfather!s younger brother is not covered by the
definition of relative!# $&55&555 $&(5&555
T'!"$ ):#'m& 4H36H000
0PCC 218 = 2009
Question 3 (1 !ar"s)
Mr. 0a@at su3;!ts the follo1!ng !nfor;at!on for the f!nanc!al .ear end!ng 1
st
MarchA 2012. Be des!res that
.ou should 9
(a) &o;pute the total !nco;e and
(3) <scerta!n the a;ount of losses that can 3e carr!ed for1ard.
(!) Be has t1o houses 9 `
(a) Bouse No. ' 'nco;e after all statutor. deduct!ons 62A000
(3) Bouse No. '' &urrent .ear loss

(0A000)
(!!) Be has three propr!etar. 3us!nesses 9
(a) Te#t!le /us!ness 9
(!) $!scont!nued fro; 1
st
Octo3erA 2011 &urrent .ear loss (0A000
(!!) /rought for1ard 3us!ness loss of the <.5. 2007=2008 8)A000
(3) &he;!cal /us!ness 9
(!) $!scont!nued fro; 1
st
MarchA 2010 hence no Prof!t-?oss N!l
(!!) /ad de3ts allo1ed !n earl!er .ears reco"ered dur!ng th!s .ear )A000
(!!!) /rought for1ard 3us!ness loss of the <.5. 2010=11 )0A000
(c) ?eather /us!ness 9 Prof!t for the current .ear 1A00A000
(d) Share of prof!t !n a f!r; !n 1h!ch he !s Partner s!nce 200( 1*A))0
(!!!) (a) Short=ter; &ap!tal Ca!n *0A000
(3) ?ong=ter; &ap!tal ?oss )A000
(!") &ontr!3ut!on to ?'& to1ards Pre;!u; 10A000
#ns$er%
Computation of total income of !r% &a'at for t(e #%)% *1*+13
,articulars - -
1% .ncome from (ouse property
Bouse No.1 62A000
Bouse No.2 (=) 0A000
(2A000
*% ,rofits an/ 0ains of business or profession
Prof!t fro; leather 3us!ness 1A00A000
?ess9 &urrent .ear loss of te#t!le 3us!ness (=) (0A000
*0A000
/ad de3ts reco"ered ta#a3le under sect!on (1(() )A000
8)A000
?ess9 /rought for1ard 3us!ness loss of te#t!le 3us!ness for
<.5.2007=08 set off aga!nst the 3us!ness !nco;e of current .ear 8)A000 N!l
3% Capital 1ains
Short=ter; cap!tal ga!n
*0A000
1ross Total .ncome 12*2
?ess9 $educt!on under chapter D'=<
Ender sect!on 70& ?'& pre;!u; pa!d 10A000
Total .ncome 3*2
Statement of losses to be carrie/ for$ar/ to #%)% *13+14
,articulars
/us!ness loss of <.5. 2010=11 to 3e carr!ed for1ard under sect!on 62 )0A000
?ong ter; cap!tal loss of <.5. 2012=1 to 3e carr!ed for1ard under sect!on 6( )A000
Notes:
(!) Share of prof!t fro; f!r; of `1*A))0 !s e#e;pt under sect!on 10(2<).
(!!) ?ong=ter; cap!tal loss cannot 3e set=off aga!nst short=ter; cap!tal ga!ns. ThereforeA !t has to 3e carr!ed
for1ard to the ne#t .ear to 3e set=off aga!nst long=ter; cap!tal ga!ns of that .ear.
;u&%!)': 4 A4 M"-k%B
4iscuss briefly on carry forward and set off of losses in the case of change in constitution of firm or
succession#
A:%w&-.
*efer to %nswer given in 6,, CA7 8 25$5 Euestion Co#1
PCC <U2E = 2009
;u&%!)': 4 A8 M"-k%B
:s# >eeta& a resident individual& provides the following details of her income . losses for the year ended
+$#5+#25$2G
(i) 3alary received as a partner from a partnership firm ` 1&/5&555#
(ii) =oss on sale of shares listed in )39 ` +&55&555# 3hares were held for $/ months and 3TT paid on sale#
(iii) =ong-term capital gain on sale of land ` /&55&555#
(iv) ` /$&555 received in cash from friends in party#
(v) ` //&555& received towards dividend on listed e@uity shares of domestic companies#
(vi) )rought forward business loss of assessment year 25$5- $$ ` $2&/5&555#
The return for assessment year 25$$-$2 was filed in time#
,ompute gross total income of :s# >eeta for the assessment year 25$2 -$+ and ascertain the amount of loss
that can be carried forward# (:odified)
A:%w&-.
C'mu!"!)': '. G-'%% T'!"$ 0:#'m& '. M%. G&&!" .'- !C& A%%&%%m&:! 5&"- 2012(13
P"-!)#u$"-% `
P-'.)!% ":* g"):% '. ?u%):&%% ":* -'.&%%)':
3alary received as a partner from a partnership firm is taxable under the head
M6rofits and gains of business and professionN 1&/5&555
=essG brought forward business loss of assessment year 25$5-$$ to be 1&/5&555
set-off against business income
Cil
C")!"$ G"):%
=ong term capital gain on sale of land 8 (3ee Cote (ii)) /&55&555
0:#'m& .-'m '!C&- %'u-#&%
,ash gift received from friends - since the value of cash gift exceeds
`/5&555& the entire sum is taxable /$&555
4ividend received from a domestic company is exempt under section $5(+-) Cil /$&555
G-'%% T'!"$ 0:#'m& 7H71H000
2'!&% =
(i) )alance brought forward business loss of assessment year 25$5-$$ of `/&55&555 has to be carried forward
to the next year#
(ii) =ong-term capital loss on sale of shares cannot be set-off against long-term capital gain on sale of land
since loss from an exempt source cannot be set-off against profit from a taxable source# Hurther& long-term
capital gain on sale of listed shares on which 3TT is paid is exempt under section $5(+2)& loss on sale of
listed shares is a loss from an exempt source# 3o it cannot be set-off against long-term capital gain on sale of
land& which is a profit from a taxable source#
PCC 218 = 2008
;u&%!)': 4 A6 M"-k%B
:r# 6& a resident individual& furnishes the following particulars of his income and other details for the
previous year 25$$-$2G `
(i) Income from salary $2&555
(ii) Cet annual value of house property 15&555
(iii) Income from business 25&555
(iv) Income from speculative business $2&555
(v) =ong term capital gain on sale of land $/&255
(vi) =oss on maintenance of race horse '&555
(vii) =oss on gambling 2&555
4epreciation allowable under the Income-tax %ct comes to `2&555 for which no treatment is given above#
The other details of unabsorbed depreciation and brought forward losses of previous year 2552-5' areG

`
(i) Bnabsorbed depreciation '&555
(ii) =oss from speculative business $(&555
(iii) 3hort term capital loss 1&255
3et Aff %nd ,arry Horward Af =osses 2'
,ompute the gross total income of :r# 6& for the %ssessment year 25$2-$+& and the amount of loss that can
or cannot be carried forward# (:odified)
A:%w&-.
C'mu!"!)': '. G-'%% T'!"$ 0:#'m& '. M-. P .'- !C& A.5. 2012(13
` `
(i) Income from salary $2&555
(ii) Income from 0ouse 6roperty
Cet annual value 15&555
=ess G 4eduction under section 2- (+5O of `15&555) 2$&555 -'&555
(iii) Income from business and profession
(a) 6rofit from business 25&555
=ess G ,urrent year depreciation 2&555
12&555
=ess G Bnabsorbed depreciation '&555 (+&555
(b) Income from speculative business $2&555
=ess G )rought forward loss from speculative business $2&555 Cil
()alance loss of `-&555 (i#e# `$(&555 8 `$2&555)
can be carried forward to the next year)
(iv) Income from capital gain
=ong term capital gain on sale of land $/&255
=ess G )rought forward short term capital loss 1&255 2&555
G-'%% !'!"$ ):#'m& 1H38H000
Am'u:! '. $'%% !' ?& #"--)&* .'-w"-* !' !C& :&+! E&"-
P"-!)#u$"-% `
=oss from speculative business (to be carried forward as per section 1+) -&555
=oss on maintenance of race horses (to be carried forward as per section 1-%) '&555
2'!&%:
(i) =oss on gambling can neither be set-off nor be carried forward#
(ii) It has been assumed that the brought forward losses relate to 6#J# 2552-5' or thereafter# Anly then
speculative business loss can set off against income from speculative business of the current year and the
balance loss can be carried forward to %#J# 25$+-$-# It may be noted that speculative business loss can be
carried forward for a maximum of four years as per section 1+#
PCC MA5 = 2008
;u&%!)': 3 A9 M"-k%B
:.s# 7ivitha K ,o#& a partnership firm& with four partners %& )& , and 4 having e@ual shares& furnishes the
following details& summarised from the valid returns of income filed by itG
A%%&%%m&:! 5&"- 0!&m &$)g)?$& .'- #"--E .'-w"-* ":* %&! '..
25$5-$$ G Bnabsorbed business loss `$&25&555
25$$-$2 G Bnabsorbed business loss `$&'5&555
25$$-$2 G Bnabsorbed depreciation `$&25&555
25$$-$2 G Bnabsorbed long term ,apital lossG
3et Aff %nd ,arry Horward Af =osses '5
- from shares `$&$5&555 3TT not paid
- from building `$&'5&555
, who was a partner during the last three years& retired from the firm with effect from 5$#5-#25$$#
The 3ummari<ed results of the firm for the assessment year 25$2-$+ are asunderG
`
Income under the head house property 15&555
0:#'m& .-'m ?u%):&%%:
3peculation 2&25&555
Con-speculation (/5&555)
C")!"$ G"):%:
3hort-term (from sale of shares) 3TT not paid -5&555
=ong-term (from sale of building) 2&$5&555
Income from other sources (5&555
)riefly discuss& how the items brought forward from earlier years can be set off in the hands of the firm for
the assessment year 25$2-$+& in the manner most beneficial to the assessee# %lso show the items to be
carried forward# ,omputation of total income is not re@uired# (:odified)
Solution:
%s per section 12& if there is a change in the constitution of a firm& so much of the loss proportionate to the
share of a retired or deceased partner remaining unabsorbed shall not be allowed to be carried forward by the
firm# 0owever& unabsorbed depreciation can be carried forward# Therefore& the firm will be allowed to carry
forward the following losses.depreciation#
Bnabsorbed business loss for assessment year 25$5-$$ ($&25&555 x 1/O) '5&555
Bnabsorbed business loss for assessment year 25$$-$2 ($&'5&555 x 1/O) $&-2&/55
Bnabsorbed depreciation for assessment year 25$$-$2 $&25&555
Bnabsorbed long term capital loss for assessment year 25$$-$2
Hrom 3hares ($&$5&555 x 1/O) 22&/55
Hrom building ($&'5&555 x 1/O) $&-2&/55
The above losses should be ad?usted against the income of assessment year 25$2-$+#
Income under the head house property 15&555
=essG Bnabsorbed deprecation (15&555)
Cil
Income from speculation business 2&25&555
=essG =oss from non-speculation business (/5&555)
=essG )rought forward business loss for assessment year 25$5-$$ ('5&555)
=essG )rought forward business loss for assessment year 25$$-$2 (25&555)
Income from )usiness.6rofession Cil
3et Aff %nd ,arry Horward Af =osses '$
Income from ,apital >ains
Income from short term capital gains -5&555
Income from long term capital gains 2&$5&555
=essG )rought forward long term capital gains (2&$5&555)
Income from capital gains -5&555
Income from Ather 3ources (5&555
=essG )rought forward unabsorbed depreciation /5&555
Income from other 3ources $5&555
C"--)&* .'-w"-* $'%%&%:
Bnabsorbed business loss for assessment year 25$$-$2 (2&/55
Bnabsorbed long term capital gain for assessment year 25$$-$2 $/&555
PCC 218 = 2007
;u&%!)': 7 A4 M"-k%B
4iscuss in brief the provisions relating to set off and carry forward of losses in speculation business#
A:%w&-.
(i) The loss of a speculation business of any assessment year is allowed to be set off only against the profits
and gains of another speculation business in the same assessment year#
(ii) The speculation loss not set-off in the same assessment year& is allowed to be carried forward to
subse@uent years and set-off only against income of any speculation business#
(iii) The loss in speculation business can be carried forward only for a maximum period of - years from the
end of the relevant assessment year in respect of which the loss was computed#
(iv) =oss from the activity of trading in derivatives& however& is not to be treated as speculative loss#
(v) %ccording to the 9xplanation to section 1+& where any part of the business of a company consists in the
purchase and sale of shares of other companies such company shall be deemed to be carrying on a
speculation business to the extent to which the business consists of the purchase and sale of such shares#
0owever& this 9xplanation does not apply to-
(a) a company whose gross total income consists mainly of income which is chargeable under the heads
MIncome from house propertyN& M,apital gainsN and MIncome from other sourcesN" and
(b) a company the principal business of which is the business of banking or money lending#
PCC MA5 = 2007
;u&%!)': 4 A6 M"-k%B
3imran& engaged in various types of activities& gives the following particulars of her income for the year
ended +$#5+#25$2G
`
3et Aff %nd ,arry Horward Af =osses '2
(a) 6rofit of business of consumer and house-hold products /5&555
(b) =oss of business of readymade garments $5&555
(c) )rought forward loss of catering business which was closed in %sst# Jear 25$$-$2 $/&555
(d) 3hort-term loss on sale of securities and shares $/&555
(e) 6rofit of speculative transactions entered into during the year $2&/55
(f) =oss of speculative transactions of %sst# Jear 2551-52 not set off till %sst# Jear 25$$-$2 $/&555
,ompute the total income of 3imran for the %#J# 25$2-$+# (:odified)
A:%w&-. C'mu!"!)': '. !'!"$ ):#'m& '. S)m-": .'- !C& A.5. 2012(13
P"-!)#u$"-% ` `
6rofit of business of consumer and house-hold products /5&555
=essG =oss of business of readymade garments for the year ad?usted
under section 15($) $5&555
-5&555
=essG )rought forward loss of catering business closed in %#J# 25$$-$2
set off against business income for the year as per section 12($) $/&555 2/&555
6rofit of speculative transaction $2&/55
T'!"$ 0:#'m& 37H700
2'!&% =
(i) =oss of speculative transaction of %#J# 2551-52 is not allowed to be set off against the profit of
speculative transaction of the %#J# 25$2-$+& since& as per the provisions of section 1+(-)& such loss can be
carried forward for set-off for a maximum period of - years only i#e# up to %#J# 25$$-$2
(ii) 3hort term capital loss of `$/&555 on sale of securities and shares has to be carried forward as per section
1- since there is no income under the head ,apital >ains for the %#J# 25$2-$+# The loss is to be carried
forward for set off in future years against income chargeable under the head ,apital >ains# 3uch loss can be
carried forward for a maximum period of 2 assessment years#
;u&%!)': 7 A4 M"-k%B
3tate the factors to be borne in mind relating to carry forward and set off of losses in case of change in
constitution of firm or succession under section 12#
A:%w&-.
*efer to %nswer given in 6,, CA7 8 25$5 Euestion Co#1
6rovisions Hor Hiling of *eturn Af Income '+
P4180S012S 314 30L02G
13 4ETU42 13 02C1ME
Su?m)%%)': '. -&!u-: '. ):#'m& 139A1B
4&!u-: '. $'%% 139A3B
9&$"!&* -&!u-: 139A4B
4&!u-: '. ):#'m& '. #C"-)!"?$& ):%!)!u!)':% 139A4AB
4&!u-: '. ):#'m& '. '$)!)#"$ "-!E 139A49B
4&!u-: '. ):#'m& '. #&-!"): "%%'#)"!)':% ":* ):%!)!u!)':% 139A4CB
4&>)%&* -&!u-: 139A7B
/&.&#!)>& -&!u-: 139A9B
P&-m":&:! "##'u:! :um?&- 139A
S#C&m& .'- %u?m)%%)': '. -&!u-:% !C-'ugC T"+ 4&!u-: P-&"-&-% 1399
4&!u-: ?E wC'm !' ?& %)g:&* 140
THE145 ;UEST012
;1 N8. 0m.O. 6-)!& " :'!& ': .)$):g '. -&!u-: '. ):#'m&. S&# 139A1B
'-
6-)!& " :'!& ': .)$):g '. >'$u:!"-E -&!u-: '. ):#'m&.
;2 N8. 0m.O. 6-)!& " :'!& ': 4&!u-: '. L'%% S&# 139A3B.
;3 N8. 0m.O. 6-)!& " :'!& ': ?&$"!&* -&!u-: '. ):#'m& S&# 139A4B.
;4 N8. 0m.O. 6-)!& " :'!& ': -&>)%&* -&!u-: '. ):#'m& S&# 139A7B.
;7 N8. 0m.O. 6-)!& " :'!& ': *&.&#!)>& -&!u-: '. ):#'m& S&# 139A9B.
;6 N8. 0m.O. 6-)!& " :'!& ': &-m":&:! "##'u:! :um?&- S&# 139A.
;7. N8. 0m.O 6-)!& " :'!& ': %u?m)%%)': '. -&!u-:% !C-'ugC T"+ 4&!u-: P-&"-&-%. S&#. 1399
;8. 6-)!& " :'!& ': %)g:):g '. -&!u-: '. ):#'m&. S&#. 140
;u&%!)': 1 N8. 0m.O: 6-)!& " :'!& ': .)$):g '. -&!u-: '. ):#'m&.
1-
6-)!& " :'!& ': .)$):g '. >'$u:!"-E -&!u-: '. ):#'m&.
A:%w&-:
3)$):g '. -&!u-: '. ):#'m&/ .)$):g '. >'$u:!"-E -&!u-: '. ):#'m&
Bnder section 139A1B& a return of income is to be filed by the following personsG
(i) 9very #'m":E "%%&%%&& or "-!:&-%C) .)-m#
(ii) 9very person other than a company assessee and partnership firm& whose total income without giving
effect to the provisions of section $5%& $5)& $5)% or ,hapter 7I% (deduction under section 25, to 25B) )%
&+#&&*):g !C& ):#'m& &+&m! .-'m !"+.
Example
If for previous year 25$$-$2 gross total income of :rs# :adhuri )a?a? is `$&'/&555 and deductions allowed
under section 25, to 25B are `(5&555 and total income is `$&+/&555 and tax liability shall be nil but still
:rs# :adhuri )a?a? has to file her return of income#
6rovisions Hor Hiling of *eturn Af Income '-
(iii) 9very person who is "%%&%%"?$& ': ?&C"$. '. ":E '!C&- &-%': and the person on whose behalf he is
assessable has gross total income more than the income exempt from tax& in such cases also& the person is
re@uired to file a return of income on behalf of such person#

Example
:inor son of :r# %shish 3ingh has gross total income from film acting ` / lakhs# In this case& :r# %shish
3ingh has to file a return of income on behalf of his minor son#
U:*&- %&#!)': 139A4ABH 9very charitable trust has to file a return of income if its total income before
permitting exemption under section $$ and $2& is exceeding the income exempt from tax& shall be re@uired to
file the return of income#
Example
DJ charitable trust has income of `$5&55&555 out of which `'&55&555 is exempt under section $$ and $2 and
balance income which is taxable is `$&55&555& in this case tax liability shall be nil because income of trust
shall be taxable at slab rate& however& the trust has to file its return of income because income before taking
exemption under section $$ and $2 shall be taken into consideration#
If income of a charitable trust is `$&25&555 and it is exempt under section $$ and $2& in this case the trust
need not file any return#
U:*&- %&#!)': 139A49BH 9very political party having total income before permitting exemption under
section $+%& more than the income exempt from income tax is also re@uired to file a return of income#
Example
If income of a political party is `/&55&555 and it is exempt to the extent of `-&55&555 under section $+%& the
political party has to file the return#
U:*&- %&#!)': 139A4CBH % research association& a news agency& trade or professional association& trade
union etc# whose incomes are exempt from tax are also re@uired to file their return of income if their total
income is exceeding the income exempt from tax before permitting exemption under section $5#
U:*&- %&#!)': 139A4/BH 9very university& college or other institution referred in section +/& which is not
re@uired to furnish return of income or loss under any other provision of this section& shall furnish the return
in respect of its income or loss in every previous year and all the provisions of this %ct shall apply#
4&!u-: '. ):#'m& :'! !' ?& .)$&* ): #&-!"): #"%&%
%s per C#C# +(.25$$ datedG 2+#5(#25$$& if any individual whose total income is not exceeding `/&55&555 and
he has income only under the head salary& shall be exempt from filing the return of income and also he may
have interest income from his savings bank account in a bank upto `$5&555# 3uch individual should obtain
certificate in Horm Co#$( from his employer and the employer should deducted tax at source and also 6%C
of the employee is mentioned in the form# The employee should not have any refund claim#
Example
(i) If an individual has salary income of ` -&'5&555 and interest income from savings bank account not
exceeding `$5&555 (which has been reported to the employer and tax has been deducted thereon)& then
the taxpayer would be exempt from the re@uirement of filing income-tax returns since the total income
from both the above sources does not exceed five lakh rupees#
(ii) % taxpayer having salary income of ` -&'2&555 and interest income from savings bank account of
`2&555 (which has been reported to the employer and tax has been deducted thereon)& would also be
eligible under this 3cheme#
(iii) % taxpayer having salary income up to ` /&55&555 and nil interest income would also be eligible under
this 3cheme#
6rovisions Hor Hiling of *eturn Af Income '/
(iv) % taxpayer having salary income of `/&/5&555& interest income from savings bank account of
`2&555(which has been reported to the employer and tax has been deducted thereon)& and who has
claimed deduction of ` 15&555 under section 25, (on account of certain payments.investments.savings)
would also be eligible under the 3cheme#
(v) % taxpayer having salary income of ` (&$5&555& interest income from savings bank account of ` $5&555
(which has been reported to the employer and tax has been deducted thereon)& and who has claimed
deduction of ` $&55&555 under section 25, (on account of certain payments.investments.savings)& a
deduction of ` 25&555 under 25,,H (Infrastructure )onds) and a further deduction of ` $/&555 under
section 254 (0ealth Insurance 6remium) would also be eligible under the 3cheme#
/u& *"!& .'- .)$):g !C& -&!u-: '. ):#'m&
*eturn is to be filed in general upto +$
st
Puly of the assessment year& however& in the following cases& the last
date shall be +5
th
3eptember of the assessment year#
1. 9very company assessee
Example
Hor the previous year 25$$-$2& %), =td# has to file its return of income upto +5#5'#25$2#
2. %ny other person who is re@uired to get his accounts audited either under Income Tax %ct or under any
other %ct#
Example
:r# %nkur ;umar has his own business and his turnover for pervious year 25$$-$2 is `(2 lakhs# In this case&
the last date of filing the return of income shall be +5#5'#25$2& but if turnover is ` -1 lakhs& the last date
shall be +$#51#25$2#
3imilarly if a partnership firm DJ has turnover of its business ` 2/ lakhs for previous year 25$$-$2& in this
case& the last date of filing of return of income shall be +$#51#25$2#
3. 9very political party& co-operative society& charitable trust#
4. Working partner of a partnership firm whose accounts are re@uired to be audited#
The return of income is to be filed in the prescribed form# It should be verified in the prescribed manner# It
should be signed by the authori<ed person#
E(3)$):g '. 4&!u-:
%n assessee has the option to e-file the return but e-filing is compulsory in case of a company and also in
case of other assesses who are re@uired to get their accounts audited#
A% &- C)-#u$"- 2'. 639H /"!&* 2'>&m?&- 13H 1992H if the last day of filing the return of income or loss is
a day on which the office is closed& the assessee can file the return on the next day afterwards on which the
office is open#
,roblem 1% %), =td# has turnover of its business `+5 lakhs for the assessment year 25$2-$+& in this case the
company has to file its return of income for the assessment year 25$2-$+ upto ]]]]]]]]]]]]]#
5int: +5#5'#25$2
,roblem *% :r# 4eepak %ggarwal has turnover of its business for the assessment year 25$2-$+ `(/ lakhs&
the last date for filing the return of income shall be ]]]]]]]]]]]]]]#
5int: +5#5'#25$2
,roblem 3% DJ partnership firm has turnover of its business for the assessment year 25$2-$+ `25 lakhs& the
6rovisions Hor Hiling of *eturn Af Income '(
last date for filing the return of income shall be ]]]]]]]]]]]]]#
5int: +$#51#25$2
,roblem 4% %), =td# has loss of `+/ lakhs for the assessment year 25$2-$+# In this case& company is not
re@uired to file any return of income# (True.Halse)
5int: Halse
%s per *ule $2& every assessee has to file return of income in the prescribed form and such form are as given
belowG
SAHA< A0T4(1B Individuals& whose total income includes income chargeable under the head 8
M3alariesN or income in the nature of family pension" or MIncome from house
propertyN& where the assessee does not own more than one house property and does
not have any brought forward loss under the head" or
MIncome from other sourcesN& except winnings from lottery or income from race
horses#
3'-m 2'. 0T4(2 Hor Individuals and 0BHs not having Income from )usiness or 6rofession
3'-m 2'. 0T4( 3 Hor Individuals.0BHs being partners in firms and not carrying out business or
profession under any proprietorship
3'-m 2'. 0T4(4 Hor individuals K 0BHs having income from a proprietary business or profession
SUGAM A0T4(4SB 6resumptive )usiness Income
% person being an individual or a 0indu undivided family deriving business income
and such income is computed in accordance with special provisions& referred to in
section --%4 and section --%9 of the %ct#
3'-m 2'. 0T4(7 Hor firms& %A6s and )AIs
3'-m 2'. 0T4( 6 Hor ,ompanies other than companies claiming exemption under section $$
3'-m 2'. 0T4(7 Hor persons including companies re@uired to furnish return under section $+'(-%) or
section $+'(-)) or section $+'(-,) or section $+'(-4)
3'-m 2'. 0T4(8 Where the data of the *eturn of Income in Horm 3%0%P& IT*-2& IT*-+& IT*--3
(3B>%:) K IT*-1 transmitted electronically without digital signature
;u&%!)': 2 N8. 0m.O : 6-)!& " :'!& ': 4&!u-: '. L'%% S&#!)': 139A3B.
A:%w&-:
4&!u-: '. L'%% S&#!)': 139A3B
If any person has sustained any loss under the head )usiness.6rofession or under the head capital gains or
the loss is from owning and maintaining of race horses and such person claims that the loss is to be carried
forward& such person has to file a return of loss and such return shall be examined by the %ssessing Afficer
and the loss computed by the assessee shall be confirmed by the %ssessing Afficer by sending an intimation
under section $/1 and only after that carry forward of loss shall be allowed to the assessee#
*eturn under section $+'(+) has to be submitted within the time allowed under section $+'($) and it should
be in the prescribed form and it should be verified in the prescribed manner#
U:*&- %&#!)': 80& if any loss has not been determined on the basis of *eturn of =oss filed under section
$+'(+)& it will not be allowed to be carried forward and set off#
Example
Hor previous year 25$$-$2 %), =td# has incurred business loss of ` /5 lakhs# In this case& the company
must file return of loss under section $+'(+) maximum upto +5#5'#25$2& otherwise carry forward of the loss
is not allowed#
The above provisions are not applicable with regard to loss under the head house property and also it is not
applicable with regard to unabsorbed deprecation#
6rovisions Hor Hiling of *eturn Af Income '1
If any return is filed under section $+'(+)& all the provisions of this %ct shall apply as if it were a return
under section $+'($)#
;u&%!)': 3 N8. 0m.O: 6-)!& " :'!& ': 9&$"!&* 4&!u-: '. 0:#'m& S&#!)': 139A4B.
A:%w&-:
9&$"!&* 4&!u-: '. 0:#'m& S&#!)': 139A4B
9very person is re@uired to file a return of income within the time allowed under section $+'($) however
return of income can be filed even after the due date but maximum within one year from the end of relevant
assessment year#
Example
Hor previous year 25$$-$2 %), =td# has to file its return of income upto +5#5'#25$2# 0owever& belated
return is allowed under section $+'(-) but maximum upto +$#5+#25$- but the assessee has to pay interest
under section 2+-% after the expiry of the due date for filing the return of income and also penalty of `/&555
shall be imposed under section 21$H& if the return has been filed after the expiry of the relevant assessment
year#
If any person has not filed his return of income upto the due date and it has come to the notice of the
%ssessing Afficer& in that case& %ssessing Afficer may issue him a notice under section $-2($) and the
assessee shall be bound to file the return within the time allowed by the %ssessing Afficer otherwise
%ssessing Afficer may do best ?udgment assessment under section $-- i#e# %ssessing Afficer can fix the tax
liability of the assessee on the basis of his own ?udgment# )elated return shall not be accepted after
completion of best ?udgment assessment# Hurther under section 21$($)(b)& if any person has failed to comply
with a notice given under section $-2($)& %ssessing Afficer may direct such a person to pay a penalty of
`$5&555 for each such failure#
Example
Hor previous year 25$$-$2 %), =td# has not filed its return of income upto +5#5'#25$2 and the %ssessing
Afficer has issued a notice under section $-2($) on $5#$$#25$2 directing the company to file its return upto
2/#$$#25$2# In this case& the company must file its return upto 2/#$$#25$2 otherwise %ssessing Afficer may
do best ?udgment assessment under section $-- and after completion of best ?udgment assessment& belated
return shall not be accepted#
If in the above case the company has not filed the return upto 2/#$$#25$2 and %ssessing Afficer has
completed best ?udgment assessment on $$#$2#25$2& belated return shall not accepted from $$#$2#25$2
onwards#
If a return is filed after the completion of best ?udgment assessment under section $-- but before serving the
demand notice on the assessee& such return is not a valid return i#e# the return must be filed before
completion of best ?udgment assessment#
Example
If a best ?udgment assessment is made on $5#$2#25$2 and the assessee files a return on $/#$2#25$2 and
notice with regard to completion of best ?udgment assessment is served on 25#$2#25$2& it is not a valid return
because best ?udgment assessment has already been completed#
;u&%!)': 4 N8. 0m.O: 6-)!& " :'!& ': 4&>)%&* 4&!u-: '. 0:#'m& S&#!)': 139A7B.
A:%w&-:
4&>)%&* 4&!u-: '. 0:#'m& S&#!)': 139A7B
If any person has furnished a return under section 139A1B or in pursuance of a notice issued under section
142A1B and such person has discovered any ?':".)*& 'm)%%)': '- w-':g %!"!&m&:!& he may furnish a
revised return at any time before expiry of one year from the end of the relevant assessment year#
6rovisions Hor Hiling of *eturn Af Income '2
Example
If %), =td# has filed its return of income on +5#5'#25$2 for previous year 25$$-$2 and subse@uently the
company has detected any bonafide error& in this case& the company is allowed to revise its return of income
under section $+'(/) but maximum upto +$#5+#25$-#
If the assessment on the return has already been completed& revision is not allowed after completion of
assessment#
Example
Hor the previous year 25$$-$2 %), =td# has filed its return of income on +5#5'#25$2# This return was
checked by the %ssessing Afficer on 5$#5+#25$+ and the company wish to file a revised return on
$5#5-#25$+# In this case& revised return shall not be accepted#
%n assessee is allowed to revise the return of income any number of times& however& if the earlier return has
already being assessed& revised return shall not be allowed#
The term Q'm)%%)':R and Qw-':g %!"!&m&:!R refers to an unintentional act or neglect to perform what the
law re@uires i#e# the omission should be bonafide omission# If any person has given a wrong information
knowingly& revision is not allowed as decided in C0T >. 4"*C&E SCE"m N1980O AA$$.B#

Amission or wrong statement in the original return must be due to a bonafide inadvertence or mistake on the
part of the assessee Su:":*" 4"m /&k" >. C0T N1994O AG"uC"!)B.
*evision is allowed only with regard to a return& which was filed under section $+'($) or in pursuance of a
notice issued under section $-2($) i#e# if the return has been filed under any other section& its revision is not
allowed#
0owever& the return filed under section $+'(+) is considered to be return under section $+'($)& its revision is
allowed#
If any return was filed under section $+'(-)& its revision is not allowed as decided in Kum"- <"g*)%C
CC":*-" S):C" >. C0T A1996B ASCB.
Example
If %), =td# has filed its return of income on $5#$$#25$2 under section $+'(-)& its revision is not allowed#
4&>)%&* -&!u-: -&$"#&% 1-)g):"$ 4&!u-:
%ny revised return shall substitute the original return i#e# it will be presumed that revised return was filed on
the date on which the original return was filed as decided in /C"mu- Sug"- M)$$% L!*. >. C0T A1973B
AA$$B
C&-!"): ):.'-m"!)': -&Ju)-&* ): !C& -&!u-: '. ):#'m& S&#!)': 139A6B
The prescribed form of the returns shall& in such cases as may be prescribed& re@uire the assessee to furnish
the following particulars
- Income exempt from tax&
- %ssets of the prescribed nature& value and belonging to him&
- )ank account and credit card held by him
- 9xpenditure exceeding the prescribed limits incurred by him under prescribed heads and such other
outgoings as may be prescribed#
6rovisions Hor Hiling of *eturn Af Income ''
;u&%!)': 7 N8. 0m.O: 6-)!& " :'!& ': /&.&#!)>& 4&!u-: '. 0:#'m& S&#!)': 139A9B.
A:%w&-:
/&.&#!)>& 4&!u-: '. 0:#'m& S&#!)': 139A9B
Where the %ssessing Afficer considers that the return of income furnished by the assessee is defective& he
may intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of
.).!&&: *"E% .-'m !C& *"!& '. %u#C ):!)m"!)': or within such further period which& the %ssessing Afficer
may& allow and if the defect is not rectified within the said period& then the return shall be treated as an
invalid return and the provisions of this %ct shall apply as if the assessee had failed to furnish the return#
6rovided that where the assessee rectifies the defect after the expiry of the said period of fifteen days or the
further period allowed& but before the assessment is made& the %ssessing Afficer may condone the delay and
treat the return as a valid return#
% *eturn of income shall be regarded as defective unless all the annexures& statements and columns in the
return of income relating to computation of income chargeable under each head of income& computation of
gross total income and total income have been duly filled in#
C0T >. /-. K-)%C": L"$ G'E"$ N1984O APu:@"? L H"-"E":"B
% return which is not verified by the assessee is not valid in the eye of law& i#e# it is an invalid return and not
the defective return#
9&C"-) L"$ CC"!!&-@) >. C0T N1934O AA$$"C"?"*B
KC)"$*"% L S':% >. C0T N1997O AM.P.B.
%n unsigned return is not a valid return at all i#e# it will not be considered to be defective return rather it is
an invalid return#
A% &- 4u$& 12A2BH :' *'#um&:!% %C"$$ ?& &:#$'%&* w)!C !C& -&!u-: '. ):#'m& -"!C&- !C& "%%&%%&&
%C'u$* -&!"): %u#C *'#um&:!% w)!C C)m ":* ':$E ': *&m":* !C& *'#um&:!% %C'u$* ?& %u?m)!!&*.
;u&%!)': 6 N8. 0m.O: 6-)!& " :'!& ': P&-m":&:! A##'u:! 2um?&- S&#!)': 139A.
A:%w&-:
P&-m":&:! A##'u:! 2um?&- S&#!)': 139A
TC& .'$$'w):g &-%':% C">& !' "$E .'- "$$'!m&:! '. &-m":&:! "##'u:! :um?&-.
1. 9very person having total income more than the income exempt from tax and also every person who is
assessable on behalf of any other person and the person on whose behalf he is assessable has income
more than the income exempt from tax#
2. 9very person who is engaged in business.profession and his turnover is likely to exceed `/ lakh during
the year#
3. 9very charitable trust who is re@uired to file a return of income under section $+'(-%)#
4. 9very person who has been notified by the ,entral >overnment#
7. %ny person who is willing to take permanent account number#
6. The %ssessing Afficer& having regard to the nature of the transactions as may be prescribed& may also
allot a permanent account number& to any other person (whether any tax is payable by him or not)& in the
manner and in accordance with the procedure as may be prescribed#
The department shall allot a $5 digit alphanumeric number on a laminated card& which contains the
photograph of the assessee#
6rovisions Hor Hiling of *eturn Af Income $55
Example
%%96> 2''(9
The purpose to issue permanent account number is to have better identification of the assessee and to
facilitate faster correspondence between the department and the assessee#
6ermanent account number is being used to detect concealed income and for this purpose the assessee has to
mention permanent account number in the following transaction as per 4u$& 1149#
1. 3ale.6urchase of immovable property of ` / lakhs or more#
2. 3ale.purchase of shares and securities exceeding ` $ lakh#
3. %pplying for a telephone#
4. 3ale.purchase of motor vehicles#
7. Apening any account in a bank not being a time deposit account#
6. Apening a time deposit account in a bank exceeding ` /5&555#
7. :aking a payment of hotel or restaurant bill exceeding ` 2/&555#
8. 4eposit in cash aggregating `/5&555 or more with a banking company during any one day#
9. 6ayment in cash for purchase of a bank draft or a pay order or banker!s che@ue for an amount aggregating
`/5&555 or more during any one day#
10. 6ayment in cash in connection with travel to any foreign country of an amount exceeding twenty-five
thousand rupees at any one time#
11. :aking an application to any banking company or to any other company or institution& for issue of a
credit card.debit card
12. 6ayment of an amount of fifty thousand rupees or more to a :utual Hund for purchase of its units#
13. 6ayment of an amount of fifty thousand rupees or more to a company for ac@uiring shares issued by it#
14. 6ayment of an amount of fifty thousand rupees or more to a company or an institution for ac@uiring
debentures or bonds issued by it#
17. 6ayment of an amount of fifty thousand rupees or more to the *eserve )ank of India& for ac@uiring
bonds issued by it#
16. 6ayment of an amount aggregating `/5&555 or more in a year as life insurance premium to an insurer#
17. 6ayment to a dealer of an amount of `/&55&555 or more at any one time for purchase of bullion or
?ewellery#
18. %ny other transaction notified for this purpose#
6rovisions Hor Hiling of *eturn Af Income $5$
P&:"$!E .'- :':(#'m$)":#&
If any person has failed to comply with the provision of section $+'%& %ssessing Afficer may impose
penalty under section 2729 of ` 10H000#
;u&%!)': 7. N8. 0m.O 6-)!& " :'!& ': %u?m)%%)': '. -&!u-:% !C-'ugC T"+ 4&!u-: P-&"-&-%.
A:%w&-:
S#C&m& .'- %u?m)%%)': '. -&!u-:% !C-'ugC T"+ 4&!u-: P-&"-&-% S&#!)': 1399
In order to enable a specified class of persons to prepare and furnish return of income& income tax
department shall appoint Tax *eturn 6reparer# The tax return preparer shall hold a graduation degree from a
recognised Indian university or other specified @ualifications but such persons should not be a ,hartered
%ccountant or other specified persons#
The 4irectorate of Income Tax constituted for this purpose shall be called *esource ,entre# The resource
centre shall enter into an agreement with the 6artner Argani<ation for recruitment and training of Tax *eturn
6reparer# The partner organi<ation will select and recruit the re@uired number of T*6s#
A &-%': m"E "-'"#C " T4P .'- .)$):g !C& -&!u-: '. ):#'m& ?u! ":E &-%': wC' )% -&Ju)-&* !' g&!
C)% "##'u:!% "u*)!&* %C"$$ :'! ?& "$$'w&* !' .)$& !C& -&!u-: !C-'ugC !C& T"+ 4&!u-: P-&"-&-.
S)m)$"-$E ":E :':(-&%)*&:! %C"$$ :'! ?& "$$'w&* !' .)$& -&!u-: !C-'ugC T"+ 4&!u-: P-&"-&-.
The resource centre shall pay a commission of 3K of the tax paid on the income declared in the return or
` 1H000 wC)#C&>&- )% $&%%# % T*6 shall be entitled for a minimum payment of ` 270 and if commission paid is
less than `2/5& he can receive the difference amount from the assessee whose return is being filed#
The resource centre shall have the powers to cancel the certificate of T*6 if fails to comply with the
prescribed conditions#
If an assessee is filing return for more than one year& commission payable shall be 3K for first return& 2K
for the second return and 1K .'- !C& !C)-* -&!u-:#
;u&%!)': 8: 6-)!& " :'!& ': S)g:):g '. 4&!u-: '. 0:#'m&.
A:%w&-:
S)g:):g '. -&!u-: '. ):#'m&
4&!u-: ?E wC'm !' ?& %)g:&* S&#!)': 140
The return under section $+' shall be signed and verifiedR
1. in the case of an individual&R
(i) by the individual himself#
(ii) where he is absent from India& by the individual himself or by some person duly authori<ed by him in
this behalf#
(iii) where he is mentally incapacitated from attending to his affairs& by his guardian or any other person
competent to act on his behalf and
(iv) where& for any other reason& it is not possible for the individual to sign the return& by any person duly
authori<ed by him in this behalf#
P-'>)*&* that in a case referred to in sub-clause (ii) or sub-clause (iv)& the person signing the return holds a
valid power of attorney from the individual to do so& which shall be attached to the return#
2. in the case of a 0indu Bndivided Hamily& by the karta& and& where the karta is absent from India or is
mentally incapacitated from attending to his affairs& by any other adult member of such family#
3. in the case of a company& by the managing director thereof& or where for any unavoidable reason such
managing director is not able to sign and verify the return& or where there is no managing director& by any
director thereof#
P-'>)*&* that where the company is not resident in India& the return may be signed and verified by a person
who holds a valid power of attorney from such company to do so& which shall be attached to the return#
P-'>)*&* .u-!C&- that&R
(a) where the company is being wound up& whether under the orders of a court or otherwise& or where any
person has been appointed as the receiver of any assets of the company& the return shall be signed and
verified by the li@uidator#
(b) where the management of the company has been taken over by the ,entral >overnment or any 3tate
>overnment under any law& the return of the company shall be signed and verified by the principal officer
thereof#
4. in the case of a firm& by the managing partner& or where for any unavoidable reason such managing
partner is not able to sign and verify the return& or where there is no managing partner as such& by any
partner thereof& not being a minor#
7. in the case of a limited liability partnership& by the designated partner thereof& or where for any
unavoidable reason such designated partner is not able to sign and verify the return& or where there is no
designated partner as such& by any partner thereof#
6. in the case of a local authority& by the principal officer#
7. in the case of a political party referred to in sub-section (-)) of section $+'& by the chief executive officer
of such party (whether such chief executive officer is known as secretary or by any other designation)#
8. in the case of any other association& by any member of the association or the principal officer#
9. in the case of any other person& by that person or by some person competent to act on his behalf#
9&C"-) L"$ CC"!!&-@) >. C0T N1934O AA$$"C"?"*B
KC)"$*"% L S':% >. C0T N1997O AM.P.B.
%n unsigned return is not a valid return at all i#e# it will not be considered to be defective return rather it is
an invalid return#
P4ACT0CE P419LEMS
;u&%!)': 1. 4uring the previous year 25$$-$2& :r# D has income under the head house property `1&55&555#
In this case& his last date of filing of return shall be ]]]]]]]]]]]]]]]]]]]]#
;u&%!)': 2. % partnership firm DJ has turnover of his business `+/&55&555 and income under the head
)usiness.6rofession `/&55&555 for previous year 25$$-$2# In this case& the last date of filing of return of
income shall be ]]]]]]]]]]]]#
;u&%!)': 3. %), =td# has loss under the head )usiness.6rofession `+&55&555 for previous year 25$$-$2# In
this case& the company has to file the return latest by ]]]]]]]]]]]]]]]]]]]]#
;u&%!)': 4. % partnership firm DJ has turnover of the business `(/&55&555 and income from business
`1&55&555 for the previous year 25$$-$2& the last date for filing of return of income shall be
]]]]]]]]]]]]]]#
;u&%!)': 7. %), =td# do not have any income for the previous year 25$$-$2# In this case& company is not
6rovisions Hor Hiling of *eturn Af Income $5+
re@uired to file any return of income# 4iscuss#
;u&%!)': 6. %), =td# has loss under the head )usiness.6rofession `1&55&555 for the previous year 25$$-$2
and the company has filed the return of loss on 5$#$$#25$2 under section $+'(+)# 4iscuss whether set off or
carried forward and set off of the loss is allowed or not#
;u&%!)': 7. Hor the previous year 25$$-$2& :r# D an assessee shall be allowed to file belated return of
income latest upto ]]]]]]]]]]]]]]]]]]]]#
;u&%!)': 8. Hor the previous year 25$$-$2& :r# D has filed original return of income on 5$#51#25$2& he can
file revised return of income latest upto]]]]]]]]]]]]]]]]]#
;u&%!)': 9. Hor the previous year 25$$-$2& :r# D has filed original return of income on 5$#$$#25$2& he can
file revised return of income latest upto ]]]]]]]]]]]]]]]]]]]]#
;u&%!)': 10. :r# D has filed original return for previous year 25$$-$2 on 5$#51#25$2 and revised return on
5$#$$#25$2 and he further wants to revise the return on 5$#5$#25$+# 4iscuss whether he is allowed to do so
or not#
A:% 1. +$#51#25$2
A:% 2. +$#51#25$2
A:% 3. +5#5'#25$2
A:% 4. +5#5'#25$2
A:% 7. %s per section $+'($)& every company has to file return of income in every case#
A:% 6. The company is allowed to set off the loss during the previous year 25$$-$2 but its carried forward is
not allowed because return of loss has to be filed within the time allowed under section $+'($) i#e#
+5#5'#25$2 in the above case#
A:% 7. +$#5+#25$-
A:% 8. +$#5+#25$-
A:% 9. %s per 3upreme ,ourt decision in ;umar Pagdish ,handra 3inha v# ,IT& revision of belated return is
not allowed#
A:% 10. % revised return can also be revised further any number of times& however& if the earlier return has
already been assessed& revised return is not allowed subse@uently# In the given case& revised return can be
filed on 5$#5$#25$+#
;u&%!)': A8. 0m.B: 6-)!& " :'!& ': 3)$):g '. S&->)#& T"+ 4&!u-:.
A:%w&-:
3u-:)%C):g '. 4&!u-:% S&#!)': 70 / 4u$& 7 '. ST4H 1994
9very assessee liable to pay service tax shall submit a half yearly return in Hrom QST(3R or QST(3AR& as the
case may be& along with a copy of the Horm GA4(7 for the months . @uarters covered in !C& C"$.(E&"-$E
-&!u-:# 9very assessee shall submit the C"$. E&"-$E -&!u-: by the 27
!C
'. !C& m':!C following the particular
half-year# If the last date is a holiday& return can be filed on the next day without any penalty#
9very assessee shall submit the half-yearly return electronically#
6rovisions Hor Hiling of *eturn Af Income $5-
9very service provider who is registered shall also be re@uired to file the return even if service tax liability is
nil i#e# if any service provider has gross receipt exceeding `'&55&555 shall be re@uired to get registered and in
that case return has to be filed even if service tax liability is nil#
9very assessee shall furnish to the 3uperintendent of ,entral 9xcise at the time of filing his return for the
first time a list of all accounts maintained by the assessee in relation to service tax including memoranda
received from his branch offices#
;u&%!)':: 6-)!& " :'!& ': 4&>)%)': '. S&->)#& T"+ 4&!u-:.
A:%w&-:
4&>)%)': '. 4&!u-: 4u$& 79 '. ST4H 1994
%n assessee may submit a revised return& in 3'-m ST(3& in !-)$)#"!&& to correct a mistake or omission&
within a period of 90 *"E% from the date of submission of the return under rule 1#
;u&%!)': A8. 0m.B: 6-)!& " :'!& ': /&$"E 3u-:)%C):g '. S&->)#& T"+ 4&!u-:.
A:%w&-:
Am'u:! !' ?& ")* .'- /&$"E ): 3u-:)%C):g 4&!u-: 4u$& 7C '. ST4H 1994
Where the return prescribed under rule 1 is furnished after the date prescribed for submission of such return&
the person liable to furnish the said return shall pay to the credit of the ,entral >overnment& for the period of
delay of-
(i) 17 *"E% from the date prescribed for submission of such return& an amount of ` 700#
(ii) ?&E':* 17 *"E% ?u! :'! $"!&- !C": 30 *"E% from the date prescribed for submission of such return& an
amount of ` 1H000" and
(iii) beyond 30 *"E% from the date prescribed for submission of such return an amount of ` 1H000 $u% ` 100
for every day from the thirty first day till the date of furnishing the said return#
6rovided that the total amount payable in terms of this rule& for delayed submission of return& shall not
exceed ` 20H000#
6rovided also that where the gross amount of service tax payable is nil& the ,entral 9xcise Afficer may& on
being satisfied that there is sufficient reason for not filing the return& reduce or waive the penalty#
;u&%!)': : 6-)!& " :'!& ': #':!&:!% '. !C& S&->)#& T"+ 4&!u-:.
A:%w&-:
C':!&:!% '. !C& 4&!u-:
$# 0alf year for which return is being filed
2# Came of the assessee
+# 3T, Cumber
-# %ddress
/# ,onstitution of the assessee like individual or partnership firm etc#
(# %ssessee liable to pay service tax as service provider or service receiver under reverse charge
1# >ross amount received
2# %mount of service tax and education cess
'# Tax credit allowed
$5# Cet tax payable
$$# 4etails of services rendered
$2# 7erification of the return
$+# 3ignature of service provider
6rovisions Hor Hiling of *eturn Af Income $5/
;u&%!)': : 6-)!& " :'!& ': *'#um&:!% !' ?& %u?m)!!&* "$':g w)!C S&->)#& T"+ 4&!u-:.
A:%w&-:
/'#um&:!% !' ?& %u?m)!!&* "$':g w)!C !C& -&!u-:
%longwith ST(3 return following documents should be attachedG
(i) copies of GA4(7 challans which indicate the payment of service tax#
(ii) a memorandum in form ST(3A giving details of the difference between the amount of provisional tax
deposited and the actual amount payable for each month#
9very service tax assessee should furnish to the 3uperintendent of ,entral 9xcise& at the time of filing first
half yearly return& a $)%! '. "$$ "##'u:!% m"):!"):&* ?E C)m ): -&$"!)': !' %&->)#& !"+#
The service tax return should be filed ): !-)$)#"!& !' !C& Su&-):!&:*&:! '. C&:!-"$ E+#)%&# The assessee
may also file the return with the concerned 4ivisional Affice by registered post 0owever& the assesses
should ensure that the return reaches the 4ivisional Affice on or before the due date# Hor an assessee who
provides m'-& !C": ':& !"+"?$& %&->)#&H .)$):g '. " %):g$& -&!u-: )% %u..)#)&:!# 0owever& the details in each
of the columns of the Horm 3T-+ have to be furnished separately for each of the taxable service rendered by
him# 9ven if no service has been provided during a half year and no service tax is payable" the assessee has
to file a 2)$ -&!u-: within the prescribed time limit#
;u&%!)': A8. 0m.B: 6-)!& " :'!& ': E(3)$):g '. S&->)#& T"+ 4&!u-:.
A:%w&-:
E(3)$):g '. 4&!u-:
With effect from 5$#$5#25$$& e-filing of service tax returns has been made mandatory for all the assesses
(Cotification Co# -+.25$$ datedG 2/#52#25$$)#
The assessee can e-file the return through software %,93 i#e# %BTA:%TIAC AH ,9CT*%= 9D,I39
%C4 39*7I,9 T%D#
The assessee should login the relevant site www#aces#gov#in# To transact business on %,93 a user has to first
register himself with %,93 through a process called M*egistration with %,93N# The assessee should have
3T6 code i#e# 6%C based $/ digit registration number allotted by 3ervice Tax 4epartment# The assessee
should fill in self-chosen user-I4 and his e-mail I4 and system will check the availability of the chosen user
I4 and then generate a password and will send it to the assessee on the e-mail I4 mentioned by him and the
assessee can submit the return in the prescribed form#
9&:&.)!% '. E(3)$):g .'- "%%&%&&:
$) *educe 6hysical Interface with the 4epartment" 2) 3ave Time" +) *educe 6aper Work" -) Anline
*egistration and %mendment of *egistration" /) 9lectronic filing of all documents such as applications for
registration& returns& claims& permissions and intimations" export-related documents& refund re@uest" ()
3ystem-generated 9-%cknowledgement" 1) Anline tracking of the status of selected documents#
;u&%!)': : 6-)!& " :'!& ': S&->)#& T"+ 4&!u-: P-&"-&- S#C&m&.
A:%w&-:
S&->)#& T"+ 4&!u-: P-&"-&- S#C&m& S&#!)': 71
4epartment shall appoint 3ervice Tax *eturn 6reparer to assist the persons to file service tax return# The
3T*6 shall have re@uired @ualification i#e# he should have passed senior secondary level examination#
The 3ervice Tax *eturn 6reparer shall 8
(a) prepare the return with due diligence"
(b) affix his signature on the return prepared by him"
(c) furnish the return as specified"
(d) hand over a copy of the return to the person whose return is prepared and furnished by him"
(e) retain a copy of the acknowledgment of having furnished the return
6rovisions Hor Hiling of *eturn Af Income $5(
0: -&%&#! '. -&!u-:% -&"-&* ":* .u-:)%C&* ?E C)m m"):!"): -&#'-* '. !C& .'$$'w):gH :"m&$E:(
(i) the name of assessees whose returns have been prepared and furnished by him during that month"
(ii) the 3ervice Tax ,ode(3T,) number and premises code of such assessees"
(iii) period for which return is filed"
(iv) date of furnishing the return"
(v) authority with whom return is filed"
(vi) amount of tax payable"
(vii) amount of tax paid"
(viii) the fee charged and received by him
0:#&:!)>& !' S&->)#& T"+ 4&!u-: P-&"-&-%
%n assessee shall pay a fee as may be mutually agreed upon between an assessee and the 3ervice Tax *eturn
6reparer# The )oard recommends& as a yardstick& a fee of rupees one thousand rupees per return prepared by
the 3ervice Tax *eturn 6reparer#
;u&%!)': A0m.B: 6-)!& " :'!& ': .)$):g '. -&!u-: u:*&- %!"!& 8AT.
A:%w&-:
% dealer is re@uired to file return on monthly . @uarterly . half-yearly . annual basis depending upon the
turnover# In case of very high turnover& return has to be filed on monthly basis and in case of low turnover&
return has to be filed on yearly basis e#g# %s per *ule 2( of 4elhi 7alue %dded Tax *ules& 255/& return has to
be filed in the manner given belowG
(i) If the turnover is upto `$5 lakhs& return should be filed on yearly basis#
(ii) If turnover is more than $5 lakhs but upto `/5 lakhs& return should be filed on half-yearly basis#
(iii) If it is more than /5 lakhs but upto ` / crores& return should be filed on @uarterly basis#
(iv) If it is exceeding `/ crores& return should be filed on monthly basis#
Su#C *u-"!)': '. .)$):g !C& -&!u-: )% "$%' #"$$&* QT"+ P&-)'*R.
%mount of 3tate 7%T should be paid within 22 days from end of the tax period#
(3imilar provision in *ule 22 of 4elhi 7alue %dded Tax *ules& 255/)
*eturn of 3tate 7%T has to be filed in the manner given belowG
(a) 3eventy five days from the end of the dealer!s tax period by the dealers having tax period of one year"
(b) Horty five days from the end of the dealer!s tax period by the dealers having tax period of six months"
(c) Twenty eight days from the end of the dealer!s tax period by the dealers having tax period of a @uarter or
one month& as the case may be#
;u&%!)': : 6-)!& " :'!& ': .)$):g '. -&!u-: u:*&- C&:!-"$ E+#)%&.
A:%w&-:
% manufacturer has to file return under ,entral 9xcise in the manner given belowG
3'-m '. 4&!u-: /&%#-)!)': 6C' )% -&Ju)-&* !' .)$& T)m& $)m)! .'- .)$):g
-&!u-:
9*-$ :onthly *eturn by
large units
:anufacturers not eligible for
33I concession
$5
th
of following month
9*-+ Euarterly *eturn by
33I
%ssessees eligible for 33I
concession (even if he does not
avail the concession)
$5
th
of next month of the
@uarter
0PCC MA5 = 2012
;u&%!)': 2 A4 M"-k%B
6aras is resident of India# 4uring the H#J# 25$$-$2 interest of `$&22&555 was credited to his Con-resident
(9xternal) %ccount with 3)I# `+5&555 being interest on fixed deposit with 3)I was credited to his saving
bank account during this period# 0e also earned `+&555 as interest on this saving account# Is 6aras re@uired
to file return of income[
What will be your answer& if he owns one shop in ;erala having area of $/5 s@# ft# [
A:%w&-:
`
C'mu!"!)': '. T'!"$ 0:#'m&
0:#'m& u:*&- !C& C&"* 1!C&- S'u-#&%
Interest credited to Con-*esident (9xternal) %ccount with 3)I $&22&555
Interest on Hixed 4eposit +5&555
Interest on 3aving account +&555
Income under the head Ather 3ources 2&2$&555
>ross Total Income 2&2$&555
Total Income 2&2$&555
Jes 6aras is re@uired to file return of income as his income exceeds the exemption limit i#e# `$&25&555
during the financial year 25$$-$2#
%nswer will remain same even if 6aras owns one shop at ;erala#
0PCC 218 = 2011
;u&%!)': 7 A4 M"-k%B
3tate with reasons whether you agree or disagree with the following statementsG
*eturn of income of =imited =iability 6artnership (==6) could be signed by any partner#
A:%w&-:
4isagree# In case of limited liability partnership return is to be signed by designated partner& in case due to
any unavoidable circumstances designated partner is not available then any partner can sign#
PCC 218 = 2011
;u&%!)': 7 A4 M"-k%B
(i) 3tate when a return of income can be treated as defective[
(ii) %n assessing officer finds a defect in the return of income and intimated the defect vide letter dated
5'#$5#25$$& which was received by :r# *am on $$#$5#25$$& What is the date by which :r# *am has to
rectify the defect& assuming that :r# *am has not applied for extension of time#
A:%w&-:
(i) *efer to Euestion Co# /
(ii) 4ate by which :r# *am has to rectify the mistakeG-
X 5'#$5#25$$ I $/ days X 2-#$5#25$$
0PCC MA5 = 2011
;u&%!)': 7 A4 M"-k%B
3pecify the persons who are authori<ed to sign and verify under section $-5& the return of income filed
under section $+' of the Income-tax %ct& $'($ in the case ofG
(i) 6olitical party"
(ii) =ocal authority"
(iii) %ssociation of persons& and
(iv) =imited =iability 6artnership (==6)
A:%w&-.
The following persons (mentioned in ,olumn III below) are authorised as per section $-5& to sign and verify
the return of income filed under section $+'#
0 00 000
(i) 6olitical party ,hief 9xecutive Afficer of such party (whether known as secretary or by
any other designation)
(ii) =ocal authority 6rincipal Afficer thereof
(iii) %ssociation of 6ersons %ny member of the association or the principal officer thereof#
(iv) ==6 4esignated partner& or
%ny partner&
- where the designated partner is not able to sign and verify the return for
any unavoidable reason"
- where there is no designated partner
;u&%!)': 7 A4 M"-k%B
3tate the due dates for filing of service tax returns# Will the delayed filing of service tax return result in
payment of any late fee[ If so& how much[
A:%w&-:
The service tax return (in Horm 3T-+) should be filed on half yearly basis by the 2/
th
of the month following
the particular half-year# The due dates on this basis are as underG
H"$. E&"- /u& *"!&
$
st
%pril to +5
th
3eptember 2/
th
Actober
$
st
Actober to +$
st
:arch 2/
th
%pril
In case the due date of filing of return falls on a public holiday& the assessee can file the return on the
immediately succeeding working day#
Jes& late fee will be levied for delay in furnishing of the service tax return# The prescribed late fee is given
hereunderG
S. 2'. P&-)'* '. *&$"E L"!& .&&
P"-!)#u$"-% `
(a) $/ days from the date prescribed for
submission of the return
/55
(b) )eyond $/ days but not later than +5 days from the date
prescribed for submission of the return#
$&555
(c) )eyond +5 days from the date prescribed for submission
of the return
%n amount of ` $&555 plus
` $55 for every day from the
+$st day till the date of
furnishing the said return
0owever& the total late fee for delayed submission should not exceed ` 25&555#
PCC MA5 = 2011
;u&%!)': 3 A4 M"-k%B
3tate whether filing of income-tax return is mandatory for the assessment year 25$2-$+ in respect of the
following casesG
6rovisions Hor Hiling of *eturn Af Income $5'
(i) *esearch association eligible for exemption under section $5(2$) having total income of
`2&$5&555#
(ii) *egistered trade union eligible for exemption under section $5(2-) having following incomesG
Income from house property (computed) `(5&555
Income from other sources (computed) `-5&555
(iii) % charitable trust registered under section $2%%& having total income of `$&'5&555#
(iv) % =imited =iability 6artnership (==6) with business loss of `$&+5&555#
A:%w&-.
(i) %s per section $+'(-,)& a research association referred to in section $5(2$) must file its return of income
within the due date under section $+'($) if its total income& without giving effect to the provisions of section
$5& exceeds the maximum amount which is not chargeable to income-tax#
3ince the total income of the research association exceeds the basic exemption limit of `$&25&555& it has to
file its return of income for the %#J#25$2-$+#
(ii) %s per section $+'(-,)& a registered trade union referred to in section $5(2-) must file its return of
income if the total income exceeds the basic exemption limit without giving effect to the provisions of
section $5#
3ince the total income of the trade union is less than the basic exemption limit of ` $&25&555& it need not file
its return of income for the %#J# 25$2-$+#
(iii) %s per section $+'(-%)& a charitable trust registered under section $2%% must file its return of income&
if its total income computed as per the provisions of the Income tax %ct& $'($& without giving effect to the
provisions of sections $$ and $2& exceeds the maximum amount which is not chargeable to income-tax#
3ince the total income of the charitable trust exceeds `$&25&555& it has to file its return of income for the %#J#
25$2-$+#
(iv) %s per section $+'($)& every company or firm shall furnish on or before the due date the return in
respect of its income or loss in every previous year# 3ince ==6 is included in the definition of firm under the
Income-tax %ct& $'($& it has to file its return mandatorily& even though it has incurred a loss#
0PCC 218 = 2010
;u&%!)': 7 A4 M"-k%B
What do you mean by e-filing of returns[ Is there any facility of e-filing of service tax returns[ If yes& then
which of the services are eligible for this facility[
A:%w&-:
%C4 39*7I,9 T%D#
6rovisions Hor Hiling of *eturn Af Income $$5
PCC 218 = 2010
;u&%!)': 2 A4 M"-k%B
6rasad K ,o# seeks your advise for the following in the context of service taxG
It wants to file revised service tax return even though the original return was filed belatedly#
Jour answer must be with reasons#
A:%w&-:
*evised service tax returns may be filed within '5 days from the date of filing original return# 9ven if the
original return is filed belatedly& the return could be revised by filing a revised return#
0PCC MA5 = 2010
;u&%!)': 4 A4 M"-k%B
What are the particulars re@uired to be furnished with the return of income& as per section $+'(()[
A:%w&-.
P"-!)#u$"-% !' ?& .u-:)%C&* w)!C !C& -&!u-: '. ):#'m& NS&#!)': 139A6BO
%s per section $+'(()& the prescribed form of return of income& shall in certain prescribed cases& re@uire the
assessee to furnish the particulars ofG
(i) income exempt from tax"
(ii) assets of the prescribed nature and value& belonging to the assessee"
(iii) details of bank account and credit card held by the assessee"
(iv) expenditure exceeding the prescribed limits incurred by the assessee under prescribed heads" and
(v) such other outgoings& as may be prescribed#
;u&%!)': 7 A2 M"-k%B
,an an assessee file a revised 3ervice tax return[
A:%w&-:
%n assessee can submit a revised return& in Horm 3T-+ in triplicate& to correct a mistake or omission in the
original return& within a period of '5 days from the date of submission of the original return#
;u&%!)': 6 A3 M"-k%B
What is the late fee payable for delay in furnishing the 3ervice tax return[ ,an the same be waived[
A:%w&-:
The late fee payable for delay in submitting the service tax return is furnished belowG
S. 2'. P&-)'* '. *&$"E A2'. '. *"E% .-'m L"!& .&& A`B
!C& *u& *"!& '. .)$):g !C& -&!u-:B
(a) $/ days /55
(b) $( 8 +5 days $555
(c) )eyond +5 days `$555 plus `$55 for every day of delay
beyond +5 days#
0owever& the total late fee payable shall not exceed `25&555#
0PCC 218 = 2009
;u&%!)': 7 A2 M"-k%B
:r# *a?u is a multiple service provider and files only a single return# 3tate with reasons whether he can do
so[
A:%w&-
Jes& :r# *a?u can file a single return though he is a multiple service provider# 0e has to furnish the details in
each of the columns of the Horm Co#3T-+ separately for each of the taxable services rendered by him# Thus&
instead of showing a lump sum figure for all the services together& service-wise details should be provided in
the return#
6rovisions Hor Hiling of *eturn Af Income $$$
;u&%!)': 6 A3 M"-k%B
=ist the documents to be submitted alongwith the first service tax return#
A:%w&-:
9very assessee shall furnish to the 3uperintendent of ,entral 9xcise at the time of filing the return for the
first time a list of following documents in duplicateG
(a) all the records prepared or maintained by the assessee for accounting of transactions in regard to
(i) providing of any service& whether taxable or exempted"
(ii) receipt or procurement of input services and payment for them"
(iii) receipt& purchase& manufacture& storage& sale or delivery& as the case may be& in regard to inputs and
capital goods"
(iv) other activities such as manufacture and sale of goods& if any#
(b) all other financial records maintained by him in the normal course of business#
;u&%!)': 8 A3 M"-k%B
4iscuss filing of *eturn under 7%T#
A:%w&-:
7%T returns are to be filed monthly.@uarterly.half-yearly.annually along with tax paid challans according to
the provisions of the 3tate %cts# They should contain details of output tax liability& value of input tax credit
and payment of 7%T and should be filed within the prescribed time schedule# In case of any mistakes&
revised returns may be filed#
The returns will be checked and any deficiency in payment of tax may have to be made good#
Hiling of returns are designed with a viewG
(i) to reduce cost of compliance
(ii) to encourage businesses to comply with their obligations" and
(iii) to ensure efficient processing of data#
PCC 218 = 2009
;u&%!)': 8 A3 M"-k%B
:s# %mrapali& a registered 3ervice 6rovider did not render any services during the financial year 25$$-$2#
Whether she is re@uired to file service tax return[
A:%w&-:
9very assessee shall file a half yearly return in Horm 3T-+# 9ven if there is no service provided during a half
year& a Cil return has to be filed# Therefore& :s# %mrapali is re@uired to file a service tax return#
PCC <U2E = 2009
;u&%!)': 6 A2 M"-k%B
Whether service tax return can be furnished after the due date[
A:%w&-:
% delayed return can be furnished by paying the prescribed late fee# 3ection 15($) of the Hinance %ct& $''-
as amended inter alia provides for filing of periodical return after the due date with the prescribed late fee of
not more than ` 25&555.-#
PCC 218 = 2008
;u&%!)': 7 A4 M"-k%B
9xplain with brief reason whether the return of income can be revised under section $+'(/) of the Income-
tax %ct& $'($ in the following casesG
(i) 4efective or incomplete return filed under section $+'(')#
6rovisions Hor Hiling of *eturn Af Income $$2
(ii) )elated return filed under section $+'(-)#
(iii) *eturn already revised once under section $+'(/)#
(iv) *eturn of loss filed under section $+'(+)#
A:%w&-.
%ny person who has furnished a return under section $+'($) or in pursuance of a notice issued under section
$-2($) can file a revised return if he discovers any omission or any wrong statement in the return filed
earlier# %ccordinglyG-
(i) % defective or incomplete return filed under section $+'(') cannot be revised# 0owever& the defect can be
removed#
(ii) % belated return filed under section $+'(-) cannot be revised# Anly a return furnished under section
$+'($) or in pursuance of a notice issued under section $-2($) can be revised#
(iii) % return revised earlier can be revised again as the first revised return replaces the original return#
Therefore& if the assessee discovers any omission or wrong statement in such a revised return& he can furnish
a second revised return within the prescribed time i#e# within one year from the end of the relevant
assessment year or before the completion of assessment& whichever is earlier#
(iv) % return of loss filed under section $+'(+) is deemed to be return filed under section $+'($)& and
therefore& can be revised under section $+'(/)#
;u&%!)': 8 A3 M"-k%B
,an service-tax return be revised by a person[
A:%w&-:
%n assessee can submit a revised return& in Horm 3T-+& in triplicate& to correct a mistake or omission& within
a period of '5 days from the date of submission of the original return#
PCC MA5 = 2008
;u&%!)': 6 A2 M"-k%B
Who are the persons liable to Hile 3ervice tax returns[
A:%w&-:
P&-%':% $)"?$& !' .)$& S&->)#& T"+ 4&!u-:%
3ection 15 of the Hinance %ct& $''- en?oins that every person liable to pay service tax shall himself assess
the tax due on the services provided by him and shall furnish a return to the 3uperintendent of ,entral
9xcise
PCC 218 = 2007
;u&%!)': 7 A4 M"-k%B
9numerate eight transactions for which @uoting of 6ermanent %ccount Cumber is mandatory#
A:%w&-.
Euoting of 6%C is mandatory in the case of following transactionsG
($) In all returns to& or correspondence with& any income tax authority&
(2) 3ale or purchase of any immovable property valued at ` / lakhs or more#
(+) % time deposit exceeding ` /5&555 with a banking company#
(-) % contract for sale or purchase of securities exceeding value of ` $&55&555#
(/) ,ash payment in excess of ` 2/&555 in connection with travel to any foreign country at any one time#
(() )ill payments to hotels and restaurants exceeding ` 2/&555 at any one time#
(1) ,ash deposit aggregating ` /5&555.- or more with a banking company during any one day#
6rovisions Hor Hiling of *eturn Af Income $$+
(2) :aking an application to any bank or banking institution or company or any institution for issue of a
credit card#
;u&%!)': 6 A2 M"-k%B
What are the due dates for filing of service tax returns[
A:%w&-:
The service tax return (in Horm 3T-+) should be filed on half yearly basis by the 2/
th
of the month following
the particular half-year# The due dates on this basis are tabulated as underG
H"$. E&"- /u& *"!&
$
st
%pril to +5
th
3eptember 2/
th
Actober
$
st
Actober to +$
st
:arch 2/
th
%pril
In case the due date of the filing of return i#e# either 2/
th
Actober or 2/
th
%pril falls on a public holiday& the
assessee can file the return on the immediately succeeding working day#
;u&%!)': 6 A2 M"-k%B
Which are the documents to be submitted along with service tax return[
A:%w&-:
%long with service tax (3T-+) return& the following documents should be attachedG
(i) copies of >%*-1 challans which indicate the payment of service tax for the months.@uarter covered in the
half-yearly return#
(ii) memorandum in Horm 3T-+% giving full details of the difference between the amount of provisional
amount of tax deposited and the actual amount payable for each month# This memorandum (Horm 3T-+%) is
to be attached only when the assessee opts for provisional payment of service tax#
PCC MA5 = 2007
;u&%!)': 1 A2 M"-k%B
Hrom 5$#5(#255( onwards& the %ssessing Afficer has the power& inter alia& to allot 6%C to any person by
whom no tax is payable#
A:%w&-.
T-u&: 3ection $+'% has been substituted w#e#f# 5$#5(#255(& to provide that the %ssessing Afficer may&
having regard to the nature of transactions as may be prescribed& also allot a 6%C to any other person&
whether any tax is payable by him or not& in the manner and in accordance with the procedure as may be
prescribed#
;u&%!)': 1 A2 M"-k%B
Where the ;arta of an 0BH is absent from India& the return of income can be signed by any male member of
the family#
A:%w&-.
3"$%&: 3ection $-5 provides that where the ;arta of a 0BH is absent from India& the return of income can be
signed by any other adult member of the family" such member can be a male or female member#
;u&%!)': 7 A4 M"-k%B
4iscuss briefly about the scheme to facilitate submission of return of income through Tax *eturn 6reparers#
A:%w&-.
S#C&m& !' ."#)$)!"!& %u?m)%%)': '. -&!u-: '. ):#'m& !C-'ugC T"+ 4&!u-: P-&"-&-% NS&#!)': 1399O
($) 3ection $+') provides that& for the purpose of enabling any specified class or classes of persons to
prepare and furnish their returns of income& the ,)4T may notify a 3cheme to provide that such persons
may furnish their returns of income through a Tax *eturn 6reparer authorised to act as such under the
3cheme#
(2) The Tax *eturn 6reparer shall assist the persons furnishing the return in a manner that will be specified
in the 3cheme& and shall also affix his signature on such return#
6rovisions Hor Hiling of *eturn Af Income $$-
(+) % Tax *eturn 6reparer can be an individual& other than 8
(i) any officer of a scheduled bank with which the assessee maintains a current account or has other
regular dealings#
(ii) any legal practitioner who is entitled to practice in any civil court in India#
(iii) a chartered accountant#
(iv) an employee of the specified class or classes of persons!#
(-) The Mspecified class or classes of personsN for this purpose means any person& other than a company or a
person& whose accounts are re@uired to be audited under section --%) or under any other existing law& who
is re@uired to furnish a return of income under the %ct#
;u&%!)': 6 A2 M"-k%B
Is e-filing of service tax return permitted[
A:%w&-:
E(3)$):g '. 4&!u-:
%C4 39*7I,9 T%D#
,haritable Trust . *eligious Trust $$/
CHA40TA9LE T4UST/
4EL0G01US T4UST
SECT012 11H 12H 13
M&":):g '. CC"-)!"?$& Pu-'%& S&#!)': 2A17B
,haritable purpose includes
- relief of the poor&
- education&
- medical relief&
- preservation of environment (including watersheds& forests and wildlife) and preservation of
monuments or places or ob?ects of artistic or historic interest&
- advancement of any other ob?ect of general public utility
advancement of any other ob?ect of general public utility should not be in the nature of business however if
the gross receipt is upto `2/&55&555& it will be considered to be charitable purpose but if gross receipt is
exceeding `2/&55&555& it will be taxable#
Example
Ane charitable trust has the business of publishing of books on social and religious matters and gross receipt
is `$/&55&555& in this case& it will be considered to be charitable purpose but if gross receipt is more than
`2/&55&555& entire income shall be taxable#
3imilarly& one such trust is running a coaching centre for sports and games and gross receipt is `25&55&555&
in this case& it will be considered to be charitable purpose but if gross receipt is exceeding `2/&55&555& entire
income shall be taxable#
%ny trust having the above ob?ectives shall be considered to be charitable or religious trust#
Trust will include any other institutions or organi<ations also i#e# it will include even 3ociety registered
under 3ocieties *egistration %ct& $2(5& company registered under section 2/ of ,ompanies %ct& $'/(& or
other similar institutions& provided they are for charitable purpose#
E+&m!)': ): #"%& '. ):#'m& '. CC"-)!"?$& '- 4&$)g)'u% T-u%! S&#!)': 11
The following incomes of a charitable or religious trust or other similar institution like a company registered
under section 2/ of the companies %ct& shall be exempt from income tax#
1. %ny income derived from the property held by such charitable or religious trust or institution# It will
also include any capital gains#
2. Income in the form of voluntary contributions#
3. 6roperty held under trust shall include a business undertaking so held& however the above business
must ?& ):#)*&:!"$ !' !C& "!!"):m&:! '. !C& '?@&#!)>&% '. !C& !-u%! ":* %&"-"!& ?''k% '. "##'u:!
"-& m"):!"):&* ?E %u#C !-u%! '- ):%!)!u!)':.
,haritable Trust . *eligious Trust $$(
C':*)!)':% .'- E+&m!)':%
(i) 9xemption is allowed provided 2/O of such income is applied for charitable or religious purposes in
India#
(ii) If income is to be accumulated or set apart for charitable or religious purposes& accumulation is allowed
upto $/O of the income#
(iii) If any voluntary contribution has been received with a specific direction that they shall form part of the
corpus of the trust or institution& in that case there is no condition to apply 2/O of such income for
charitable or religious purposes#
(iv) If 2/O of the income derived during a particular year has not been applied for charitable or religious
purposes in that previous year& it can be applied for such purposes during the previous year immediately
following the previous year in which the income was derived& but in that case the assessee has to give such
option in writing before the expiry of the time allowed for furnishing the return of income# If the income is
not applied to charitable or religious purposes even by the end of such previous year& it will be considered to
be income of such previous year i#e# in the year immediately following the previous year in which the
income was derived#
Example
DJ ,haritable Trust has derived income of $5 lakhs in the previous year 25$$-$2# It can accumulate
maximum to the extent of $#/ =akhs and balance amount of 2#/ lakhs must be applied for charitable or
religious purposes in India during the year to get exemption however any deficiency shall be allowed to be
utilised upto +$#5+#25$+# If still the income is not utilised& such unutilised amount shall be considered to be
income of the previous year 25$2-$+#
If in the above case the trust has applied only `/&55&555 for charitable purposes upto +$#5+#25$2 and
`2&55&555 more in the year 25$2-$+& balance amount of `$&/5&555 (2&/5&555 8 /&55&555 8 2&55&555) shall be
considered to be income of previous year 25$2-$+#
(v) If any income is derived in a particular year but it was received in some other year& 2/O of such income
can be applied for charitable purposes upto the end of the year in which the income was received and if there
is any deficiency it can be applied upto the end of the subse@uent year and if there is any unutilised amount&
it shall be considered to be income of such subse@uent year# 0owever& above relaxation is allowed only if
the trust has given a declaration in writing at the time of filing of return of income latest by the time allowed
for furnishing the return of income#
Example
Income of DJ charitable trust for previous year 25$$-$2 is ` $5 lakhs out of which + lakhs have been
received on $5#5-#25$2# In this case& the trust can save upto ` $#/ lakhs and balance amount must be utili<ed
for charitable purpose upto +$#5+#25$+ but + lakhs received on $5#5-#25$2 can be utili<ed upto +$#5+#25$-#
S&#)"$ -'>)%)':% .'- C")!"$ G"):% S&#!)': 11A1AB
If there is capital gains on transfer of any asset of the trust and entire net consideration has been invested in
ac@uiring new capital asset& in that case& entire amount of capital gain shall be exempt otherwise capital
gains& to the extent& amount invested exceeds the cost of the transferred asset shall be exempt from tax#
Example
DJ charitable trust purchased an asset on 5$#$5#255' for ` / =akhs and sold it on 5$#$5#25$$ for `$$ =akhs
and purchased an asset for ` $$ =akhs or more& in that case& entire capital gains shall be exempt from tax and
if the new asset was purchased for ` /#/ =akhs& in that case exemption allowed shall be `/5&555#
,haritable Trust . *eligious Trust $$1
S&#)"$ -'>)%)': .'- "##umu$"!)': '. m'-& !C": 17K '. !C& 0:#'m& S&#!)': 11A2B
The trust can accumulate and set apart more than $/O of the income provided the trust under *ule $1
applies in Horm Co# $5 to the %ssessing Afficer mentioning the purpose for which the income is to be
accumulated and specifies the period for which income is to be accumulated# 0owever& total period cannot
exceed / years# Hurther& the income so accumulated should be invested or deposited as given in section
$$(/)#
3'-m% ":* m'*&% '. ):>&%!):g '- *&'%)!):g !C& m':&E S&#!)': 11A7B
$# Investment in savings certificates notified by the ,entral >overnment#
2# 4eposit in any account with the 6ost Affice#
+# 4eposit in any account with a scheduled bank or a co-operative society engaged in carrying on the
business of banking#
-# Investment in units of Bnit Trust of India#
/# Investment in any security issued by the ,entral >overnment or a 3tate >overnment#
(# Investment in debentures issued by any company or corporation which are guaranteed by the
>overnment#
1# Investment or deposit in any public sector company#
2# Investment in any bonds issued by a financial corporation which is engaged in providing long term
finance for the Industrial development in India and which is approved by the ,entral >overnment#
'# Investment in any bonds issued by a public company formed and registered in India with the main ob?ect
of carrying on the business of providing long term finance for construction or purchase of houses in
India and which is approved by ,entral >overnment#
$5# Investment in immovable property#
$$# 4eposits with the Industrial 4evelopment )ank of India#
$2# Investment in any bonds issued by a public company formed and registered in India with the main ob?ect
of carrying on the business of providing long-term finance for urban infrastructure in India#
$+# Investment by way of ac@uiring shares of a depository as defined in section 2($)(e) of the 4epositories
%ct& $''(#
$-# Investment in shares of& or deposit in any public sector company#
$/# %ny other mode prescribed by the government#
T"+"?)$)!E '. !C& ):#'m& '. CC"-)!"?$& T-u%! ): C&-!"): C"%&%
Income of the charitable trust shall become taxable in the following casesG
$# If it is applied to purposes other than charitable or religious purposes& or
2# If it ceases to be accumulated or set apart for application thereto& or
,haritable Trust . *eligious Trust $$2
+# It ceases to remain invested or deposited as per the modes given in $$(/)& or
-# It is not utili<ed for the purpose for which it is so accumulated or during the specified period# or
/# If any part of the income from the property held under a trust is not utilised for the benefit of the public#
or
(# If the trust or institution is created for the benefit of a particular religious community or caste# Ar
1# If the income is for the benefit of a person referred to in section $+(+) and t he person referred to in
3ection $+(+) areG
(a) The author of the trust or founder of the institution#
(b) %ny person who has made a substantial contribution to the trust or institution (That is to say any
person whose total contribution upto the end of the relevant previous year exceeds ` /5&555#
(c) Where such author& founder or the person is 0indu Bndivided Hamily& in that case& any member of
the family#
(d) %ny trustee of the trust or manager of the institution#
(e) %ny relative of any such author& founder& person& member& trustee or manager as aforesaid#
(f) %ny concern in which any of the persons mentioned above has a substantial interest#
TC& !&-m -&$"!)>& %C"$$ ):#$u*&:
$# 3pouse of the individual#
2# )rother or sister of the individual#
+# )rother or sister of the spouse of the individual#
-# The lineal ascendant or descendant of the individual#
/# %ny lineal ascendant or descendent of the spouse of the individual#
(# 3pouse of a person referred to at 3erial Co# 2&+&-&/#
1# %ny lineal descendant of a brother or sister of the individual#
2# %ny lineal descendant of a brother or sister of the spouse of the individual#
U:*&- %&#!)': 13A2BG Income of the trust shall be deemed to have been used or applied for the benefit of
the persons referred to in section $+(+) in the following casesG
$# %ny part of the income or property of the trust is lent to any person of $+(+) for any period without
ade@uate security or interest or both#
2# If any land& building or other property is made available for use of any person without charging
ade@uate rent or other compensation#
+# %ny amount paid as salary& allowance etc# to the extent it is unreasonable#
,haritable Trust . *eligious Trust $$'
-# If services are made available to any such person without ade@uate compensation#
/# If any share& security etc# is purchased during the previous year for consideration& which is more than
ade@uate#
(# If any share& security etc# are sold on behalf of trust& or consideration which is less than ade@uate#
1# If any property of the trust or income is diverted in favour of any such person and its value is more than
`$555#
2# If any funds of the trust or institution remain invested in any concern in which any of the persons
referred to in section $+(+) has a substantial interest#
4&g)%!-"!)': '. T-u%!% S&#!)': 12A/12AA
9xemption to a trust is allowed if the trust is registered# The trust must make an application under 4u$& 17A
): .'-m 2'.10A# 9xemption is allowed from the $
st
day of the financial year in which the application has
been made#
e#g# Ane charitable trust comes into existence on 5$#5$#25$$ and it has given application for registration on
5$#5/#25$$ and registration is granted on 5$#5(#25$$& in this case& exemption shall be available wef
5$#5-#25$$ but if application was given upto +$#5+#25$$& exemption shall be available from 5$#5$#25$$
The ,ommissioner on receiving an application for registration of trust shall call for such documents and
information as are necessary# %fter satisfying himself& he shall pass the order for registration or he can refuse
registration if he is not satisfied# In such case applicant has to be given an opportunity of being heard# 1-*&-
mu%! ?& "%%&* ?&.'-& &+)-E '. %)+ m':!C% .-'m !C& &:* '. !C& m':!C ): wC)#C !C& "$)#"!)': w"%
-&#&)>&*.
Where a trust or an institution has been granted registration u.s $2% and subse@uently the ,ommissioner is
satisfied that the activities of such trust or institution are not genuine or are not being carried out in
accordance with the ob?ects of the trust or institution& as the case may be& he shall pass an order in writing
cancelling the registration of such trust or institutionG
4&!u-: '. ):#'m& '. #C"-)!"?$& '- -&$)g)'u% !-u%! '- ):%!)!u!)': S&#!)': 139A4AB
If the total income of a charitable or religious trust or institution before exemption under sections $$ and $2
exceeds the maximum amount not chargeable to tax& then the trust or institution is under an obligation to
furnish the return of income within the time allowed under section $+'($) and all provisions of the Income-
tax %ct shall apply as if it were a return furnished under section $+'($)#
2'!& 1: The tax rates applicable to a religious. charitable trust. institution are the same as applicable to an
individual#
2'!& 2: %s per section $2%& exemption under section $$ K $2 is available only if the trust . institution gets
its accounts audited in case the total income of the trust. institution before exemption under section $$ K $2
exceeds `$&25&555.-# %udit report should be submitted under rule $1) in form Co# $5)#
2'!& 3: The due date for filing of return under section $+'(-%) is +5
th
2'!& 4: *eturn furnished under section $+'(-%) is deemed to be return furnished under section $+'($) and
can therefore be revised under section $+'(/)#
,haritable Trust . *eligious Trust $25
4&$)g)'u%/CC"-)!"?$& T-u%!
C"%& 0 C"%& 00
*eceipts /&55&555 /&55&555
9xemption under section $$ K $2 -&1/&555 +&55&555
T'!"$ 0:#'m& 2/&555 2&55&555
In both the above cases& the trust is re@uired to furnish the return under section $+'(-%)#
A:':Em'u% /':"!)':% S&#!)': 11799C
If any charitable trust or other similar organi<ation has received anonymous donation& it will be taxable V
+5O however exemption shall be allowed to the extent of /O of total donation or `$&55&555 whichever is
higher# e#g# Ane such trust has received total donations of `$55&55&555 out of which anonymous donations
are `-5&55&555& in this case& exemption allowed shall be /O of `$55&55&555 or `$&55&555 whichever is
higher i#e# `/&55&555 and balance anonymous donations i#e# `+/&55&555 (-5&55&555 8 /&55&555) shall be
taxable V +5O#
The provisions shall not apply to any anonymous donation received by any trust or institution created or
established wholly for religious purposes#
A$E):g !C& ):#'m& .'- -&$)g)'u% u-'%& %pply! will include both revenue expenditure
as well as capital expenditure# )oard has clarified vide circular Co# $55 datedG 2-.$.1+ that even
repayment of loan originally taken to fulfill one of the ob?ect of the trust will amount to an application of
income
R 9xpenditure by payment of tax out of current years income has to be considered as application for
charitable purposes 8 C0T > <":"k) Amm"$ AEE" 2"*"- T-u%!H A1987B AM"*B.
R 4onation by one charitable trust to the other charitable trust shall be considered to be application of
income#
R ,apital exp# incurred on improving or maintaining property of the trust shall be considered to be
application of income# 8 C0T > K"::)k" P"-"m&%w"-) /&>"%!C":"m L CC"-)!)&%H A1982B AM"*B.
R 9xcess expenditure in one year may be set off against next year!s incomeRC0T > M"C"-":" '. M&w"-
CC"-)!"?$& 3'u:*"!)':H A1987B A4"@.B.
P-'m'!)': '. %'-!% AC)-#u$"- 2'. 397 /"!&*: 24/9/84B
)oard has clarified that promotion of sports and games shall be considered to be charitable purpose#
4&$)&. '. ''- = C0T > M. <"m"$ M'C"m"* S"C)? A1941B AM"*.B
*elief must not be only to a group of private individuals rather it should be a relief to the poor in general#
E*u#"!)': = /.8. A-u- > C0TH A1947B A9'mB.
9ducation must relate to the public in general& instead of providing education only to specific group#
9ducation only to the members of a particular family shall not be considered to be charitable purpose#
T-u%! ): !C& :"m& '. -)>"!& &-%':. = C6T > HEH TC& 2)I"mR% Su$&m&:!"$ L 4&$)g)'u%
E:*'wm&:! T-u%!H A1973B AAPB.
If the trust is for charitable purpose& in that case it do not matter in whose name that trust has been started#
,haritable Trust . *eligious Trust $2$
02C1MES 13 P1L0T0CAL PA4T0ES
SECT012 13A
%ny income of a political party which is chargeable under the head Income from house property or Income
from other sources or ,apital gains or any income by way of voluntary contributions received by a political
party from any person shall not be included in the total income of the previous year of such political party G
P-'>)*&* that
(a) such political party keeps and maintains such books of account and other documents as would enable the
%ssessing Afficer to properly deduce its income therefrom"
(b) in respect of each such voluntary contribution in excess of twenty thousand rupees& such political party
keeps and maintains a record of such contribution and the name and address of the person who has made
such contribution" and
(c) the accounts of such political party are audited by a ,hartered %ccountant#
P-'>)*&* .u-!C&- that if the treasurer of such political party or any other person authori<ed by that political
party in this behalf fails to submit a report under sub-section (+) of section 2', of the *epresentation of the
6eople %ct& $'/$ for a financial year& no exemption under this section shall be available for that political
party for such financial year#
9xplanation# Hor the purposes of this section& political party means a political party registered under section
2'% of the *epresentation of the 6eople %ct& $'/$#
.llustration: The books of account maintained by a Cational 6olitical 6arty registered with 9lection
,ommissioner for the year ending :arch +$
st
& 25$2 disclose the following receiptsG `
*ent of property let out to a departmental store at ,hennai (&55&555
Interest on deposits other than )anks /&55&555
,ontributions from $55 persons (who have secreted their names) of `2$&555 each 2$&55&555
,ontribution V `$$ each from $&55&555 members in cash $$&55&555
Cet 6rofit of ,afeteria run in the premises at 4elhi +&55&555
,ompute the total income of the political party for the assessment year 25$2-$+& with reasons for inclusion
or otherwise#
Solution:
Computation of Total .ncome for #ssessment )ear *1*+13
`
*ent of property (9xempt under section $+%) Cil
Interest on deposits (9xempt under section $+%) Cil
,ontribution exceeding `25&555
(Cames of persons marking contribution not available) 2$&55&555
,ontribution not exceeding `25&555 Cil
Cet 6rofit of ,afeteria assessable as business income +&55&555
Total Income 2-&55&555
4&!u-: '. ):#'m& '. P'$)!)#"$ P"-!E S&#!)': 139A49B
If the total income of a political party before exemption under section $+% exceeds the maximum amount
not chargeable to tax& then the political party is under an obligation to furnish the return of income within the
time allowed under section $+'($) and all provisions of the Income-tax %ct shall apply as if it were a return
furnished under section $+'($)#
2'!& 1: The tax rates applicable to a political party are the same as applicable to an individual#
2'!& 2: Hor claiming exemption under section $+%& audit is compulsory#
2'!& 3: The due date of filing of return under section $+'(-)) is +5
th
0:#'m& 1. E$&#!'-"$ T-u%! S&#!)': 139
%ny voluntary contributions received by an electoral trust shall not be included in the total income of the
previous year of such electoral trust& ifR
(a)such electoral trust distributes to any political party& registered under section 2'% of the *epresentation of
the 6eople %ct& $'/$& during the said previous year& ninety-five per cent of the aggregate donations received
by it during the said previous year along with the surplus& if any& brought forward from any earlier previous
year" and
(3)such electoral trust functions in accordance with the rules made by the ,entral >overnment#
,haritable Trust . *eligious Trust $2+
FORM NO. 10A
[See rule 17A]
A$)#"!)': .'- -&g)%!-"!)': '. #C"-)!"?$& '- -&$)g)'u% !-u%! '- ):%!)!u!)':
u:*&- #$"u%& A""B '. %u?(%&#!)': A1B '. %&#!)': 12A '. !C& 0:#'m&(!"+ A#!H 1961
To
The ,ommissioner of Income-tax&
\\\\\\\\\\\\\\\
3ir&
I&]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]on behalf of]]]]]]]]]]]]]]]]]]]]]]]]]
Yname of the trust or institutionZ
hereby apply for the registration of the said trust.institution under section $2% of the Income-tax %ct& $'($#
The following particulars are furnished herewithG
1. Came of the S trust.institution in full Yin block lettersZ \\\\\\\\#
2. %ddress \\\\\\\\#
3. Came(s) and address(es) of author(s).founder(s) \\\\\\\\#
4. 4ate of creation of the trust or establishment of the institution \\\\\\\\
7. Came(s) and address(es) of trustee(s).manager(s) \\\\\\\\
I also enclose the following documentsG
1. (a) S Ariginal.,ertified copy of the instrument under which the trust.institution was created.established&
together with a copy thereof#
(3) S Ariginal.,ertified copy of document evidencing the creation of the trust or the establishment of the
institution& together with a copy thereof# YThe originals& if enclosed& will be returnedZ#
2. Two copies of the accounts of the S trust.institution for the latest S one.two.three years#
I undertake to communicate forthwith any alteration in the terms of the trust& or in the rules governing the
institution& made at any time hereafter#
$ate :::::::::::::::: \\\\\\\
S!gnature
\\\\\\\##
$es!gnat!on
\\\\\\\
<ddress
^3trike out whichever is not applicable#
,haritable Trust . *eligious Trust $2-
314M 21. 10
Y3ee rule $1Z
2'!)#& !' !C& A%%&%%):g 1..)#&-/P-&%#-)?&* Au!C'-)!E u:*&- %&#!)': 11A2B
'. !C& 0:#'m&(!"+ A#!H 1961
To
The %ssessing Afficer .6rescribed %uthority&
\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ ##
\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ ##
I& \ \ \ \ \ \ \ \ \ \ \ \ \ ## on behalf of ###\ \ \ \ \ \ \ \ \ \ \ \ ## Yname of
the trust.institution.associationZ hereby bring to your notice that it has been decided by a resolution passed
by the trustees.governing body& by whatever name called& on ###################\ \ \ ## (copy enclosed) that&
out of the income of the trust.institution. association for the previous year(s)& relevant to the assessment year
\ \ #####-##\ ##### and subse@uent previous year(s)& an amount of `#########\ \ \ per cent of the income of
the trust.institution.association.such sum as is available at the end of the previous year(s) should be
accumulated or set apart till the previous year(s) ending ##########\ \ \ in order to enable the
trustees.governing body by whatever name called& to accumulate sufficient funds for carrying out the
following purposes of the trust.association.institutionGR
($) \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ ##
(2) \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ ##
2. )efore expiry of six months commencing from the end of each previous year& the amount so accumulated
or set a part has been.will be invested or deposited in any one or more of the forms or modes specified in
sub-section (/) of section $$#
3. ,opies of the annual accounts of the trust.institution.association along with details of investment
(including deposits) and utilisation& if any& of the money so accumulated or set apart will be furnished to you
before the expiry of six months commencing from the end of each relevant previous year#
4. It is re@uested that in view of our complying with the conditions laid down in section $$(2) of the Income-
tax %ct& $'($& the benefit of that section may be given in the assessments of the trust.exempting the income
in respect of the trust.institution.association in respect of the incomes accumulated or set apart as mentioned
above#
.\ \ \ \ \ \ \ \ \ \ \ \
S!gnature
\ \ \ \ \ \ \ \ \ \ \ \
4esignation
\ \ \ \ \ \ \ \ \ \ \ ##
%ddress
$ate F F F F F
2'!&%:
$# This notice should be signed by a trustee.principal officer#
2# 4elete the inappropriate words#
,haritable Trust . *eligious Trust $2/
314M 21. 109
GSee rule $1)Z
Au*)! -&'-! u:*&- %&#!)': 12AA?B '. !C& 0:#'m&(!"+ A#!H 1961H ): !C& #"%& '.
#C"-)!"?$& '- -&$)g)'u% !-u%!% '- ):%!)!u!)':%
Î.We have examined the balance sheet of###################################\ \ \ as at \ \ ###################
Yname of the trust or institutionZ
and the profit and loss account for the year ended on that date which are in agreement with the books of
account maintained by the said trust or institution#
Î.We have obtained all the information and explanations which to the best of ^my.our knowledge and belief
were necessary for the purposes of the audit# In ^my.our opinion& proper books of account have been kept by
the head office and the branches of the above-named ^trust.institution visited by ^me.us so far as appears
from ^my.our examination of the books& and proper returns ade@uate for the purposes of audit have been
received from branches not visited by ^me.us& sub?ect to the comments given belowG
In ^my.our opinion and to the best of ^my.our information& and according to information given to ^me.us&
the said accounts give a true and fair viewR
(!) in the case of the balance sheet& of the state of affairs of the above named ^trust. institution as
at#############& and
(!!) in the case of the profit and loss account& of the profit or loss of its accounting year ending
on###############
The prescribed particulars are annexed hereto#
Place.............FF . FFFFFFFFFF.
$ate...............FF S!gned
FFFFFFFFFF.
<ccountant
H
2'!&%:
$# ^3trikeout whichever is not applicable#
2
b
This report has to be given by-
(i) a chartered accountant within the meaning of the ,hartered %ccountants %ct& $'-' (+2 of $'-')"
or
(ii) any person who& in relation to any 3tate& is& by virtue of the provisions of sub-section (2) of
section 22( of the ,ompanies %ct& $'/(($ of $'/()& entitled to be appointed to act as an auditor of
the company registered in that 3tate#
+# Where any of the maters stated in this report is answered in the negative& or with a @ualification& the report
shall state the reasons for the same#
,haritable Trust . *eligious Trust $2(
<NN%IE0%
STATEME2T 13 PA4T0CULA4S
$# %66=I,%TIAC AH IC,A:9 HA* ,0%*IT%)=9 A* *9=I>IAB3 6B*6A393
1. %mount of income of the previous year applied to charitable
or religious purposes in India during that year \\\\\\\##
2. Whether the trust.institution^ has exercised the option under
clause (2) of the 9xplanation to section $$($)[ If so& the
details of the amount of income deemed to have been applied
to charitable or religious purposes in India during the \\\\\\\##
previous year

3. %mount of income
apart set finally
^ apart set or d accumulate
for application
to charitable or religious purposes& to the extent it does not
exceed 2/ per cent of the income derived from property held
under trust
only part in
^ wholly
for such purposes#
\\\\\\\##
4. %mount of income eligible for exemption under section
$$(l)(c) (>ive details) \\\\\\\##
7. %mount of income& in addition to the amount referred to in
item + above& accumulated or set apart for specified purposes
under section $$(2) \\\\\\\##
6. Whether the amount of income mentioned in item / above
has been invested or deposited in the manner laid down in
section $$(2)(b)[ If so& the details thereof \\\\\\\##
7. Whether any part of the income in respect of which an option
was exercised under clause (2) of the 9xplanation to section $$($)
in any earlier year is deemed to be income of the previous year
under section $$($)) [ If so& the details thereof \\\\\\\##
8. Whether& during the previous year& any part of income accumulated
or set apart for specified purposes under section $$(2) in any earlier yearR \\\\\\\##
(a) has been applied for purposes other than charitable or religious purposes
or has ceased to be accumulated or set apart for application thereto& or \\\\\\\##
(3) has ceased to remain invested in any security referred to
in section 11(2)(3)(!) or deposited in any account referred
to in section 11(2)(3)(!!) or section 11(2)(3)(!!!)& or \\\\\\\##
(c) has not been utilised for purposes for which it was accumulated
or set apart during the period for which it was to be accumulated or
set apart& or in the year immediately following the expiry thereof[
If so& the details thereof \\\\\\\##
00. APPL0CAT012 14 USE 13 02C1ME 14 P41PE4T5
314 THE 9E2E30T 13 PE4S12S 4E3E44E/
T1 02 SECT012 13A3B
1. Whether any part of the income or property of the ^trust.
institution was lent& or continues to be lent& in the previous
year to any person referred to in section $+(+) (hereinafter \\\\\\\##
referred to in this %nnexure as such person)[ If so& give details
of the amount& rate of interest charged and the nature of
security& if any
2. Whether any land& building or other property of the ^trust.
institution was made& or continued to be made& available for
the use of any such person during the previous year[ If so& \\\\\\\##
give details of the property and the amount of rent or compensation
charged& if any
3. Whether any payment was made to any such person during
the previous year by way of salary& allowance or otherwise[ \\\\\\\##
If so& give details
4. Whether the services of the ^trust.institution were made
available to any such person during the previous year[ If so&
give details thereof together with remuneration or compensation \\\\\\\##
received& if any
7. Whether any share& security or other property was purchased
by or on behalf of the ^trust.institution during the previous
year from any such person[ If so& give details thereof together \\\\\\\##
with the consideration paid
6. Whether any share& security or other property was sold by or
on behalf of the ^trust.institution during the previous year
to any such person[ If so& give details thereof together with \\\\\\\##
the consideration received
7. Whether any income or property of the ^trust.institution was
diverted during the previous year in favour of any such person[
If so& give details thereof together with the amount of income \\\\\\\##
or value of property so diverted
8. Whether the income or property of the ^trust.institution was
used or applied during the previous year for the benefit of
any such person in any other manner[ If so& give details \\\\\\\##
^ 3trike out whichever is not applicable#
000. 028ESTME2TS HEL/ AT A25 T0ME /U402G THE P4E801US 5EA4ASB 02 C12CE42S
02 6H0CH PE4S12S 4E3E44E/ T1 02 SECT012 13A3B HA8E A
SU9STA2T0AL 02TE4EST
S? No. Na;e and
address of the
concern
2here the
concern !s a
co;pan.
nu;3er and
class of shares
held
No;!nal "alue
of the
!n"est;ent
'nco;e fro;
the !n"est;ent
2hether the
a;ount in col -
e#ceeded) per
cent of the
cap!tal of the
concern dur!ng
the pre"!ous
.ear=sa.A
5es-No
$ 2 + - / (
TAT%=
Place..........FFF .
FFFFFFFF..
$ate.............. S!gned
<ccountant
,haritable Trust . *eligious Trust $2'
PCC MA5 = 2012
;u&%!)': 4 A4 M"-k%B
Will a charitable trust be forfeited of tax exemption granted to it& if it holds shares in a public sector
company[ Will a charitable trust having business receipt and income of `25&55&555 and `2&55&555
respectively be denied the tax exemption[
A:%w&-.
%s per section $$(/)& charitable trust is allowed to make investment in the shares or bonds of public sector
company and accordingly exemption shall not be forfeited# If any charitable trust is engaged in business for
the advancement of any ob?ect of general public utility and gross receipt is upto `2/&55&555& such charitable
trust shall be allowed exemption under section $$ and $2& hence in the given case trust will not be denied tax
exemption#
0PCC 218 = 2010
;u&%!)': 4 A4 M"-k%B
,an a political party claim exemption of its income under section $+% of the Income tax %ct& $'($[
A:%w&-.
Bnder section $+%& a political party registered under section 2'% of the *epresentation of the 6eople %ct&
$'/$& can claim exemption under the following heads - Income from house property& capital gains and
income from other sources# The income by way of voluntary contributions received by such political party is
also exempt under section $+%#
These exemptions are sub?ect to the following conditionsG-
(i) The political party must keep and maintain such books of account and other documents as would
enable the %ssessing Afficer to properly deduce its income therefrom#
(ii) The political party should keep and maintain a record of each such voluntary contribution in excess of
`25&555 and the names and addresses of such contributors#
(iii) The accounts of the political party must be audited by a ,hartered %ccountant#
0PCC MA5 = 2010
;u&%!)': 1 A2 M"-k%B
What is the time limit for filing application seeking registration in the case of ,haritable Trusts. Institutions
under section $2%% of the %ct[
A:%w&-.
3ection $2%% re@uires that the person in receipt of income should make an application for registration of the
charitable trust or institution in the prescribed form and prescribed manner to the ,ommissioner of Income-
tax#
If the application is made on or after $
st
Pune& 2551 the provisions of section $$ and $2 shall apply in relation
to income of such trust and institution from the assessment year immediately following the financial year in
which such application is made# The application can therefore be filed at any time#
;u&%!)': 4 A4 M"-k%B
What are the conditions to be fulfilled by a ,haritable Trust under section $2% for applicability of
,haritable Trust . *eligious Trust $+5
exemption provisions contained in section $$ and $2[
A:%w&-.
C':*)!)':% .'- "$)#"?)$)!E '. %&#!)':% 11 ":* 12 NS&#!)': 12AO
The exemption provisions contained in sections $$ and $2 shall not apply in relation to the income of any
trust or institution unless the following conditions are fulfilled 8
(i) %n application for registration of the trust or institution in the prescribed form and in the prescribed
manner should be made to the ,ommissioner and the trust or institution should be registered under section
$2%%#
(ii) The provisions of sections $$ and $2 shall apply from the assessment year relevant to the financial year
in which the application is made i#e# the exemption would be available only with effect from the assessment
year relevant to the previous year in which the application is filed# It would not be available in respect of any
earlier assessment year#
(iii) Where the total income of the trust or institution& without giving effect to the provisions of sections $$
and $2& exceeds the maximum amount which is not chargeable to income-tax in any previous year& the
accounts of the trust or institution must be audited by a ,hartered %ccountant and the report of such audit in
the prescribed form duly signed and verified by such accountant setting forth such prescribed particulars&
should be furnished along with the return of income#
,haritable Trust . *eligious Trust $+$
Income Bnder The head ,apital >ains $+2
02C1ME U2/E4 THE HEA/
CAP0TAL GA02S
SECT012 47 T1 77A
M&":):g '. #")!"$ "%%&! 2A14B
T-":%.&- '. #")!"$ "%%&!% 47A1B
C")!"$ g"):% ): #"%& '. ):%u-":#& #$")m% 47A1AB
T-":%.&- '. #")!"$ "%%&!% ):!' %!'#k():(!-"*& 47A2B
T-":%.&- '. %&#u-)!)&% ?E " *&'%)!'-E 47A2AB
P-'.)!% '- g"):% "-)%):g .-'m !C& !-":%.&- '. " #")!"$ "%%&! ?E " &-%': !' " .)-m
'- A%%'#)"!)': '. &-%': '- 9'*E '. ):*)>)*u"$
47A3B
P-'.)!% '- g"):% "-)%):g .-'m !C& !-":%.&- '. " #")!"$ "%%&! ?E w"E '. *)%!-)?u!)':
'. #")!"$ "%%&!% ': !C& *)%%'$u!)': '. " .)-m '- A%%'#)"!)': '. &-%': '- 9'*E '.
):*)>)*u"$
47A4B
T-":%.&- '. " #")!"$ "%%&! ?E w"E '. #'mu$%'-E "#Ju)%)!)': 47A7B
C")!"$ g"):% ': *)%!-)?u!)': '. "%%&!% ?E #'m":)&% ): $)Ju)*"!)': 46
C")!"$ g"):% ': u-#C"%& ?E #'m":E '. )!% 'w: %C"-&% '- '!C&- %&#).)&*
%&#u-)!)&%
46A
T-":%"#!)':% :'! -&g"-*&* "% !-":%.&- 47
C'%! w)!C -&.&-&:#& !' #&-!"): m'*&% '. "#Ju)%)!)': 49
S&#)"$ -'>)%)': .'- #'mu!"!)': '. #")!"$ g"):% ): #"%& '. *&-&#)"?$& "%%&!% 70
S&#)"$ -'>)%)': .'- #'%! '. "#Ju)%)!)': ): #"%& '. 'w&- g&:&-"!):g u:)!% 70A
S&#)"$ -'>)%)': .'- #'mu!"!)': '. #")!"$ g"):% ): #"%& '. %$um %"$& 709
S&#)"$ -'>)%)': .'- .u$$ >"$u& '. #':%)*&-"!)': ): #&-!"): #"%&% 70C
A*>":#& m':&E -&#&)>&* 71
E+&m!)': .-'m #")!"$ g"):% ': !-":%.&- '. -'&-!E u%&* .'- -&%)*&:#& 74
E+&m!)': .-'m #")!"$ g"): ': !-":%.&- '. $":* u%&* .'- "g-)#u$!u-"$ u-'%&% 749
E+&m!)': .-'m #")!"$ g"):% ': #'mu$%'-E "#Ju)%)!)': '. $":*% ":* ?u)$*):g%
'. ):*u%!-)"$ u:*&-!"k):g.
74/
E+&m!)': .-'m #")!"$ g"): ': !-":%.&- '. ":E #")!"$ "%%&! 74EC
E+&m!)': .-'m #")!"$ g"): ': !-":%.&- '. $':g !&-m #")!"$ "%%&!% &+#&!
-&%)*&:!)"$ C'u%&
743
E+&m!)': .-'m #")!"$ g"):% ': !-":%.&- '. "%%&!% ): #"%& '. %C).!):g '. ):*u%!-)"$
u:*&-!"k):g .-'m u-?": "-&"
74G
E+&m!)': '. #")!"$ g"):% ': !-":%.&- '. "%%&!% ): #"%&% '. %C).!):g '. ):*u%!-)"$
u:*&-!"k):g .-'m u-?": "-&" !' ":E S&#)"$ E#':'m)# T':&
74GA
/&!&-m):"!)': '. !)m& &-)'* ): #"%& '. #'mu$%'-E "#Ju)%)!)': '. #")!"$ "%%&! 74H
M&":):g '. F#'%! '. )m-'>&m&:!G 77A1B
M&":):g '. F#'%! '. "#Ju)%)!)':G 77A2B/77A3B
4&.&-&:#& !' >"$u"!)': '..)#&- 77A
C'mu!"!)': '. !"+ ': $':g !&-m #")!"$ g"):% 112
C'mu!"!)': '. !"+ ': %C'-! !&-m #")!"$ g"):% ): #&-!"): #"%&% 111A
E+&m!)': .-'m $':g !&-m #")!"$ g"):% ': !-":%.&- '. .'-&)g: &+#C":g& "%%&! ):
#"%& '. :':(-&%)*&:! 0:*)":%
1173
Income Bnder The head ,apital >ains $++
6C"! )% !-":%.&- 2A47B
3")- m"-k&! >"$u& *&.):&* 2A229B
L':g(!&-m #")!"$ "%%&! 2A29AB
L':g(!&-m #")!"$ g"): 2A299B
SC'-!(!&-m #")!"$ "%%&! 2A42AB
SC'-!(!&-m #")!"$ g"): 2A429B
S$um %"$& *&.):&* 2A42CB
C")!"$ g"):% ': #'mu$%'-E "#Ju)%)!)': '. "g-)#u$!u-"$ $":* 10A37B
C")!"$ g"):% ': !-":%.&- '. &Ju)!E %C"-&% '- u:)!% 10A38B
THE145 ;UEST012
;1. N8. 0m.O E+$"): !C& m&":):g '. #")!"$ "%%&! u:*&- 0:#'m& T"+ A#!U
;2. /)..&-&:!)"!& %C'-! !&-m #")!"$ "%%&! ":* $':g !&-m #")!"$ "%%&!.
;3. N0m.O 6-)!& " :'!& ': m'*& '. #'mu!"!)': '. #")!"$ g"):%.
;4. 6-)!& " :'!& ': #'mu!"!)': '. #")!"$ g"):% ): #"%& '. ):%u-":#& #$")m%.
;7. N0m.O 6-)!& " :'!& ': #'mu!"!)': '. #")!"$ g"):% ): #"%& '. #':>&-%)': '. #")!"$ "%%&!% ):!'
%!'#k():(!-"*&.
;6. 6-)!& " :'!& ': #'mu!"!)': '. #")!"$ g"):% ): #"%& '. !-":%.&- '. #")!"$ "%%&! ?E " *&'%)!'-E.
;7. 6-)!& " :'!& ': #'mu!"!)': '. #")!"$ g"):% ): #"%& '. !-":%.&- '. " #")!"$ "%%&! ?E " &-%': !' "
3)-mH A%%'#)"!)': '. &-%': '- 9'*E '. ):*)>)*u"$.
;8. 6-)!& " :'!& ': #'mu!"!)': '. #")!"$ g"):% ): #"%& '. !-":%.&- '. " #")!"$ "%%&! ?E w"E '.
*)%!-)?u!)': '. #")!"$ "%%&! ': !C& *)%%'$u!)': '. " .)-m &!#.
;9. N8. 0m.O 6-)!& " :'!& ': #'mu!"!)': '. #")!"$ g"):% ': #'mu$%'-E "#Ju)%)!)': '. " #")!"$
"%%&!.
;10. 6-)!& " :'!& ': #")!"$ g"):% ': *)%!-)?u!)': '. "%%&!% ?E " #'m":E ': $)Ju)*"!)':.
;11. 6-)!& " :'!& ': #")!"$ g"):% ): #"%& '. 'w: %C"-&% '- '!C&- %&#).)&* %&#u-)!)&% u-#C"%&* ?E
#'m":E.
;12. N8. 0m.O 6-)!& " :'!& ': !-":%"#!)':% :'! -&g"-*&* "% !-":%.&-.
;13. 6-)!& " :'!& ': #'%! w)!C -&.&-&:#& !' #&-!"): m'*&% '. "#Ju)%)!)':.
;14. E+$"): -&>&-%& m'-!g"g&.
;17. 6-)!& " :'!& ': #")!"$ g"):% ): #"%& '. *&-&#)"?$& "%%&!%.
;16. 6-)!& " :'!& ': #'mu!"!)': '. #")!"$ g"): ): #"%& '. %$um %"$& #'>&-&* u:*&- %&#!)': 709.
;17. N0m.O 6-)!& " :'!& ': .u$$ >"$u& '. #':%)*&-"!)': ): #&-!"): #"%&%.
;18. N8. 0m.O 6-)!& " :'!& ': "*>":#& m':&E '- .'-.&)!u-& '. "*>":#& m':&E u:*&- %&#!)': 71.
;19. N8. 0m.O 6-)!& " :'!& ': &+&m!)': u:*&- %&#!)': 74.
;20. N8. 0m.O 6-)!& " :'!& ': &+&m!)': u:*&- %&#!)': 749.
;21. 6-)!& " :'!& ': &+&m!)': u:*&- %&#!)': 74/.
;22. N8. 0m.O 6-)!& " :'!& ': &+&m!)': u:*&- %&#!)': 74EC.
;23. N8. 0m.O 6-)!& " :'!& ': &+&m!)': u:*&- %&#!)': 743.
;24. 6-)!& " :'!& ': &+&m!)': u:*&- %&#!)': 74G.
;27. 6-)!& " :'!& ': &+&m!)': u:*&- %&#!)': 74GA.
;26. 6-)!& " :'!& ': #'mu!"!)': '. #")!"$ g"):% ): #"%& '. !-":%.&- '. %C"-&%.
;27. 6-)!& " :'!& ': #'mu!"!)': '. #")!"$ g"):% ': #':>&-%)': '. *&?&:!u-&% &!#. ):!' %C"-&%.
;28. N8. 0m.O 6-)!& " :'!& ': #'mu!"!)': '. #")!"$ g"):% ': !C& !-":%.&- '. %C"-&% '- !C& u:)!% '.
Mu!u"$ .u:* ': wC)#C %&#u-)!)&% !-":%"#!)': !"+ C"% ?&&: ")*.
;29. N0m.O 6-)!& " :'!& ': -&.&-&:#& !' >"$u"!)': '..)#&-.
;30. 6-)!& " :'!& ': #'%! '. )m-'>&m&:!.
;31. 6-)!& " :'!& ': #'%! '. "#Ju)%)!)':.
;32. 6-)!& " :'!& ': *&!&-m):):g '. !C& &-)'* '. C'$*):g '. " #")!"$ "%%&!. S&#!)': 2A42AB.
;33. 6C"! !E&% '. !-":%"#!)':% "-& ):#$u*&* ): !C& !&-m Q!-":%.&-R ): -&$"!)': !' " #")!"$ "%%&!U
;34. 6-)!& " :'!& ': !"+"?)$)!E '. L':g T&-m C")!"$ G"):%.
Income Bnder The head ,apital >ains $+-
;37. 6-)!& %C'-! :'!& ': %&#)"$ -'>)%)':% .'- .u$$ >"$u& '. #':%)*&-"!)': ): #&-!"): #"%&%H ): !C&
#':!&+! '. #")!"$ g"):% $)"?)$)!E.
;36. 6-)!& " :'!& ': %&! '.. ":* #"--E .'-w"-* '. $'%% u:*&- !C& C&"* #")!"$ g"):%.
Income Bnder The head ,apital >ains $+/
;u&%!)': 1.N8. 0m.O: E+$"): !C& m&":):g '. C")!"$ A%%&! u:*&- 0:#'m& T"+ A#!U
A:%w&-:
CC"-g&"?)$)!E '. #")!"$ G"):% S&#!)': 47A1B
%ny profits or gains arising from the transfer of a capital asset effected in the previous year shall be deemed
to be the income of the previous year in which the transfer took place#
M&":):g '. C")!"$ A%%&!
C")!"$ "%%&!% S&#!)': 2A14B
M,apital assetN means property of any kind held by an assessee& whether or not connected with his business
or profession& accordingly& capital assets shall include any $":*H ?u)$*):gH -&#)'u% m&!"$%H -&#)'u%
%!':&%H $":! ":* m"#C):&-EH .u-:)!u-& ":* .)+!u-&%H g''*w)$$H !&:":#E -)gC!%H $''m C'u-%H -'u!&
&-m)!% etc#& but does not includeR
1. S!'#k ): !-"*&
%ny stock-in-trade& consumable stores or raw materials held for the purposes of his business or profession
shall not be considered to be capital asset#
Example
If a dealer of :aruti cars has sold ten motor cars and there is a gain of `$&55&555& it will be considered to be
income under the head business.profession and not under the head ,apital >ains#
2. P&-%':"$ m'>"?$& &..&#!%
P&-%':"$ &..&#!%H that is to say& movable property (including wearing apparel and furniture) held for personal
use by the assessee or any member of his family dependent on him& but excludesR
(a) ?ewellery"
(b) archaeological collections"
(c) drawings"
(d) paintings"
(e) sculptures" or
(f) any work of art#
F <&w&$$&-EG includesR
(a) ornaments made of gold& silver& platinum or any other precious metal or any alloy containing one or
more of such precious metals& whether or not containing any precious or semi-precious stone& and whether
or not worked or sewn into any wearing apparel"
(b) precious or semi-precious stones& whether or not set in any furniture& utensil or other article or worked or
sewn into any wearing apparel#
%ccordingly& items of personal use like C'u%&C'$* .u-:)!u-&H u!&:%)$%H T8H .-)*g&H %'."H &-%':"$ m'!'-
#"- &!#. %C"$$ :'! ?& #':%)*&-&* !' ?& C")!"$ A%%&!%H and any amount received on their sale shall be
considered to be a capital receipt not chargeable to tax under any head#
Example
(i) :r# Ceera? ;umar purchased one motor car for his personal use and subse@uently it was sold by him& in
this case it will not be considered to be capital asset#
(ii) :r# %bhishek )hasin purchased one fridge for his personal use but subse@uently it was sold by him& it
will not be considered to be capital asset#
(iii) :r# %man 3ehgal purchased silver utensils for his personal use and subse@uently these utensils were
sold by him& it will not be considered to be capital asset because silver utensils can not be considered to be
?ewellery and further they are the items of personal use& as per the decision in C0T >. 9&:"-%C)$"$ K"!"-uk"
Income Bnder The head ,apital >ains $+(
6C&!C&- #")!"$ g"): "-)%& ': !C& %"$& '. %)$>&- u!&:%)$%.
In ,IT v# )enarshilal ;ataruka& during the previous year relevant year to assessment year $'11-12& the
assessee sold -'#/2$ kgs# of silver utensils which were in the form of thalis& katoris& tumblers& etc# The
assessee contended that the silver utensils were for personal use and they were not capital assets within the
meaning of section 2($-) of the Income Tax %ct& $'($ and thus the profit on sale of these utensils was not
liable to capital gains tax# The ITA re?ected the assessee!s claim that the silver utensils were personal
effects!
The high court held that silver utensils& consisted of thalis& katoris& tumblers& etc# which are meant for
personal use although they may not be used daily# Whether silver utensils constitute personal effects depend
not merely on the financial status of the assessee# The main factor in deciding whether an article constitute
personal effect is the nature of the article# Therefore& in the present case& silver utensils constitute personal
affects and no capital gains will arise on the sale of silver utensils#
6C&!C&- #")!"$ g"): "-)%& ': !C& %"$& '. g'$*/%)$>&- #'):%.
H.H. M"C"-"@" 4":" H&m":! S):gC <)
In this case the assessee sold -22/ gold sovereigns& 1&'5&--5 old silver rupee coins and silver bars weighing
2&/-&$1- tolas and claimed that no capital gains arose as the aforesaid items fell outside the definition of
capital assets# The assessee claimed that these articles formed personal effects as they were used by the
assessee and his family for personal use as it was evident that they were used for the purpose of :ahalaxmi
6u?a and other religious festivals in the family# 0is contention was re?ected by the appellate authorities and
the 0igh ,ourt# The 3upreme ,ourt also decided the case against the assessee as according to it& these
articles did not constitute personal effects!# The ,ourt held that only those effects can be legitimately be
said to be personal which pertain to the assessee!s person# In other words& an intimate connection between
the effect and the person of the assessee must be shown to exist to render them personal effects!# The ,ourt
said that the silver bars or bullion can by no stretch of imagination be deemed to be MeffectsN meant for
personal use# %ccording to the 3upreme ,ourt& the gold sovereigns& silver coins and silver bar have been
used for pu?a of the deities as a matter of pride or ornamentation but it is difficult to understand how such
use can be characteri<ed as personal use# Therefore& the capital gains are taxable in the present case#
H.H. M"C"-":) U%C" /&>) > C0T A1982B 133 0T4 43 AMPB
9ven if personal effects were occasionally used as and when dinners were arranged for the family and
guests& it will still be a personal effect and occasional use shall not be taken into consideration#
If any person has movable items in his business or profession& these items shall be considered to be capital
assets
Example
:r# :ukesh %ggarwal has one motor car in the use of his business and subse@uently this motor car was sold
by him& it will be considered to be capital asset and capital gains shall be computed#
If personal effects are immovable& they will be considered to be capital assets# e#g# % house meant for
assessee!s own residence shall be considered to be capital asset#
3. Ag-)#u$!u-"$ $":*
%gricultural land in India in rural area shall not be considered to be capital asset# If the land is in the urban
area& it will be considered to be capital asset#
Example
:r# :ohit %rora has agricultural land in the rural area which was purchased by him for `/&55&555 and it was
sold by him for `$$&55&555& in this case capital gain shall not be computed& but if the land is in 4elhi& in this
case capital gains shall be computed#
If the land is in rural area in India but it is within 2 ;m# from any urban municipality and the >overnment
has notified it to be urban land& it will be considered to be a capital asset#
If the agricultural land is in rural area outside India& it will be considered to be capital asset or in other
words agricultural land situated outside India is capital asset in all cases#
Example
(i) :r# 7ipul Pha has agricultural land in the rural area which was sold by him& in this case there are no
capital gains#
(ii) :r# :ukesh %ggarwal has one agricultural land in urban area which was sold by him& in this case
capital gains shall be computed#
(iii) :r# Jogesh Tayal has agricultural land in rural area which is six kms away from 4elhi municipality
and the >overnment has notified it to be urban area& in this case it will be considered to be capital
asset#
(iv) :r# 3unny :ishra who is resident and ordinarily resident has sold one agricultural land in rural area in
Cepal& in this case it will be considered to be capital asset because the land is not situated in India#
4. G'$* /&'%)! 9':*%
>old 4eposit )onds issued under the >old 4eposit 3cheme& $''' notified by the ,entral >overnment#
7. S&#)"$ 9&"-&- 9':*%H 1991
3pecial )earer )onds& $''$& issued by the ,entral >overnment#
;u&%!)': 2: /)..&-&:!)"!& SC'-! T&-m C")!"$ A%%&! ":* L':g T&-m C")!"$ A%%&!.
A:%w&-:
SC'-! T&-m C")!"$ A%%&!/L':g T&-m C")!"$ A%%&!
S&#!)': 2A42AB
F SC'-!(!&-m #")!"$ "%%&!G means a capital asset held by an assessee for not more than thirty-six months#
P-'>)*&* that in the following cases the period shall be twelve months instead of thirty-six months#
(i) % share held in a company (whether listed or not)"
(ii) % unit of the Bnit Trust of India or a unit of a :utual Hund specified under section $5(2+4) (whether
listed or not)#
(iii) % <ero coupon bond#
(iv) %ny other security listed in a recognised stock exchange in India#
T&-' #'u': ?':* S&#!)': 2A48B
MWero coupon bondN means a bondR
(a) issued by notified company#
(b) in respect of which no benefit is received before maturity or redemption#
(c) which the ,entral >overnment may& by notification in the Afficial >a<ette& specify in this behalf#
S&#!)': 2A29AB
M=ong-term capital assetN means a capital asset which is not a short-term capital asset#
S&#!)': 2A429B
M3hort-term capital gainN means capital gain arising from the transfer of a short-term capital asset#
S&#!)': 2A299B
M=ong-term capital gainN means capital gain arising from the transfer of a long-term capital asset#
;u&%!)': 3 N0m.O: 6-)!& " :'!& ': m'*& '. #'mu!"!)': '. C")!"$ G"):%.
A:%w&-:
C'mu!"!)': '. C")!"$ G"):% S&#!)': 48
SC'-! !&-m #")!"$ g"):%
3hort term capital gain shall be computed in the manner given belowG
Hull 7alue of ,onsideration xxx
=essG
- ,ost of %c@uisition xxx
- ,ost of Improvement xxx
- 3elling 9xpenses xxx
3hort Term ,apital >ain xxx
L':g !&-m #")!"$ g"): S&#':* P-'>)%' !' S&#!)': 48
In case of long term capital gains& instead of cost of ac@uisition and cost of improvement& indexed cost of
ac@uisition and indexed cost of improvement shall be taken into consideration#
F 0:*&+&* #'%! '. "#Ju)%)!)':G means the cost ad?usted as per cost inflation index i#e#
0:*&+&* C'%! '. "#Ju)%)!)': V
C'%! '. "#Ju)%)!)': + 0:*&+ '. !C& E&"- ): wC)#C !C& "%%&! w"% !-":%.&--&*
0:*&+ '. !C& E&"- ): wC)#C !C& "%%&! w"% u-#C"%&*
F 0:*&+&* #'%! '. ":E )m-'>&m&:!G means the cost ad?usted as per cost inflation index i#e#
0:*&+&* C'%! '. )m-'>&m&:! X
C'%! '. )m-'>&m&:! + 0:*&+ '. !C& E&"- ): wC)#C !C& "%%&! w"% !-":%.&--&*
0:*&+ '. !C& E&"- ): wC)#C #'%! w"% ):#u--&*
A%%&! u-#C"%&* ?&.'-& 01.04.1981
If any capital asset has been purchased or constructed before 5$#5-#$'2$& in that case cost shall be
considered to be the cost incurred or fair market value of the asset as on 5$#5-#$'2$ whichever is higher and
further indexed of $'2$-22 shall be used instead of the index of the earlier year#
0:*&+"!)': )% :'! "$)#"?$& ): #"%& '. ?':*% '- *&?&:!u-&% &+#&! #")!"$ ):*&+&* ?':*%.
C'%! 0:.$"!)': 0:*&+
6inancial year Cost .nflation .n/ex
1981(1982 100
1982(1983 109
1983(1984 116
1984(1987 127
1987(1986 133
1986(1987 140
1987(1988 170
1988(1989 161
1989(1990 172
1990(1991 182
Income Bnder The head ,apital >ains $+'
1991(1992 199
1992(1993 223
1993(1994 244
1994(1997 279
1997(1996 281
1996(1997 307
1997(1998 331
1998(1999 371
1999(2000 389
2000(2001 406
2001(2002 426
2002(2003 447
2003(2004 463
2004(2007 480
2007(2006 497
2006(2007 719
2007(2008 771
2008(2009 782
2009(2010 632
2010(2011 711
2011(2012 787
0$$u%!-"!)': 1. ,ompute capital gains in the following situations for the assessment year 25$2-$+G
A%%&! G'$* L":* 4&%)*&:!)"$
H'u%&
P&-%':"$ Mu%)#
SE%!&m
4ate of purchase 5$#51#$'12 5$#5-#$'25 5$#51#255- 5$#5/#255+
,ost price -&55&555 (&55&555 2&55&555 2/&555
,ost of improvement +5&555 2&55&555 -&55&555 Cil
Jear of improvement $'1'-25 $'25-2$ 255/-5( 255(-51
Hair market value on 5$#5-#$'2$ +&'5&555 (&/5&555 C#%# C#%#
4ate of 3ale 5$#5$#25$2 5$#5$#25$2 5$#5$#25$2 5$#5$#25$2
Hull value of consideration +/&55&555 -5&55&555 25&55&555 25&555
S'$u!)':: `
G'$*
Hull value of consideration +/&55&555#55
=essG Indexed cost of ac@uisition
X -&55&555 . Index of 2$-22 x Index of $$-$2
X -&55&555 . $55 x 12/ X +$&-5&555 +$&-5&555#55
=ong term capital gain +&(5&555#55
L":*
Hull value of consideration -5&55&555#55
X (&/5&555 . Index of 2$-22 x Index of $$-$2
X (&/5&555 . $55 x 12/ X /$&52&/55 /$&52&/55#55
=ong term capital loss $$&52&/55#55
4&%)*&:!)"$ H'u%&
Hull value of consideration 25&55&555#55
Income Bnder The head ,apital >ains $-5
X 2&55&555 . Index of 5--5/ x Index of $$-$2
X 2&55&555 . -25 x 12/ X $+&52&+++#++ $+&52&+++#++
=essG Indexed cost of improvement
X -&55&555 . Index of 5/-5( x Index of $$-$2
X -&55&555 . -'1 x 12/ X (&+$&1'5#1- (&+$&1'5#1-
=ong term capital gain /'&21/#'+
P&-%':"$ Mu%)# SE%!&m
It is not an asset as per section 2($-)
0$$u%!-"!)': 2: :r# 0imanshu )ansal purchased one house on 5$#51#$'22 for `+&/5&555# 0e constructed its
first floor on 5$#$5#$''$ by incurring `-&55&555 and constructed its second floor on 5$#$5#2555 by incurring
`(&55&555 and third floor on 5$#$5#255$ by incurring `1&55&555# Hinally& sold the building on 5$#5$#25$2 for
`1/&55&555 and selling expenses were 2O of the sale price#
,ompute tax liability of the assessee for the assessment year 25$2-$+#
S'$u!)':: `
Computation of Capital 1ains
Hull value of consideration 1/&55&555#55
X +&/5&555 . Index of 22-2+ x Index of $$-$2
X +&/5&555 . $5' x 12/ X `2/&25&(-2#25 2/&25&(-2#25
,ost of constructing first floor
X -&55&555 . Index of '$-'2 x Index of $$-$2
X -&55&555 . $'' x 12/ X `$/&11&22'#-/ $/&11&22'#-/
,ost of constructing second floor
X (&55&555 . Index of 55-5$ x Index of $$-$2
X (&55&555 . -5( x 12/ X `$$&(5&5'2#/2 $$&(5&5'2#/2
,ost of constructing third floor
X 1&55&555 . Index of 5$-52 x Index of $$-$2
X 1&55&555 . -2( x 12/ X `$2&2'&'5(#$5 $2&2'&'5(#$5
=essG 3elling 9xpenses
X 2O of `1/&55&555 X `$&/5&555 $&/5&555#55
=ong Term ,apital >ain 2&5$&-(+#1+
Income under the head ,apital >ain (=T,>) 2&5$&-(+#1+
>ross Total Income 2&5$&-(+#1+
Total Income (*ounded off u.s 222%) 2&5$&-(5#55
T3ince there is no normal income& so as per section $$2 deficiency of `$&25&555 shall be allowed from
=T,> and balance income shall be taxed at flat rate of 25OU
Income Bnder The head ,apital >ains $-$
Tax on `(&2$&-(5 (2&5$&-(5 8 $&25&555) V 25O $&2-&2'2#55
%ddG 9ducation cess V 2O 2&-2/#2-
%ddG 309, V $O $&2-2#'2
Tax =iability $&22&525#1(
*ounded off u.s 222) $&22&525#55
0$$u%!-"!)': 3: :r# D purchased one house property on 5$#51#$'12 for `+&55&555 and incurred `$&55&555 on
its improvement in $'1/-1( and its market value as on 5$#5-#$'2$ was `1&55&555 and he incurred `/&55&555
on its improvement in $''2-'+ and sold the house on 5$#$$#25$$ for `'2&55&555#
0e purchase one commercial building on 5$#5-#25$$ for `/5&55&555 and it was let out V `2&55&555 p#m# to
DJW =td# and he has charged service tax wherever it was applicable in addition to `2&55&555 and DJW =td#
has deducted tax at source#
:r# D has paid :unicipal Tax of `25&555 p#m#
,ompute income tax liability.payable for %ssessment Jear 25$2-$+ and service tax liability for Hinancial
Jear 25$$-$2 of :r# D and also amount of tax deducted at source by DJW =td# (0e is eligible for 336
exemption)
S'$u!)'::
`
C'mu!"!)': '. ):#'m& .-'m C")!"$ G"):
Hull value of consideration '2&55&555#55
=essG Indexed ,ost of ac@uisition
X 1&55&555.Index of 2$-22 x Index of $$-$2
X 1&55&555.$55 x 12/ X `/-&'/&555 /-&'/&555#55
=essG Indexed cost of Improvement
X /&55&555.Index of '2-'+ x Index of $$-$2
X /&55&555.22+ x 12/ X `$1&(5&52'#(2 $1&(5&52'#(2
=ong Term ,apital >ain $'&--&'$5#+2
C'mu!"!)': '. ):#'m& u:*&- C&"* H'u%& P-'&-!E
>ross %nnual 7alue (2&55&555 x $2) 2-&55&555#55
=essG :unicipal Tax (25&555 x $2) 2&-5&555#55
Cet %nnual 7alue 2$&(5&555#55
=essG +5O of C%7 u.s 2-(a) (&-2&555#55
=essG Interest on capital borrowed u.s 2-(b) Cil
Income under the head 0ouse 6roperty $/&$2&555#55
C'mu!"!)': '. G-'%% T'!"$ 0:#'m&
Income under the head 0ouse 6roperty $/&$2&555#55
Income from =ong Term ,apital >ain $'&--&'$5#+2
>ross Total Income +-&/(&'$5#+2
Total Income +-&/(&'$5#+2
Cormal Income $/&$2&555#55
=T,> $'&--&'$5#+2
*ounded off u.s 222% $'&--&'$5#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on =T,> `$'&--&'$5 V 25O +&22&'22#55
Tax on normal income `$/&$2&555 at slab rate +&5/&(55#55
Tax before education cess (&'-&/22#55
%ddG 9, V 2O $+&2'$#(-
%ddG 309, V $O (&'-/#22
Tax liability 1&$/&-$'#-(
=essG T43 2&-5&555#55
Tax payable -&1/&-$'#-(
*ounded off u.s 222) -&1/&-25#55
C'mu!"!)': '. S&->)#& T"+ L)"?)$)!E
>ross *eceipt 2-&55&555#55
=essG 336 9xemption ($5&55&555#55)
7alue after exemption $-&55&555#55
=essG :unicipal Tax 6aid (25&555 x 1) ($&-5&555#55)
Taxable 7alue of 3ervice $2&(5&555#55
3ervice Tax V $5#+O $&2'&125#55
C"$#u$"!)': '. T"+ /&*u#!&* "! S'u-#&
T43 u.s $'--I
*ental 7alue (`2&55&555 x $2) 2-&55&555#55
T43 V $5O 2&-5&555#55
C'mu!"!)': '. C")!"$ G"):% ): S&#)"$ C"%&%
C")!"$ g"):% ): #"%& '. ):%u-":#& #$")m% S&#!)': 47A1AB
C")!"$ g"):% ): #"%& '. #':>&-%)': '. #")!"$ "%%&!% ):!' %!'#k():(!-"*& S&#!)': 47A2B
C")!"$ g"):% ): #"%& '. !-":%.&- '. #")!"$ "%%&! ?E " *&'%)!'-E S&#!)': 47A2AB
C")!"$ g"):% ): #"%& '. !-":%.&- '. " #")!"$ "%%&! ?E " &-%': !' " 3)-mH A%%'#)"!)': '. &-%':
'- 9'*E '. ):*)>)*u"$ S&#!)': 47A3B
C")!"$ g"):% ): #"%& '. !-":%.&- '. " #")!"$ "%%&! ?E w"E '. *)%!-)?u!)': ': !C& *)%%'$u!)': '. "
.)-m &!#. S&#!)': 47A4B
C'mu!"!)': '. #")!"$ g"):% ': #'mu$%'-E "#Ju)%)!)': '. " #")!"$ "%%&! S&#!)': 47A7B
/)%!-)?u!)': '. "%%&!% ?E " #'m":E ': $)Ju)*"!)': S&#!)': 46
C")!"$ g"):% ): #"%& '. 'w: %C"-&% '- '!C&- %&#).)&* %&#u-)!)&% u-#C"%&* ?E #'m":E
S&#!)': 46A
;u&%!)': 4: 6-)!& " :'!& ': #'mu!"!)': '. #")!"$ g"):% ): #"%& '. 0:%u-":#& C$")m%.
A:%w&-:
C")!"$ G"):% ): #"%& '. 0:%u-":#& C$")m% S&#!)': 47A1AB
If any person receives any money under an insurance claim on account of damage or destruction of& any
capital asset& because ofR
(i) flood& typhoon& hurricane& cyclone& earth@uake or other conclusion of nature or
(ii) riot or civil disturbance or
(iii) accidental fire or explosion or
(iv) action by an enemy or action taken in combating an enemy (whether with or without a declaration of
war)&
then& any profits arising from receipt of such money shall be chargeable to income-tax under the head
M,apital gainsN and shall be deemed to be the income of such person of the previous year in which %u#C
m':&E '- '!C&- "%%&! w"% -&#&)>&* and the amount so received shall be deemed to be the full value of the
consideration#
Example
Income Bnder The head ,apital >ains $-+
%), =td# has one plant and machinery on 5$#5-#25$$ with written down value `25&55&555 the asset is
destroyed due to natural calamity and the company has received insurance claim of `2$&55&555& in this case
there will be short term capital gain of `$&55&555#
;u&%!)': 7 N0m.O: 6-)!& " :'!& ': #'mu!"!)': '. #")!"$ g"):% ): #"%& '. #':>&-%)': '. #")!"$ "%%&!%
):!' S!'#k(0:(T-"*&.
A:%w&-:
C")!"$ G"):% ): #"%& '. #':>&-%)': '. #")!"$ "%%&!% ):!' S!'#k(0:(T-"*& S&#!)': 47A2B
The profits or gains arising from the transfer by way of conversion by the owner of a capital asset into stock-
in-trade of a business carried on by him shall be chargeable to income-tax as his income of the previous year
in which such stock-in-trade is sold or otherwise transferred by him and& for the purposes of section -2& the
fair market value of the asset on the date of such conversion or treatment shall be deemed to be the full value
of the consideration#
3ection -/(2) is applicable only if the asset has been converted into stock-in-trade w#e#f# 01.04.1984
':w"-*%# If the conversion is prior to 5$#5-#$'2-& no capital gains shall be computed as per 3upreme ,ourt
decision in 9") SC)-):?") K. K''k" >. C0T A1962BASCB.
S&#!)': 2A229B F3")- M"-k&! 8"$u&GH in relation to a capital asset& meansRthe price that the capital asset
would ordinarily fetch on sale in the open market on the relevant date#
0$$u%!-"!)': 4: :r# *ohit 6aul purchased >old on 5$#$5#$'1$ for `2&55&555 and its fair market value on
5$#5-#$'2$ is `+&55&555 and he converted it into stock-in-trade on 5$#$5#$'22 and market value of the gold
on the date of conversion was `$$&55&555 and subse@uently half of the stock-in-trade was sold on
5$#$5#25$$ for `(&/5&555 and balance half was sold on 5$#$5#25$2 for `1&/5&555#
,ompute his total income for various years#
S'$u!)':: `
Computation of Capital 1ains un/er section 47(*)
Hull value of consideration $$&55&555
X +&55&555 . Index of 2$-22 x Index of 22-2'
X +&55&555 . $55 x $($ X `-&2+&555 -&2+&555
=ong Term ,apital >ain (&$1&555
#ssessment year *1*+13
=ong Term ,apital >ain ($.2 of `(&$1&555) +&52&/55
)usiness Income
(`(&/5&555-`/&/5&555) $&55&555
Total Income -&52&/55
#ssessment year *13+14
=ong Term ,apital >ain ($.2 of `(&$1&555) +&52&/55
)usiness Income
(`1&/5&555-`/&/5&555) 2&55&555
Total Income /&52&/55
;u&%!)': 6: 6-)!& " :'!& ': #'mu!"!)': '. #")!"$ g"):% ): #"%& '. !-":%.&- '. #")!"$ "%%&! ?E "
/&'%)!'-E.
A:%w&-:
C")!"$ g"):% ): #"%& '. !-":%.&- '. #")!"$ "%%&! ?E " *&'%)!'-E S&#!)': 47A2AB
Where any person has had at any time during previous year any beneficial interest in any securities& then&
Income Bnder The head ,apital >ains $--
any profits or gains arising from transfer made by the depository or participant of such beneficial interest in
respect of securities shall be chargeable to income-tax as the income of the beneficial owner of the previous
year in which such transfer took place and shall not be regarded as income of the depository who is deemed
to be the registered owner of securities by virtue of section $5($) of the 4epositories %ct& $''(& and the cost
of ac@uisition and the period of holding of any securities shall be determined on the basis of the .)-%!():(
.)-%!('u! m&!C'*#
;u&%!)': 7: 6-)!& " :'!& ': #'mu!"!)': '. #")!"$ g"):% ): #"%& '. !-":%.&- '. " #")!"$ "%%&! ?E "
P&-%': !' " 3)-mH A%%'#)"!)': '. P&-%': '- 9'*E '. 0:*)>)*u"$.
A:%w&-:
C")!"$ g"):% ): #"%& '. !-":%.&- '. " #")!"$ "%%&! ?E " &-%': !' " 3)-mH A%%'#)"!)': '. P&-%': '- 9'*E
'. 0:*)>)*u"$ S&#!)': 47A3B
The profits or gains arising from the transfer of a capital asset by a person to a firm or other association of
persons or body of individuals in which he is or becomes a partner or member& by way of capital
contribution or otherwise& shall be chargeable to tax as his income of the previous year in which such
transfer takes place and the "m'u:! -&#'-*&* ): !C& ?''k% '. "##'u:! of the firm& association or body as
the value of the capital asset shall be deemed to be the full value of the consideration received or accruing as
a result of the transfer of the capital asset#
0$$u%!-"!)': 7: :r# %nkit 3oni and :r# Tushar %rora are two partners of a firm D K ,o# An 5$#5$#25$2& :r#
*upesh 4ahiya ?oins the firm and brings shares in a company as his capital contribution# Hair market value
of these shares on 5$#5$#25$2 is `2(&555 whereas amount credited in :r# *upesh 4ahiya!s account in the
firm is `$&$5&555# %ssuming that cost of ac@uisition in $'2(-21 of these shares was `-2&555& find out the
amount of chargeable capital gain for the assessment year 25$2-$+ in the hands of :r# *upesh 4ahiya#
S'$u!)':: `
Hull value of consideration $&$5&555#55
X -2&555 . Index of 2(-21 x Index of $$-$2
X -2&555 . $-5 x 12/ X `2&('&$-2#2( 2&('&$-2#2(
=ong Term ,apital =oss ($&/'&$-2#2()
;u&%!)': 8: 6-)!& " :'!& ': #'mu!"!)': '. #")!"$ g"):% ): #"%& '. !-":%.&- '. " #")!"$ "%%&! ?E w"E
'. *)%!-)?u!)': '. #")!"$ "%%&! ': !C& *)%%'$u!)': '. " .)-m &!#.
A:%w&-:
C")!"$ g"):% ): #"%& '. !-":%.&- '. " #")!"$ "%%&! ?E w"E '. *)%!-)?u!)': ': !C& *)%%'$u!)': '. " .)-m
&!#. S&#!)': 47A4B
The profits or gains arising from the transfer of a capital asset by way of distribution of capital assets on the
dissolution of a firm or other association of persons or body of individuals or otherwise& shall be chargeable
to tax as the income of the firm& association or body& of the previous year in which the said transfer takes
place and the .")- m"-k&! >"$u& of the asset on the date of such transfer shall be deemed to be the full value
of the consideration received as a result of the transfer#
0$$u%!-"!)': 6: Ane partnership firm has purchased one building on 5$#$5#$''/ for `/&55&555 and
dissolution has taken place on 5$#$5#25$$ and this building was transferred to one of the partner in
settlement of his claim of `2/&55&555& though the market value was `+/&55&555#
,ompute capital gains for assessment year 25$2-$+ and also its tax liability#
S'$u!)':: `
Income Bnder The head ,apital >ains $-/
X /&55&555 . Index of '/-'( x Index of $$-$2
X /&55&555 . 22$ x 12/ X `$+&'(&1'1#$/ $+&'(&1'1#$/
=ong Term ,apital >ain 2$&5+&252#2/
*ounded off u.s 222% 2$&5+&255#55
Tax on `2$&5+&255 V 25O u.s $$2 -&25&(-5#55
%ddG 9ducation cess V 2O 2&-$2#25
%ddG 309, V $O -&25(#-5
Tax =iability -&++&2/'#25
*ounded off u.s 222) -&++&2(5#55
;u&%!)': 9 N8. 0m.O: 6-)!& " :'!& ': #'mu!"!)': '. #")!"$ g"):% ': #'mu$%'-E "#Ju)%)!)': '. "
C")!"$ A%%&!.
A:%w&-:
C'mu!"!)': '. #")!"$ g"):% ': #'mu$%'-E "#Ju)%)!)': '. " #")!"$ "%%&! S&#!)': 47A7B
If any capital asset has been ac@uired compulsorily by the >overnment or other similar agency& capital gains
shall be computed in the year in which the asset was ac@uired but capital gains so computed shall be taxable
in the year in which the compensation or the part of compensation is first received#
E:C":#&* C'm&:%"!)':
If the compensation is enhanced by the ,ourt& Tribunal etc#& such enhanced compensation shall be the capital
gains of the year in which the enhanced compensation is received# The cost of ac@uisition and the cost of
improvement shall be taken to be nil#
4&*u#&* C'm&:%"!)':
If the compensation is reduced subse@uently by any ,ourt etc#& in such cases capital gains shall be re-
computed taking into consideration such reduced compensation#
/&"!C '. !C& T-":%.&-'-
It is possible that the transferor may die before he receives the enhanced compensation# In that case& the
enhanced compensation or consideration will be chargeable to tax in the hands of the person who receives
the same#
0$$u%!-"!)': 7: :r# %?ay ;umar (4ate of birth 5$#$5#$'-/) has purchased one house on 5$#5-#$'1/ for
`-&55&555 and incurred `2&55&555 on its improvement on 5$#$5#$'12# Its market value on 5$#5-#$'2$ was
`+&55&555# This house was ac@uired by the >overnment on 5$#$5#2555 and the compensation fixed was
`+/&55&555 and the >overnment has paid half of the compensation on 5$#$5#25$$ and balance half on
5$#$5#25$2#
The assessee has filed an appeal for increasing the compensation and the court has given decision on
+$#5+#25$+ directing the >overnment to pay additional compensation of `/&55&555#
The >overnment has paid half of the amount on 5$#5-#25$- and balance half on 5$#5-#25$/#
0e has invested `12&555 in C3,#
,ompute assessee!s tax liability for the assessment year 25$2-$+ and also capital gains for various years#
S'$u!)'::
Computation of Capital 1ains un/er section 47(7)
,apital gain shall be computed in the year in which the asset was ac@uired by the >overnment i#e# in the
previous year 2555-5$ and shall be taxed in the year in which the first payment has been received by the
Income Bnder The head ,apital >ains $-(
assessee i#e# in the previous year 25$$-$2 `
X -&55&555 . Index of 2$-22 x Index of 55-5$
X -&55&555 . $55 x -5( X `$(&2-&555 $(&2-&555#55
=ong Term ,apital >ain $2&1(&555#55
Income under the head ,apital >ain (=T,>) $2&1(&555#55
>ross Total Income $2&1(&555#55
=essG 4eduction u.s 25, Cil
T4eduction under section 25, is not allowed from =T,>U
Total Income $2&1(&555#55
T3ince normal income is nil& as per section $$2 deficiency of `2&/5&555 shall be allowed from long term
capital gains and balance income shall be taxed at flat rate of 25OU
Tax on `$(&2(&555 (`$2&1(&555 8 `2&/5&555) V 25O +&2/&255#55
%ddG 9ducation cess V 2O (&/5-#55
%ddG 309, V $O +&2/2#55
Tax =iability +&+-&'/(#55
*ounded off u.s 222) +&+-&'(5#55
Computation of Capital 1ain for t(e pre8ious year *14+17
=ong Term ,apital >ain 2&/5&555#55
Computation of Capital 1ain for t(e pre8ious year *17+19
=ong Term ,apital >ain 2&/5&555#55
0$$u%!-"!)': 8: :rs# D purchased one house on 5$#51#$'11 for `2&55&555 and incurred `$&55&555 on its
improvement in $'12-1' and its market value as on 5$#5-#$'2$ is `2&/5&555# 3he incurred `2&55&555 on its
improvement in $''$-'2 and the house was ac@uired by the >overnment on 5$#51#255' and compensation
fixed is `(5&55&555 and half of the amount was paid by the >overnment on 5$#5$#25$2 and balance half on
5$#5$#25$+# 3he has also received interest of ` 2&55&555 in previous year 25$$-$2 from the >overnment for
delay in payment of compensation#
3he is rendering taxable service in financial year 25$$-$2 and total amount received is `+(&55&555 and input
service taken is `$5&55&555 plus service tax and other expenses is `2&55&555#
3he is not eligible for 336 exemption and she has not collected any service tax#
4iscuss tax treatment of income tax for %ssessment Jear 25$2-$+ and service tax for Hinancial Jear 25$$-
$2#
S'$u!)'::
Computation of income un/er t(e (ea/ Capital 1ains
previous year 255'-$5 and shall be taxed in the year in which the first payment has been received by the
assessee i#e# in the previous year 25$$-$2
`
Hull value of consideration (5&55&555#55
X 2&/5&555.Index of 2$-22 x Index of 5'-$5
X 2&/5&555.$55 x (+2 $/&25&555#55
X 2&55&555. Index of '$-'2 x Index of 5'-$5
X 2&55&555.$'' x (+2 (&+/&$1/#21
=ong Term ,apital >ain +1&2-&22-#$+
Computation of income un/er t(e (ea/ :t(er Sources
Interest income 2&55&555#55
=essG 4eduction u.s /1 V /5O $&55&555#55
Income under the head Ather 3ources $&55&555#55
Computation of income un/er t(e (ea/ ;usiness< ,rofession
>ross receipt from services exclusive of service tax +2&(+&22/#'+
(+(&55&5555 8 +&+(&$1-#51)
=essG Input service $5&55&555#55
=essG Ather expenses 2&55&555#55
Income under the head )usiness 6rofession 25&(+&22/#'+
Computation of 1ross Total .ncome
Income under the head )usiness 6rofession 25&(+&22/#'+
Income from long term capital gains +1&2-&22-#$+
Income under the head Ather 3ources $&55&555#55
>ross Total Income /'&-2&(/5#5(
Total Income /'&-2&(/5#5(
=T,> +1&2-&22-#$+
*ounded off u.s 222% +1&2-&225#55
Cormal income 2$&(+&22/#'+
*ounded off u.s 222% 2$&(+&2+5#55
Tax on =T,> `+1&2-&225 V 25O u.s $$2 1&/(&'(-#55
Tax on `2$&(+&2+5 at slab rate /&55&$-'#55
Tax before education cess $2&/1&$$+#55
%ddG 9ducation ,ess V 2O 2/&$-2#2(
%ddG 309, V$O $2&/1$#$+
Tax =iability $2&'-&22(#+'
*ounded off u.s 222) $2&'-&2+5#55
Computation of Ser8ice Tax ,ayable
Autput 3ervice Tax (+(&55&555 . $$5#+ x $5#+) +&+(&$1-#51
=essG ,9C7%T credit ($5&55&555 x $5#+O) $&5+&555#55
3ervice Tax 6ayable 2&++&$1-#51
*ounded off u.s +14 2&++&$1-#55
;u&%!)': 10: 6-)!& " :'!& ': #")!"$ g"):% ': *)%!-)?u!)': '. "%%&!% ?E " #'m":E ': L)Ju)*"!)':.
A:%w&-:
C")!"$ G"):% ': *)%!-)?u!)': '. "%%&!% ?E #'m":)&% ): L)Ju)*"!)': S&#!)': 46
Cotwithstanding anything contained in section -/& where the assets of a company are distributed to its
shareholders on its li@uidation& such distribution shall not be regarded as a transfer by the company for the
purposes of section -/#
Where a shareholder on the li@uidation of a company receives any money or other assets from the company&
he shall be chargeable to income-tax under the head M,apital gainsN& in respect of the money so received or
the market value of the other assets on the date of distribution& as reduced by the amount assessed as
dividend within the meaning of sub-clause (c) of clause (22) of section 2 and the sum so arrived at shall be
deemed to be the full value of the consideration for the purposes of section -2#
AA$-&"*E *)%#u%%&* u:*&- !C& C&"* 1!C&- S'u-#&% u:*&- %&#!)': 2A22BA#BB
0$$u%!-"!)': 9: %), =td# has issued one-lakh shares of `$5 each and the company goes into li@uidation on
5$#$5#25$$ and distributable asset of the company are valued at `2 lakh# The company!s accumulated profits
on the date of li@uidation are `+#/ lakhs which are included in `2 lakhs# :r# ;aran :anchanda has
purchased $55 shares in this company on 5$#$5#$'12 for ` $5 each and market value of the shares on
5$#5-#$'2$ is `$2 per share#
,ompute dividends in the hands of :r# ;aran :anchanda and also capital gains#
S'$u!)':: `
3hare of :r# ;aran :anchanda in the distributable profits
2&55&555 x $55.$&55&555 255
%ccumulated profits +&/5&555
6roportionate share of :r# ;aran :anchanda +/5
4ividends in the hands of :r# ;aran :anchanda as per sec 2(22)(c) +/5
Computation of capital 0ains as per section 49
Hull value of consideration -/5
X ($2 x $55) . Index of 2$-22 x Index of $$-$2
X $&255.$55 x 12/ X '&-25 '&-25
=ong-term loss (2&'15)
0$$u%!-"!)': 10: :s# )hanumathi purchased $5&555 e@uity shares of 7imil ,o# 6vt# =td# on 22#52#255/ for
`$&25&555# The company was wound up on +$#51#25$$# The following is the summari<ed financial position
of the company as on +$#51#25$$G
L)"?)$)!E ` A%%&!% `
15&555 9@uity shares 1&55&555 %gricultural lands -+&55&555
>eneral reserve -5&55&555 ,ash at bank 1&55&555
6rovision for taxation +&55&555
70H00H000 70H00H000
The tax liability (towards dividend distribution tax) was ascertained at `+&/5&555& after considering refund
due to the company# The remaining assets were distributed to the shareholders in the proportion of their
shareholding# The market value of ( acres of agricultural land (in an urban area) as on +$#51#25$$ is
`$$&55&555 per acre#
The agricultural land received above was sold by :s# )hanumathi on 22#2#25$2 for `$(&55&555#
4iscuss the tax conse@uences in the hands of the company and :s# )hanumathi#
,ost inflation indices areG
Hinancial year Index number
255--5/ -25
25$$-$2 12/
Income Bnder The head ,apital >ains $-'
S'$u!)'::
The company has distributed assets to its shareholders at the time of li@uidation is not regarded as a transfer
under section -(($)#
Computation of capital 0ains of !s% ;(anumat(i
Capital 0ain on transfer of s(ares `
Cet distributable amount
(`1&55&555 I ((&55&555 8 +&/5&555) ('&/5&555#55
6roportionate amount of )hanumathi $.1th x ('&/5&555 '&'2&2/1#$-
%ccumulated profits -5&55&555 8 (+&/5&555 8 +&55&555) +'&/5&555#55
6roportionate share of )hanumathi $.1th x +'&/5&555 /&(-&22/#1$
0ence deemed dividend under section 2(22)(c) shall be /&(-&22/#1$
0owever dividends shall be exempt from income tax under section $5(+-)
Hull value of consideration ('&'2&2/1#$- 8 /&(-&22/#1$) -&22&/1$#-+
X $&25&555 . Index of 5--5/ x Index of $$-$2
X $&25&555. -25 x 12/ X $&'(&2/5 $&'(&2/5#55
=ong term capital gain 2&+2&+2$#-+
,apital gain on transfer of agricultural land
Hull value of consideration $(&55&555#55
=essG ,ost of ac@uisition (market value) '&-2&2/1#$-
3hort term capital gain (&/1&$-2#2(
;u&%!)': 11: 6-)!& " :'!& ': #")!"$ g"):% ): #"%& '. 'w: %C"-&% '- '!C&- %&#).)&* %&#u-)!)&% u-#C"%&*
?E #'m":E.
A:%w&-:
C")!"$ G"):% ): #"%& '. 'w: %C"-&% '- '!C&- %&#).)&* %&#u-)!)&% u-#C"%&* ?E C'm":E S&#!)': 46A
If any company has re-purchased its shares or other securities& in such cases capital gains shall be computed
in the hands of its holder and for this purpose consideration paid by the company shall be considered to be
full value of consideration#
Example
:r# 3atnam 3ingh purchased $55 preference shares of %), =td# on 5$#$5#$''/ V `$5 per share and
subse@uently these shares were re-purchased by the company on 5$#$5#25$$ V `1/ per share& in this case
capital gains in the hands of :r# 3atnam 3ingh shall be computed in the manner give belowG `
Hull value of consideration 1&/55#55
($55 x 1/)
X $&555 . Index of '/-'( x Index of $$-$2
X $&555.22$ x 12/ X `2&1'+#/' 2&1'+#/'
=ong term capital gains -&15(#-$
Where a shareholder or a holder of other specified securities receives any consideration from any company
for purchase of its own shares or other specified securities held by such shareholder or holder of other
specified securities& then& sub?ect to the provisions of section -2& the *)..&-&:#& ?&!w&&: !C& #'%! '.
"#Ju)%)!)': ":* !C& >"$u& '. #':%)*&-"!)': received by the shareholder or the holder of other specified
securities& shall be deemed to be the capital gains arising to such shareholder or the holder of other specified
Income Bnder The head ,apital >ains $/5
securities& in the year in which such shares or other specified securities were purchased by the company#
;u&%!)': 12 N8. 0m.O: 6-)!& " :'!& ': !-":%"#!)':% :'! -&g"-*&* "% !-":%.&-.
A:%w&-:
T-":%"#!)':% :'! -&g"-*&* "% !-":%.&- S&#!)': 47
The following transactions will not be considered as transfer and therefore& no capital gains will ariseG-
A1B %ny distribution of capital assets on the !'!"$ '- "-!)"$ "-!)!)': '. " H):*u U:*)>)*&* 3"m)$E#
A2B %ny transfer of a capital asset under a g).! '- w)$$ '- ": )--&>'#"?$& !-u%!#
A3B %ny transfer of a capital asset by " #'m":E !' )!% %u?%)*)"-E #'m":E& ifR
(a) the holding company or its nominees hold the whole of the share capital of the subsidiary company&
and
(b) the subsidiary company is an Indian company#
A4B %ny transfer of a capital asset by " %u?%)*)"-E #'m":E !' !C& C'$*):g #'m":E& ifR
(a) the whole of the share capital of the subsidiary company is held by the holding company& and
(b) the holding company is an Indian company#
A7B %ny transfer& in a scheme of amalgamation& of a capital asset by the "m"$g"m"!):g #'m":E !' !C&
"m"$g"m"!&* #'m":E if the "m"$g"m"!&* #'m":E )% ": 0:*)": #'m":E#
A6B %ny transfer& in a demerger& of a capital asset by the *&m&-g&* #'m":E !' !C& -&%u$!):g #'m":E& if
the -&%u$!):g #'m":E )% ": 0:*)": #'m":E#
A7B %ny transfer of shares in the "m"$g"m"!):g #'m":E ?E " %C"-&C'$*&-& in a scheme of amalgamation&
ifR
(a) the transfer is made in consideration of the allotment to him of shares in the amalgamated company&
and
(b) the amalgamated company is an Indian company#
A8B %ny transfer of a capital asset& being ":E w'-k '. "-!H "-#C"&'$'g)#"$H %#)&:!).)# '- "-! #'$$&#!)':&
?''kH m":u%#-)!H *-"w):gH "):!):gH C'!'g-"C '- -):!& to the >overnment or a Bniversity or the
Cational :useum& Cational %rt >allery& Cational %rchives or any such other public museum or
institution as may be notified by the ,entral >overnment#
A9B %ny transfer by way of #':>&-%)': '. ?':*% '- *&?&:!u-&%H *&?&:!u-&(%!'#k '- *&'%)! #&-!).)#"!&%
etc# of a company into shares or debentures of that company#
A10B %ny transfer of a capital asset by a .)-m !' " #'m":E "% " -&%u$! '. %u##&%%)': of the firm by a
company#
6rovided thatR
(a) all the assets and liabilities of the firm or of the association of persons or body of individuals become the
assets and liabilities of the company#
(b) all the partners of the firm immediately before the succession become the shareholders of the company in
the same proportion in which their capital accounts stood#
(c) the partners of the firm do not receive any consideration other than by way of allotment of shares in the
company#
Income Bnder The head ,apital >ains $/$
(d) the aggregate of the shareholding in the company of the partners of the firm is not less than fifty per cent
of the total voting power in the company and their shareholding continues to be as such for a period of
five years from the date of the succession#
A11B %ny transfer of a capital asset in a !-":%"#!)': '. -&>&-%& m'-!g"g& under a scheme made and notified
by the ,entral >overnment
A12B If a sole proprietary concern is succeeded by a company in the business carried on by it as a result of
which the %'$& -'-)&!"-E #':#&-: %&$$% '- '!C&-w)%& !-":%.&-% ":E #")!"$ "%%&! '- ):!":g)?$& "%%&!
!' !C& #'m":E#
6rovided thatR
(a) all the assets and liabilities of the sole proprietary concern should become the assets and liabilities of the
company#
(b) the shareholding of the sole proprietor in the company is not less than fifty per cent of the total voting
power and it should be maintained for a minimum period of five years from the date of the succession
and
(c) the sole proprietor does not receive any consideration or benefit& in any manner& other than by way of
allotment of shares in the company#
A13B %ny transfer of a capital asset or intangible asset by " -)>"!& #'m":E '- u:$)%!&* u?$)# #'m":E
!' " $)m)!&* $)"?)$)!E "-!:&-%C) as a result of conversion of the company into a limited liability
partnership#
6rovided thatR
(a) all the assets and liabilities of the company immediately before the conversion become the assets and
liabilities of the limited liability partnership"
(b) all the shareholders of the company immediately before the conversion become the partners of the
limited liability partnership and their capital contribution and profit sharing ratio in the limited liability
partnership are in the same proportion as their shareholding in the company on the date of conversion"
(c) the shareholders of the company do not receive any consideration or benefit& directly or indirectly& in any
form or manner& other than by way of share in profit and capital contribution in the limited liability
partnership"
(d) the aggregate of the profit sharing ratio of the shareholders of the company in the limited liability
partnership shall not be less than fifty per cent# at any time during the period of five years from the date
of conversion"
(e) the total sales& turnover or gross receipts in business of the company in any of the three previous years
preceding the previous year in which the conversion takes place does not exceed sixty lakh rupees" and
(f) no amount is paid& either directly or indirectly& to any partner out of balance of accumulated profit
standing in the accounts of the company on the date of conversion for a period of three years from the
date of conversion#
;u&%!)': 13. 6-)!& " :'!& ': #'%! w)!C -&.&-&:#& !' #&-!"): m'*&% '. A#Ju)%)!)':.
A:%w&-:
C'%! w)!C -&.&-&:#& !' #&-!"): m'*&% '. "#Ju)%)!)': S&#!)': 49
C'%! '. "#Ju)%)!)': ): #"%& '. !-":%.&- '. " #")!"$ "%%&! !C-'ugC !C& !-":%"#!)': '. %&#!)': 47 S&#!)':
49A1B
If any person has received an asset through a transaction of section -1& cost of ac@uisition and the cost of
improvement shall be the cost of ac@uisition.cost of improvement of the previous owner who has transferred
the asset through the transaction of section -1 and such transactions are as given belowG
1. If any capital asset became the property of the assessee on "-!)!)': '. " H):*u U:*)>)*&* 3"m)$E.
2. If any capital asset became the property of the assessee under a g).! '- w)$$.
3. If any capital asset became the property of the assessee on any *)%!-)?u!)': '. "%%&!% ': !C& $)Ju)*"!)':
'. " #'m":E. (If the assessee has been assessed to capital gains under section -( on the basis of market
value& in that case& cost of ac@uisition shall be the market value)
4. If any capital asset became the property of the assessee on any !-":%.&- '. " #")!"$ "%%&! ?E " #'m":E
!' )!% %u?%)*)"-E #'m":E.
7. If any capital asset became the property of the assessee on any !-":%.&- '. " #")!"$ "%%&! ?E "
%u?%)*)"-E #'m":E !' !C& C'$*):g #'m":E#
6. If any capital asset became the property of the assessee& in a scheme of "m"$g"m"!)':.
C'%! '. "#Ju)%)!)': ): #"%& '. #':>&-%)': '. *&?&:!u-&% &!#. ):!' %C"-&% S&#!)': 49A2AB
Where the capital asset& being a share or debenture in a company& became the property of the assessee in
consideration of a transfer by way of #':>&-%)': '. ?':*% '- *&?&:!u-&%& debentures stock or deposit
certificates& the cost of ac@uisition of the asset to the assessee shall be deemed to be that part of the cost of
debenture& debenture-stock or deposit certificates in relation to which such asset is ac@uired by the assessee#
C'%! '. "#Ju)%)!)': ): #"%& '. %C"-&%/*&?&:!u-&% -&#&)>&* u:*&- Em$'E&&% S!'#k 1!)': P$": S&#!)':
49A2AAB
If the employer has issued sweat e@uity shares to the employees& in such cases as per section $1(2)(vi)&
market value of the shares shall be taxable in the hands of the employee#
If the same shares have been sold by the employees subse@uently& the cost of ac@uisition of the shares shall
be the market value of the shares which was taken into consideration for the purpose of per@uisite value
under the head salary#
(It will be discussed under the head 3alary)#
C'%! '. "#Ju)%)!)': ): #"%& '. "%%&!% -&#&)>&* "% g).! S&#!)': 49A4B A"$)#"?$& w.&.. 01.10.2009B
If any individual or 0BH has received gift in kind and it was taxable under section /(& in such cases& at the
time of sale& cost of ac@uisition of such asset shall be the value which has been taken into consideration for
the purpose of computing taxable amount of gift#
Example
:r# %man >upta purchased one house property on 5$#51#$''2 and it was gifted to :r# ;aran ;hanna on
5$#$$#25$$ and value for the purpose of charging stamp duty was `/&55&555 and subse@uently the house
property was sold by :r# ;aran ;hanna on 5$#5$#25$2 for `2/&55&555& in this case tax liability shall be
computed in the manner given belowG `
Income under the head Ather 3ources /&55&555#55
()eing the amount of gift under section /()
Income Bnder The head ,apital >ains $/+
.ncome un/er t(e (ea/ capital 0ain
=essG ,ost of ac@uisition /&55&555#55
>ross Total Income 2/&55&555#55
Total Income 2/&55&555#55
Tax on `2/&55&555 at slab rate (&52&555#55
%ddG 9ducation cess V 2O $2&5-5#55
%ddG 309, V $O (&525#55
Tax =iability (&25&5(5#55
0$$u%!-"!)': 11: :r# 6anka? >oenka purchased one house on 5$#$5#$'($ for `2&55&555 and incurred
`$&55&555 on its improvement on 5$#$5#$'1$# Its fair market value on 5$#5-#$'2$ is `+&/5&555#
:r# 6anka? >oenka expired on 5$#$5#25$$ and the house was inherited by his son :r# Citesh Cirmal and
value for the purpose of charging stamp duty was `$5&55&555#
:r# Citesh Cirmal has sold the house on 5$#$$#25$$ for `+/&55&555#
,ompute tax liability of :r# Citesh Cirmal for the assessment year 25$2-$+#
S'$u!)':: `
X +&/5&555 . $55 x 12/ X `21&-1&/55 21&-1&/55#55
=ong Term ,apital >ain 1&/2&/55#55
Income under the head ,apital >ain 1&/2&/55#55
Total Income 1&/2&/55#55
T3ince normal income is nil& as per section $$2 deficiency of `$&25&555 shall be allowed from long term
capital gain and balance income shall be taxed at flat rate of 25OU
Tax on `/&12&/55 (`1&/2&/55 8 `$&25&555) V 25O $&$-&/55#55
%ddG 9ducation cess V 2O 2&2'5#55
%ddG 309, V $O $&$-/#55
Tax =iability $&$1&'+/#55
*ounded off u.s 222) $&$1&'-5#55
0$$u%!-"!)': 12: :r# D purchased one house on 5$#$5#$''2 for `2&55&555 and incurred ` /&55&555 on its
improvement in H#J# $'''-2555 and :r# D gifted the house on 5$#$5#25$$ to his friend :r# J when its value
for the purpose of charging stamp duty was `$5&55&555#
:r# J sold the house on 5$#5$#25$2 for `-2&55&555#
,ompute his tax liability#
S'$u!)':: `
Income under the head Ather 3ources $5&55&555#55
Income Bnder The head ,apital >ains $/-
=essG ,ost of ac@uisition $5&55&555#55
3hort Term ,apital >ain +2&55&555#55
Income under the head ,apital >ain +2&55&555#55
>ross Total Income -2&55&555#55
Total Income -2&55&555#55
Tax on `-2&55&555 at slab rate $$&$2&555#55
%ddG 9ducation cess V 2O 22&2-5#55
%ddG 309, V $O $$&$25#55
Tax =iability $$&-/&+(5#55
A?B 6resume :r# J is son of :r# D#
S'$u!)':: `
X 2&55&555 . 22+ x 12/ X `1&5-&5+/#21 1&5-&5+/#21
X /&55&555 . +2' x 12/ X `$5&52&''1#-+ $5&52&''1#-+
=ong Term ,apital >ain 2-&2(&'((#15
Income under the head ,apital >ain 2-&2(&'((#15
>ross Total Income 2-&2(&'((#15
Total Income (*ounded off u.s 222%) 2-&2(&'15#55
Tax on `2+&5(&'15 (`2-&2(&'15 8 `$&25&555) V 25O -&($&+'-#55
%ddG 9ducation cess V 2O '&221#22
%ddG 309, V $O -&($+#'-
Tax =iability -&1/&2+/#22
*ounded off u.s 222) -&1/&2-5#55
A#B 6resume :r# J is son of :r# D and house was gifted on 5$#$$#255' and value for the purpose of charging
stamp duty was `+2&55&555#
S'$u!)':: `
X 2&55&555 . 22+ x 12/ X `1&5-&5+/#21 1&5-&5+/#21
X /&55&555 . +2' x 12/ X `$5&52&''1#-+ $5&52&''1#-+
=ong Term ,apital >ain 2-&2(&'((#15
Income Bnder The head ,apital >ains $//
Income under the head ,apital >ain 2-&2(&'((#15
>ross Total Income 2-&2(&'((#15
Total Income (*ounded off u.s 222%) 2-&2(&'15#55
Tax on `2+&5(&'15 (`2-&2(&'15 8 `$&25&555) V 25O -&($&+'-#55
%ddG 9ducation cess V 2O '&221#22
%ddG 309, V $O -&($+#'-
Tax =iability -&1/&2+/#22
*ounded off u.s 222) -&1/&2-5#55
A*B 6resume in part (c) :r# J is friend of :r# D#
S'$u!)':: `
=essG ,ost of ac@uisition +2&55&555#55
3hort Term ,apital >ain $5&55&555#55
>ross Total Income $5&55&555#55
Total Income $5&55&555#55
Tax on `$5&55&555 at slab rate $&/2&555#55
%ddG 9ducation cess V 2O +&5-5#55
%ddG 309, V $O $&/25#55
Tax =iability $&/(&/(5#55
;u&%!)': 14: E+$"): 4&>&-%& M'-!g"g&.
A:%w&-:
%s per section -1& reverse mortgage shall not be considered to be transfer for the purpose of capital gain#
Bnder reverse mortgage& an individual can mortgage his house property to the bank and the bank shall grant
a loan against the security of house property and such loan shall be given in monthly installments and the
amount so received shall not be considered to be income of the mortgagor under section $5(-+)#
%fter the death of the mortgagor the bank shall have right to sell off the property and shall ad?ust loan and
interest and shall compute capital gains for the deceased person and shall pay tax to the government#
The purpose of the scheme is to make available regular amount to the persons who do not have regular
income but are the owners of the house property#
In general& the mortgagor repay the loan in installments but in this case mortgagee i#e# bank is paying
installment to the mortgagor and hence it is called reverse mortgage#
;u&%!)': 17: w-)!& " :'!& ': #")!"$ g"):% ): #"%& '. /&-&#)"?$& A%%&!%.
A:%w&-:
C")!"$ g"):% ): #"%& '. /&-&#)"?$& A%%&!% S&#!)': 70
If any person has transferred depreciable asset& gain or loss shall always be short term and indexation shall
Income Bnder The head ,apital >ains $/(
not be applicable and capital gains shall be computed in the manner given belowG

Hull value of consideration
=essG
(i) Written down value of the asset in the beginning of the year
(ii) 3elling expenses
3hort Term ,apital >ains
The excess so obtained shall be considered to be short term capital gains#
Example
%), =td# has one plant and machinery on 5$#5-#25$$ with wdv `(&55&555 and it was ac@uired by the
company on 5$#5-#$''1 and the plant was sold on 5$#5$#25$2 for `$$&55&555 and selling expenses are
`+5&555& in this case& capital gains shall be computed in the manner given belowG
`
=essG
(i) Written down value of the asset in the beginning of the year (&55&555
(ii) 3elling expenses +5&555
3hort Term ,apital >ains -&15&555
;u&%!)': 16: 6-)!& " :'!& ': #'mu!"!)': '. #")!"$ g"): ): #"%& '. %$um %"$& #'>&-&* u:*&- %&#!)':
709.
A:%w&-:
S&#)"$ -'>)%)': .'- #'mu!"!)': '. #")!"$ g"):% ): #"%& '. S$um S"$& S&#!)': 709
S&#!)': 2A42CBWFS$um %"$&G means the transfer of one or more undertakings as a result of the sale for a
lump sum consideration without values being assigned to the individual assets and liabilities in such sales#
If any person has transferred the entire unit or part of the unit for a lump sum consideration& it will be called
slump sale and capital gain shall be computed for the entire unit instead of individual asset and cost of
ac@uisition shall be the net worth of the unit or the division#
If a unit or division was held by the assessee for not more than +( months immediately preceding the date of
its transfer& capital gain shall be considered to be short term and if the period is more than +( months& capital
gain shall be considered to be long term and ):*&+"!)': )% :'! "$)#"?$&.
F 2&! w'-!CG shall be the aggregate value of total assets of the undertaking or division as reduced by the
value of liabilities of such undertaking or division as appearing in its books of accountG
%ny change in the value of assets on account of revaluation of assets shall be ignored for the purposes of
computing the net worth#
9very assessee& in the case of slump sale& shall furnish in the prescribed form alongwith the return of
income& a report of a ,hartered %ccountant indicating the computation of the net worth of the undertaking or
division and certifying that the net worth of the undertaking or division& has been correctly arrived at#
Example
%), =td# has sold one of its division on 5$#$5#25$$ for `+/&55&555 and its net worth on 5$#$5#25$$ was
`25&55&555 and it was setup in $''+& in this case there is long term capital gain of `$/&55&555#
0$$u%!-"!)': 13: :r# % is a proprietor of ;amal 9nterprises having 2 units started on 5$#5-#255(# 0e
transferred on 5$#5-#25$$ his unit $ by way of slump sale for a total consideration of `-/ =acs# The
expenses is incurred for this transfer were `(/&555.-# 0is )alance 3heet as on +$#5+#25$$ is as underG
L)"?)$)!)&% T'!"$
`
A%%&!% U:)! 1
`
U:)! 2
`
T'!"$
`
Awn ,apital 2$&55&555 )uilding $/&55&555 -&55&555 $'&55&555
*evaluation *eserve
(for building of unit $)
(&55&555 :achinery /&55&555 2&55&555 1&55&555
)ank =oan
(15O for unit $)
-&55&555 4ebtors +&55&555 15&555 +&15&555
Trade creditors
(2/O for unit $)
+&$5&555 Ather assets +&/5&555 '5&555 -&-5&555
T'!"$ 34H10H000 T'!"$ 26H70H000 7H60H000 34H10H000
Ather informationG
(i) *evaluation reserve is created by revising upward the value of the building of unit $#
(ii) Co individual value of any asset is considered in the transfer deed#
,ompute the capital gain for the assessment year 25$2-$+#
S'$u!)'::
C'mu!"!)': '. #")!"$ g"):% ': %$um %"$& '. U:)! 1
P"-!)#u$"-% `
3ale value -/&55&555
?ess9 9xpenses on sale (/&555
?ess9 Cet worth (3ee Cote (i) below) $(&5/&555
=ong term capital gain 22&+5&555
2'!& A)B : C'mu!"!)': '. :&! w'-!C '. U:)! 1 '. K"m"$ E:!&--)%&%
P"-!)#u$"-% ` `
)uilding (excluding `( lakhs on account of revaluation) '&55&555
:achinery /&55&555
4ebtors +&55&555
Ather assets (`+&/5&555 8 `2&55&555) +&/5&555
Total assets 25&/5&555
?ess G
)ank =oan (2&25&555)
,reditors (11&/55)
2&! w'-!C 16H92H700
;u&%!)': 17 N0m.O: 6-)!& " :'!& ': .u$$ >"$u& '. #':%)*&-"!)': ): #&-!"): #"%&%.
A:%w&-:
S&#)"$ -'>)%)': .'- .u$$ >"$u& '. #':%)*&-"!)': ): #&-!"): #"%&% S&#!)': 70C
If the consideration received by an assessee as a result of transfer of land or building is less than the value
adopted by the stamp valuation authority of the 3tate >overnment& in that case the value so adopted shall be
considered to be full value of consideration and capital gains shall be computed accordingly#
If any assessee claims that the value adopted by stamp valuation authority exceeds the fair market value of
the property on the date of transfer of the asset& %ssessing Afficer may refer the valuation of the capital asset
to a valuation officer and the value determined by the valuation officer shall be taken into consideration but
if the value determined by the valuation officer is exceeding the value determined stamp valuation authority&
in that case& value determined by stamp valuation authority shall be taken into consideration#
Example
:r# 7ishal Pain has one plot of 255 s@# yards which has been sold by him and he claims that it was sold at a
rate of `$&555 per s@# yard but for the purpose of stamp valuation& value is considered to be `/&555 per s@#
yard# In this case full value of consideration for the purpose of section -2 shall be `/&555 per s@ yard and if
the assessee claims that fair market value is less than `/&555 per s@# yard& %ssessing Afficer may refer the
matter to the valuation officer#
0$$u%!-"!)': 14: :r# D who transferred his land and building on $5#52#25$2& furnishes the following
informationG
(i) Cet consideration received `+/&55&555#
(ii) 7alue adopted by stamp valuation authority& which was contested by :r# D `/5&55&555#
(iii) value ascertained by 7aluation Afficer on reference by the %ssessing Afficer `/2&55&555#
(iv) This land was distributed to :r# D on the partial partition of his 0BH on 5$#5-#$'2$# Hair market value
of the land as on 5$#5-#$'2$ was `$&(5&555#
(v) % residential building was constructed on the above land by :r# D at a cost of `+&/5&555 (construction
completed on 5$#$2#2552) during the financial year 2552-5+#
(vi) )rought forward unabsorbed short-term capital loss (incurred on sale of shares during the financial year
255'-$5) `25&555#
What should be the maximum amount to be invested by :r# D in C0%I . *9,= bonds so as to be exempt
from clutches of capital gain tax[
S'$u!)'::
C'mu!"!)': '. C")!"$ G"):% '. M-. X .'- !C& A%%&%%m&:! 5&"- 2012(13
`
Hull value of consideration /5&55&555#55
Indexed cost of land ($&(5&555 . $55 x 12/) $2&/(&555#55
Indexed cost of building (+&/5&555 . --1 x 12/) (&$-&(/+#2-
=ong term capital gain +$&2'&+-(#1(
=essG )rought forward short term capital loss set off 25&555#55
=ong term capital gain +5&-'&+-(#1(
%mount to be invested in C0%I . *9,= bonds (+5&-'&+-(#1( 8 $&25&555) 22&('&+-(#1(
3ince income upto `$&25&555 is exempt from income tax hence amount can be invested upto `22&('&+-(#1(
instead of `+5&-'&+-(#1(#
;u&%!)': 18 N8. 0m.O: 6-)!& " :'!& ': "*>":#& m':&E '- .'-.&)!u-& '. "*>":#& m':&E u:*&-
S&#!)': 71.
A:%w&-:
A*>":#& m':&E/.'-.&)!u-& '. "*>":#& m':&E S&#!)': 71
If any capital asset was sub?ect of negotiation for sale and any advance money was received under an
agreement to sell but subse@uently the buyer has refused to purchase the asset and advance money was
forfeited& in such cases& cost of ac@uisition shall be reduced by the amount so forfeited#
If any such advance money was forfeited by a person who has transferred the capital asset through the
transaction of section -1& in such cases& there will not be any ad?ustment for the money so forfeited#
0$$u%!-"!)': 17: :r# 4hruv %ggarwal purchased one building on 5$#$5#$'22 for `/&55&555# 0e entered into
an agreement on 5$#$5#$'21 to sell this building and advance money of `2/&555 was received but
subse@uently the buyer backed out and the advance money was forfeited# This building was sold on
5$#5$#25$2 to some other person for `-/&55&555#
Income Bnder The head ,apital >ains $/'
,ompute total income in the hands of :r# 4hruv %ggarwal for the assessment year 25$2-$+#
S'$u!)':: `
Hull value of consideration -/&55&555#55
X ,ost of ac@uisition as per section /$ (` /&55&555 8 `2/&555)
X -&1/&555 . Index of 22-2+ x Index of $$-$2
X -&1/&555 . $5' x 12/ X `+-&25&21$#/( +-&25&21$#/(
=ong Term ,apital >ain $5&1'&$22#--
Total Income (rounded off u.s 222%) $5&1'&$+5#55
0$$u%!-"!)': 16: :r# Peevan ,hauhan purchased one house on 5$#$5#$'22 for ` +&55&555# 0e entered into an
agreement to sell the house on 5$#$5#$'22 for ` 1&55&555 and advance money of `2/&555 was received but
the buyer has backed out and the advance money was forfeited# :r# Peevan ,huahan has expired on
5$#$5#$''/ and the asset was inherited by his son :r# )aldev ,hauhan who has further entered into
agreement to sell this house on 5$#$5#$''2 and advance money of ` +5&555 was received but the buyer
backed out and the advance money was forfeited# Hinally the house was sold on 5$#5$#25$2 for `21&55&555#
,ompute capital gain and tax liability for assessment year 25$2-$+#
S'$u!)':: `
X `2&15&555 (+&55&5558+5&555). Index of 22-2+ x Index of $$-$2
X ` 2&15&555 . $5' x 12/ X `$'&--&-'/#-$ $'&--&-'/#-$
=ong Term ,apital >ain 1&//&/5-#/'
Income under the head ,apital >ains 1&//&/5-#/'
Total Income (rounded off u.s 222%) 1&//&/55#55
Computation of tax liability
Tax on long term capital gain `/&1/&/55 (1&//&/55 8 $&25&555) V 25O u.s $$2 $&$/&$55#55
%ddG 9ducation cess V 2O 2&+52#55
%ddG 309, V $O $&$/$#55
Tax =iability $&$2&//+#55
*ounded off u.s 222) $&$2&//5#55
;u&%!)': 19 N8. 0m.O: 6-)!& " :'!& ': &+&m!)': u:*&- %&#!)': 74.
A:%w&-:
P-'.)! ': %"$& '. -'&-!E u%&* .'- -&%)*&:#& S&#!)': 74
1. A%%&%%&&: The assessee should be ):*)>)*u"$ or a H):*u U:*)>)*&* 3"m)$E# (i#e# exemption is not
allowed to firm& company& association of person or body of individual etc#)
2. A%%&!: ,apital asset transferred should be ?u)$*):g% '- $":*% "u-!&:":! !C&-&!'& being a -&%)*&:!)"$
C'u%&& the income of which is chargeable under the head MIncome from house propertyN#
3. TE& '. #")!"$ g"):: ,apital gain should be $':g !&-m#
4. 0:>&%!m&:!: The assessee has within a period of ':& E&"- ?&.'-& '- !w' E&"-% ".!&- !C& date on which
the transfer took place u-#C"%&*& or has within " &-)'* '. !C-&& E&"-% ".!&- that date constructed& a
residential house#
Income Bnder The head ,apital >ains $(5
7. Am'u:! '. &+&m!)':: 9xemption shall be allowed to be the extent of investment#
6. 6)!C*-"w"$ '. &+&m!)':: The house so purchased.constructed mu%! :'! ?& !-":%.&--&* w)!C): "
&-)'* '. !C-&& E&"-% otherwise exemption given shall be withdrawn and for this purpose while computing
capital gains& its cost of ac@uisition shall be reduced by the amount of the exemption earlier allowed#
7. C")!"$ g"):% "##'u:! S#C&m& 1988: The amount of capital gain has to be utilised till the last date of
furnishing of return of income otherwise amount should be deposited in capital gains account scheme $'22
and proof of such deposit should be enclosed with the return of income# 3ubse@uently the amount should be
withdrawn from this scheme and should be utilised for the specified purpose otherwise it will be considered
to be long term capital gain of the year in which the prescribed period has expired#
C)-#u$"- 2'. 743H *"!&* M"E 6H 1996
If the assessee dies before the expiry of stipulated period (for purchasing the new asset) and later on the
unutili<ed amount is refunded to the legal heirs& the )oard is of opinion that in such cases the said amount
cannot be taxed in the hands of the deceased# This amount is not taxable in the hands of legal heirs also as
the unutili<ed portion of the deposit does not partake the character of income in their hands but is only a part
of the estate devolving upon them#
8. E+!&:%)': '. !)m& .'- "#Ju)-):g :&w "%%&! '- *&'%)!):g '- ):>&%!):g "m'u:! '. #")!"$ g"): %&#!)':
74H: If the asset has been ac@uired compulsorily by the >overnment& period of investment shall be
determined from the date of payment instead of the date of compulsory ac@uisition#
CLA4030CAT012 341M 0CA0
9xemption under section /- can be claimed for purchase or construction of one residential house# 0owever&
in $. <nanda /asappa ". &'T (2008)& it held that where the assessee purchases two residential flats ad?acent
to each other& with the intention of using the same as a single residential unit& exemption under section /- is
allowable in respect of investment in both the flats& by treating the same as a single residential unit#
3imilarly& the ;arnataka 0igh ,ourt& applying the rationale of the above ruling in &'T ". J.C. 0uk;!n!a;;a
(2011)A held that where the assessee entered into a ?oint development agreement with a builder& whereby the
property owned by the assessee was given to the builder& who agreed to construct 2 flats therein and hand
over - flats to the assessee and bear the entire cost of construction& the assessee would be entitled to
exemption under section /- in respect of investment in all the - flats& by treating the same as a single
residential unit#
0$$u%!-"!)': 17: :r# 6arakh >upta purchased one residential house on 5$#5-#$'22 for `/&55&555# This house
was ac@uired compulsorily by the >overnment on 5$#$5#255$ and compensation of `+/&55&555 was fixed by
the government but the amount was paid by the >overnment on 5$#5+#25$2# The assessee has purchased one
residential house on 5$#5$#25$2 for `2&55&555 and the house was sold by him on 5$#5$#25$+ for `-&55&555#
,ompute his tax liability for the assessment year 25$2-$+ and also capital gains for the various years#
S'$u!)':: `
Computation of capital 0ains un/er section 47(7)
,apital gain shall be computed in the year in which the asset was ac@uired i#e# in the previous year 255$-
52 and shall be taxed in the year in which the first payment has been received i#e# in the previous year
25$$-$2
X /&55&555 . $5' x -2( X `$'&/-&$22#-- $'&/-&$22#--
=ong Term ,apital >ains $/&-/&21$#/(
Income Bnder The head ,apital >ains $($
=essG 9xemption u.s /- 2&55&555#55
=ong Term ,apital >ains $+&-/&21$#/(
Income under the head ,apital >ain (=T,>) $+&-/&21$#/(
>ross Total Income $+&-/&21$#/(
Total Income (rounded off u.s 222%) $+&-/&215#55
Tax on `$$&(/&215 (`$+&-/&215 8 `$&25&555) V 25O 2&++&$1-#55
%ddG 9ducation cess V 2O -&((+#-2
%ddG 309, V $O 2&++$#1-
Tax =iability 2&-5&$('#22
*ounded off u.s 222) 2&-5&$15#55
Computation of Capital 1ain for t(e assessment year *13+14
C")!"$ g"): ': %"$& '. H'u%&
Hull value of consideration -&55&555#55
=essG ,ost of ac@uisition (`2&55&555 8 `2&55&555) Cil
3hort Term ,apital >ain -&55&555#55
0ence 3hort Term ,apital >ain for assessment year 25$+-$- -&55&555#55
A?B 6resume the house was purchased on 5$#5'#25$2 instead of 5$#5$#25$2#
S'$u!)':: `
Computation of capital 0ains un/er section 47(7)
,apital gain shall be computed in the year in which the asset was ac@uired i#e# in the previous year 255$-
52 and shall be taxed in the year in which the first payment has been received i#e# in the previous year
25$$-$2
X /&55&555 . $5' x -2( X `$'&/-&$22#-- $'&/-&$22#--
=ong Term ,apital >ains $/&-/&21$#/(
Income under the head ,apital >ain (=T,>) $/&-/&21$#/(
>ross Total Income $/&-/&21$#/(
Total Income (rounded off u.s 222%) $/&-/&215#55
Tax on `$+&(/&215 (`$/&-/&215 8 `$&25&555) V 25O 2&1+&$1-#55
%ddG 9ducation cess V 2O /&-(+#-2
%ddG 309, V $O 2&1+$#1-
Tax =iability 2&2$&+('#22
*ounded off u.s 222) 2&2$&+15#55
2'!&: 9xemption under section /- is not allowed as the house was purchased after the last date of filing of
return of income (i#e# +$
st
Puly 25$2)
Computation of Capital 1ain for t(e assessment year *13+14
C")!"$ g"): ': %"$& '. H'u%&
Hull value of consideration -&55&555#55
=essG ,ost of ac@uisition 2&55&555#55
3hort Term ,apital >ain 2&55&555#55
0ence 3hort Term ,apital >ain for assessment year 25$+-$- 2&55&555#55
0$$u%!-"!)': 18: :r# D purchased one house on 5$#5-#$'2$ for `2&55&555 and sold the house on 5$#51#25$$
for `15&55&555 and purchased one house on 5$#5'#25$$ for ` $2&55&555 and it was sold by him on
5$#5$#25$2 for `$/&55&555#
0e is aged 22 years#
,ompute his income and tax liability for assessment year 25$2-$+#
S'$u!)'::
`
C'mu!"!)': '. ):#'m& u:*&- !C& C&"* C")!"$ G"):%
X 2&55&555 . Index of 2$-22 . Index of $$-$2
X 2&55&555 . $55 x 12/ X `$/&15&555 $/&15&555#55
=ong Term ,apital >ains /-&+5&555#55
The assessee has the option either not to avail exemption under section /- or to avail exemption under
section /- and also it will be withdrawn
1!)': 0 E+&m!)': )% :'! ">")$&*:
=ong Term ,apital >ain /-&+5&555#55
S"$& '. C'u%& u-#C"%&* ': 01.09.2011
Hull value of consideration $/&55&555#55
3hort term capital gain +&55&555#55
Income under the head ,apital >ains /1&+5&555#55
>ross Total Income /1&+5&555#55
Total Income /1&+5&555#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on =T,> `/2&+5&555 (`/-&+5&555 8 `2&55&555) V 25O $5&-(&555#55
Tax on `+&55&555 at slab rate Cil
%ddG 9ducation cess V 2O 25&'25#55
%ddG 309, V $O $5&-(5#55
Tax =iability $5&11&+25#55
1!)': 00 E+&m!)': )% ">")$&*
=ong Term ,apital >ain /-&+5&555#55
=essG 9xemption u.s /- $2&55&555#55
=ong Term ,apital >ain -2&+5&555#55
Income Bnder The head ,apital >ains $(+
S"$& '. C'u%& u-#C"%&* ': 01.09.2011
=essG ,ost of ac@uisition ($2&55&555 8 $2&55&555) Cil
3hort term capital gain $/&55&555#55
Income under the head ,apital >ains /1&+5&555#55
>ross Total Income /1&+5&555#55
Total Income /1&+5&555#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on =T,> `-2&+5&555 V 25O 2&-(&555#55
Tax on `$/&55&555 at slab rate 2&15&555#55
Tax before education cess $$&$(&555#55
%ddG 9ducation cess V 2O 22&+25#55
%ddG 309, V $O $$&$(5#55
Tax =iability $$&-'&-25#55
0ence assessee should opt Aption-I#

;u&%!)': 20 N8. 0m.O: 6-)!& " :'!& ': &+&m!)': u:*&- %&#!)': 749.
A:%w&-:
C")!"$ g"): ': !-":%.&- '. $":* u%&* .'- "g-)#u$!u-"$ u-'%&% :'! !' ?& #C"-g&* ): #&-!"): #"%&%
S&#!)': 749
1. A%%&%%&&: 9xemption is allowed only to ": ):*)>)*u"$.
2. A%%&!: The asset transferred should be $":* which& in !C& !w' E&"-% )mm&*)"!&$E preceding the date on
which the transfer took place& was being used by the "%%&%%&& '- " "-&:! of his for "g-)#u$!u-"$ u-'%&%#
3. TE& '. #")!"$ g"):: It may be %C'-! !&-m '- $':g !&-m.
4. 0:>&%!m&:!: The assessee has& within a period of two years after that date& purchased any other land for
being used for agricultural purposes#
7. Am'u:! '. &+&m!)':: 9xemption allowed shall be e@ual to the amount invested#
6. 6)!C*-"w"$ '. &+&m!)':: The land so u-#C"%&* mu%! :'! ?& !-":%.&--&* w)!C): " &-)'* '. !C-&&
E&"-% otherwise exemption given shall be withdrawn and for this purpose while computing capital gains on
the transfer of new asset& its cost of ac@uisition shall be reduced by the amount of the exemption earlier
allowed#
and proof of such deposit should be enclosed with the return of income and subse@uently the amount should
be withdrawn from this scheme and should be utilised for the specified purpose otherwise it will be
considered to be capital gain of the year in which the prescribed period has expired#
C")!"$ g"):% ): #"%& '. #'mu$%'-E "#Ju)%)!)': '. "g-)#u$!u-"$ $":* S&#!)': 10A37B
If any individual or 0indu Bndivided Hamily has agricultural land and this land was being used by him for
agricultural purposes for a period of at least 2 years when it was ac@uired by the government& in this case
capital gains shall be exempt from income tax#
Income Bnder The head ,apital >ains $(-
0$$u%!-"!)': 19: :r# *a?at Tandon purchased agricultural land on 5$#$5#$'22 for `+&55&555 and it was being
used for agricultural purposes by him# It was sold on 5$#5$#25$2 for `/5&55&555# The assessee has purchased
one agricultural land in the rural area on $5#5$#25$2 for `$5&55&555 and this land was sold by him on
$$#52#25$2 for `$$&55&555 and has invested `+5&555 in Cational 3aving ,ertificate#
0e is aged about 2( years#
A?B 6resume the land was purchased in the urban area instead of rural area#
S'$u!)': A"B: `
X +&55&555 . $5' x 12/ X `2$&(5&//5#-( 2$&(5&//5#-(
=ong Term ,apital >ain 22&+'&--'#/-
=essG 9xemption u.s /-) $5&55&555#55
=ong Term ,apital >ain $2&+'&--'#/-
Income under the head ,apital >ain (=T,>) $2&+'&--'#/-
>ross Total Income $2&+'&--'#/-
=essG 4eduction u.s 25, Cil
T4eduction u.s 25, is not allowed from =T,>U
Total Income (rounded off u.s 222%) $2&+'&-/5#55
T3ince normal income is nil& as per section $$2 deficiency of `/&55&555 shall be allowed from long term
Tax on `$+&+'&-/5 (` $2&+'&-/5 8 `/&55&555) V 25O 2&(1&2'5#55
%ddG 9ducation cess V 2O /&+/1#25
%ddG 309, V $O 2&(12#'5
Tax =iability 2&1/&'2(#15
*ounded off u.s 222) 2&1/&'+5#55
2'!&: If land is purchased in rural area& exemption is allowed under section /-) but on its sale exemption is
not withdrawn#
S'$u!)': A?B: `
X +&55&555 . $5' x 12/ X `2$&(5&//5#-( 2$&(5&//5#-(
The assessee has the option either not to avail exemption under section /-) or to avail exemption under
section /-)#
:ption . Exemption is not a8aile/:
U-?": "g-)#u$!u-"$ $":*
Income Bnder The head ,apital >ains $(/
Hull value of consideration $$&55&555#55
3hort Term ,apital >ain $&55&555#55
Income under the head ,apital >ains 2'&+'&--'#/-
>ross Total Income 2'&+'&--'#/-
=essG 4eduction u.s 25, TC3,U +5&555#55
Total Income (rounded off u.s 222%) 2'&5'&-/5#55
Tax on long term capital gain `2-&5'&-/5 (22&+'&-/5 8 -&+5&555) V 25O -&2$&2'5#55
Tax on `15&555 at slab rate Cil
%ddG 9ducation cess V 2O '&(+1#25
%ddG 309, V $O -&2$2#'5
Tax =iability -&'(&+-(#15
*ounded off u.s 222) -&'(&+/5#55
:ption .. Exemption is a8aile/:
=essG 9xemption u.s /-) $5&55&555#55
=ong Term ,apital >ain $2&+'&--'#/-
U-?": "g-)#u$!u-"$ $":*
=essG ,ost of ac@uisition ($5&55&555 8 $5&55&555) Cil
3hort Term ,apital >ain $$&55&555#55
Income under the head ,apital >ains 2'&+'&--'#/-
>ross Total Income 2'&+'&--'#/-
=essG 4eduction u.s 25, TC3,U +5&555#55
Total Income (rounded off u.s 222%) 2'&5'&-/5#55
Tax on long term capital gain `$2&+'&-/5 V 25O +&(1&2'5#55
Tax on `$5&15&555 at slab rate $&-$&555#55
Tax before education cess /&52&2'5#55
%ddG 9ducation cess V 2O $5&$11#25
%ddG 309, V $O /&522#'5
Tax =iability /&2-&$/(#15
*ounded off u.s 222) /&2-&$(5#55
0ence the assessee should opt for option8I and his tax liability shall be -&'(&+/5
;u&%!)': 21: 6-)!& " :'!& ': &+&m!)': u:*&- %&#!)': 74/.
A:%w&-:
C")!"$ g"): ': #'mu$%'-E "#Ju)%)!)': '. $":*% ":* ?u)$*):g% :'! !' ?& #C"-g&* ): #&-!"): #"%&%
S&#!)': 74/
1. A%%&%%&&: 9xemption is allowed to "$$ !C& "%%&%%&&.
2. A%%&!: The asset should be $":* '- ?u)$*):g forming part of ": ):*u%!-)"$ u:*&-!"k):g belonging to the
assessee which& in the !w' E&"-% )mm&*)"!&$E preceding the date on which the transfer took place& was
being used by the assessee for the purposes of the ?u%):&%% of the said u:*&-!"k):g and further there should
?& #'mu$%'-E "#Ju)%)!)':.
Income Bnder The head ,apital >ains $((
3. TE& '. #")!"$ g"):: It can be %C'-! !&-m '- $':g !&-m.
4. 0:>&%!m&:!: The assessee has within a period of !C-&& E&"-% ".!&- that date u-#C"%&* any other $":* '-
?u)$*):g '- ":E -)gC! ): ":E '!C&- $":* '- ?u)$*):g or #':%!-u#!&* any other ?u)$*):g for the purposes of
%C).!):g or -&(&%!"?$)%C):g the said u:*&-!"k):g or %&!!):g u ":'!C&- ):*u%!-)"$ u:*&-!"k):g.
7. Am'u:! '. &+&m!)':: 9xemption allowed is e@ual to investment#
6. 6)!C*-"w"$ '. &+&m!)':: The land or building so purchased.constructed mu%! :'! ?& !-":%.&--&*
w)!C): " &-)'* '. !C-&& E&"-% otherwise exemption given shall be withdrawn and for this purpose while
computing capital gains on the transfer of new asset& its cost of ac@uisition shall be reduced by the amount of
the exemption earlier allowed#
to be capital gain of the year in which the prescribed period has expired#
0$$u%!-"!)': 20: :r# Btsav )atra has one industrial undertaking in Wa<irpur industrial area and the building
which is being used for industrial purposes was purchased on 5$#$5#$'21# 3ince then it was being used for
industrial purpose and was purchased for `2+&55&555 and its w#d#v# as on 5$#5-#25$$ is `$5&+2&555# This
building was ac@uired by the >overnment on 5$#5$#2551 and compensation fixed was `2/&55&555# 9ntire
payment was released by the >overnment on 5$#51#25$$# The assessee has purchased one building for the
purpose of industrial undertaking in )awana Industrial %rea on 5$#5$#25$2 for `(&55&555#
S'$u!)':: `
Computation of Capital 1ains un/er section 47(7)
,apital gains shall be computed in the year of compulsory ac@uisition i#e# in the previous year 255(-51
=essG W#d#v of the building $5&+2&555#55
3hort Term ,apital >ain $-&(2&555#55
Computation of capital 0ains an/ tax liability for t(e assessment year *1*+13
,apital gain shall be taxed in the year in which payment has been given by the >overnment i#e# in the
previous year 25$$-$2
3hort Term ,apital >ain $-&(2&555#55
=essG 9xemption u.s /-4 (&55&555#55
3hort Term ,apital >ain 2&(2&555#55
Income under the head ,apital >ain (3T,>) 2&(2&555#55
>ross Total Income 2&(2&555#55
Total Income 2&(2&555#55
Tax on `2&(2&555 at slab rate $&$5&(55#55
%ddG 9ducation cess V 2O 2&2$2#55
%ddG 309, V $O $&$5(#55
Tax =iability $&$+&'$2#55
*ounded off u.s 222) $&$+&'25#55
;u&%!)': 22 N8. 0m.O: 6-)!& " :'!& ': &+&m!)': u:*&- %&#!)': 74EC.
A:%w&-:
C")!"$ g"): :'! !' ?& #C"-g&* ': ):>&%!m&:! ): #&-!"): ?':*% S&#!)': 74EC
1. A%%&%%&&: 9xemption is allowed to "$$ !C& "%%&%%&&.
2. A%%&!: The assessee can transfer ":E #")!"$ "%%&!.
3. TE& '. #")!"$ g"):: It should be only $':g !&-m #")!"$ g"):.
4. 0:>&%!m&:!: The assessee has& at any time within a period of %)+ m':!C% ".!&- the date of such transfer&
invested the wC'$& '- ":E "-! of capital gains in the $':g(!&-m %&#).)&* "%%&!#
F L':g(!&-m %&#).)&* "%%&!G means any ?':* -&*&&m"?$& ".!&- !C-&& E&"-%& issued by&R
(i) Cational 0ighways %uthority of India
(ii) *ural 9lectrification ,orporation =imited
7. Am'u:! '. &+&m!)':: 9xemption shall be allowed to the extent of the investment# :aximum
investment allowed in a financial year to a particular assessee cannot exceed `/5 lakhs#
6. 6)!C*-"w"$ '. &+&m!)':: If the long term specified asset is transferred or converted into cash within a
period of + years& exemption earlier allowed shall be considered to be long term capital gains of the year in
which such asset was transferred or converted into cash#
,onverting into cash means taking a loan on the security of the specified asset#
7. C")!"$ g"):% "##'u:! %#C&m& 1988: ,apital gain account scheme shall not apply#
8. E+!&:%)': '. !)m& .'- "#Ju)-):g :&w "%%&! '- *&'%)!):g '- ):>&%!):g "m'u:! '. #")!"$ g"): %&#!)':
0$$u%!-"!)': 21: :r# >aurav ;umar purchased agricultural land in the urban area on 5$#5-#$'2$ for
`2&55&555# It was being used for agricultural purposes since then and was sold by the assessee on 5$#51#25$$
for `+5&55&555# 0e made following investmentsG
(i) )onds of Cational )ank for %griculture and *ural 4evelopment on 5$#5(#25$$ for `$&/5&555 which
are redeemable after + years#
(ii) 0e purchased agricultural land on 5$#5'#25$$ for `2&55&555#
(iii) 0e has invested `1/&555 on 5$#$5#25$$ in the bonds of Cational 0ighway %uthority of India
redeemable after three years#
0e sold the bonds of Cational 0ighway %uthority of India on $/#5-#25$2 for `+&55&555#
,ompute his capital gains for various years and also tax liability for assessment year 25$2-$+#
S'$u!)':: `
,re8ious year *11+1*
Hull value of consideration +5&55&555#55
X 2&55&555 . $55 x 12/ X `$/&15&555 $/&15&555#55
=ong Term ,apital >ain $-&+5&555#55
=essG 9xemption u.s /-) 2&55&555#55
=essG 9xemption u.s /-9, 1/&555#55
=ong Term ,apital >ain $$&//&555#55
Income under the head ,apital >ain (=T,>) $$&//&555#55
>ross Total Income $$&//&555#55
Total Income $$&//&555#55
Tax on `'&1/&555 (` $$&//&555 8 `$&25&555) V 25O $&'/&555#55
%ddG 9ducation cess V 2O +&'55#55
%ddG 309, V $O $&'/5#55
Tax =iability 2&55&2/5#55
,re8ious year *1*+13
Hull value of consideration +&55&555#55
=essG ,ost of ac@uisition 1/&555#55
3hort Term ,apital >ain 2&2/&555#55
=ong Term ,apital >ain (withdrawal of exemption) 1/&555#55
0$$u%!-"!)': 22: %r?un furnishes the following particulars and re@uests you to advise him the liability of
capital gains for the assessment year 25$2-$+G
(a) Pewellery purchased by him on $5#5+#$''/ for `$&5'&555 was sold by him for a consideration of
`+&'/&555 on 52#$$#25$$#
(b) 0e incurred expenses 8
(i) at the time of purchase 8 `2&555
(ii) at the time of sale (for brokerage) 8 `-&555
(c) 0e invested `'5&555 in )onds of Cational 0ighway %uthority of India out of sale consideration on
5+#$$#25$$ redeemable after + years#
,ompute capital gains chargeable to tax for the assessment year 25$2-$+#
S'$u!)':: `
Hull value of consideration +&'/&555#55
X `$&$$&555 . 2/' x 12/ X `+&+(&-22#/1 +&+(&-22#/1
=essG 3elling expenses -&555#55
=ong Term ,apital >ain /-&/1$#-+
=essG 9xemption u.s /-9, /-&/1$#-+
Income Bnder The head ,apital >ains $('
T`'5&555 sub?ect to a maximum of `/-&/1$#-+U
=ong Term ,apital >ain Cil
0$$u%!-"!)': 23: :rs# 7imla sold a residential building at Podhpur for `$/&$/&555 on 5$#51#25$$# The
building was purchased for ` $&1/&555 on 5$#5(#$''(# 3he paid brokerage V 2O at the time of the sale of
the building# 3he invested `1&/5&555 in purchase of a residential building in 4ecember 25$$ and deposited `
2&55&555 in the bonds of C%)%*4 in :arch 25$2 redeemable after three years#
,ompute her tax liability for the assessment year 25$2-$+#
S'$u!)':: `
Hull value of consideration $/&$/&555#55
X $&1/&555 . Index of '(-'1 x Index of $$-$2
X $&1/&555 . +5/ x 12/ X `-&/5&-5'#2- -&/5&-5'#2-
=essG )rokerage
X 2O x $/&$/&555 X `+5&+55 +5&+55#55
=ong Term ,apital >ain $5&+-&2'5#$(
=essG 9xemption u.s /- 1&/5&555#55
=ong Term ,apital >ain 2&2-&2'5#$(
Total Income (rounded off u.s 222%U 2&2-&2'5#55
T3ince normal income is nil& as per section $$2 deficiency of `$&'5&555 shall be allowed from long term
Tax on `'-&2'5 (`2&2-&2'5 8 `$&'5&555) u.s $$2 V 25O $2&2/2#55
%ddG 9ducation cess V 2O +11#$(
%ddG 309, V $O $22#/2
Tax =iability $'&-2+#1-
*ounded off u.s 222) $'&-25#55
;u&%!)': 23 N8. 0m.O: 6-)!& " :'!& ': &+&m!)': u:*&- S&#!)': 743.
A:%w&-:
E+&m!)': .-'m #")!"$ g"):% ': !-":%.&- '. ":E #")!"$ "%%&!% '!C&- !C": " 4&%)*&:!)"$ H'u%& S&#!)':
743
1. A%%&%%&&: The assessee should be ):*)>)*u"$ or H):*u U:*)>)*&* 3"m)$E.
2. A%%&!: ,apital asset transferred can be any asset but it should :'! ?& " -&%)*&:!)"$ C'u%&.
3. TE& '. #")!"$ g"):: ,apital gain should be $':g !&-m.
4. 0:>&%!m&:!: The assessee has within a period '. ':& E&"- ?&.'-& '- !w' E&"-% ".!&- the date on which
the transfer took place u-#C"%&*& or has within a period of !C-&& E&"-% ".!&- that date #':%!-u#!&*& a
-&%)*&:!)"$ C'u%& and further the assessee should either u-#C"%& or #':%!-u#! ':$E ':& C'u%& and also
assessee should :'! C">& m'-& !C": ':& C'u%& ): C)% :"m& "! !C& !)m& '. !-":%.&- '. !C& "%%&! besides the
house which is being purchased or constructed for availing exemption#
7. Am'u:! '. &+&m!)':: 9xemption allowed shall be that percentage of the capital gain as the amount
invested bears to net consideration# i#e# &+&m!)': V #")!"$ g"): + ):>&%!m&:! / :&! #':%)*&-"!)':#
Income Bnder The head ,apital >ains $15
2&! #':%)*&-"!)': is e@ual to full value of consideration less selling expenses# i#e# .u$$ >"$u& '.
#':%)*&-"!)': = %&$$):g &+&:%&%.
6. 6)!C*-"w"$ '. &+&m!)':: The house so u-#C"%&* or #':%!-u#!&* must not be transferred for a
minimum period of !C-&& E&"-% otherwise exemption earlier allowed shall be considered to be the $':g !&-m
#")!"$ g"): of the year in which the asset has been transferred (i#e# exemption shall be withdrawn in the
similar manner as given under section /-9,)#
3imilarly if the assessee has purchased any other house within one year before or two years after or the
assessee has constructed any other house within three years after the date of transfer of original asset&
exemption given shall be withdrawn in that case also#
7. C")!"$ g"):% "##'u:! S#C&m& 1988: The assessee should invest the amount till the last date of
be withdrawn from this scheme and should be utilised for the specified purpose otherwise exemption earlier
allowed will be considered to be long term capital gain of the year in which the prescribed period has
expired#
8. E+!&:%)': '. !)m& .'- "#Ju)-):g :&w "%%&! '- *&'%)!):g '- ):>&%!):g "m'u:! '. #")!"$ g"): %&#!)':
0$$u%!-"!)': 24: :r# Caveen >andhi purchased gold on 5$#5-#$'1$ for `+&55&555 and its market value on
5$#5-#$'2$ is `2&55&555# This gold was sold by him on 5$#5$#25$2 for `+/&55&555 and selling expenses are
`+1&555# 0e has purchased one house on 5$#5/#25$2 for `-&55&555 because he did not have any house in his
name and he deposited `+&55&555 in capital gain account scheme on +5#5'#25$2#
:r# Caveen >andhi is also engaged in a business and he has turnover of his business `(/&55&555 and cost of
goods sold `(5&55&555 and other expenses `/&$5&555#
0e has withdrawn `2&55&555 from capital gain account scheme on 5$#5$#25$+ and constructed $
st
floor of
the house which was purchased by him on 5$#5/#25$2#
*emaining amount in the capital gain account scheme was unutili<ed#
,ompute assessee!s tax liability for assessment year 25$2-$+ and capital gains for various years#
S'$u!)':: `
,re8ious year *11+1*
Computation of capital 0ain
X +&55&555 . $55 x 12/ X `2+&//&555 2+&//&555#55
=essG 3elling expenses +1&555#55
=ong Term ,apital >ain $$&52&555#55
=essG 9xemption u.s /-H
X $$&52&555 . +-&(+&555 x 1&55&555 X `2&2+&'(1#(/ 2&2+&'(1#(/
=ong Term ,apital >ain 2&2-&5+2#+/
Income under the head ,apital >ain (=T,>) 2&2-&5+2#+/
=oss under the head )usiness.6rofession ($5&555#55)
Total Income (rounded off u.s 222%) 2&1-&5+5#55
Income Bnder The head ,apital >ains $1$
Tax on `(&'-&5+5 (2&1-&5+5 8 $&25&555) V 25O $&+2&25(#55
%ddG 9ducation cess V 2O 2&11(#$2
%ddG 309, V $O $&+22#5(
Tax =iability $&-2&'15#$2
*ounded off u.s 222) $&-2&'15#55
,re8ious year *14+17
%mount deposited in capital gain a.c scheme +&55&555#55
=essG %mount withdrawn 2&55&555#55
)alance amount $&55&555#55
=ong Term ,apital >ain
X $$&52&555 x $&55&555 X `+$&''/#+2 +$&''/#+2
+-&(+&555
(6roportionate exemption with regard to the unutili<ed amount lying in the capital gain account scheme is
chargeable to tax after expiry of period of three years#)
0$$u%!-"!)': 27: :r# %mrit 3ingh sold gold for `/&/5&555 on 5$#$5#25$$ which had been ac@uired by him in
Actober& $'2- for `//&555# 0e wants to utili<e the said amount of sale consideration for purchase or
construction of a new residential house# 0e already owns one residential house at the time of sale of the gold
on 5$#$5#25$$# 0e has deposited `-&55&555 under the capital gains deposit scheme with a specified bank on
+5#5-#25$2#
%scertain the capital gains taxable in :r# %mrit!s hands for assessment year 25$2-$+ and advise him as to
what further action he has to take to avail the exemption#
S'$u!)':: `
Hull value of consideration /&/5&555
X //&555 . $2/ x 12/ X `+&-/&-55 +&-/&-55
=ong Term ,apital >ain 2&5-&(55
X 2&5-&(55./&/5&555 x -&55&555 X `$&-2&255 $&-2&255
=ong Term ,apital >ain //&255
D has to fulfill the following conditions so as to avail exemption of section /-H
0e should ac@uire a residential house property by withdrawing from the deposit account# The new
house can be purchased at any time upto +5#5'#25$+ or it can be constructed upto +5#5'#25$-# If
the amount utilised is lower than `-&55&555 then the following amount will become chargeable to
tax as long term capital gain for the assessment year 25$/-$(
X Y`-&55&555 8 %mount utilisedZ. /&/5&555 x 2&5-&(55
0e should not transfer the new house within + years
0e should not purchase another residential house upto +5#5'#25$+ and he should not complete
construction of another residential house property upto +5#5'#25$-#
0$$u%!-"!)': 26: :r# 3hankar Cayyar has sold three asset i#e# Brban =and& >old and 3ilver each for
`$$&55&555 and their indexed cost of ac@uisition is `+&55&555& `/&55&555 and `1&55&555 and selling expenses
are `25&555 in each case# The assessee has invested `$/&55&555 in purchasing one house because he did not
have any house in his name and has complied with all the conditions of section /-H#
,ompute his tax liability for the assessment year 25$2-$+#
S'$u!)':: `
L":*
=essG Indexed cost of ac@uisition +&55&555#55
=essG 3elling expenses 25&555#55
=ong Term ,apital >ain 1&25&555#55
G'$*
=essG Indexed cost of ac@uisition /&55&555#55
=essG 3elling 9xpenses 25&555#55
=ong Term ,apital >ain /&25&555#55
S)$>&-
=essG Indexed cost of ac@uisition 1&55&555#55
=essG 3elling expenses 25&555#55
=ong Term ,apital >ain +&25&555#55
In this case& assessee is eligible for exemption under section /-H and such exemption is allowed from any
of the above three assets but first preference shall be given to =and& second to >old and third to 3ilver
because highest exemption is available from land& then from gold and then from silver and exemption
allowed shall be computed in the manner given belowG-
$# If assessee makes investment of `$5&25&555 exemption allowed from land is `1&25&555# i#e#
,apital >ains . Cet ,onsideration x Investment
X 1&25&555 . $5&25&555 x $5&25&555 X `1&25&555
=ong Term ,apital >ain on =and 1&25&555#55
=essG 9xemption u.s /-H 1&25&555#55
2# *emaining investment of `-&25&555 shall be utilised for availing exemption from gold and exemption
allowed shall be `2&2/&//(#
,apital >ain . Cet ,onsideration x Investment
X /&25&555 . $5&25&555 x -&25&555 X `2&2/&///#/(
=ong Term ,apital >ain on >old /&25&555#55
=essG 9xemption u.s /-H 2&2/&///#/(
=ong Term ,apital >ain on >old +&/-&---#--
=ong Term ,apital >ain on 3ilver +&25&555#55
Income under the under ,apital >ains 1&+-&---#--
>ross Total Income 1&+-&---#--
Total Income 1&+-&--5#55
(*ounded off u.s 222%)
Tax on `/&/-&--5 (1&+-&--5 8 $&25&555) V 25O $&$5&222#55
Income Bnder The head ,apital >ains $1+
%ddG 9ducation cess V 2O 2&2$1#1(
%ddG 309, V $O $&$52#22
Tax =iability $&$-&2$-#(-
*ounded off u.s 222) $&$-&2$5#55
0$$u%!-"!)': 27: :r# 3umit 4iwan sold >old and 3ilver for `$+&/5&555 each and their indexed cost of
ac@uisition is `(&55&555& `2&55&555 and selling expenses are `$+&555 each# 0e has invested `$(&55&555 in
purchasing one house because he did not have any house in his name# 0e has invested `/5&555 in the bonds
of Cational 0ighway %uthority of India and has complied with all the conditions of section /-9,#
S'$u!)':: `
G'$*
Hull value of consideration $+&/5&555#55
=essG Indexed cost of ac@uisition (&55&555#55
=essG 3elling expenses $+&555#55
=ong Term ,apital >ain 1&+1&555#55
=essG 9xemption u.s /-H 1&+1&555#55
X 1&+1&555 x $+&+1&555 . $+&+1&555
S)$>&-
Hull value of consideration $+&/5&555#55
=essG Indexed cost of ac@uisition 2&55&555#55
=essG 3elling expenses $+&555#55
=ong Term ,apital >ain /&+1&555#55
=essG 9xemption u.s /-H $&5/&(+2#1(
X /&+1&555 . $+&+1&555 x 2&(+&555
=essG 9xemption u.s /-9, /5&555#55
=ong Term ,apital >ain +&2$&+(1#2-
Income under the under ,apital >ains +&2$&+(1#2-
Total Income +&2$&+15#55
(*ounded off u.s 222%)
T3ince there is no income under any head so as per section $$2 deficiency of `$&25&555 shall be allowed
from long term capital gain and balance income shall be taxed at flat rate of 25OU
Tax on `2&5$&+15 (+&2$&+15 8 $&25&555) V 25O -5&21-#55
%ddG 9ducation cess V 2O 25/#-2
%ddG 309, V $O -52#1-
Tax =iability -$&-22#22
*ounded off u.s 222) -$&-25#55
;u&%!)': 24: 6-)!& " :'!& ': &+&m!)': u:*&- %&#!)': 74G.
A:%w&-:
E+&m!)': '. #")!"$ g"):% ': !-":%.&- '. "%%&!% ): #"%&% '. %C).!):g '. ):*u%!-)"$ u:*&-!"k):g .-'m
U-?": A-&" S&#!)': 74G
1. A%%&%%&&: 9xemption is allowed to "$$ !C& "%%&%%&&%#
2. A%%&!: ,apital asset transferred should be m"#C):&-E or $":! or ?u)$*):g or $":* used for the purposes
Income Bnder The head ,apital >ains $1-
of the business of an industrial undertaking situated in an urban area& effected in the conse@uence of& the
shifting of such industrial undertaking#
3. TE& '. #")!"$ g"):: ,apital gain should be %C'-! !&-m/$':g !&-m.
4. 0:>&%!m&:!: The assessee has within a period of ':& E&"- ?&.'-& or !C-&& E&"-% ".!&- the date on which
the transfer took place&R
(a) u-#C"%&* :&w m"#C):&-E '- $":! for the purposes of business of the industrial undertaking in the
area to which the said undertaking is shifted "
(b) "#Ju)-&* ?u)$*):g '- $":* '- #':%!-u#!&* ?u)$*):g for the purposes of his business in the said area#
(c) %C).!&* !C& '-)g):"$ "%%&! and !-":%.&--&* !C& &%!"?$)%Cm&:! of such undertaking to such area" and
(d) ):#u--&* &+&:%&% on such other purpose as may be specified in a scheme framed by the ,entral
>overnment for the purposes of this section#
(,apital gains on transfer of furniture and fixtures are not available for exemption#)
7. Am'u:! '. &+&m!)':: %mount of exemption is e@ual to amounts mentioned above#
6. 6)!C*-"w"$ '. &+&m!)':: The asset u-#C"%&* or #':%!-u#!&* must not be transferred for a m):)mum
&-)'* '. !C-&& E&"-% otherwise exemption earlier allowed shall be withdrawn by computing capital gain in
special manner i#e# The cost of ac@uisition shall be reduced by the amount of the exemption allowed#
(9xemption shall be withdrawn in the similar manner given under section /-& /-)& /-4)#
to be capital gain of the year in which the prescribed period has expired#
8. E+!&:%)': '. !)m& .'- "#Ju)-):g :&w "%%&! '- *&'%)!):g '- ):>&%!):g "m'u:! '. #")!"$ g"): %&# 74H:
3ection /-0 is not applicable#
0$$u%!-"!)': 28: D =td# owns an industrial undertaking in urban area# It is being shifted to a rural area#
The company has sold the following assets (date of shifting 5$#5+#25$2)G
$# 6lant and machinery with written down value as on 5$#5-#25$$ `$5&55&555 and it was sold on
5$#5$#25$2 for `/5&55&555
2# )uilding with written down value as on 5$#5-#25$$ `$$&55&555 and it was sold on 5$#5$#25$2 for
`2/&55&555
+# Hurniture with written down value as on 5$#5-#25$$ `$&55&555 and it was sold on 5$#5$#25$2 for
`/&55&555#
-# =and was purchased on 5$#$5#$''$ for `+&55&555 and it was sold on 5$#5$#25$2 for `/5&55&555#
The company has u-#C"%&* following assets as on 5$#5-#25$2G
$# 6lant and machinery `2/&55&555
Income Bnder The head ,apital >ains $1/
2# )uilding `1&55&555
+# Hurniture `/&55&555
-# =and `-5&55&555
9xpenses on shifting `2&55&555#
,ompute ,apital gains and tax liability for the assessment year 25$2-$+#
S'$u!)':: `
Computation of /epreciation an/ capital 0ains
P$":! ":* m"#C):&-E
3ale of plant on 5$#5$#25$2 /5&55&555#55
=essG Written down value as on 5$#5-#25$$ $5&55&555#55
3hort term capital gain -5&55&555#55
9u)$*):g
3ale of building on 5$#5$#25$2 2/&55&555#55
=essG Written down value as on 5$#5-#25$$ $$&55&555#55
3hort term capital gain 1-&55&555#55
3u-:)!u-&
3ale of furniture on 5$#5$#25$2 /&55&555#55
=essG Written down value as on 5$#5-#25$$ $&55&555#55
3hort term capital gain -&55&555#55
L":*
=essG Indexed cost of ac@uisition (+&55&555 .$'' x 12/) $$&2+&-$1#52
=ong term capital gain +2&$(&/22#'2
3hort term capital gain $&$2&55&555#55
=essG 9xemption u.s /-> 1-&55&555#55
6'-k):g 2'!&: `
Investment.expenses eligible for exemption under section /->
(i) 6lant and machinery 2/&55&555
(ii) )uilding 1&55&555
(iii) =and -5&55&555
(iv) 9xpenses on shifting 2&55&555
Total 1-&55&555
9xemption has been taken from 3T,> because rate of 3T,> in case of a company is
+5O
3hort term capital gain --&55&555#55
=ong tem capital gain +2&$(&/22#'2
Income under the head ,apital >ain 22&$(&/22#'2
Total Income (rounded off u.s 222%) 22&$(&/25#55
Tax on `+2&$(&/25 V 25O 1&(+&+$(#55
Tax on `--&55&555 V +5O $+&25&555#55
Tax before education cess 25&2+&+$(#55
Income Bnder The head ,apital >ains $1(
%ddG 9ducation cess V 2O -$&(((#+2
%ddG 309, V $O 25&2++#$(
Tax =iability 2$&-/&2$/#-2
*ounded off u.s 222) 2$&-/&225#55
;u&%!)': 27: 6-)!& " :'!& ': &+&m!)': u:*&- %&#!)': 74GA.
A:%w&-:
E+&m!)': .-'m #")!"$ g"):% ': !-":%.&- '. "%%&!% ): #'::&#!)': w)!C %C).!):g '. ):*u%!-)"$
u:*&-!"k):g .-'m u-?": "-&" !' ":E S&#)"$ E#':'m)# T':& S&#!)': 74GA
1. A%%&%%&&: 9xemption is allowed to "$$ !C& "%%&%%&&%#
2. A%%&!%: %ssets transferred may be $":!H m"#C):&-EH $":* '- ?u)$*):g used for the purpose of industrial
undertaking and transfer of assets should be in connection with shifting of industrial undertaking from
u-?": "-&" !' %&#)"$ &#':'m)# I':&.
3. TE& '. C")!"$ G"):%: ,apital gain may be %C'-! !&-m or $':g !&-m#
4. Am'u:! '. E+&m!)':: 9xemption is allowed if the assessee has u-#C"%&* or #':%!-u#!&* any
?u)$*):g& land& plant or machinery for the purpose of industrial undertaking including the expenses incurred
on shifting#
7. 0:>&%!m&:!: The assessee should make the investment within ':& E&"- ?&.'-& or !C-&& E&"-% ".!&- the
date on which the transfer took place#
6. 6)!C*-"w"$ '. &+&m!)':: The asset u-#C"%&* or #':%!-u#!&* must not be transferred for a m):)mum
&-)'* '. !C-&& E&"-% otherwise exemption earlier allowed shall be withdrawn by computing capital gain in
special manner i#e# The cost of ac@uisition shall be reduced by the amount of the exemption allowed#
(9xemption shall be withdrawn in the similar manner given under section /-& /-)& /-4& /->)#
be withdrawn from this scheme and should be utilised for the specified purpose otherwise it will be
considered to be capital gain of the year in which the prescribed period has expired#
0$$u%!-"!)': 29: :rs# >ayathri shifted her industrial undertaking located in corporation limits of >urgaon& to
a 3pecial 9conomic Wone (39W) on 5$#$2#25$$#
The following particulars are availableG `
(a) L":*: 6urchased on 25#5$#2552 -&2(&555
3old for 2'&55&555
(b) 9u)$*):g: Y,onstruction completed on $-#5+#255(Z
W47 of building as on 5$#5-#25$$ 2&-5&555
3old for $2&+'&555
(c) W47 of C"-% as on 5$#5-#25$$ 1&25&555
3old for 1&55&555
(d) 9xpenses on shifting the undertaking $&2/&555
(e) %ssets ac@uired for the undertaking in the 39W (on or before 2/#5(#25$2)G
(i) =and -&55&555
(ii) )uilding (&55&555
(iii) ,omputers 2&55&555
(iv) ,ar /&25&555
(v) :achinery (second hand) +&55&555
(vi) Hurniture 25&555
There is no intention of investing in any other asset in this undertaking#
,ompute the exemption available under section /->% for the assessment year 25$2-$+#
,ompute income and tax liability of the assessee#
,ost inflation indices areG Hinancial year 255$-52 - -2(" 25$$-$2 -12/
S'$u!)'::
Computation of exemption un/er section 741# ` `
L":*
Hull value of consideration 2'&55&555
X -&2(&555 . Index of 5$-52 x Index of $$-$2
X -&2(&555 . -2( x 12/ X 1&2/&555 1&2/&555
=ong term capital gains 2$&$/&555
9u)$*):g
Hull value of consideration $2&+'&555
=essG ,ost of ac@uisition 2&-5&555
3hort term capital gains +&''&555
C"-%
Hull value of consideration 1&55&555
=essG ,ost of ac@uisition 1&25&555
3hort term capital loss (25&555)
=essG 9xemption u.s /->%
=and -&55&555
)uilding (&55&555
,omputers 2&55&555
,ar /&25&555
:achinery (second hand) +&55&555
3hifting expenses $&2/&555
Total 2$&-/&555
9xemption has been taken from long term capital gains and afterwards from short term capital gains
3hort term capital gains +&('&555
=essG 3hort term loss on sale of car 25&555
3hort term capital gains 2&2'&555
Tax I 9, $5&$'1
C")!"$ G"):% ': 3):":#)"$ "%%&!% ).&. SC"-&%/U:)!%//&?&:!u-&%
;u&%!)': 26: 6-)!& " :'!& ': #'mu!"!)': '. #")!"$ g"):% ): #"%& '. !-":%.&- '. %C"-&%.
A:%w&-:
C")!"$ g"):% ): #"%& '. !-":%.&- '. %C"-&%
If case of transfer of shares& capital gain shall be computed in the manner given belowG
1. ,ost of ac@uisition of the original shares and right shares shall be the actual expenditure incurred for
ac@uiring the shares (3ection //(2))#
2. ,ost of ac@uisition of bonus shares shall be nil but if such shares have been issued before 5$#5-#$'2$&
their value on 5$#5-#$'2$ shall be considered# (3ection //(2))
3. If the right to purchase the rights shares has been renounced& cost of ac@uisition of such right shall be
taken to be nil# (3ection //(2))
4. In case of rights renouncee& cost shall be the amount paid to the company and to the right holder who has
renounced the right# (3ection //(2))
7. 6eriod of holding shall be computed as per section 2(-2%) in the manner given belowG
(i) In case of original shares& right shares and bonus shares& the period of holding shall start from the date of
allotment of shares#
(ii) In case of right to subscribe to right shares& period shall be determined from the date of offer of such
right#
0: #"%& '. $':g !&-m &Ju)!E %C"-&% '- $':g !&-m u:)!% '. &Ju)!E '-)&:!&* mu!u"$ .u:*%H :'
#")!"$ g"):% %C"$$ ?& #'mu!&* "% &- %&#!)': 10A38B w.&... 01.10.2004 -'>)*&* %&#u-)!)&%
!-":%"#!)': !"+ C"% ?&&: ")*.
0: #"%& '. %C'-! !&-m &Ju)!E %C"-&% '- !C& u:)!%H #")!"$ g"):% %C"$$ ?& #'mu!&* ?u! "% &-
%&#!)': 111AH %u#C #")!"$ g"):% %C"$$ ?& !"+&* , 17K.
0$$u%!-"!)': 30: :r# ,hetan )akshi purchased $55 e@uity shares in %), =td# on 5$#$5#$'1/ V `$5 per
share# The company has issued $55 bonus shares on 5$#$5#$'12 and market value of the shares on
5$#5-#$'2$ was `1 per share# The company has again issued $55 bonus shares on 5$#$5#$''2#
The company has offered $55 right shares on 5$#5-#25$$ V `$-5 per share though the market value is `2/5
per share# :r# ,hetan )akshi purchased half of the shares and remaining half were renounced by him in
favour of his friend :r# 0armeet 3ingh# 0e has charged `25 per share from :r# 0armeet 3ingh for
renouncing the right#
%ll the shares were sold by :r# ,hetan )akshi and :r# 0armeet 3ingh V `+55 per share on 5$#5$#25$2 and
securities transaction tax has been paid#
:r# ,hetan )akshi has income under the head house property `2&25&555 and has invested `$&55&555 in C3,#
:r# 0armeet 3ingh has income under the head house property `2&/5&555 and has invested `+5&555 in C3,#
,ompute tax liability of :r# ,hetan )akshi and :r# 0armeet 3ingh#
Income Bnder The head ,apital >ains $1'
S'$u!)':: `
M-. CC&!": 9"k%C)
1-)g):"$ SC"-&% "-& &+&m! u:*&- %&#!)': 10A38B
1%! 9':u% SC"-&% "-& &+&m! u:*&- %&#!)': 10A38B
2:* 9':u% SC"-&% "-& &+&m! u:*&- %&#!)': 10A38B
4)gC! SC"-&%
Hull value of consideration $/&555#55
(/5 x +55)
=essG ,ost of %c@uisition 1&555#55
(/5 x $-5)
3hort Term ,apital >ain u.s $$$% 2&555#55
4&:'u:#):g '. -)gC! !' u-#C"%& %C"-&%
Hull value of consideration $&555#55
=essG ,ost of ac@uisition Cil
3hort Term ,apital >ain $&555#55
Computation of Total .ncome
Income under the head 0ouse 6roperty 2&25&555#55
Income under the head ,apital >ains '&555#55
>ross Total Income 2&2'&555#55
=essG 4eduction u.s 25, $&55&555#55
Total Income $&2'&555#55
Tax on (2&555 8 2&555) V $/O u.s $$$% Cil
Tax on `$&2$&555 at slab rate Cil
Tax before education cess Cil
%ddG 9ducation cess V 2O Cil
%ddG 309, V $O Cil
Tax =iability Cil
(4eduction under section 25, is not allowed from short term capital gain u.s $$$% on the transfer of e@uity
shares on which securities transaction tax has been paid#)
M-. H"-m&&! S):gC
Hull value of consideration $/&555#55
=essG ,ost of ac@uisition (/5 x $(5) 2&555#55
3hort Term ,apital >ain u.s $$$% 1&555#55
Computation of Total .ncome
Income under the head 0ouse 6roperty 2&/5&555#55
Income under the head ,apital >ains 1&555#55
>ross Total Income 2&/1&555#55
=essG 4eduction u.s 25, +5&555#55
Tax on `1&555 V $/O u.s $$$% $&5/5#55
Tax on `2&25&555 at slab rate -&555#55
Tax before education cess /&5/5#55
%ddG 9ducation cess V 2O $5$#55
%ddG 309, V $O /5#/5
Tax =iability /&25$#/5
*ounded off u.s 222) /&255#55
(4eduction under section 25, is not allowed from short term capital gain u.s $$$% on the transfer of e@uity
shares on which securities transaction tax has been paid#)
0$$u%!-"!)': 31: :r# 6rashant ;aushik holds /55 shares of %), =td# which were allotted to him on
22#5-#255$ V `+5 per share# An 22#51#25$$ %), =td# made right issue to the existing shareholders at the
rate of one share for every five shares held V `25 per share# :r# 6rashant ;aushik instead of exercising his
rights to obtain right shares& has exercised his right of renouncement by renouncing the said right entitlement
in favour of :r# 4harmender ;umar V `$+ per right share entitlement on 5-#52#25$$#
(a) 4etermine the nature and amount of capital gain& if any& taxable in the hands of :r# 6rashant ;aushik#
(b) What will be the cost of ac@uisition of shares purchased by :r# 4harmender ;umar[
S'$u!)':: `
Computation of Capital 1ains in t(e (an/s of !r% ,ras(ant =aus(i"
Hull value of consideration $&+55
($55 x $+)
3hort Term ,apital >ain $&+55
,ost of ac@uisition of shares purchased by :r# 4harmender ;umar X `++ x $55 X `+&+55
0$$u%!-"!)': 32: :r# ;artik ,hawla is a shareholder of %), =td# holding $&555 shares of the face value of
`$5 each# The company made a right issue in the ratio of $G$ on 5$#5$#25$2 at a premium of `/5 per share#
0e renounced it in favour of :r# )harat %hu?a at a price of `$5 per share#
What is the capital gain chargeable in the hands of :r# ;artik ,hawla[ What will be the cost of the shares in
the hands of :r# )harat %hu?a[
S'$u!)':: `
Computation of Capital 1ains in t(e (an/s of !r% =arti" C(a$la
Hull value of consideration $5&555
($&555 x $5)
3hort Term ,apital >ain $5&555
,ost of the shares in the hands of :r# )harat %hu?a is `15 per share#
;u&%!)': 27: 6-)!& " :'!& ': #'mu!"!)': '. #")!"$ g"):% ': #':>&-%)': '. *&?&:!u-&% &!#. ):!'
%C"-&%.
A:%w&-:
C")!"$ g"):% ': #':>&-%)': '. *&?&:!u-&% &!#. ):!' %C"-&%
%s per section -1& no capital gain shall be computed in case of conversion of debenture etc# into shares&
however if subse@uently these shares have been sold& capital gains shall be computed in the manner given
belowG
1. %s per section -'(2%)& the cost of ac@uisition of the shares shall be the cost of ac@uisition of the
debentures etc#
Income Bnder The head ,apital >ains $2$
2. 6eriod of holding shall start from the date of conversion instead of the date of purchasing the debentures
etc#
0$$u%!-"!)': 33: :r# Paspal 3ingh has purchased $55 debentures in %), =td# on 5$#$5#$''2 V `+55 per
debentures and subse@uently these debentures were converted into shares on 5$#$5#25$5 and + shares were
issued for each debenture#
The assessee has sold all the shares on 5$#5-#25$$ V `2/5 per share# ,ompute capital gains for the
assessment year 25$2-$+#
S'$u!)':: `
Hull value of consideration 1/&555
(+55 x 2/5)
=essG ,ost of ac@uisition +5&555
($55 x +55)
3hort Term ,apital >ain -/&555
0$$u%!-"!)': 34: :r# Inder 6al 4ude?a purchased +&555 partly convertible debentures of %), =td# on
5$#$$#$''$ for ` +55 per debentures $.+ of each debenture was converted into one e@uity share on
5$#$2#$''(# %ll the e@uity shares were sold on 5$#5$#25$2 V ` 2(1 per share and brokerage was paid V 2O#
,ompute capital gains for assessment year 25$2-$+#
S'$u!)':: `
C'mu!"!)': '. C")!"$ G"):%
Hull value of consideration 2&5$&555#55
(+&555 x 2(1)
X (+&555 x $55) . Index of '(-'1 x Index of $$-$2
X +&55&555 . +5/ x 12/ X `1&12&$+$#$- 1&12&$+$#$-
3ince $.+ part of each debenture is converted into one share hence cost of ac@uisition
of one share shall be e@ual to the cost of $.+ part of the debenture as per section //(2)#
=essG )rokerage $(&525#55
X 2O of `2&5$&555 X `$(&525
=ong Term ,apital >ain $2&2-2#2(
;u&%!)': 28 N8. 0m.O: 6-)!& " :'!& ': #'mu!"!)': '. #")!"$ g"):% ': !C& !-":%.&- '. %C"-&% '- !C&
u:)!% '. mu!u"$ .u:* ': wC)#C %&#u-)!)&% !-":%"#!)': !"+ C"% ?&&: ")*.
A:%w&-:
C")!"$ g"):% ': !C& !-":%.&- '. EJu)!E SC"-&% '- !C& u:)!% '. Mu!u"$ 3u:* ': wC)#C S&#u-)!)&%
T-":%"#!)': T"+ C"% ?&&: ")*
T"+"?)$)!E '. L':g T&-m G"):% ': !-":%.&- '. EJu)!E SC"-&% '- U:)!% S&#!)': 10A38B
Bnder section $5(+2)& any income arising from transfer of a long term e@uity shares or units of an e@uity
oriented fund shall be fully exempt from income tax provided securities transaction tax has been paid on
such transaction#
F EJu)!E '-)&:!&* .u:*G means a fund 8
(i) where the investible funds are invested by way of e@uity shares in domestic companies to the extent of
more than (/O of the total proceeds of such fund" and
(ii) which has been set up under a scheme of a :utual Hund specified under section $5(2+4)#
T"+"?)$)!E '. %C'-! !&-m g"):% ': !-":%.&- '. &Ju)!E %C"-&% '- u:)!% S&#!)': 111A
If any person has transferred e@uity shares or units of an e@uity oriented fund w#e#f 5$#$5#255- and such
shares and units were short term capital asset and such transaction is chargeable to securities transaction tax&
then tax shall be charged V $/O instead of slab rates#
Example
:r# ;unal :ehra purchased e@uity shares on 5$#5-#25$$ and these shares were sold by him 25#$5#25$$
(3TT paid)& in this case short term capital gain shall be taxed V $/O#
6C)$& #'mu!):g #")!"$ g"):%H %&#u-)!)&% !-":%"#!)': !"+ ")* %C"$$ :'! ?& "$$'w&* !' ?& *&*u#!&*.
/&*u#!)': u:*&- %&#!)': 80C !' 80U %C"$$ :'! ?& "$$'w&* .-'m %u#C %C'-! !&-m #")!"$ g"):.
0. :'-m"$ ):#'m& )% $&%% !C": ` 1H80H000/1H90H000/2H70H000/7H00H000H *&.)#)&:#E %C"$$ ?& "$$'w&* .-'m
%C'-! !&-m #")!"$ g"):.
S&#)"$ -'>)%)': ): #"%& '. $':g !&-m #")!"$ ):*&+&* ?':*% S&#!)': 112
If the assessee has transferred long term capital indexed bonds& the assessee will have the option to compute
capital gains in the normal manner and it will be taxable V 25O or capital gain can be computed without
indexation but capital gain shall be taxable V $5O#
3ection $$2 has been amended to provide that the capital gains arising from transfer (i#e# maturity
redemption.sale) of <ero coupon bonds shall be taxed at the rate of $5O# Indexation shall not be available as
indexation is not available for bonds#
;u&%!)': 29 N0m.O: 6-)!& " :'!& ': -&.&-&:#& !' 8"$u"!)': 1..)#&-.
A:%w&-:
4&.&-&:#& !' 8"$u"!)': 1..)#&- S&#!)': 77A 4u$& 111AA
If the %ssessing Afficer is of the view that the fair market value of a capital asset computed by the assessee
is not correct& %ssessing Afficer may refer the valuation to the 7aluation Afficer in the following
circumstancesG
(i) in a case where the value of the asset has been estimated by a registered valuer& if the %ssessing Afficer is
of opinion that the value so claimed is less than its fair market value#
(ii) In any other case& if the value in the opinion of the %ssessing Afficer is exceeding by more than $/O of
the value computed by the assessee or it is exceeding by more than `2/&555 of the value computed by the
assessee#
Example
:r# :ahesh 3wami has converted one capital asset into stock in trade and its market value computed by the
assessee is `$&55&555 but in the opinion of the %ssessing Afficer& value should be `$&$5&555& in this case
valuation can not be referred to the 7aluation Afficer# )ut if the value in the opinion of the %ssessing Afficer
is `$&25&555& in this case matter can be referred to the 7aluation Afficer#
3imilarly& if the value computed by the assessee is `2&55&555 but in the opinion of the %ssessing Afficer
value should be `2&21&555& matter can be referred to the 7aluation Afficer#
8"$u"!)': 1..)#&- S&#!)': 2A-B N6&"$!C T"+ A#!O
M7aluation AfficerN means a person appointed as a 7aluation Afficer and includes a *egional 7aluation
Afficer& a 4istrict 7aluation Afficer& and an %ssistant 7aluation Afficer#
;u&%!)': 30: 6-)!& " :'!& ': C'%! '. 0m-'>&m&:!.
Income Bnder The head ,apital >ains $2+
A:%w&-:
C'%! '. 0m-'>&m&:! S&#!)': 77A1B
C'%! '. )m-'>&m&:! m&":% &+&:*)!u-& '. #")!"$ :"!u-& ):#u--&* ): #'::&#!)': w)!C #")!"$ "%%&! i#e#
if any expenditure is of revenue nature and has been claimed as an expenditure while computing income
under any head& it will not to be considered to be cost of improvement#
Example
If an additional floor has been constructed in an existing house& it will be considered to be cost of
improvement but if it is a case of minor repairs or white washing& painting etc#& it will not be considered to
be cost of improvement#
,ost of improvement in different cases is determined in the manner given belowG
1. If expenditure is incurred before 5$#5-#$'2$& it will not be taken into consideration#
2. If expenditure is incurred from 5$#5-#$'2$& actual expenditure incurred shall be taken into
consideration#
3. In case of following intangible assets& cost of improvement shall be nil
(i) goodwill of a business#
(ii) right to manufacture& produce or process any article or thing#
(iii) right to carry on any business#
;u&%!)': 31: 6-)!& " :'!& ': C'%! '. A#Ju)%)!)':.
A:%w&-:
C'%! '. A#Ju)%)!)': S&#!)': 77A2B
C'%! '. "#Ju)%)!)': m&":% !C& "#!u"$ &+&:*)!u-& ):#u--&* .'- "#Ju)-):g ": "%%&! ":* )! w)$$ ?&
*&!&-m):&* ): !C& m"::&- g)>&: ?&$'w:
1. If the asset is ac@uired before 5$#5-#$'2$& cost of ac@uisition shall be the expenditure incurred by the
assessee for ac@uiring the asset or its fair market value as on 5$#5-#$'2$& whichever is higher#
2. If the asset has been ac@uired with effect from 5$#5-#$'2$ onwards& the cost of ac@uisition shall be the
expenditure incurred by the assessee for ac@uiring the asset#
3. In case of original shares.right shares& cost of ac@uisition shall be the actual amount paid for purchasing
the shares#
4. In case of bonus shares& cost of ac@uisition shall be nil& but if the bonus shares have been issued prior to
5$#5-#$'2$& their cost of ac@uisition shall be the market value on 5$#5-#$'2$#
7. If the right to purchase the rights shares has been renounced& cost of ac@uisition of such right shall be
taken to be nil#
6. In case of rights renouncee& cost shall be the amount paid to the company and to the right holder who has
renounced the right#
7. Where the capital asset became the property of the assessee on the distribution of the capital assets of a
company on its li@uidation and the assessee has been assessed to income-tax under the head M,apital gainsN
in respect of that asset under section -(& means the fair market value of the asset on the date of distribution#
8. In case of following %&$. "#Ju)-&* ):!":g)?$& "%%&!%& Mcost of ac@uisition& will be nil#
Income Bnder The head ,apital >ains $2-
(i) goodwill of a business
(ii) right to carry on any business
(iii) right to manufacture& produce or process any article or thing
(iv) trade mark or brand name associated with a business
(v) tenancy rights
(vi) stage carriage permits
(vii) loom hours
In case there is any other self ac@uired asset& it will not be chargeable to tax& as per the 3upreme ,ourt!s
ruling in C0T >. 9.C. S-):)>"%" S&!!E A1981B ASCB& wherein it was pointed out that the income chargeable to
capital gains tax is to be computed by deducting from the full value of the consideration Mthe cost of
ac@uisition of the capital asset and the cost of any improvement theretoN# If it is not possible to ascertain cost
of ac@uisition and or cost of improvement& then transfer of such asset is not taxable under the %ct#
77A3B Where the cost for which the previous owner ac@uired the property cannot be ascertained& the cost
of ac@uisition to the previous owner means the fair market value on the date on which the capital asset
became the property of the previous owner#
Example
:r# =okesh )hardwa? purchased route permits on 5$#5$#$''- for ` $ lakh# The same are sold by him on
5$#5$#25$2 for ` / lakhs#
S'$u!)'::
Capital 0ains on route permits
6eriod of holding G 5$#5$#$''- to +$#$2#25$$ (=ong Term)
Hull value of consideration /&55&555#55
X $&55&555 . 2-- x 12/ X `+&2$&12$#+$ +&2$&12$#+$
=ong Term ,apital >ain $&12&212#('
Example
:r# %noop 3harma was awarded route permits between 4elhi and )ombay on the basis of his performance
on 5$#5$#$''1# 0e sells the same on 5$#5$#25$2 for `/ lakhs# 0e claims that no capital gains are taxable
since cost of ac@uisition is in determinate#
S'$u!)'::
Capital 0ains on route permits
6eriod of holdingG 5$#5$#$''1 to +$#$2#25$$ (=ong Term)
Hull value of consideration /&55&555
=ong Term ,apital >ain /&55&555
;u&%!)': 32: 6-)!& " :'!& ': *&!&-m):):g '. !C& &-)'* '. C'$*):g '. " #")!"$ "%%&!. S&#!)': 2A42AB.
Income Bnder The head ,apital >ains $2/
A:%w&-:
/&!&-m):):g '. !C& &-)'* '. C'$*):g '. " C")!"$ A%%&! S&#!)': 2A42AB
P&-)'* '. C'$*):g "% &- %&#!)': 2A42AB %C"$$ ?& *&!&-m):&* ): !C& m"::&- g)>&: ?&$'w:
1. %ny period subse@uent to the date of li@uidation shall not be considered#
2. The period of holding of the previous owner of section -1 shall also be considered in the following casesG
(a) ,apital asset became the property of the assessee on any distribution of assets on partition of a 0indu
Bndivided Hamily#
(b) ,apital asset became the property of the assessee under a gift or will#
(c) ,apital asset became the property of the assessee on any distribution of assets on the li@uidation of a
company#
(d) ,apital asset became the property of the assessee on any transfer of a capital asset by a company to its
subsidiary company#
(e) ,apital asset became the property of the assessee on any transfer of a capital asset by a subsidiary
company to the holding company#
(f) ,apital asset became the property of the assessee on any transfer in a scheme of amalgamation& of a
capital asset by the amalgamating company to the amalgamated company#
F P-&>)'u% 'w:&- '. !C& -'&-!EG in relation to any capital asset owned by an assessee means the last
previous owner of the capital asset who ac@uired it otherwise than through a transaction of section -1#
3. In case of original shares& right shares and bonus shares& the period of holding shall start from the date of
allotment of shares#
4. In case of right to subscribe to right shares& period shall be determined from the date of offer of such right#
7. In case of shares received in connection with demerger& the period for which the shares were held in the
demerged company shall also be considered#
;u&%!)': 33: 6C"! !E&% '. !-":%"#!)':% "-& ):#$u*&* ): !C& !&-m Q!-":%.&-R ): -&$"!)': !' " #")!"$
"%%&!U
A:%w&-:
M&":):g '. Q!-":%.&-R ): -&$"!)': !' " #")!"$ "%%&!
T-":%.&- S&#!)': 2A47)
The Income Tax %ct contains an inclusive definition of the term transfer! under section 2(-1) the following
types of transactions are included in the term transfer! in relation to a capital assetG
(i) (a) The sale of the asset&
(b) The exchange of the asset#
Example
:r# >urpreet 3ingh has exchanged his capital asset of `1&55&555 for an asset of `$5&55&555& there will be
capital gain of ` +&55&555#
(c) The relin@uishment of the asset#
Example
Income Bnder The head ,apital >ains $2(
:r# Caresh ;ukre?a has received the right to purchase the right shares but he has relin@uished his right to
purchase the share in favour of some other person by charging `$&55&555& in this case& he has capital gain of
`$&55&555#
(ii) The extinguishment of any rights therein#
Example
:r# Cishant >ulati was holding shares in %), =td# The company has gone into li@uidation and :r# Cishant
>ulati has received `2&55&555 being the full value of consideration and the cost of ac@uisition was
`$&/5&555& in this case there is a capital gain of `/5&555#
(iii) The compulsory ac@uisition thereof under any law#
(iv) The owner of the capital asset may convert the same into stock in trade of a business carried on by him&
such conversion is treated a transfer#
(v) 6art performance of the contractG (3ection /+% of Transfer of 6roperty %ct $222) 3ometimes possession
of an immovable property is given in consideration of part performance of a contract#
Example
:r# %akash )atra enters into an agreement for the sale of his house# The purchaser gives the entire sale
consideration to :r# %akash )atra# % hands over complete rights of possession to the purchaser since he has
realised the entire sales consideration# The above transaction is considered as transfer#
(vi)There are certain types of transactions which have the effect of transferring or enabling the en?oyment of
an immovable property#
Example
% person may become a member of a cooperative society& company or other association of persons which
may be building house.flats# When he pays an agreed amount& the society etc# hands over possession of the
house to the person concerned# Co conveyance is registered# The above transaction is also a transfer#
(vii) The maturity or redemption of a <ero coupon bond#
0$$u%!-"!)': 37: %ditya owns a plot of land ac@uired on 5$#5(#$'22 for a consideration of ` 2 lakhs# 0e
enters into an agreement to sell the property on $/#5+#25$2 for a consideration of ` 1#/ lakhs# In part
performance of the contract& he handed over the possession of land on 2$#5+#25$2 on which date he received
the full consideration# %s on +$
st
:arch 25$2 the sale was not registered#
4iscuss the liability to capital gain for the assessment year 25$2-$+#
S'$u!)':: `
Hull value of consideration 1&/5&555#55
X 2&55&555 . Index of 22-2' x Index of $$-$2
X 2&55&555 . $($ x 12/ X `'&1/&$//#22 '&1/&$//#22
=ong Term ,apital =oss (2&2/&$//#22)
;u&%!)': 34: 6-)!& " :'!& ': !"+"?)$)!E '. L':g T&-m C")!"$ G"):%.
A:%w&-:
T"+ ': L':g(T&-m C")!"$ G"):% S&#!)': 112A1B
If total income of an assessee includes long term capital gains& such capital gains shall be taxed V 25O
Example
If %), =td# has business income of `/&55&555 and long term capital gain `-&55&555& company tax liability
shall be `2&+(&'55#
S&#)"$ -'>)%)': ): #"%& '. -&%)*&:! ):*)>)*u"$ ":* -&%)*&:! H):*u U:*)>)*&* 3"m)$E
Where the total income as reduced by such long-term capital gains is below the maximum amount which is
not chargeable to income-tax ($&25&555.$&'5&555.2&/5&555./&55&555)& then& such long-term capital gains shall
be reduced by the amount by which the total income as so reduced falls short of the maximum amount
which is not chargeable to income-tax and the tax on the balance of such long-term capital gains shall be
computed at the rate of 25O#
/&*u#!)':% u:*&- %&#!)': 80C !' 80U %C"$$ :'! ?& "$$'w&* .-'m $':g !&-m #")!"$ g"): S&#!)': 112A2B
If any assessee has long term capital gains& no deduction shall be allowed from such long term capital gains
under chapter 7I-% i#e# deductions under section 25, to 25B are not allowed#
Example
:r# %khil Pain has long term capital gains of `/&55&555# 0e has donated `$&55&555 in 6rime :inister!s
Cational *elief Hund eligible for deduction under section 25>& his tax liability shall be +&25&555 x 25O I
2O I $O X `(/&'25 (deduction under section 25> is not been allowed but deficiency of the normal income
has been allowed#)
;u&%!)': 37: 6-)!& %C'-! :'!& ': %&#)"$ -'>)%)':% .'- 3u$$ 8"$u& '. C':%)*&-"!)': ): #&-!"): #"%&%H ):
!C& #':!&+! '. #")!"$ g"):% $)"?)$)!E.
A:%w&-:
S&#)"$ -'>)%)':% .'- .u$$ >"$u& '. #':%)*&-"!)': ): #&-!"): #"%&%
Hull value of consideration means the sale price in connection with a capital asset which has been
transferred& however in the following cases& full value of consideration shall be computed on notional basisG
1. %s per section -/($%)& in case of destruction of a capital asset& full value of consideration shall be claim
received from insurance company#
2. %s per section -/(2)& in case of conversion of capital asset into stock in trade& market value of the asset on
the date of conversion#
3. %s per section -/(+)& in case of transfer of capital asset by a partner to the partnership firm or association
of person or body of individual& credit given in the book of accounts in connection with the asset transferred#
4. %s per section -/(-)& in case of dissolution of a partnership firm or association of person or body of
individual& market value of the asset on the date of transfer#
7. %s per section /5,& if the full value of consideration in connection with land or building claimed by an
assessee is less than the value adopted by the stamp valuation authority& the value adopted by the stamp
valuation authority#
;u&%!)': 36: 6-)!& " :'!& ': %&! '.. ":* #"--E .'-w"-* '. $'%% u:*&- !C& C&"* C")!"$ G"):%.
A:%w&-:
S&! '.. ":* #"--E .'-w"-* '. $'%% u:*&- !C& C&"* C")!"$ G"):% S&#!)': 70H 71H 74
S&! '.. '. $'%% .-'m ':& %'u-#& "g"):%! ):#'m& .-'m ":'!C&- %'u-#& u:*&- !C& %"m& C&"* '. ):#'m&
S&#!)': 70
If any person has short term loss& it can be set off either from short term or from long term gain but if any
person has long term loss& it can be set off only from long term gains i#e# set off from short term is not
allowed#
Example
:r# >irish %ggarwal has long term loss of `/&55&555 and short term gain of `/&55&555& his tax liability shall
be `+2&'(5 but if he has long term gain of `/&55&555 and short term loss of `/&55&555& his tax liability shall
be nil#
S&! '.. '. $'%% .-'m ':& C&"* "g"):%! ):#'m& .-'m ":'!C&- S&#!)': 71
Where in respect of any assessment year& the net result of the computation under the head M,apital gainsN is
a loss and the assessee has income assessable under any other head of income& the assessee shall not be
entitled to have such loss set off against income under the other head#
Example
:r# ,hanpreet 3ingh has short term loss `/&55&555 and business income of `/&55&555& his tax liability shall
be `+2&'(5#
L'%%&% u:*&- !C& C&"* F#")!"$ g"):%G S&#!)': 74
If any assessee has short term loss or long term loss which could not be set off& such losses shall be allowed
to be carried forward but for a maximum period of 8 E&"-% starting from the year next to the year in which
the loss was incurred#
)rought forward short term loss can be set off either from short term or from long term gain but brought
forward long term loss can be set off only from long term gain and not from short term gain#
Income Bnder The head ,apital >ains $2'
P4ACT0CE P419LEMS
T:T#L ,&:;LE!S *>
P-'?$&m 1.
4iscuss whether the following are capital assets or notG
(i) 0ousehold furniture
(ii) 6ersonal :otor car
(iii) *esidential house
(iv) Brban land
(v) *ural land in India
(vi) *ural land in Cepal
(vii) 3tock in trade
(viii) >old ornaments
(ix) :usic system for personal use
(x) :usic system in business use
(xi) :otor car in business use
(xii) 6lant and machinery in business use
(xiii) 3ilver utensils for personal use
(xiv) 6recious stones in personal use
A:%w&- V (i) Cot a capital asset" (ii) Cot a capital asset" (iii) ,apital asset" (iv) ,apital asset" (v) Cot a
capital asset" (vi) ,apital asset" (vii) Cot a capital asset" (viii) ,apital asset" (ix) Cot a capital asset" (x)
,apital asset" (xi) ,apital asset" (xii) ,apital asset" (xiii) Cot a capital asset" (xiv) ,apital asset
P-'?$&m 2.
,ompute capital gains in the following situations for the assessment year 25$2-$+G
A%%&! G'$* L":* 4&%)*&:!)"$ C'u%& P&-%':"$ M'!'-
C"-
4ate of purchase 5$#51#$'12 5$#5-#$'25 5$#51#255' 5$#5/#255+
,ost price +&55&555 /&55&555 1&55&555 2&55&555
,ost of improvement 25&555 $&55&555 +&55&555 Cil
Jear of improvement $'1'-25 $'25-2$ 255'-$5 255(-51
Hair market value on 5$#5-#$'2$ 2&'5&555 /&/5&555 C#%# C#%#
4ate of 3ale 5$#5$#25$2 5$#5$#25$2 5$#5$#25$2 5$#5$#25$2
Hull value of consideration +5&55&555 +2&55&555 $/&55&555 $&25&555
A:%w&- V =ong term capital gainsG >oldG `(&-/&555" =ong term capital lossG =andG (`$$&$1&/55)" 3hort term
capital gainG *esidential 0ouseG `/&55&555" 6ersonal motor car is not an asset#
P-'?$&m 3.
:r# D started rendering services from 5$#5-#25$$ and bills issued and amount received during financial year
25$$-$2 is `+5&55&555 and service tax has been charged wherever it is applicable# 9xpenses incurred in
connection with rendering of services are `25&55&555#
:r# D ac@uired a residential house in Panuary& $'1' for `2&55&555 and its market value on 5$#5-#$'2$ is
`$&25&555 and he constructed its $
st
floor in 3eptember! $'21 by incurring `+&55&555 and constructed second
floor in Actober! 255$ by incurring `-&55&555 and constructed its third floor in Hebruary! 25$$ by incurring
`/&55&555 and sold the house on 5$#5$#25$2 for `$55&55&555 and paid brokerage V $O and he invested
`25&555 in e@uity shares of infrastructure development company notified under section 25,#
3how the treatment for service tax and also compute his tax liability for assessment year 25$2-$+#
Income Bnder The head ,apital >ains $'5
A:%w&- V Tax =iabilityG `$2&11&+25
P-'?$&m 4.
:r# D purchased one house on 5$#51#$'1( for `2&55&555 and incurred `+&55&555 on its improvement in
$'11-12 and its market value as on 5$#5-#$'2$ is `+&/5&555# 0e incurred `/&55&555 on its improvement in
previous year $''1-'2# 0e sold the house on 5$#51#25$$ for `'1&55&555 and paid brokerage V 2O on sale
price#
0e is engaged in rendering services and his gross receipt is `-5&55&555 and it includes
- `2&55&555 for the service rendered in Indian Territorial Waters#
- `+&55&555 for rendering services in Pammu and ;ashmir#
- `$&/5&555 for service rendered to notified International Arganisation#
- `-&55&555 for services rendered in 39W#
- `+&55&555 for service rendered to 9mbassies#
- `$&1/&555 for export of services#
- `-&55&555 for services rendered to I,%I#
- `+&55&555 for services rendered to ,haritable Trust#
- `2&55&555 for services rendered to *)I#
- `$&55&555 for services rendered to %ssociated 9nterprises#
0e is not eligible for 336 exemption and he has not collected any service tax and expenses incurred for
rendering services are `$2&55&555#
,ompute his income tax liability for the assessment year 25$2-$+ and service tax liability for financial year
25$$-$2#
A:%w&-: Income Tax =iabilityG `$/&'2&$/5" 3ervice Tax =iabilityG `2&-'&1'(
P-'?$&m 7.
:r# *ahul 4ubey (aged (/ years) sold the following assets during the previous year 25$$-$2G
1. 0e purchased one house in rural area on 5$#$5#$'($ for `2&55&555 and incurred `/5&555 on its
improvement on 5$#51#$'25# Its market value on 5$#5-#$'2$ is `2&+5&555# It was sold on 5$#5-#25$$
for `/&55&555#
2. 0e purchased agricultural land in the rural area for `2&55&555 on 5$#51#2552 and sold it on 5$#51#25$$
for `+&55&555#
3. 0e purchased one T#7# for his personal use on 5$#5$#255+ for `2/&555 and sold it on +5#$2#25$$ for
`25&555#
4. 0e purchased gold on 5$#51#2552 for `+&55&555 and sold it on 5$#5-#25$$ for `-&/5&555#
7. 0e has one motor car in his business with written down value as on 5$#5-#25$$ `2&55&555 and it was
sold by him on 5$#51#25$$ for `2&/5&555#
6. 0e purchased one house on 5$#$5#$'22 for `1&55&555 and incurred `-&/5&555 on 5$#$5#2552 to
construct its first floor and subse@uently the house was sold on 5$#5$#25$2 for `1/&55&555 and selling
expenses were 2O of the sale price#
,ompute tax liability of :r# *ahul 4ubey for the assessment year 25$2-$+#
Income Bnder The head ,apital >ains $'$
A:%w&- V Tax =iabilityG `++&/15
P-'?$&m 6.
:r# 3andeep :ishra purchased one house on 5$#$5#$'22 for `/&55&555 and this house was ac@uired
compulsorily by the >overnment on 5$#51#$''/# ,ompensation fixed by the >overnment was `+2&55&555#
>overnment has paid half of the amount on 5$#$5#25$$ and balance half on 5$#$5#25$2#
The assessee was not satisfied with the compensation and he has filed an appeal in the 0igh ,ourt# The 0igh
,ourt has given decision on +$#5+#25$- directing the >overnment to pay additional compensation of
`/&55&555 and the >overnment has paid `+&55&555 on $5#5-#25$- and balance `2&55&555 on $5#5-#25$/#
,ompute capital gains for the various years and tax liability for assessment year 25$2-$+#
A:%w&- V %ssessment Jear 25$2-$+G =ong term capital gainsG `$'&$$&5$5" Tax =iabilityG `+&/(&/'5"
%ssessment Jear 25$/-$(G =ong term capital gainsG `+&55&555"
%ssessment Jear 25$(-$1G =ong term capital gainsG `2&55&555
P-'?$&m 7.
:r# D purchased one house on 5$#51#$'11 for `2&55&555 and paid brokerage of `25&555 and its market value
as on 5$#5-#$'2$ is `2&$5&555 and the house was ac@uired by the >overnment on 5$#51#2552 and
compensation fixed by the >overnment is `(5&55&555 and >overnment paid `25&55&555 on 5$#5$#25$2 and
balance on 5$#5$#25$+#
:r# D has purchased one commercial building on 5$#5-#25$$ and it was let out to DJW =td# V `$&55&555
p#m# plus service tax and :r# D has paid municipal tax of `2&-5&555 and he is eligible for 336 exemption
,ompute income tax liability and income tax payable for assessment year 25$2-$+ and service tax liability
for financial year 25$$-$2 and also amount of T43 under section $'--I and $'-=%
%nswer X Income Tax =iabilityG `$5&-5&(2'#(5" Income Tax 6ayableG `1&25&(+5" 3ervice Tax =iabilityG
`$(&-25" T43 under section $'--IG `$&25&555" T43 under section $'-=%G `2&55&555
P-'?$&m 8.
:r# D is engaged in providing Technical Testing and %nalysis 3ervices and he has submitted informations as
given belowG
$# *endered services on $/#5(#25$$ to % =td# and issued bill on 5$#51#25$$ and payment was received on
$5#51#25$$ for `1&55&555 inclusive of service tax#
2# *endered services on $/#5'#25$$ to ) =td# and issued bill on 22#5'#25$$ and payment was received on
5$#$5#25$$ for `(&55&555 inclusive of service tax#
+# *endered services on $/#$2#25$$ to , =td# and issued bill on 5$#5$#25$2 and payment was received on
5$#$$#25$$ for `/&55&555 inclusive of service tax#

-# *endered services on $/#5+#25$$ to BCI,9H& a notified International Arganisation and issued bill on
$5#5+#25$2 and payment was received on 5$#5-#25$2 for `2&55&555#
The service provider is not eligible for 336 exemption#
9xpenses incurred in connection with rendering of services are `$5&55&555#
,ompute his service liability for each @uarter#
:r# D purchased one residential house on 5$#$5#$''2 for `/&55&555 and sold the house on 5$#51#25$$ for
`$55&55&555 and purchased one house on 5$#5$#25$2 for `25&55&555 and this house was sold by him on
5$#5$#25$+ for `2/&55&555#
,ompute his income tax liability for assessment year 25$2-$+ and also capital gains for all the years#
A:%w&- V 3ervice Tax =iabilityG %pril to PuneG `(/&+(1#$2" Puly to 3eptemberG `/(&52'#5$" Actober to
4ecemberG `-(&('5#2-" Panuary to :archG Cil
Income Tax =iability G `$/&1/&--5
%ssessment Jear 25$+-$-G 3hort term capital gainsG `2/&55&555
(b) 6resume the house purchased on 5$#5$#25$2 was sold on +$#5$#25$2
Income Tax =iability G `2$&-$&'-5
(c) 6resume the house purchased on 5$#5$#25$2 was purchased on 5$#$5#25$2 and was not sold upto
5$#5'#25$/#
Income Tax =iability G `$'&21&--5
(d) 6resume no house was purchased but the amount was deposited in capital gains account scheme on
+$#51#25$2 and the amount remained unutili<ed#
Income Tax =iability G `$/&1/&--5
%ssessment Jear 25$/-$(G =ong term capital gainsG `25&55&555
P-'?$&m 9.
:r# Jogender 3harma purchased agricultural land for `+&55&555 on 5$#$5#$'2/ and this land was transferred
by him on 5$#51#25$$ for `+2&55&555 (this agricultural land is used for agricultural purpose since its
purchase)# :r# Jogender 3harma purchased one agricultural land on +5#5'#25$2 in the urban area for
`(&55&555# The agricultural land were sold on 5$#5$#25$+ for `$5&55&555#
0e has one business also with turnover `(/&55&555 and has income from business `$&$5&555#
,ompute capital gains for various years and also tax liability for assessment year 25$2-$+#
A:%w&- V
%ssessment Jear 25$2-$+G =ong Term ,apital >ainsG `2&2'&+2+#+$" Tax =iabilityG `$&/(&-25
%ssessment Jear 25$+-$-G 3hort Term ,apital >ainsG `$5&55&555
P-'?$&m 10.
An 2/#5-#25$$ %nand sold an urban agricultural land for `/5&55&555 which he had been using for
agricultural purposes for several years# 0e ac@uired that land in $'25 for `2&/5&555# The market value of
such land as on 5$#5-#$'2$ was `/&55&555# 0e purchased rural agricultural land for `2&55&555 on 2/#5(#25$$
which was sold for `$2&/5&555 on $2#5$#25$2# % sum of `$2&/5&555 was also invested by him in purchase of
Income Bnder The head ,apital >ains $'+
residential property on 2/#51#25$$# 0e did not own any house property before this date# The new house
property was sold on 22#5+#25$2 for `$/&55&555#
,ompute tax liability for assessment year 25$2-$+#
A:%w&- V =ong term capital gainG `2&1/&555" 3hort term capital gainG `2&/5&555" Tax =iabilityG `(+&2(5
P-'?$&m 11.
:r# 3unil 3arraf sells a commercial house property on $/
th
4ecember 25$$ for `$'&55&555 (cost of
ac@uisition on 2+
rd
%pril $'2$ `$&/5&555)# An $-
th
:arch 25$2 he purchases a residential house for
`+&55&555 for availing exemption under section /-H and bonds of C0%I which are redeemable after + years
for `+&25&555 for claiming exemptions under section /-9,# 0e does not own any other house# 0e also
incurred a short term capital loss amounting to `/5&555 during the previous year 25$$-$2#
4uring the previous year his only other income was from business amounting to `/5&555#
0e deposited `25&555 in public provident fund#
,ompute the total income and tax liability of :r# 3unil 3arraf for the assessment year 25$2-$+#
A:%w&- V Total IncomeG `2&52&-25" Tax =iabilityG `/&2/5
P-'?$&m 12.
:r# Tara ,hand 3achdeva purchased agricultural land on 5$#5/#$'1$ for `+&55&555 in urban area and its
market value on 5$#5-#$'2$ is `2&55&555# This land was gifted by him to his son :r# 7inay 3achdeva on
5$#5$#255+ when its market value was `$/ lakhs# :r# 7inay 3achdeva has transferred this land on
5$#5$#25$2 for `-5 lakhs (this agricultural land is used for agricultural purposes since its purchase) and he
purchased one more agricultural land in rural area on $5
th
Panuary 25$2 for `2&/5&555 and purchased one
residential house on +$#5$#25$2 because he didn!t have any house in his name& for `1&55&555#
0e invested `$&55&555 in bonds of Cational 0ighways %uthority of India redeemable after + years# The
amount was invested on +5#5(#25$2#
A:%w&- V Tax =iabilityG `$&15&+'5
P-'?$&m 13.
:r# %poorv Pain is the owner of the following assetsG
$# 0e purchased gold in $'11-12 for `'5&555 and its market value as on 5$#5-#$'2$ is `$&5$&555#
2# 0e purchased e@uity shares in % =td (listed) in $'1+-1- for `$&'2&555 and its market value on
5$#5-#$'2$ is `2&2+&555#
:r# %poorv Pain died on $(#52#$''2 and as per his will these assets were transferred to his son %nkur Pain#
:r# %nkur Pain now sells these assets on $5#5(#25$$ for `25&55&555 and `+&55&555 respectively and
securities transaction tax has been paid on sale of e@uity shares#
Hind out the amount of capital gains chargeable to tax and also tax liability for the assessment year 25$2-$+#
A:%w&- V Income under the head ,apital >ainsG `$&25&1/5" Tax =iabilityG `2&$$&/'5
Income Bnder The head ,apital >ains $'-
P-'?$&m 14.
:r# %bhinav )ilotia purchased a house property for `+(&555 on $5#5/#$'(+# 0e gets the first floor of the
house constructed in $'(1-(2 by spending `25&555# 0e dies on $2#5'#$'2+# The property is transferred to
:rs# 9kta )ilotia by his will# :rs# 9kta )ilotia spends `-5&555 during $'2--2/ for renewals.reconstruction
of the property# :rs# 9kta )ilotia sells the house property for `$-&/5&555 on $/#5+#25$2 (brokerage paid by
:rs# 9kta )ilotia is `$-&/55)# The fair market value of the house on 5$#5-#$'2$ is `$&$5&555#
Hind out the amount of capital gain chargeable to tax for the assessment year 25$2-$+#
A:%w&- V =ong Term ,apital >ainsG `+&25&255
P-'?$&m 17.
:r# 6iyush >arg a senior citi<en sold residential building at %lwar for `2+&55&555 on Actober $
st
& 25$$# This
building was ac@uired by his father on 5$#5$#$'1' for `$&55&555# An the death of his father on Puly /
th
& $'2(&
he inherited this building# Hair market value of this property on 5$#5-#$'2$ was `$&/5&555# 0e paid
brokerage V $O to the real estate agent at the time of sale of the building# 0e purchased a residential
building at )angalore on :arch 1
th
& 25$2 for `2&55&555 and deposited `+&55&555 on %pril 25
th
& 25$2 in the
bonds of Cational 0ighways authority of India redeemable after one year#
0is other incomes are ` /5&555# 0e deposited ` $5&555 in public provident fund#
,ompute taxable income and tax liability of :r# 6iyush for the assessment year 25$2-$+#
A:%w&- V Taxable IncomeG `+&+'&/55" Tax =iabilityG `$2&--5
P-'?$&m 16.
:r# :ukul >rover purchased one building on 5$#$5#$'(2 for `2&55&555 and incurred `$&/5&555 on its
improvement on 5$#$5#$'12# 0e entered into an agreement to sell this house on 5$#5-#$'2$ for `+&55&555
but the buyer backed out# 3ubse@uently :r# :ukul >rover incurred `/&55&555 on its improvement on
5$#51#$'21 and :r# :ukul >rover expired on 5$#$5#$''1# The asset was inherited by his son :r# ;apil
>rover who further incurred `2&55&555 on its improvement on 5$#5$#2552# Hinally this asset was sold by
him on 5$#5$#25$2 for `/'&55&555 and he purchased C3, of `/&55&555#
A:%w&- V Tax =iabilityG `12&2-5
P-'?$&m 17.
:r# 6rabhu ,hand Talwar purchased one house on 5$#5-#$'2$ for `/&55&555# 0e entered into an agreement
to sell this house on 5$#$5#$''$ and advance money of `22&555 was received but the buyer backed out and
advance money was forfeited# :r# 6rabhu ,hand Talwar expired on 5$#$5#$''+ and the house was inherited
by his son :r# Bmesh ,hand Talwar who has further entered into an agreement on 5$#$5#255$ to sell this
house and advance money of `+5&555 was received but the buyer backed out and advance money was
forfeited and subse@uently :r# Bmesh ,hand Talwar has sold the house on 5$#5$#25$2 for `-/&55&555#
,ompute tax liability for assessment year 25$2-$+#
A:%w&- V Tax =iabilityG `$&2'&225
P-'?$&m 18.
:r# 3agar 3aini purchased $55 e@uity shares in %), =td# (listed) on 5$#$5#$'1( V `$5 per share# The
company had issued $55 bonus shares on 5$#$5#$'25 and market value of the share as on 5$#5-#$'2$ is `2
per share# ,ompany has again issued $55 bonus shares on 5$#$5#$''(#
Income Bnder The head ,apital >ains $'/
The company has further offered $55 right shares on 5$#5/#25$$ V `$/5 per share and :r# 3agar 3aini has
purchased half of the shares and balance half was renounced in favour of :r# 3an?ay 3hukla by charging `/
per share#
:r# 3agar 3aini and :r# 3an?ay 3hukla both have transferred all the shares on 5$#5$#25$2 V `255 per share
and securities transaction tax has been paid#
:r# 3agar 3aini has income under the head business.profession `2&(5&555 and he has invested `15&555 in
public provident fund#
:r# 3an?ay 3hukla has income under the head business.profession `2&-5&555 and he has invested `/5&555 in
public provident fund#
,ompute tax liability of :r# 3agar 3aini and :r# 3an?ay 3hukla#
A:%w&- V :r# 3agar 3ainiG Tax =iabilityG `$&--5" :r# 3an?ay 3huklaG Tax =iabilityG `$&+25
P-'?$&m 19.
:r# 7ikram Carula purchased $55 debentures in %), =td# on 5$#$5#$''- V `+55 per debenture and
subse@uently the company has converted the debentures into shares on 5$#$5#25$5 and for each debenture +
shares were issued and market value of the shares on the date of conversion was `2/5 per share and
subse@uently assessee has sold all these shares on 5$#5-#25$$ V `21/ per share and has paid brokerage V
$O of the sale price#

,ompute capital gains in the hands of :r# 7ikram Carula#
A:%w&- V 3hort Term ,apital >ainsG `/$&(1/
P-'?$&m 20.
:r# *a?eev >oel purchased /55 debentures on 5$#51#$''$ of %), =td# V ` +'5 per debenture and paid
brokerage V $#/O# The debentures were converted into share V + share for each debenture on 5$#51#255$#
:arket value on the date of conversion was ` $15 per share# %ll the shares were sold on 5$#51#25$$ V `//5
per share and no securities transaction tax has been paid and paid brokerage V $#/O#
% sum of `$&55&555 was invested in purchasing a house on 22#5(#25$2 because the assessee did not have any
house and `$&55&555 was deposited in capital gain account scheme on +5#5(#25$2 for availing exemption
under section /-H and ` /5&555 was withdrawn on 52#51#25$2 to construct first floor of the house purchased
on 22#5(#25$2 and the house was sold on 5$#$$#25$- for `+&55&555#
,ompute total income and tax liability for assessment year 25$2-$+ and capital gains for various years#
A:%w&- V Total IncomeG `+&+1&(15" Tax =iabilityG `+2&-25"
%ssessment Jear 25$/-$(G =ong Term ,apital >ainG `$&$5&2+(#+/
%ssessment Jear 25$/-$(G 3hort Term ,apital >ainG `$&/5&555
P-'?$&m 21.
:r# Tarun )hasin has transferred land on 5$#$5#25$$ for `2&1/&555 and selling expenses are `25&555 and
Indexed cost of ac@uisition is `+&2'&555# 0e has also transferred gold on 5$#5$#25$2 for `$$&55&555 and
Indexed cost of ac@uisition is `2&+$&555 and selling expenses are $O of the sale price# 0e has invested
`-&21&/55 on $5#5$#25$2 for purchasing one house and `2&/5&555 in the bonds of Cational 0ighways
%uthority of India which are redeemable after + years#
Income Bnder The head ,apital >ains $'(
0e is running a shop for selling consumer goods and his gross sale are ` -/&55&555 and he purchased stock
in trade for ` +2&55&555 and paid 4elhi 7%T V $2#/O and he has opted composition scheme and 4elhi 7%T
was paid by him V $O of gross sales# 0e has re?ected presumptive income under section --%4 and he has
maintained the records and also accounts have been audited#
A:%w&- V Tax =iabilityG `//&2+5
P-'?$&m 22.
:r# D is a service provider and has been rendering services since 2551-2552 and in the H#J 25$5-$$ his
gross receipt was $55 lacs and has paid service tax V $5#+O& he has submitted the information for H#J 25$$-
$2 as given belowG
a) 3ervices completed for % =td# on $1#5-#25$$& bill issued on $1#5(#25$$ and receive ` 1 =acs plus
service tax on $5#51#25$$#
b) *eceived ` ( =acs plus service tax in advance on $5#5(#25$$ from a client ) =td# and services were
completed on $5#52#25$$ and bill was issued on $5#$5#25$$#
c) *endered services to , =td# on $1#5'#25$$ and issued bill on 5-#$5#25$$ and payment received on
5/#5+#25$2 ` 2 =acs plus service tax#
d) *endered services on $2#$2#25$$ and issued on +$#$2#25$$ ` ( =acs plus service tax but no payment
has been received so far#
9xpenses incurred for rendering the above services were `$2&55&555#
,ompute amount of service tax payable for each @uarter and the last date on which service tax should be
paid#
If there was delay of $5 days in each payment& compute interest u.s 1/ and penalty u.s 1(#
0e has also sold the following assetsG
A%%&! G'$* L":* 4&%)*&:!)"$ C'u%& P&-%':"$ M'!'-
C"-
4ate of purchase 5$#51#$'12 5$#5-#$'25 5$#51#255' 5$#5/#255+
,ost price +&55&555 /&55&555 1&55&555 2&55&555
,ost of improvement 25&555 $&55&555 +&55&555 Cil
Jear of improvement $'1'-25 $'25-2$ 255'-$5 255(-51
Hair market value on 5$#5-#$'2$ 2&'5&555 /&/5&555 C#%# C#%#
4ate of 3ale 5$#5$#25$2 5$#5$#25$2 5$#5$#25$2 5$#5$#25$2
Hull value of consideration +5&55&555 +2&55&555 $/&55&555 $&25&555
,ompute his total income and tax liability also for assessment year 25$2-$+#
A:%w&- V Total IncomeG `$'&'2&(+5" Tax =iabilityG `-&(/&$-5" =oss under the head capital gainsG `-&12&/55
P-'?$&m 23.
:r# 3ridharan is a technocrat and is engaged in providing Technical ,onsultancy 3ervices wef 5$#5-#25$$
and he has issued bills and received payments of `-5&55&555 during the year and he has not collected any
service tax# The above amount includes `/&55&555 charged from a notified International Argani<ation for
rendering services and also `+&55&555 charged from B3 9mbassy for rendering services#

9xpenses incurred for rendering above services are `22&55&555#
0e has submitted information regarding sale of certain assets as given belowG
1. 0e purchased one house on 5$#$5#$'12 for `/&55&555 and paid brokerage `2/&555# 0e entered into an
agreement to sell this house on 5$#5-#$'2$ for `/&$5&555 but the buyer backed out# 0e constructed its
first floor on 5$#5$#255+ by incurring `-&55&555 and subse@uently this house was sold on 5$#5$#25$2
for `(5&55&555 and selling expenses were `2/&555#
2. 0e purchased 6reference shares in %), =td# on 5$#51#2552 for `$&/5&555 and sold these shares on
+$#5+#25$2 for `$&55&555#
3. 0e purchased one motor car for personal use on 22#52#255+ for `2&55&555 and sold it on 5$#5-#25$$
for `2&$5&555#
4. 0e purchased gold ornaments on 5$#$5#$'25 for `2&$5&555# Its market value on 5$#5-#$'2$ is
`2&55&555 and it was sold by her on 5$#51#25$$ for `2&55&555#
7. 0e purchased silver utensils on 5$#51#2552 for `+5&555 and these utensils were sold by her on
5$#5$#25$2 for `2+&555#
6. 0e has invested `+/&555 in the units of BTI#
3how the treatment for service tax and also compute his income tax liability for assessment year 25$2-$+#
A:%w&- V Tax =iabilityG `+&-/&2$5
P-'?$&m 24.
:rs# D purchased $&555 4ebenture of %), =td on 5$#51#255$ V `/55 per debenture and the 4ebenture
were converted into shares on 5$#51#25$5 and for each debenture two shares were issued#
:rs# D sold half of the shares on 5$#5/#25$$ V `255 per shares K balance half on 5$#$$#25$$ V `'55 per
share# (3TT not paid)
3he is engaged in retail trade and is registered under 47%T and purchased goods from 4elhi for `+5 lakh
and paid 7%T V $2#/O and half of the good were stock transferred to some other state and balance half
were sold in 4elhi for `2/ lakh plus 7%T V $2#/O#
3he purchased goods from some other state for `-5 lakh and paid ,3T V 2O K goods were sold in 4elhi
for `/+ lakh 6lus 7%T $2#/O#
,ompute her tax liability for %#J# 25$2-$+ also show the working for 7%T financial year not paid#
A:%w&- V Tax =iabilityG `2&+$&555
P-'?$&m 27A"B.
:rs# D purchased one house on 5$#51#$'1/ for ` 2&55&555 and its market value on 5$#5-#$'2$ is ` +&55&555#
3he has entered into an agreement to sell the house in $''2-'+ and advance money of `+5&555 was forfeited#
3he has gifted the house on 5$#$$#25$$ to :rs# J when its market value was `25&55&555 and value for the
purpose of stamp duty was `$/&55&555#
:rs# J has sold the house on 5$#5$#25$2 for ` 1/&55&555 and has purchased one house on $5#5$#25$2 for
`/&55&555 and it was sold by her on 25#5$#25$2 for ` (&55&555#
,ompute her tax liability for the assessment year 25$2-$+#
A:%w&- V Tax =iabilityG `$/&1(&'+5
P-'?$&m 27A?B.
6resume :rs# J is sister of :rs# D#
,ompute her tax liability for assessment year 25$2-$+#
A:%w&- V Tax =iabilityG `$5&5'&-55
P-'?$&m 26.
:r# 6uneet ,houdhary owns several assets but does not own any residential house# 0e sells the following
assets and re@uests you to compute his tax liability for the assessment year 25$2-$+#
$# 3hares (non-listed) purchased in %pril $''1 for `$&+5&555 sold on $'#51#25$$ for `$2&55&555#
2# An 5$#5-#$'2$& he had agreed to sell the ?ewellery to :r# :ilan )hardwa? for `+&/5&555 which was
purchased in $'1( for `$&25&555# 0owever& the sale could not be effected as :r# :ilan )hardwa?
backed out# 0e now sold the ?ewellery on $/#52#25$$ for `$2&55&555 and incurred `+5&555 incidental
selling expenses on account of brokerage and commission#
In 4ecember 25$$& he also purchased a small residential house for `2&55&555#
0e has deposited `$&(5&555 on 25#$5#25$$ in deposit account with a public sector bank under capital
gains deposit scheme for construction on the house which he has purchased in 4ecember 25$$#
An 25#5$#25$2& he invested `2&/5&555 in the bonds issued by Cational 0ighway %uthority of India
which are redeemable after + years#
+# 4ebentures purchased in %pril 25$$ for `25&555 sold on +$#$2#25$$ for `$&-5&555#
-# 3old his motor car purchased in %ugust $''1 for `$&/5&555 on $/#5+#25$2 for `$2&555#
/# 0e purchased e@uity shares of %), =imited on 5$#$$#25$5 for `2&55&555 and sold all the shares on
5$#5(#25$$ for `$5&55&555 and has paid 3TT V 5#2/O of sale price#
0e has a small business and is trading in consumer goods and he purchased goods of `2/5&55&555 from
4elhi and paid 4elhi 7%T V -O and goods were sold by him at a profit of $5O on sale price and has
charged 7%T V -O and he is registered under 4elhi 7%T#
,ompute his income tax liability and also show working of 7%TG
A:%w&- V Tax =iabilityG `2&-2&5+5" ,arried forward long term capital lossG `(&5+&+$/#1$
P-'?$&m 27.
0ari has ac@uired a residential house property in 4elhi on $
st
%pril& 2555 for `$5&55&555 and decided to sell
the same on +
rd
:ay& 255+ to :s# 6ari and an advance of `2/&555 was taken from her# The balance money
was not paid by :s# 6ari and 0ari has forfeited the entire advance sum# An +
rd
Pune& 25$$& he has sold this
Income Bnder The head ,apital >ains $''
house to :r# 3uri for `+/&55&555# In the meantime& on -
th
%pril& 25$$& he had purchased a residential house
in 4elhi for `2&55&555& where he was staying with his family on rent for the last / years and paid the full
amount as per the purchase agreement# 0owever& 0ari does not possess any legal title till +$
st
:arch& 25$2&
as such transfer was not registered with the registration authority#
:r# 0ari is a *egistered 4ealer under 7%T and he has submitted the information for H#J# 25$$-$2 as given
belowG
P"-!)#u$"-% Am'u:!
`
4"!& '.
8AT
4etails of purchase
*aw material purchased from another 3tate (,3T V 2O)#
*aw material D purchased within the 3tate
*aw material J imported from 3ingapore (includes basic customs duty paid V $5O
plus education cess)
*aw material W purchased within the 3tate#
25&55&555
+5&55&555
22&55&555
$2&55&555
$O
$2#/O
4etails of sales
3ale of goods produced from raw material D#
3ale of goods produced from inter-3tate purchase and imported raw materials#
3ale of goods produced from raw material W#
/-&55&555
(-&55&555
$(&55&555
-O
$O
$2#/O
CoteG The purchase and sales figures given above do not include 7%T.,3T#
4etermine his income tax liability for %ssessment Jear 25$2-$+ and also show the tax treatment for 7%T for
Hinancial Jear 25$$-$2#
A:%w&- V Income Tax =iabilityG `$/&-2&5(5" Cet 7%T 6ayableG ` +&55&555
Income Bnder The head ,apital >ains 255
S1LUT012S
T1
P4ACT0CE P419LEMS
S'$u!)': 1:
(i) 0ousehold furniture is not a capital asset#
(ii) 6ersonal motor car is not a capital asset#
(iii) *esidential house is a capital asset#
(iv) Brban land is a capital asset#
(v) *ural land in India is not a capital asset#
(vi) *ural land in Cepal is a capital asset#
(vii) 3tock in trade is not a capital asset#
(viii) >old ornaments are a capital asset#
(ix) :usic system for personal use is not a capital asset#
(x) :usic system for business use is a capital asset#
(xi) :otor car in business use is a capital asset#
(xii) 6lant and machinery in business use is a capital asset#
(xiii) 3ilver utensils for personal use is not a capital asset#
(xiv) 6recious stones in personal use is a capital asset#
S'$u!)': 2:
`
G'$*
Hull value of consideration +5&55&555
X +&55&555 . Index of 2$-22 x Index of $$-$2
X +&55&555 . $55 x 12/ X 2+&//&555 2+&//&555
=ong term capital gain (&-/&555
L":*
Hull value of consideration +2&55&555
X /&/5&555 . Index of 2$-22 x Index of $$-$2
X /&/5&555 . $55 x 12/ X -+&$1&/55 -+&$1&/55
=ong term capital loss $$&$1&/55
4&%)*&:!)"$ H'u%&
Hull value of consideration $/&55&555
=essG ,ost of ac@uisition 1&55&555
=essG ,ost of improvement +&55&555
3hort term capital gain /&55&555
P&-%':"$ m'!'- #"-
It is not a capital asset as per section 2($-)
Income Bnder The head ,apital >ains 25$
S'$u!)': 3:
`
>ross *eceipt +5&55&555#55
=essG 336 exemption $5&55&555#55
)alance amount 25&55&555#55
3ervice Tax V $5#+O 2&5(&555#55
C'mu!"!)': '. ):#'m& u:*&- !C& C&"* 9u%):&%%/P-'.&%%)':
>ross *eceipt +5&55&555#55
=essG 9xpenses 25&55&555#55
C'mu!"!)': '. ):#'m& u:*&- !C& C&"* C")!"$ G"):
Hull value of consideration $55&55&555#55
X 2&55&555 . $55 x 12/ X `$/&15&555 $/&15&555#55
,ost of constructing first floor
X +&55&555 . Index of 21-22 x Index of $$-$2
X +&55&555 . $/5 x 12/ X `$/&15&555 $/&15&555#55
,ost of constructing second floor
X -&55&555 . Index of 5$-52 x Index of $$-$2
X -&55&555 . -2( x 12/ X `1&+1&52'#25 1&+1&52'#25
,ost of constructing third floor
X /&55&555 . Index of $5-$$ x Index of $$-$2
X /&55&555 . 1$$ x 12/ X `/&/2&5+'#+2 /&/2&5+'#+2
=essG )rokerage V $O
X $O of `$55&55&555 X `$&55&555 $&55&555#55
=ong Term ,apital >ain /-&15&21$#-2
Income under the head ,apital >ain (=T,>) /-&15&21$#-2
>ross Total Income (-&15&21$#-2
=essG 4eduction u.s 25, 25&555#55
Total Income (-&/5&21$#-2
*ounded off u.s 222% (-&/5&215#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on `'&25&555 at slab rate $&-(&555#55
Tax on `/-&15&215 V 25O $5&'-&$1-#55
Tax before education cess $2&-5&$1-#55
%ddG 9ducation cess V 2O 2-&25+#-2
%ddG 309, V $O $2&-5$#1-
Tax =iability $2&11&+1'#22
*ounded off u.s 222) $2&11&+25#55
S'$u!)': 4:
`
C'mu!"!)': '. ):#'m& u:*&- !C& C&"* C")!"$ G"):%
Hull valuation of consideration '1&55&555#55
X +&/5&555 . Index of 2$-22 x Index of $$-$2
X +&/5&555 . $55 x 12/ X 21&-1&/55 21&-1&/55#55
X /&55&555 . Index of '1-'2 x Index of $$-$2
X /&55&555 . ++$ x 12/ X $$&2/&255#(5 $$&2/&255#(5
=essG 3elling expenses $&'-&555#55
('1&55&555 x 2O)
=ong Term ,apital >ain //&12&(''#-5
C'mu!"!)': '. ):#'m& u:*&- !C& C&"* 9u%):&%%/P-'.&%%)':
>ross *eceipt exclusive of service tax +1&/5&25+#''
(-5&55&555 8 2&-'&1'(#5$)
=essG 9xpenses $2&55&555#55
Income under the head )usiness.6rofession $'&/5&25+#''
C'mu!"!)': '. T'!"$ 0:#'m&
=ong Term ,apital >ain //&12&(''#-5
Income under the head )usiness.6rofession $'&/5&25+#''
>ross Total Income 1/&22&'5+#+'
Total Income 1/&22&'5+#+'
=T,> //&12&(''#-5
*ounded off u.s 222% //&12&155#55
Cormal Income $'&/5&25+#''
*ounded off u.s 222% $'&/5&255#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on =T,> `//&12&155 V 25O $$&$-&/-5#55
Tax on normal income `$'&/5&255 at slab rate -&+1&5(5#55
Tax before education cess $/&/$&(55#55
%ddG 9ducation cess V 2O +$&5+2#55
%ddG 309, V $O $/&/$(#55
Tax =iability $/&'2&$-2#55
*ounded off u.s 222) $/&'2&$/5#55
C'mu!"!)': '. S&->)#& T"+ L)"?)$)!E
>ross *eceipt -5&55&555#55
=essG 9xempted services $+&2/&555#55
3ervices rendered in Pammu and ;ashmir +&55&555
3ervices rendered to notified International Arganisation $&/5&555
3ervices rendered to 39W -&55&555
3ervice rendered to 9mbassies +&55&555
9xport of services $&1/&555
Total $+&2/&555
Taxable services 2(&1/&555#55
Income Bnder The head ,apital >ains 25+
3ervice Tax liability 2&-'&1'(#5$
(2(&1/&555 . $$5#+ x $5#+)
*ounded off u.s +14 2&-'&1'(#55
S'$u!)': 7:
`
C'mu!"!)': '. C")!"$ G"):%
1. H'u%&
Hull value of consideration /&55&555#55
=essG Indexed cost of ac@uisition (2&+5&555 . $55 x 12/) $2&5/&/55#55
=ong term capital loss $+&5/&/55#55
2. Ag-)#u$!u-"$ L":* in rural area not an asset as per section 2($-)#
3. T.8. is not an asset as per section 2($-)#
4. G'$*
Hull value of consideration -&/5&555#55
=essG ,ost of ac@uisition +&55&555#55
3hort term capital gain $&/5&555#55
7. M'!'- #"-
Hull value of consideration 2&/5&555#55
=essG written down value 2&55&555#55
3hort term capital gain as per section /5 /5&555#55
6. H'u%&
=essG Indexed cost of ac@uisition (1&55&555 . $5' x 12/) /5&-$&22-#-5
=essG Indexed cost of improvement (-&/5&555 . --1 x 12/) 1&'5&2(2#-(
=essG 3elling expenses V 2O $&/5&555#55
=essG =ong term capital loss on sale of first house $+&5/&/55#55
=ong term capital gain after ad?ust loss 2&$2&'-1#$-
3hort Term ,apital >ain 2&55&555#55
Income under the head ,apital >ains -&$2&'-1#$-
>ross Total Income -&$2&'-1#$-
Total Income -&$2&'-1#$-
*ounded off u.s 222% -&$2&'/5#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on =T,> `$&(2&'/5 (`2&$2&'/5 - `/5&555) V 25O +2&/'5#55
Tax on `2&55&555 at slab rate Cil
Tax before education cess +2&/'5#55
%ddG 9ducation cess V 2O (/$#25
%ddG 309, V $O +2/#'5
Tax =iability ++&/(1#15
*ounded off u.s 222) ++&/15#55
S'$u!)': 6:
C'mu!"!)': '. T"+ L)"?)$)!E .'- !C& -&>)'u% E&"- 2011(12 u:*&- %&#!)': 47A7B
3ince the >overnment has made the first payment in the previous year 25$$-$2& =ong term capital gain shall
Income Bnder The head ,apital >ains 25-
be taxed in the pervious year 25$$-$2# 0owever& =ong term capital gain shall be computed in the year in
which the asset has been ac@uired i#e# in the year $''/-'(#
`
C'mu!"!)': '. #")!"$ g"):%
Hull value consideration +2&55&555#55
X /&55&555 . Index of 22-2+ x Index of '/-'(
X /&55&555.$5' x 22$ X `$2&22&''5#2+ $2&22&''5#2+
=ong Term ,apital >ain $'&$$&55'#$1
Income under the head ,apital >ains (=T,>) $'&$$&55'#$1
>ross Total Income $'&$$&55'#$1
=essG 4eductions u.s 25, to 25B Cil
Total Income T*ounded off u.s 222%U $'&$$&5$5#55
C'mu!"!)': '. T"+ L)"?)$)!E
T3ince there is no income under any other head so as per section $$2 deficiency of `$&25&555 shall be
allowed from =T,> and the balance income shall be taxed at flat rate of 25OU
Tax on `$1&+$&5$5 (`$'&$$&5$5 8 $&25&555) V 25O +&-(&252#55
%ddG 9ducation cess V 2O (&'2-#5-
%ddG 309, V $O +&-(2#52
Tax liability of :r# 3andeep :ishra +&/(&/22#5(
*ounded off u.s 222) +&/(&/'5#55
C'mu!"!)': '. C")!"$ G"):%
,apital gains for the previous year 25$--$/ i#e# the year in which additional compensation has been
received#
=ong term capital gain for 25$--$/ +&55&555#55
,apital gain for the previous year 25$/-$( in which balance amount of additional compensation has been
received#
=ong term capital gain for the year 25$/-$( 2&55&555#55
S'$u!)': 7:
`
C'mu!"!)': '. ):#'m& u:*&- !C& C&"* H'u%& P-'&-!E
>ross %nnual 7alue $2&55&555#55
($&55&555 x $2)
=essG :unicipal Tax 2&-5&555#55
Cet %nnual 7alue '&(5&555#55
=essG +5O of C%7 u.s 2-(a) 2&22&555#55
=essG Interest on capital borrowed u.s 2-(b) Cil
Income under the head 0ouse 6roperty (&12&555#55
C'mu!"!)': '. ):#'m& u:*&- !C& C&"* C")!"$ G"):%
previous year 2552-5' and shall be taxed in the year in which the first payment has been made by the
>overnment i#e# in the previous year 25$$-$2
X 2&25&555 . Index of 2$-22 x Index of 52-5'
X 2&25&555 . $55 x /22 X `$2&25&-55 $2&25&-55#55
=ong Term ,apital >ain -1&$'&(55#55
Income Bnder The head ,apital >ains 25/
C'mu!"!)': '. T'!"$ 0:#'m&
Income under the head 0ouse 6roperty (&12&555#55
=ong Term ,apital >ain -1&$'&(55#55
>ross Total Income /+&'$&(55#55
Total Income /+&'$&(55#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on =T,> `-1&$'&(55 V 25O '&-+&'25#55
Tax on normal income `(&12&555 at slab rate ((&-55#55
Tax before education cess $5&$5&+25#55
%ddG 9ducation cess V 2O 25&25(#-5
%ddG 309, V $O $5&$5+#25
Tax =iability $5&-5&(2'#(5
=essG T43 +&25&555#55
Tax 6ayable 1&25&(2'#(5
*ounded off u.s 222) 1&25&(+5#55
C'mu!"!)': '. "m'u:! '. T/S
T43 on rent under section $'--I $&25&555#55
($&55&555 x $2 x $5O)
T43 on compensation under section $'-=% 2&55&555#55
(25&55&555 x $5O)
Total T43 +&25&555#55
C'mu!"!)': '. S&->)#& T"+ L)"?)$)!E
>ross *eceipts $2&55&555#55
($&55&555 x $2)
Taxable services 2&55&555#55
=essG :unicipal taxes (-5&555#55)
(2&-5&555 . $2 x 2)
7alue of Taxable 3ervices $&(5&555#55
3ervice tax V $5#+O $(&-25#55
S'$u!)': 8:
`
C'mu!"!)': '. %&->)#& !"+ $)"?)$)!E
A-)$ !' <u:&R 2011
7alue of 3ervice tax
1&55&555 . $$5#+ x $5#+ (/&+(1#$2
<u$E !' S&!&m?&-R 2011
(&55&555 . $$5#+ x $5#+ /(&52'#5$
1#!'?&- !' /&#&m?&-R 2011
X /&55&555 . $$5#+ x $5#+ -(&('5#2-
<":u"-E !' M"-#CR 2012
3ervice provided to BCI,9H& a notified International organi<ation is exempt
Income Bnder The head ,apital >ains 25(
C'mu!"!)': '. ):#'m& u:*&- !C& C&"* 9u%):&%%/P-'.&%%)':
3ervice rendered to % =td# (1&55&555 . $$5#+ x $55) (&+-&(+2#22
3ervice rendered to ) =td# ((&55&555 . $$5#+ x $55) /&-+&'15#''
3ervice rendered to , =td# (/&55&555 . $$5#+ x $55) -&/+&+5'#$(
3ervice rendered to BCI,9H 2&55&555#55
>ross *eceipt 2-&+$&'$2#'1
Income under the head )usiness.6rofession $-&+$&'$2#'1
C'mu!"!)': '. C")!"$ G"):%
X /&55&555 . Index of '2-'+ x Index of $$-$2
X /&55&555 . 22+ . 12/ X $1&(5&52'#(' $1&(5&52'#('
=ong Term ,apital >ains 22&+'&'$5#+$
=ong Term ,apital >ains (2&+'&'$5#+$
Income under the head ,apital >ains (2&+'&'$5#+$
>ross Total Income 1(&1$&22+#22
Total Income 1(&1$&22+#22
*ounded off u.s 222% 1(&1$&225#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on `$-&+$&'$5 at slab rate 2&2$&/1+#55
Tax on =T,> `(2&+'&'$5 V 25O $2&-1&'22#55
Tax before education cess $/&2'&///#55
%ddG 9ducation cess V 2O +5&/'$#$5
%ddG 309, V $O $/&2'/#//
Tax =iability $/&1/&--$#(/
*ounded off u.s 222) $/&1/&--5#55
C'mu!"!)': '. C")!"$ G"): .'- !C& "%%&%%m&:! E&"- 2013(14
=essG ,ost of ac@uisition (25&55&555- 25&55&555) Cil
3hort Term ,apital >ain 2/&55&555#55
S'$u!)': 8A?B:
3ervice tax liability for each @uarter are same as given above#
C'mu!"!)': '. ):#'m& u:*&- !C& C&"* 9u%):&%%/P-'.&%%)':
>ross *eceipt 2-&+$&'$2#'1
C'mu!"!)': '. C")!"$ G"):%
X /&55&555 . 22+ . 12/ X $1&(5&52'#(' $1&(5&52'#('
=ong Term ,apital >ain 22&+'&'$5#+$
section /- and also it will be withdrawn
1!)': 0 E+&m!)': )% :'! ">")$&*:
S"$& '. C'u%& u-#C"%&* ': 01.01.2012
3hort Term ,apital >ain /&55&555#55
Income under the head ,apital >ains 21&+'&'$5#+$
>ross Total Income $&5$&1$&22+#22
Total Income $&5$&1$&22+#22
*ounded off u.s 222) $&5$&1$&225#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on `$'&+$&'$5 at slab rate -&+$&/1+#55
Tax on =T,> `22&+'&'$5 V 25O $(&-1&'22#55
Tax before education cess 25&1'&///#55
%ddG 9ducation cess V 2O -$&/'$#$5
%ddG 309, V $O 25&1'/#//
Tax =iability 2$&-$&'-$#//
*ounded off u.s 222) 2$&-$&'-5#55
1!)': 00 E+&m!)': )% ">")$&*
S"$& '. C'u%& u-#C"%&* ': 01.01.2012
=essG ,ost of ac@uisition (25&55&555 8 25&55&555) Cil
3hort Term ,apital >ain 2/&55&555#55
>ross Total Income $&5$&1$&22+#22
Total Income $&5$&1$&22+#22
*ounded off u.s 222) $&5$&1$&225#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on `+'&+$&'$5 at slab rate $5&+$&/1+#55
Tax on =T,> `(2&+'&'$5 V 25O $2&-1&'22#55
Tax before education cess 22&1'&///#55
%ddG 9ducation cess V 2O -/&/'$#$5
%ddG 309, V $O 22&1'/#//
Tax =iability 2+&-1&'-$#(/
*ounded off u.s 222) 2+&-1&'-5#55
0ence the assessee should opt for option I and his tax liability shall be `2$&-$&'-5
S'$u!)': 8A#B:
C'mu!"!)': '. ):#'m& u:*&- !C& C&"* 9u%):&%%/P-'.&%%)':
>ross *eceipt 2-&+$&'$2#'1
C'mu!"!)': '. C")!"$ G"):%
X /&55&555 . 22+ . 12/ X $1&(5&52'#(' $1&(5&52'#('
(9xemption is not allowed because house was purchased after the last date of filing of return of income)
>ross Total Income '(&1$&22+#22
Total Income '(&1$&22+#22
*ounded off u.s 222% '(&1$&225#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on =T,> `22&+'&'$5 V 25O $(&-1&'22#55
Tax before education cess $'&2'&///#55
%ddG 309, V $O $'&2'/#//
Tax =iability $'&21&--$#(/
*ounded off u.s 222) $'&21&--5#55
S'$u!)': 8A*B:
C'mu!"!)': '. ):#'m& u:*&- !C& C&"* 9u%):&%%/P-'.&%%)':
>ross *eceipt 2-&+$&'$2#'1
Income Bnder The head ,apital >ains 25'
C'mu!"!)': '. C")!"$ G"):%
X /&55&555 . 22+ . 12/ X $1&(5&52'#(' $1&(5&52'#('
Income under the head ,apital >ains (2&+'&'$5#+$
>ross Total Income 1(&1$&22+#22
Total Income 1(&1$&22+#22
*ounded off u.s 222% 1(&1$&225#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on =T,> `(2&+'&'$5 V 25O $2&-1&'22#55
Tax before education cess $/&2'&///#55
%ddG 309, V $O $/&2'/#//
Tax =iability $/&1/&--$#(/
*ounded off u.s 222) $/&1/&--5#55
C'mu!"!)': '. C")!"$ G"): .'- !C& "%%&%%m&:! E&"- 2017(16
Bnutili<ed amount in capital gain account scheme after expiry of three years

=ong Term ,apital >ain 25&55&555#55
S'$u!)': 9:
`
C'mu!"!)': '. C")!"$ G"):%
P-&>)'u% E&"- 2011(12
X `+&55&555 . Index of 2/-2( x Index of $$-$2
X `+&55&555 . $++ x 12/ X `$1&15&(1(#(' $1&15&(1(#('
=ong term capital gain $-&2'&+2+#+$
=essG 9xemption u.s /-) (&55&555#55
=ong term capital gain 2&2'&+2+#+$
Income under the head )usiness.6rofession $&$5&555#55
>ross Total Income '&+'&+2+#+$
Total Income '&+'&+2+#+$
*ounded off u.s 222% '&+'&+25#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on =T,> `1&/'&+25 (`2&2'&+25 8 `15&555) V 25O $&/$&2(-#55
Tax on `$&$5&555 at slab rate Cil
Tax before education cess $&/$&2(-#55
%ddG 9ducation cess V 2O +&5+1#22
%ddG 309, V $O $&/$2#(-
Tax =iability $&/(&-$'#'2
Income Bnder The head ,apital >ains 2$5
*ounded off u.s 222) $&/(&-25#55
P-&>)'u% E&"- 2012(13
S"$& '. $":*
=essG ,ost of ac@uisition X `(&55&555
=essG 9xemption earlier allowed X `(&55&555
3o& ,ost of ac@uisition X Cil Cil
3hort term capital gain $5&55&555#55
S'$u!)': 10:
`
C'mu!"!)': '. C")!"$ G"):%
1. S"$& '. L":*
Hull value of consideration /5&55&555
X /&55&555 . Index of 2$-22 x Index of $$-$2
X /&55&555 . $55 x 12/ X `+'&2/&555 +'&2/&555
=ong term capital gain $5&1/&555
=essG 9xemption u.s /-) 2&55&555
=ong term capital gain 2&1/&555
2. H'u%&
Hull value of consideration $/&55&555
=essG ,ost of ac@uisition $2&/5&555
3hort term capital gain 2&/5&555
Income under the head capital >ain /&2/&555
>ross Total Income /&2/&555
Total Income /&2/&555
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on `2&1/&555 V 25O u.s $$2 //&555
Tax on `2&/5&555 at slab rate 1&555
Tax before education cess (2&555
%ddG 9ducation cess V 2O $&2-5
%ddG 309, V $O (25
Tax =iability (+&2(5
2'!&: %ssessee will be allowed exemption under section /-H but exemption shall be withdrawn because the
house has been sold hence exemption allowed and exemption withdrawn will be the same amount and it will
give the same tax liability#
S'$u!)': 11:
`
C'mu!"!)': '. C")!"$ G"):%
Hull value of consideration $'&55&555#55
X $&/5&555 . Index of 2$-22 x Index of $$-$2
X $&/5&555 . $55 x 12/ X `$$&11&/55 $$&11&/55#55
=ong term capital gain 1&22&/55#55
=essG 9xemption u.s /-9, +&25&555#55
Income Bnder The head ,apital >ains 2$$
X 1&22&/55.$'&55&555 x +&55&555 $&$-&512#'/
=ong term capital gain 2&22&-2$#5/
=essG 3hort Term ,apital =oss (/5&555#55)
Income under the head ,apital >ains (=T,>) $&12&-2$#5/
Income under the head )usiness.6rofession /5&555#55
>ross Total Income 2&22&-2$#5/
=essG 4eductions u.s 25, 25&555#55
Total Income T*ounded off u.s 222%U 2&52&-25#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on =T,> `22&-25 ($&12&-25 8 $&/5&555) V 25O u.s $$2 /&(2-#55
Tax on normal income `+5&555 at slab rate Cil
%ddG 9ducation cess V 2O $$+#(2
%ddG 309, V $O /(#2-
Tax =iability /&2/-#/2
*ounded off u.s 222) /&2/5#55
S'$u!)': 12:
`
C'mu!"!)': '. C")!"$ G"):%
X +&55&555 . $55 x 12/ X `2+&//&555 2+&//&555#55
=ong term capital gain $(&-/&555#55
=essG 9xemption u.s /-)
6urchased on $5#5$#25$2 2&/5&555#55
X ,apital >ains . Cet ,onsideration x %mount of investment
X `$(&-/&555. -5&55&555 x 1&55&555 2&21&21/#55
=essG 9xemption u.s /-9, $&55&555#55
=ong term capital gain after various deductions $5&51&$2/#55
Income under the head ,apital >ains (=T,>) $5&51&$2/#55
>ross Total Income $5&51&$2/#55
Total Income Trounded u.s 222 %U $5&51&$+5#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax `2&21&$+5 (`$5&51&$+5 8 `$&25&555) V 25O u.s $$2 $&(/&-2(#55
%ddG 9ducation cess V 2O +&+52#/2
%ddG 309, V $O $&(/-#2(
Tax =iability $&15&+22#12
*ounded off u.s 222) $&15&+'5#55
S'$u!)': 13:
`
C'mu!"!)': '. C")!"$ G"):%
G'$*
X $&5$&555 . Index of 2$-22 x Index of $$-$2
X $&5$&555 . $55 x 12/ X `1&'2&2/5 1&'2&2/5#55
=ong term capital gain $2&51&$/5#55
SC"-&% ): A L!*
,apital gain on sale of long term e@uity shares is exempt u.s $5(+2)
Income under the head ,apital >ains $2&51&$/5#55
>ross Total Income $2&51&$/5#55
Total Income $2&51&$/5#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on =T,> `$5&21&$/5 (`$2&51&$/5 8 `$&25&555) V 25O 2&5/&-+5#55
%ddG 9ducation cess V 2O -&$52#(5
%ddG 309, V $O 2&5/-#+5
Tax =iability 2&$$&/'2#'5
*ounded off u.s 222) 2&$$&/'5#55
S'$u!)': 14:
`
C'mu!"!)': '. C")!"$ G"):%
Hull value of consideration $-&/5&555#55
X $&$5&555 . Index of 2$-22 x Index of $$-$2
X $&$5&555 . $55 x 12/ X `2&(+&/55 2&(+&/55#55
X -5&555 . Index of 2--2/ x Index of $$-$2
X -5&555 . $2/ x 12/ X `2&/$&255 2&/$&255#55
=essG )rokerage $-&/55#55
=ong term capital gain +&25&255#55
Income under the head ,apital >ains +&25&255#55
S'$u!)': 17:
`
C'mu!"!)': '. ):#'m& u:*&- !C& C&"* C")!"$ G"):%
Hull value of consideration 2+&55&555#55
X $&/5&555 . Index of 2$-22 x Index of $$-$2
X $&/5&555 . $55 x 12/ X `$$&11&/55 $$&11&/55#55
=essG )rokerage 2+&555#55
$O of `2+&55&555 X `2+&555
=ong term capital gain 2&''&/55#55
Income under the head ,apital >ains (=T,>) 2&''&/55#55
Ather Incomes /5&555#55
>ross Total Income +&-'&/55#55
=essG 4eduction u.s 25, $5&555#55
Total Income +&+'&/55#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on =T,> on `2'&/55 ( `2&''&/55 8 `2&$5&555) V 25O u.s $$2 $1&'55#55
Tax on `-5&555 at slab rate Cil
%ddG 9ducation cess V 2O +/2#55
%ddG 309, V $O $1'#55
Income Bnder The head ,apital >ains 2$+
Tax =iability $2&-+1#55
*ounded off u.s 222) $2&--5#55
S'$u!)': 16:
`
C'mu!"!)': '. C")!"$ G"):%
Hull value of consideration /'&55&555#55
X +&55&555 . $55 x 12/ X `2+&//&555 2+&//&555#55
X /&55&555 . Index of 21-22 x Index of $$-$2
X /&55&555 . $/5 x 12/ X `2(&$(&(((#(1 2(&$(&(((#(1
X 2&55&555 . -2( x 12/ X `+&(2&/--#(5 +&(2&/--#(5
=ong term capital gain /&/'&122#1+
Income under the head ,apital >ains (=T,>) /&/'&122#1+
>ross Total Income /&/'&122#1+
T4eduction u.s 25, to 25B is not allowed from =T,>U
Total Income T*ounded off u.s 222%U /&/'&1'5#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax `+&1'&1'5 (`/&/'&1'5 8 `$&25&555) V 25O 1/&'/2#55
%ddG 9ducation cess V 2O $&/$'#$(
%ddG 309, V $O 1/'#/2
Tax =iability 12&2+(#1-
*ounded off u.s 222) 12&2-5#55
S'$u!)': 17:
`
C'mu!"!)': '. C")!"$ G"):%
Hull value of consideration -/&55&555#55
X (`/&55&555 8 `+5&555) . Index of 2$-22 x Index of $$-$2
X `-&15&555 . $55 x 12/ X `+(&2'&/55 +(&2'&/55#55
=ong term capital gain 2&$5&/55#55
Income under the head ,apital >ains (=T,>) 2&$5&/55#55
>ross Total Income 2&$5&/55#55
Total Income 2&$5&/55#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on =T,> `(&+5&/55 (2&$5&/55 8 $&25&555) V 25O $&2(&$55#55
%ddG 9ducation cess V 2O 2&/22#55
%ddG 309, V $O $&2($#55
Tax =iability $&2'&22+#55
*ounded off u.s 222) $&2'&225#55
Income Bnder The head ,apital >ains 2$-
S'$u!)': 18:
C'mu!"!)': '. C")!"$ G"):% ): !C& C":*% '. M-. S"g"- S"):)
Ariginal shares are exempt under section $5(+2)
$st bonus shares are exempt under section $5(+2)
2nd bonus shares are exempt under section $5(+2)
C'mu!"!)': '. #")!"$ g"):% ): #"%& '. -)gC! %C"-&%
`
(/5 x 255)
=essG ,ost of ac@uisition 1&/55
(/5 x $/5)
3hort term capital gain 2&/55
C'mu!"!)': '. #")!"$ g"):% ): #"%& '. %C"-&% -&:'u:#&*
Hull value of consideration 2/5
(/5 x /)
3hort term capital gain 2/5
3hort term capital gain of :r# 3agar 3aini 2&1/5
6'-k):g 2'!&:
P&-)'* '. C'$*):g ): #"%& '. -&:'u:#):g '. -)gC! !' u-#C"%& " -)gC! %C"-&% %&#!)': 2A42AB
In the case of a capital asset& being the right to subscribe to any financial asset& which is renounced in favour
of any person& the period shall be reckoned from the date of the offer of such right by the company or
institution& as the case may be& making such offer#
C'mu!"!)': '. T'!"$ 0:#'m&
Income under the head )usiness.6rofession 2&(5&555
Income under the head ,apital >ains 2&1/5
>ross Total Income 2&(2&1/5
=essG 4eduction u.s 25, 15&555
Total Income $&'2&1/5
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on `2&/55 V $/O u.s $$$% +1/
Tax on `$&'5&2/5 at slab rate $&52/
Tax before education cess $&-55
%ddG 9ducation cess V 2O 22
%ddG 309, V $O $-
Tax =iability $&--2
*ounded off u.s 222) $&--5
(4eduction under section 25, is not allowed from short term capital gain on the transfer of e@uity shares
on which 3TT has been paid#)
C'mu!"!)': '. #")!"$ g"):% ): #"%& '. M-. S":@"E SCuk$"
(255 x /5)
=essG ,ost of ac@uisition 1&1/5
(/5 x $//)
Income Bnder The head ,apital >ains 2$/
3hort term capital gain 2&2/5
6'-k):g 2'!&:
C'%! '. "#Ju)%)!)': '. -)gC! -&:'u:#&& %&#!)': 77A2B
In relation to any financial asset purchased by any person in whose favour the right to subscribe to such
asset has been renounced& means the aggregate of the amount of the purchase price paid by him to the person
renouncing such right and the amount paid by him to the company or institution& as the case may be& for
ac@uiring such financial asset#
P&-)'* '. C'$*):g ): #"%& '. -)gC! -&:'u:#&& %&#!)': 2A42AB
In the case of a capital asset& being a share or any other security subscribed to by the assessee on the basis of
his right to subscribe to such financial asset or subscribed to by the person in whose favour the assessee has
renounced his right to subscribe to such financial asset& the period shall be reckoned from the date of
allotment of such financial asset#
C'mu!"!)': '. T'!"$ 0:#'m&
Income under the head )usiness.6rofession 2&-5&555#55
Income under the head ,apital >ains 2&2/5#55
>ross Total Income 2&-2&2/5#55
=essG 4eduction u.s 25, /5&555#55
Total Income $&'2&2/5#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on `2&2/5 V $/O u.s $$$% ++1#/5
Tax on `$&'5&555 at slab rate $&555#55
Tax before education cess $&++1#/5
%ddG 9ducation cess V 2O 2(#1/
%ddG 309, V $O $+#+2
Tax =iability $&+11#(+
*ounded off u.s 222) $&+25#55
(4eduction under section 25, is not allowed from short term capital gain on the transfer of e@uity shares
on which 3TT has been paid#)
S'$u!)': 19:
`
C'mu!"!)': '. C")!"$ G"):%
Hull value of consideration 22&/55
(+55 x 21/)
=essG ,ost of ac@uisition +5&555
=essG )rokerage
($O on `22&/55) 22/
3hort term capital gain /$&(1/
S'$u!)': 20:
`
C'mu!"!)': '. C")!"$ G"):%
P-&>)'u% 5&"- 2011(12 A%%&%%m&:! 5&"- 2012(13
Hull value of consideration 2&2/&555#55
($&/55 x //5)
X (/55 x +'/#2/) . Index of 5$-52 x Index of $$-$2
X $&'1&'2/ . -2( x 12/ X `+&(-&125#'/ +&(-&125#'/
=essG )rokerage V $#/O
X $#/ O of `2&2/&555 X `$2&+1/ $2&+1/#55
Income Bnder The head ,apital >ains 2$(
=ong Term ,apital >ains -&-1&'5-#5/
X -&-1&'5-#5/ x 2&55&555 X `$&$5&2+(#+/ $&$5&2+(#+/
2&$2&(2/
=ong Term ,apital >ain +&+1&((1#15
Total Income (rounded off u.s 222%) +&+1&(15#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on `$&/1&(15 (`+&+1&(15 8 `$&25&555) V 25O +$&/+-#55
%ddG 9ducation cess V 2O (+5#(2
%ddG 309, V $O +$/#+-
Tax =iability +2&-25#52
*ounded off u.s 222) +2&-25#55
A%%&%%m&:! 5&"- 2017(16
%mount deposited in capital gain a.c scheme $&55&555#55
=essG %mount withdrawn /5&555#55
=ong Term ,apital >ain
X -&-1&'5-#5/ x /5&555 X `21&//'#5' 21&//'#5'
2&$2&(2/
(6roportionate exemption with regard to the unutilised amount lying in the capital gain account scheme in
chargeable to tax after expiry of period of three years#)
When the house is sold within three year exemption earlier allowed shall be considered to be =T,> of the
year in which the asset is sold i#e# 6#J 25$--$/& %#J# 25$/-$(
X -&-1&'5-#5/ x $&/5&555 X `22&(11#2(
2&$2&(2/
=T,> 22&(11#2(
C")!"$ g"): ': %"$& '. C'u%& ): !C& P-&>)'u% 5&"- 2014(17
=essG ,ost of ac@uisition $&55&555#55
=essG ,ost of improvement /5&555#55
3T,> $&/5&555#55
0ence for %#J# 25$/-$(
=T,> (21&//'#5' I 22&(11#2() $&$5&2+(#+/
3T,> $&/5&555#55
S'$u!)': 21:
C'mu!"!)': '. C")!"$ G"):%
1. L":*
Hull value of consideration 2&1/&555
=essG Indexed cost of ac@uisition +&2'&555
=essG 3elling 9xpenses 25&555
=ong term capital gain /&2(&555
2. G'$*
=essG Indexed cost of ac@uisition 2&+$&555
=essG 3elling 9xpenses $$&555
=ong term capital gain 2&/2&555
In this case assessee is eligible for exemption under section /-H and such exemption is allowed from any
of the above two assets but first preference shall be given to land and second to gold because higher
exemption is available from land and then from gold and amount of exemption is
X ,apital gains . Cet consideration x %mount of investment
X /&2(&555 . 2&//&555 x -&21&/55 X `2&(+&555
%ccordingly& income is 8
=ong term capital gain on =and /&2(&555#55
=essG 9xemption u.s /-H 2&(+&555#55
2&(+&555#55
=ong term capital gain on >old 2&/2&555#55
=essG 9xemption u.s /-9, 2&/5&555#55
2&555#55
=ong term capital gain 2&1$&555#55
Income under the head ,apital >ains 2&1$&555#55
0:#'m& u:*&- !C& C&"* ?u%):&%%/ -'.&%%)':
>ross sales -/&55&555#55
=essG ,omposition tax V $O -/&555#55
=essG ,ost of goods sold -2&1/&555#55
Y+2&55&555 I (+2&55&555 x $2#/O)Z
Income under the business.profession $&25&555#55
>ross Total Income -&/$&555#55
Total Income -&/$&555#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on `2&1$&555 V 25O u.s $$2 /-&255#55
Tax on `$&25&555 at slab rate Cil
%ddG 9ducation cess V 2O $&52-#55
%ddG 309, V $O /-2#55
Tax =iability //&22(#55
*ounded off u.s 222) //&2+5#55
S'$u!)': 22:
1
%!
;!- AA-H M"E ":* <u:&B 2011(12 `
7alue of service % =td# 1&55&555
7alue of service ) =td# (&55&555
Total 7alue of service in $
st
Etr $+&55&555
3ervice tax V$5#+O $&++&'55
=ast date of payment (
th
Puly 25$$
Interest on delay payment of service tax by $5 days
%s per section 1/
Interest X $&++&'55 x $2O x $5.+(( X ` (/2#/2 (/'
6enalty u.s 1(
` $&++&'55 x $O x $5 .+$ X ` -+2
A*
$5 x $55 X ` $&555
Whichever is higher
Thus amount of penalty will be $&555
2
:*
;!- A<u$EH Aug ":* S&!B 2011(12
Total 7alue of service 2&55&555
3ervice Tax V $5#+ O 22&-55
th
Act 25$$
Interest u.s 1/
4elay in payment $5 days
` 22&-55 x $2O x $5.+(( X ` -5/#2- -5/
6enalty u.s 1(
` 22&-55 x $Ox $5.+$ X` 2((
A*
$5 x $55 X` $&555
Whichever is higher
Thus amount of penalty $&555
3
-*
;!- A1#!H 2'> ":* /&#B 2011(12
Total 7alue of service (&55&555
%mount of 3ervice tax V$5#+O ($&255
th
Pan! 25$2
Interest u.s 1/
4elay in payment of 3T $5 days
` ($&255 x $2O x $5.+(( X ` +5+#'+ +5-
6enalty u.s 1(
` ($&255 x $Ox $5.+$ X ` $''#+/
A*
$5 x $55 X ` $&555
Whichever is higher
Thus amount of penalty $&555
4
!C
;!- A<":H 3&? ":* M"-#CB 2012(13
CI=
C'mu!"!)': '. ):#'m& u:*&- !C& C&"* 9u%):&%%/P-'.&%%)':
>ross *eceipt (1&55&555 I (&55&555 I 2&55&555 I (&55&555) 21&55&555#55
=essG 9xpenses incurred $2&55&555#55
=essG Interest under section 1/ ((/' I -5/ I +5-) $&+(2#55
Income under the head )usiness.6rofession $-&'2&(+2#55
C'mu!"!)': '. ):#'m& u:*&- !C& C&"* C")!"$ G"):%
G'$*
X +&55&555 . $55 x 12/ X 2+&//&555 2+&//&555#55
=ong term capital gain (&-/&555#55
L":*
X /&/5&555 . Index of 2$-22 x Index of $$-$2
X /&/5&555 . $55 x 12/ X -+&$1&/55 -+&$1&/55#55
=ong term capital loss $$&$1&/55#55
Income Bnder The head ,apital >ains 2$'
4&%)*&:!)"$ H'u%&
=essG ,ost of improvement +&55&555#55
3hort term capital gain /&55&555#55
P&-%':"$ m'!'- #"-
It is not a capital asset as per section 2($-)
Income under the head capital gains /&55&555#55
>ross Total Income $'&'2&(+2#55
Total Income $'&'2&(+5#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on `$'&'2&(+5 at slab rate -&/$&/2'#55
%ddG 9ducation cess V 2O '&5+$#12
%ddG 309, V $O -&/$/#2'
Tax =iability -&(/&$+(#(1
*ounded off u.s 222) -&(/&$-5#55
,arry forward long term capital loss -&12&/55#55
S'$u!)': 23:
`
>ross *eceipt -5&55&555#55
=essG 3ervice provide to International Argani<ation /&55&555#55
=essG 3ervice provide to B3 9mbassy +&55&555#55
)alance amount 22&55&555#55
3ervice Tax (22&55&555 . $$5#+ x $5#+) 2&5/&-+'#1$
*ounded off u.s +14 2&5/&--5#55
C'mu!"!)': '. ):#'m& u:*&- !C& C&"* 9u%):&%%/P-'.&%%)':
>ross *eceipt (-5&55&555 8 2&5/&--5) +1&'-&/(5#55
=essG 9xpenses incurred 22&55&555#55
Income under the head )usiness.6rofession $/&'-&/(5#55
C'mu!"!)': '. ):#'m& u:*&- !C& C&"* C")!"$ G"):
1. H'u%&
=essG Indexed cost of ac@uisition (/&2/&555. $55 x 12/) -$&2$&2/5#55
=essG Indexed cost of improvement of Hirst floor (-&55&555. --1 x 12/) 1&52&-(5#2/
=essG 3elling 9xpenses 2/&555#55
=ong term capital gain $5&'$&22'#$/
2. SC"-&%
Hull value of ,onsideration $&55&555#55
=essG Indexed cost of ac@uisition ($&/5&555 . --1 x 12/) 2&(+&-22#22
=ong term capital loss $&(+&-22#22
3. M'!'- #"- for personal use is not an asset as per section 2($-)#
4. G'$*
=essG Indexed cost of ac@uisition (2&$5&555 . $55 x 12/) $(&-2&/55#55
=ong term capital loss 2&-2&/55#55
7. S)$>&- U!&:%)$% not an asset as per section 2($-)
Income under the head capital gain (=T,>) 1'&+((#++
>ross Total Income $(&1+&'2(#++
=essG 4eduction u.s 25, +/&555#55
Total Income (rounded off u.s 222%) $(&+2&'+5#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on `$/&/'&/(5 V slab rate +&$'&2(2#55
Tax on =T,> `1'&+15 V 25O $/&21-#55
Tax before education cess +&+/&1-2#55
%ddG 9ducation cess V 2O (&1$-#2-
%ddG 309, V $O +&+/1#-2
Tax =iability +&-/&2$-#2(
*ounded off u.s 222) +&-/&2$5#55
S'$u!)': 24: `
01.07.2011
Hull 7alue of ,onsideration 2&55&555#55
($&555 x 255)
=essG ,ost of %c@uisition
($&555 x /55) . 2 2&/5&555#55
3hort Term ,apital >ain /&/5&555#55
01.11.2011
Hull 7alue of consideration '&55&555#55
($&555 x '55)
=essG Index ,ost of %c@uisition
X 2&/5&555 . Index of $5-$$ x Index of $$-$2
X 2&/5&555 . 1$$ x 12/ X 2&1(&5$'#(' 2&1(&5$'#('
=ong Term ,apital >ain (&2+&'25#+$
Pu-#C"%& .-'m /&$C)
6urchase +5&55&555#55
47%T V $2#/O +&1/&555#55
Tax credit allowed for the goods sold in 4elhi $&21&/55#55
Tax credit allowed for the stock transferred to other 3tate ($2#/O - 2O) $&/1&/55#55
Total tax credit allowed +&-/&555#55

Pu-#C"%& .-'m '!C&- S!"!&
6urchase
-5&55&555#55
,3T V 2O 25&555#55
-5&25&555#55
3ale 2/&55&555#55
7%T V $2#/ O +&$2&/55#55
22&$2&/55#55
3ale /+&55&555#55
7%T V $2#/O (&(2&/55#55
/'&(2&/55#55
1u!u! 8AT
3ale - $ +&$2&/55#55
3ale - 2 (&(2&/55#55
Total '&1/&555#55
=essG- Input Tax credit (+&-/&555#55)
Cet Tax 6ayable (&+5&555#55
C'mu!"!)': '. ):#'m& u:*&- !C& C&"* 9u%):&%%/P-'.&%%)':
3ale $ 2/&55&555#55
3ale 2 /+&55&555#55
=essG 6urchases
6 -$ ($/&55&555#55)
6- 2 (-5&25&555#55)
Income under head )usiness.6rofession 22&25&555#55
C'mu!"!)': '. T'!"$ 0:#'m&
Income under head business profession 22&25&555#55
=ong Term ,apital >ains (&2+&'25#+$
3hort Term ,apital >ains /&/5&555#55
>ross Total Income ++&'+&'25#+$
Total Income (rounded off u.s 222%) ++&'+&'25#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on =T,> `(&2+&'25 V 25O $&2-&1'(#55
Tax on `21&15&555 at slab rate (&22&555#55
Tax before education cess 2&5(&1'(#55
%ddG 9, V 2O $(&$+/#'2
%ddG 309, V $O 2&5(1#'(
Tax =iability 2&+5&'''#22
*ounded off u.s 222) 2&+$&555#55
S'$u!)': 27A"B:
`
Hull value of consideration 1/&55&555
=essG ,ost of ac@uisition $/&55&555
3hort Term ,apital >ains (5&55&555
2&w C'u%&
Hull value of consideration (&55&555
=essG ,ost of ac@uisition /&55&555
3hort Term ,apital >ains $&55&555
Income under the head capital gain ($&55&555
0:#'m& u:*&- !C& C&"* 1!C&- S'u-#&%
>ift received from :rs# D $/&55&555
Income under the head other sources $/&55&555
>ross Total Income 1(&55&555
Total Income 1(&55&555
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on ` 1(&55&555 at slab rate 2$&+$&555
%ddG 9ducation cess V 2O -2&(25
%ddG 309, V $O 2$&+$5
Tax =iability 2$&'-&'+5
S'$u!)': 27A?B:
`
Hull value of consideration 1/&55&555
=essG ,ost of ac@uisition
X +&55&555 . Index of 2$-22 x index of $$-$2
X +&55&555 . $55 x 12/ 2+&//&555
=ong Term ,apital >ains /$&-/&555
section /-#
1!)': 0 E+&m!)': )% :'! ">")$&*
=ong Term ,apital >ain /$&-/&555
2&w C'u%&
=essG ,ost of ac@uisition /&55&555
3hort Term ,apital >ains $&55&555
Income under the head capital gain /2&-/&555
>ross Total Income /2&-/&555
Total Income /2&-/&555
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on ` $&55&555 at slab rate Cil
Tax on ` /5&//&555 (/$&-/&555 8 '5&555) V 25O $5&$$&555
%ddG 9ducation cess V 2O 25&225
%ddG 309, V $O $5&$$5
Tax =iability $5&-$&++5
1!)': 00 E+&m!)': )% ">")$&*
=ong Term ,apital >ain /$&-/&555
=essG 9xemption u.s /- /&55&555
=ong Term ,apital >ain -(&-/&555

2&w C'u%&
=essG ,ost of ac@uisition (/&55&555 8 /&55&555)
Cil
3hort Term ,apital >ains (&55&555
Income under the head capital gain /2&-/&555
>ross Total Income /2&-/&555
Total Income /2&-/&555
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on ` (&55&555 at slab rate /$&555
Tax on ` -(&-/&555 V 25O '&2'&555
Tax before education cess '&25&555
%ddG 9ducation cess V 2O $'&(55
%ddG 309, V $O '&255
Tax =iability $5&5'&-55
0ence the assessee should opt for option-II and his tax liability shall be $5&5'&-55#
S'$u!)': 26:
`
C'mu!"!)': '. #")!"$ g"):%
1. SC"-&%
X $&+5&555 . Index of '1-'2 x Index of $$-$2
X $&+5&555 . ++$ x 12/ X `+&52&+52#$( +&52&+52#$(
=ong term capital gain 2&'$&('$#2-
X 2&'$&('$#2- . $2&55&555 x +&(5&555 X 2&(1&/51#// 2&(1&/51#//
=essG 9xemption u.s /-9, 2&/5&555#55
=ong term capital gain +&1-&$2-#2'
2. <&w&$$&-E
X +&/5&555 . Index of 2$-22 x Index of $$-$2
X +&/5&555 . $55 x 12/ X `21&-1&/55 21&-1&/55#55
=essG 3elling 9xpenses +5&555#55
=ong term capital loss ('&11&/55#55)
3. /&?&:!u-&%
Hull value of consideration $&-5&555#55
=essG ,ost of ac@uisition 25&555#55
3hort term capital gain (5&555#55
4. M'!'- #"-: is covered under the personal movable effects& hence& no capital gains shall be computed
7. EJu)!E SC"-&%
3hort term capital gain u.s section $$$% 2&55&555#55
0:#'m& u:*&- !C& C&"* C")!"$ g"): 8H60H000.00
0:#'m& u:*&- !C& C&"* 9u%):&%%/P-'.&%%)':
6urchase 6rice 2/5&55&555#55
3ale 6rice 211&11&111#11
(2/5&55&555 . $55O . '5O)
Income under the head )usiness.6rofession (211&11&111#11 8 2/5&55&555) 21&11&111#11
>ross Total Income +(&+1&111#11
Total Income +(&+1&111#11
*ounded off u.s 222% +(&+1&125#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on `2&55&555 V $/O u.s $$$% $&25&555#55
Tax on `22&+1&125 at slab rate 1&5+&++-#55
Tax before education cess 2&2+&++-#55
%ddG 9ducation cess V 2O $(&-((#(2
%ddG 309, V $O 2&2++#+-
Tax =iability 2&-2&5+-#52
*ounded off u.s 222) 2&-2&5+5#55
=ong term capital loss carried forward ('&11&/55 8 +&1-&$2-#2') (&5+&+$/#1$
6'-k):g '. 8AT
Autput Tax (211&11&111#11 x -O) $$&$$&$$$#52
=essG 7%T credit (2/5&55&555 x -O) $5&55&555#55
Cet 7%T $&$$&$$$#52
S'$u!)': 27:
C'mu!"!)': '. !"+"?$& #")!"$ g"): '. M-. H"-) .'- !C& A.5. 2012(13
`
3ale proceeds +/&55&555#55
=essG Indexed cost of ac@uisition (3ee Cote $) $2&2/&$(5#5'
=ong Term ,apital >ain $(&$-&2+'#'$
=essG 9xemption under section /- in respect of investment in house at 4elhi 2&55&555#55
Taxable long-term capital gain 2&$-&2+'#'$
2'!&:
C'mu!"!)': '. ):*&+&* #'%! '. "#Ju)%)!)': `
,ost of ac@uisition $5&55&555#55
=essG %dvance taken and forfeited 2/&555#55
,ost for the purpose of Indexation '&1/&555#55
Indexed cost of ac@uisition ('&1/&555 x 12/.-5() $2&2/&$(5#5'
C'mu!"!)': '. ):#'m& u:*&- !C& C&"* 9u%):&%%/P-'.&%%)':
3ale of goods produced from raw material D /-&55&555#55
3ale of goods produced from inter-3tate purchase and imported raw materials# (-&55&555#55
3ale of goods produced from raw material W $(&55&555#55
=essG
*aw material purchased from another 3tate 25&-5&555#55
*aw material D purchased within the 3tate +5&55&555#55
*aw material J imported from 3ingapore 22&55&555#55
*aw material W purchased within the 3tate $2&55&555#55
Income under the head )usiness.6rofession -'&(5&555#55
C'mu!"!)': '. G-'%% T'!"$ 0:#'m&
=ong-term capital gain 2&$-&2+'#'$
Income under the head )usiness.6rofession -'&(5&555#55
>ross Total Income /1&1-&2+'#'$
Total Income /1&1-&2+'#'$
=T,> 2&$-&2+'#'$
*ounded off u.s 222% 2&$-&2-5#55
Cormal Income -'&(5&555#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on =T,> `2&$-&2-5 V 25O $&(2&'(2#55
Tax on normal income `-'&(5&555 V slab rate $+&-5&555#55
Tax before education cess $/&52&'(2#55
%ddG 9ducation cess V 2O +5&5/'#+(
%ddG 309, V $O $/&52'#(2
Tax =iability $/&-2&5/1#5-
*ounded off u.s 222) $/&-2&5(5#55
C'mu!"!)': '. 8AT "E"?$& ?E M-. H"-)
*aw material purchased from another 3tate
6urchase 6rice 25&55&555#55
%ddG ,3T V 2O -5&555#55
Total purchased price 25&-5&555#55
*aw material D purchased within the 3tate
6urchase 6rice +5&55&555#55
%ddG 7%T V $O +5&555#55
*aw material J imported from 3ingapore
6urchase 6rice 22&55&555#55
*aw material W purchased within the 3tate
6urchase 6rice $2&55&555#55
%ddG 7%T V $2#/O $&/5&555#55
3ale of goods produced from raw material D#
3ale 6rice /-&55&555#55
%ddG 7%T V -O 2&$(&555#55
3ale of goods produced from inter-3tate purchase and imported raw materials#
3ale 6rice (-&55&555#55
%ddG 7%T V $O (-&555#55
3ale of goods produced from raw material W#
3ale 6rice $(&55&555#55
%ddG 7%T V $2#/O 2&55&555#55
Cet Tax payable
Autput tax (2&$(&555 I (-&555 I 2&55&555) -&25&555#55
=essG Tax credit (+5&555 I $&/5&555) $&25&555#55
Cet tax payable +&55&555#55
0PCC MA5 = 2012
;u&%!)': 3 A8 M"-k%B
%nshu transfers land and building on 52#5$#25$2 and furnishes the following informations#
P"-!)#u$"-% `
(i) Cet consideration received $-&55&555
(ii) 7alue adopted by 3tamp 7aluation %uthority $(&55&555
(iii) 7alue ascertained by 7aluation Afficer on reference by the %ssessing Afficer $1&55&555
(iv) This land was ac@uired by %nshu on 5$#5-#$'2$# Hair :arket value of the land as on
5$#5-#$'2$ was
$&$5&555
(v) % *esidential building was constructed on land by %nshu at cost of `+&25&555
(construction completed on 5$#$2#2552 during financial year 2552-5+#)
3hort term capital loss incurred on sale of shares during financial year 2551-52 b.f of
`$&/5&555
%nshu seeks your advice to the amount to be invested in C0%I bonds so as to be exempt from capital gain
tax under Income Tax %ct#
,ost inflation index of HJ $'2$-$'22 X $55
,ost inflation index of HJ 2552-255+ X --1
,ost inflation index of HJ 25$$-25$2 X 12/
A:%w&-:
C'mu!"!)': '. L':g !&-m C")!"$ G"): .'- A.5. 2012(13
%s per section /5,& where the consideration received or accruing as a result of transfer of a capital asset&
being land or building or both& is less than the valuation by the stamp valuation authority& such value adopted
or assessed by the stamp valuation authority shall be deemed to be the full value of consideration# Where a
reference is made to the valuation officer& and the value ascertained by the valuation officer exceeds the
value adopted by the stamp valuation authority& the value adopted by the stamp valuation authority shall be
taken as the full value of consideration#
3ale consideration ` $-&55&555
7aluation made by registration authority for stamp duty ` $(&55&555
7aluation made by the valuation officer on a reference ` $1&55&555
%pplying the provisions of section /5, to the present case& ` $(&55&555& being& the value adopted by the
registration authority for stamp duty& shall be taken as the sale consideration for the purpose of charge of
capital gain#
3ale consideration as per section /5, of the %ct $(&55&555
$&$5&555 x 12/.$55 X 2&(+&/55#55
Indexed cost of improvement
+&25&555 x 12/.--1 X /&($&'(2#(2 $-&2/&-(2#(2
=ong term capital gain $&1-&/+$#+$
=essG 3hort term capital loss $$$% 2551-52 $&/5&555#55
0: '-*&- !' g&! &+&m!)':H "m'u:! !' ?& ):>&%!&* ): 2HA0 %C"$$ ?& 24H731.31
PCC MA5 = 2012
;u&%!)': 6 A7 M"-k%B
4inesh received a vacant site as gift from his friend in Covember 2552# The site was ac@uired by his friend
for `+&55&555 in %pril $''5# 4inesh constructed a residential building during the year 255--5/ in the said
site for `$/&55&555# 0e carried out some further extension of a construction in the year 2551-52 for
`/&55&555#
4inesh sold the residential building for `//&55&555 in Panuary 25$2 but the state stamp valuation authority
adopted `(/&55&555 as value for the purpose of stamp duty#
,ompute his long term capital gain& for the assessment year 25$2-$+ based on the above information# The
cost inflation index are as followsG
3):":#)"$ E&"- C'%! ):.$"!)': ):*&+
$''5-'$ $22
2552-5+ --1
255--5/ -25
2551-52 //$
25$$-$2 12/
A:%w&-:
C'mu!"!)': '. #")!"$ g"): .'- !C& A%%&%%m&:! 5&"- 2012(13
`
Hull value of consideration (/&55&555#55
X `+&55&555. Index of '5-'$ x Index of $$-$2
X ` +&55&555 . $22 x 12/ X `$2&'+&'/(#5- $2&'+&'/(#5-
X `$/&55&555. Index of 5--5/ x Index of $$-$2
X ` $/&55&555 . -25 x 12/ X `2-&/+&$2/ 2-&/+&$2/#55
X `/&55&555. Index of 51-52 x Index of $$-$2
X ` /&55&555 . //$ x 12/ X `1&$2&+-$#25 1&$2&+-$#25
L':g T&-m C")!"$ G"): 20H40H777.76
;u&%!)': 6 A3 M"-k%B
:r# %bhishek a senior citi<en& pledged his residential house to a bank under a notified reverse mortgage
scheme# 0e was getting loan from bank in monthly instalments# :r# %bhishek did not repay the loan on
maturity and hence gave possession of the house to the bank to discharge his loan# 0ow will the treatment of
long-term capital gain be on such reverse mortgage transaction[
A:%w&-:
%s per section -1& reverse mortgage shall not be considered to be transfer for the purpose of capital gain#
Bnder reverse mortgage& a senior citi<en can mortgage his house property to the bank and the bank shall
grant a loan against the security of house property and such loan shall be given in monthly installments and
the amount so received shall not be considered to be income of the mortgagor under section $5(-+)#
%fter the death of the mortgagor the bank shall have right to sell off the property and shall ad?ust loan and
interest and shall compute capital gains for the deceased person and shall pay tax to the government#
The purpose of the scheme is to make available regular amount to the persons who do not have regular
income but are the owners of the house property#
In general& the mortgagors repay the loan in installments but in this case mortgagee i#e# bank is paying
installment to the mortgagor and hence it is called reverse mortgage#
0PCC 218 = 2011
;u&%!)': 3 A8 M"-k%B
:r# 3elvan& ac@uired a residential house in Panuary& 2555 for `$5&55&555 and made some improvements by
way of additional construction to the house& incurring expenditure of `2&55&555 in Actober& 255-# 0e sold
the house property in Actober& 25$$ for `1/&55&555# The value of property was adopted as `25&55&555 by the
3tate stamp valuation authority for registration purpose# 0e ac@uired a residential house in Panuary& 25$$ for
`2/&55&555# 0e deposited `25&55&555 in capital gains bonds issued by Cational 0ighways %uthority of India
(C0%I) in Pune 25$2#
,ompute the capital gain chargeable to tax for the assessment year 25$2-$+#
What would be the tax conse@uence and in which assessment year it would be taxable& if the house property
ac@uired in Panuary& 25$$ is sold for `-5&55&555 in :arch& 25$+[
,ost inflation indexG H#J# $'''-2555 X +2'
H#J# 255--255/ X -25
H#J# 25$5-25$$ X 1$$
H#J# 25$$-25$2 X 12/ (:odified)
A:%w&-:
C'mu!"!)': '. #")!"$ g"):% .'- A.5. 2012(13 `
(3ee Cote-$)
X $5&55&555 . Index of $'''-2555 x Index of 25$$-25$2
X $5&55&555 . +2' x 12/ X `25&$1&''-#2/ 25&$1&''-#2/
X 2&55&555 . Index of 255--255/ x Index of 25$$-25$2
X 2&55&555 . -25 x 12/ X `+&21&52+#++ +&21&52+#++
=ong term capital gain /(&/-&'2$#22
=essG 9xempted u.s /-
-6urchase of new house 2/&55&555#55
=ong term capital gain +$&/-&'2$#22
Total Income (rounded off u.s 222%) +$&/-&'25#55
2'!&:1( 3ince the value adopted by stamp valuation authority is higher than the sale value& hence& the value
determined by stamp valuation authority shall be the sale consideration#
2'!&:(2 Co exemption u.s /-9, is available since capital gain bonds are purchased after ( months
from the date of sale
T"+ #':%&Ju&:#&% ): #"%& !C& -'&-!E u-#C"%&* ): <":u"-E 2011 %'$* w)!C): 3 E&"-% ).&. ': M"-#C
2013
T"+ #':%&Ju&:#&% %C"$$ ?& .'- !C& "%%&%%m&:! E&"- 2013(14
=essG ,ost of %c@uisition CI=
( 2/&55&555-2/&55&555)
3hort term capital gain -5&55&555#55
PCC 218 = 2011
;u&%!)': 3 A4 M"-k%B
:r# :ithun purchased $55 shares of :.s >oodmoney ,o# =td# on 5$#5-#255/ at rate of `$&555 per shares in
public issue of the company#
,ompany allotted bonus shares in the ratio of $G$ on 5$#$2#25$5# 0e has also received dividend of `$5 per
share on 5$#5/#25$$#
0e has sold all the shares on 5$#$5#25$$ at the rate of `+&555 per share through a recogni<ed stock exchange
and paid brokerage of $O and securities transaction tax of 5#$2/O to celebrate his 1/
th
birthday# The cost
inflation Index are as followsG
3):":#)"$ 5&"- C'%! 0:.$"!)': 0:*&+
255/#( -'1
25$$-$2 12/
,ompute his total income and tax liability for %ssessment Jear 25$2-$+ assuming that he is having no
income other than given above# (:odified)
A:%w&-:
C'mu!"!)': '. !'!"$ ):#'m& ":* !"+ $)"?)$)!E .'- A.5. 2012(13 `
9':u% %C"-&%
($55 x +555)
=essG ,ost of %c@uisition Cil
=essG 9xpenses (+&55&555 x $O) +&555#55
3hort term capital gain u.s $$$% 2&'1&555#55
1-)g):"$ SC"-&%
9xempted u.s$5(+2) since 3TT has been paid
>ross Total Income 2&'1&555#55
Total income 2&'1&555#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on 3T,> `-1&555(2&'1&555-2&/5&555) V $/O u.s $$$% 1&5/5#55
(3ince normal income is below exemption limit hence will be reduced from 3T,> u.s $$$%)
%ddG 9ducation cess V 2O $-$#55
%ddG 309, V $O 15#/5
Tax =iability 1&2($#/5
*ounded off u.s 222) 1&2(5#55

Income Bnder The head ,apital >ains 2+5
0PCC MA5 = 2011

;u&%!)': 7 A8 M"-k%B
:r# *akesh purchased a house property on $-
th
%pril& $'1' for `$&5/&555# 0e entered into an agreement with
:r# ) for the sale of house on $/
th
3eptember& $'22 and received an advance of `2/&555# 0owever& since :r#
) did not remit the balance amount& :r# *akesh forfeited the advance#
=ater on& he gifted the house property to his friend :r# % on $/
th
Pune& $'2(#
Hollowing renovations were carried out by :r# *akesh and :r# % to the house propertyG
%mounts (`)
)y :r# *akesh during H#J# $'1'-25 $5&555
)y :r# *akesh during H#J# $'2+-2- /5&555
)y :r# % during H#J# $''+-'- $&'5&555
The fair market value of the property as on 5$#5-#$'2$ is `$&/5&555.-
:r# % entered into an agreement with :r# , for sale of the house on $
st
Pune& $''/ and received an advance
of `25&555# The said amount was forfeited by :r# %& since :r# , could not fulfill the terms of the
agreement#
Hinally& the house was sold by :r# % to :r# 3an?ay on 2
nd
Panuary& 25$2 for a consideration of `2/&55&555#
,ompute the capital gains and income tax liability of :r# % for the assessment year 25$2-$+#
,ost inflation indices are as underG
3):":#)"$ 5&"- C'%! ):.$"!)': ):*&+
$'2$-22 $55
$'2+-2- $$(
$'2(-21 $-5
$''+-'- 2--
25$$-$2 12/
(:odified)
A:%w&-.
`
C'mu!"!)': '. #")!"$ g"):% #C"-g&"?$& !' !"+ ): !C& C":*% '. M-. A
Hull 7alue of ,onsideration 2/&55&555#55
?ess9 Indexed cost of ac@uisition
X ($&/5&555 8 25&555) x 12/ . $55 /&-'&/55#55
?ess9 Indexed cost of improvement
X /5&555 . $$( x 12/ +&+2&+(2#55
X $&'5&555 . 2-- x 12/ (&$$&215#-'
L':g !&-m #")!"$ g"): 10H00H867.71
Total Income $5&55&2(1#/$
*ounded off u.s 222% $5&55&215#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on =T,> `2&25&215 ($5&55&215 8 $&25&555) V 25O $&(-&$1-#55
%ddG 9ducation ,ess V 2O +&22+#-2
%ddG 309, V $O $&(-$#1-
Income Bnder The head ,apital >ains 2+$
Tax =iability $&('&5''#22
*ounded off u.s 222) $&('&$55#55
PCC MA5 = 2011
;u&%!)': 1 A7 M"-k%B
:r# ,handru transferred a vacant site on 22#$5#25$$ for `$55 lakhs# The site was ac@uired for `'&''&+55 on
+5#5(#2555# 0e deposited `/5 lakhs in eligible bonds issued by *ural 9lectrification ,orporation (*9,) on
25#5+#25$2#
%gain& he deposited `25 lakhs in eligible bonds issued by Cational 0ighways %uthority of India (C0%I) on
$(#5-#25$2#
,ompute total income and tax liability of :r# ,handru for the assessment year 25$2-$+#
3):":#)"$ E&"- C'%! 0:.$"!)': 0:*&+
2555#$ -5(
25$$#$2 12/
A:%w&-.
C'mu!"!)': '. #C"-g&"?$& #")!"$ g"): '. M-. CC":*-u .'- !C& A.5. 2012(13
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on `2&21&2(5 ($5&(1&2(5 8 $&25&555) V 25O $&11&/12#55
%ddG 9ducation cess V 2O +&//$#--
%ddG 309, V $O $&11/#12
Tax =iability $&22&2''#$(
*ounded off u.s 222) $&22&'55#55
2'!&:
($) 3ince the site was held for more than +( months prior to the date of transfer& it is a long-term capital asset
and the capital gain arising upon its transfer is long-term capital gain#
(2) In order to claim exemption under section /-9,& :r# ,handru has to invest in specified bonds of *9,=
or C0%I within a period of ( months from the date of transfer of the asset#
(+) 0owever& investments made in such bonds by an assessee during any financial year cannot exceed `/5
lakhs#
In this case& :r# ,handru has invested ` /5 lakhs in *9,= bonds in the H#J# 25$$-$2 and ` 25 lakhs in
C0%I bonds in the H#J#25$2-$+& both within six months from the date of transfer# 0e has& therefore& fulfilled
both the conditions and hence& he is eligible to claim exemption of ` 15 lakhs under section /-9,#
P"-!)#u$"-% ` `
3ale consideration $55&55&555#55

=
-5(
12/
+55 & '' & '

19H32H14
4.00
25&(1&2/(#55
?ess9 4eduction under section /-9,
25#5+#25$2 *9,= bonds
$(#5-#25$2 C0%I bonds
/5&55&555
25&55&555 15&55&555#55
L':g !&-m #")!"$ g"):
T'!"$ 0:#'m& A-'u:*&* '.. u/% 288AB
10H67H876.00
10H67H860.00
;u&%!)': 4 A4 M"-k%B
4ecide the following transactions in the context of Income-tax %ct& $'($G
(i) :rs# D transferred a vacant site to :rs# J for `-&2/&555# The stamp valuation authority fixed the
value of vacant site for stamp duty purpose at `(&55&555# The total income of :rs# D and :rs# J
before considering the transfer of vacant site are `/5&555 and `2&5/&555 respectively# The indexed
cost of ac@uisition for :rs# D in respect of vacant site is `-&55&555 (computed)#
4etermine the total income of both :rs# D and :rs# J taking into account the above said
transaction#
(ii) :r# D is employed in a company with taxable salary income of `/&55&555# 0e received a cash
gift of `$&55&555 from %tma *am ,haritable Trust (registered under section $2%%) in 4ecember
25$$ for meeting his medical expenses#
Is the cash gift so received from the trust chargeable to tax in the hands of :r# D[
A:%w&-.
(i) Transfer of immovable property for inade@uate consideration will not have any tax implication in the
hands of transferee under section /(# Therefore& in the hands of transferee& i#e#& :rs# J& the provisions of
section /( would not be attracted# 0owever& for the transferor& :rs# D& the value adopted for stamp duty
purpose will be taken as the deemed sale consideration under section /5, for computation of capital gains#
P"-!)#u$"-% M-%. X
AT-":%.&-'-B
`
M-%. 5
AT-":%.&-&&B
`
C")!"$ g"):%
4eemed sale consideration under section /5,
1!C&- ):#'m& A#'mu!&*B
T'!"$ ):#'m&
(&55&555
-&55&555
2&55&555
/5&555
2H70H000
2&5/&555
2H07H000
(ii) The provisions of section /( would not apply to any sum of money or any property received from any
trust or institution registered under section $2%%# Therefore& the cash gift of `$ lakh received from %tma
*am ,haritable Trust& being a trust registered under section $2%%& for meeting medical expenses would not
be chargeable to tax under section /( in the hands of :r# D#
0PCC 218 = 2010
;u&%!)': 1 A7 M"-k%B
:r# % is a proprietor of %kash 9nterprises having 2 units which were set up on 5$#51#255+# 0e transferred
on 5$#5-#25$$ his unit $ by way of slump sale for a total consideration of `2/ =acs# The expenses is incurred
for this transfer were `22&555.-# 0is )alance 3heet as on +$#5+#25$$ is as underG
L)"?)$)!)&% T'!"$
`
A%%&!% U:)! 1
`
U:)! 2
`
T'!"$
`
Awn ,apital $/&55&555 )uilding $2&55&555 2&55&555 $-&55&555
*evaluation *eserve
(for building of unit $)
+&55&555 :achinery +&55&555 $&55&555 -&55&555
)ank =oan
(15O for unit $)
2&55&555 4ebtors $&55&555 -5&555 $&-5&555
Trade creditors
(2/O for unit $)
$&/5&555 Ather assets $&/5&555 (5&555 2&$5&555
Income Bnder The head ,apital >ains 2++
T'!"$ 21H70H000 T1TAL 17H70H000 4H00H000 21H70H000
Ather informationG
(i) *evaluation reserve is created by revising upward the value of the building of unit $#
(ii) Co individual value of any asset is considered in the transfer deed#
,ompute the capital gain for the assessment year 25$2-$+#
(:odified)
A:%w&-.
C'mu!"!)': '. #")!"$ g"):% ': %$um %"$& '. U:)! 1 `
3ale value 2/&55&555
?ess9 9xpenses on sale 22&555
?ess9 Cet worth (3ee Cote (i) below) $2&/5&(2/
=ong term capital gain $2&2$&+1/
2'!& A)B : C'mu!"!)': '. :&! w'-!C '. U:)! 1 '. Ak"%C E:!&--)%&%
` `
)uilding (excluding `+ lakhs on account of revaluation) '&55&555
:achinery +&55&555
4ebtors $&55&555
Ather assets $&/5&555
Total assets $-&/5&555
?ess G
)ank =oan ($&-5&555)
,reditors (+1&/55)
2&! w'-!C 12H72H700
;u&%!)': 2 A4 M"-k%B
0ow will you calculate the period of holding in case of the following assets[
($) 3hares held in a company in li@uidation
(2) )onus shares
(+) Hlat in a co-operative society
(-) Transfer of a security by a depository (i#e#& demat account)
A:%w&-.
A1B SC"-&% C&$* ): " #'m":E ): $)Ju)*"!)': 8
The period after the date on which the company goes into li@uidation shall be excluded while calculating the
period of holding# Therefore& the period of holding shall commence from the date of ac@uisition of shares
and shall end with the date on which the company goes into li@uidation#
A2B 9':u% %C"-&% 8
The period of holding shall be reckoned from the date of allotment of bonus shares and will end with the
date of transfer#
A3B 3$"! ): " #'('&-"!)>& %'#)&!E 8
The period of holding shall be reckoned from the date of allotment of shares in the society and will end with
the date of transfer#
2'!& 8 %ny transaction whether by way of becoming a member of& or ac@uiring shares in& a co-operative
society or by way of any agreement or any arrangement or in any other manner whatsoever which has the
effect of transferring& or enabling en?oyment of& any immovable property is a transfer as per section 2(-1)
Income Bnder The head ,apital >ains 2+-
(vi)# 0ence& it is possible to take a view that any date from which such right is obtained may be taken as the
date of ac@uisition#
A4B T-":%.&- '. " %&#u-)!E ?E " *&'%)!'-E A).&.H *&m"! "##'u:!B 8
The period of holding shall be computed from the date of purchase to the date of sale# The first-in-first-out
(HIHA) method will be adopted for determining the period of holding#
PCC 218 = 2010
;u&%!)': 4 A7 M"-k%B
:ukesh (aged // years) owned a residential house at Cagpur# It was ac@uired by :ukesh on $5#$5#$'2- for
`-&55&555# It was sold for `//&55&555 on 5-#$$#25$$# The 3tate stamp valuation authority fixed the value of
the property at `(5&55&555# The assessee paid 2O of the sale consideration as brokerage for the sale of said
property#
:ukesh ac@uired a residential house at ,hennai on $5#$2#25$$ for `$/&55&555 and deposited `$5&55&555 on
$5#5-#25$2 in the capital gain bond or *ural 9lectrification ,orporation =td (*9,)# 0e deposited `/&55&555
on 5(#51#25$2 in the ,apital >ain 4eposit 3cheme in a nationali<ed bank for construction of additional floor
on the residential house property ac@uired at ,hennai#
,ompute the capital gain chargeable to tax in the hands of :r# :ukesh for the assessment year 25$2-$+#
,alculate the income tax payable on the assumption that he has no other income chargeable to tax#
,ost inflation indexG Hinancial year $'2--2/ X $2/
Hinancial year 25$$-$2 X 12/ (:odified)
A:%w&-.
C'mu!"!)': '. #")!"$ g"):% ): !C& C":*% '. Muk&%C .'- !C& A.5. 2012(13
P"-!)#u$"-% ` `
4eemed sale consideration (under section /5,) (5&55&555
?ess9 )rokerage V 2O of `//&55&555 $&$5&555
?essG Indexed cost of ac@uisition -&55&555 . $2/ x 12/ 2/&$2&555
++&12&555
Less: E+&m!)': u:*&- %&#!)':% 74 ":* 74EC
U:*&- %&#!)': 74:
(i) *esidential house ac@uired at ,hennai on $5#$2#25$$ $/&55&555
(ii) %mount deposited in ,apital >ains %ccounts 3cheme
on 5(#51#25$2 A?&.'-& !C& *u& *"!& '. .)$):g '. -&!u-:B
for construction of additional floor on the residential house
property ac@uired at ,hennai /&55&555
25&55&555
U:*&- %&#!)': 74EC:
%mount deposited in *9,= bonds on $5#5-#25$2 Aw)!C): %)+
m':!C% .-'m !C& *"!& '. !-":%.&-B $5&55&555
+5&55&555
Taxable long-term capital gain +&12&555
C'mu!"!)': '. !"+ $)"?)$)!E '. M-. Muk&%C .'- A.5. 2012(13
Tax on `$&'2&555 (i#e#& long term capital gain `+&12&555 less +'&(55
basic exemption limit of `$&25&555) V 25O
<dd9 9ducation cess V 2O 1'2
3econdary and higher education cess V $O +'(
T'!"$ !"+ $)"?)$)!E -5&122
4'u:*&* '.. u/% 2889 40H790
Income Bnder The head ,apital >ains 2+/
;u&%!)': 7 A4 M"-k%B
3achin received `$/&55&555 on 2+#5$#25$2 on transfer of his residential building in a transaction of reverse
mortgage under a scheme notified by the ,entral >overnment# The building was ac@uired in :arch $''$ for
`2&55&555#
Is the amount received on reverse mortgage chargeable to tax in the hands of 3achin under the head ,apital
>ains![
,ost inflation index for the Hinancial year $''5-'$ X $22
Hinancial year 25$$-$2 X 12/ (:odified)
A:%w&-.
%s per section -1& any transfer of a capital asset in a transaction of *everse :ortgage under a scheme made
and notified by the ,entral >overnment will not be regarded as a transfer# Therefore& capital gains tax
liability is not attracted#
3ection $5(-+) provides that the amount received by an individual as a loan& either in lump sum or in
installments& in a transaction of *everse :ortgage would be exempt from income-tax# Therefore& the amount
received by 3achin in a transaction of *everse :ortgage of his residential building is exempt under section
$5(-+)#
0PCC MA5 = 2010
;u&%!)': 2 A6 M"-k%B
:r# *a? ;umar sold a house to his friend :r# 4huruv on $
st
Covember& 25$$ for a consideration of
`2/&55&555# The 3ub-*egistrar refused to register the document for the said value& as according to him&
stamp duty had to be paid on `-/&55&555& which was the >overnment guideline value# :r# *a? ;umar
preferred an appeal to the *evenue 4ivisional Afficer& who fixed the value of the house as `+2&55&555
(`22&55&555 for land balance for building portion)# The differential stamp duty was paid& accepting the said
value determined# %ssuming that the fair market value is `+2&55&555& what are the tax implications in the
hands of :r# *a? ;umar and :r# 4huruv for the assessment year 25$2-$+[ :r# *a? ;umar had purchased
the land on the $
st
Pune& 255( for `/&$'&555 and completed the construction of house on $
st
Actober& 255' for
`$-&55&555#
,ost inflation indices may be taken as /$' for the financial year 255(-51& (+2 for the financial year 255'-$5
and 12/ for the financial year 25$$-$2# (:odified)
A:%w&-.
0: !C& C":*% '. !C& %&$$&-H M-. 4"@ Kum"-
%s per section /5,& where the consideration received or accruing as a result of transfer of land or building or
both& is less than the value adopted or assessed or assessable by the stamp valuation authority& the value
adopted or assessed or assessable by the stamp valuation authority shall be deemed to be the full value of
consideration received or accruing as a result of transfer#
Where the assessee appeals against the stamp valuation and the value is reduced in appeal by the appellate
authority (*evenue 4ivisional Afficer& in this case)& such value will be regarded as the consideration
received or accruing as a result of transfer#
In the given problem& land has been held for a period exceeding +( months and building for a period less
than +( months immediately preceding the date of transfer# 3o land is a long-term capital asset& while
building is a short-term capital asset#
P"-!)#u$"-% `
L':g !&-m #")!"$ g"): ': %"$& '. $":*
Hull value of consideration 22&55&555
Income Bnder The head ,apital >ains 2+(
=essG Indexed cost of ac@uisition /&$'&555 x 12/./$' 1&2/&555
=ong-term capital gain $-&$/&555
SC'-!(!&-m #")!"$ $'%% ': %"$& '. ?u)$*):g
Hull value of consideration $5&55&555
=essG ,ost of ac@uisition $-&55&555
3hort term capital loss (-&55&555)
%s per section 15& short-term capital loss can be set-off against long-term capital gains# Therefore& the net
taxable long-term capital gains would be `$5&$/&555 (i#e#& `$-&$/&555 8 `-&55&555)#
0PCC 218 = 2009
;u&%!)': 2 A6 MA4KSB
,ompute the net taxable capital gains and tax liability of 3mt# :egha on the basis of the following
information G
% house was purchased on 5$#5/#$''2 for `-&/5&555 and was used as a residence by the owner# The owner
had contracted to sell this property in Pune& 2552 for `$5 lacs and had received an advance of `15&555
towards sale# The intending purchaser did not proceed with the transaction and the advance was forfeited by
the owner# The property was sold in %pril& 25$$ for `$/&55&555# The owner& from out of sale proceeds&
invested `- lacs in a new residential house in Panuary& 25$2# (:odified)
A:%w&-.
C'mu!"!)': '. :&! !"+"?$& #")!"$ g"):% '. Sm!. M&gC" .'- !C& A.5. 2012(13
P"-!)#u$"-% `
?ess9 Indexed cost of ac@uisition 2&-'&2/2#55
X (`-&/5&555 8 `15&555) x 12/ . +/$ X 2&-'&2/2
=ong term capital gain (&/5&$-2#55
?ess9 9xemption under section /- -&55&555#55
=ong term capital gain 2&/5&$-2#55
Total Income 2&/5&$-2#55
*ounded off u.s 222% 2&/5&$-5#55
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on `(5&$-5 (`2&/5&$-5 8 `$&'5&555) V 25O $2&522#55
%ddG 9ducation cess V 2O 2-5#/(
%ddG 309, V $O $25#22
Tax =iability $2&+22#2-
*ounded off u.s 222) $2&+'5#55
2'!&%:
(i) %s per section /$& any advance received and retained by the assessee& as a result of earlier negotiations
for sale of the asset& shall be deducted from the purchase price for computing the cost of ac@uisition of the
asset#
;u&%!)': 4 A4 M"-k%B
9xplain the concept of reverse mortgage and discuss its tax implications#
A:%w&-.
4&>&-%& M'-!g"g& S#C&m& ":* )!% !"+ )m$)#"!)':%
(i) The *everse :ortgage scheme is for the benefit of an individual& who own a residential house property#
In order to supplement their existing income& they can mortgage their house property with a scheduled bank
or housing finance company& in return for a lump-sum amount or for a regular monthly.@uarterly.annual
income#
The individual can continue to live in the house and receive regular income& without the botheration of
having to pay back the loan#
(ii) The borrower can use the loan amount for renovation and extension of residential property& family!s
medical and emergency expenditure etc#& amongst others#
0owever& he cannot use the amount for speculative or trading purposes#
(iii) 3ection -1 clarifies that any transfer of a capital asset in a transaction of reverse mortgage under a
scheme made and notified by the ,entral >overnment would not amount to a transfer for the purpose of
capital gains#
(iv) 3ection $5(-+) provides that any amount received by an individual as a loan& either in lump sum or in
installments& in a transaction of reverse mortgage would be exempt from income-tax#
;u&%!)': 4 A4 M"-k%B
What are the circumstances under which the %ssessing Afficer can make reference to the 7aluation Afficer
u.s //% of the Income Tax %ct& $'($[
A:%w&-.
4&.&-&:#& !' 8"$u"!)': 1..)#&-
With a view to ascertaining the fair market value of a capital asset& the %ssessing Afficer may refer valuation
of the capital asset to the 7aluation Afficer& in the following casesG
($) Where the value of the asset& as claimed by the assessee& is in accordance with the estimate made by the
registered valuer but the %ssessing Afficer is of the opinion that the value so claimed is less than its fair
market value"
(2) Where the %ssessing Afficer is of the opinion that the fair market value of the asset exceeds the value of
the asset as claimed by the assessee by more than $/O of the value of the asset as so claimed or by more
than `2/&555.
(+) Where the %ssessing Afficer is of opinion that& having regard to the nature of the asset and relevant
circumstances& it is necessary to make a reference to the 7aluation Afficer#
PCC 218 = 2009
;u&%!)': 4 A7 M"-k%B
:r# 6ranav& a resident individual had purchased a plot of land at a cost of `1/&555 in Pune& $'''# 0e
constructed a house for his residence on that land at a cost of `$&2/&555 in %ugust& 255$# 0e sold that house
in :ay& 25$$ at `$/&55&555 and purchased another residential house in Pune& 25$$ for `2&55&555# 0e
furnishes other income and investment as followsG
`
Interest on fixed deposit with a )ank (after T43) -/&555
T43 made by bank /&555
Investment in C3, 7III issue 25&555
Jou are re@uired to compute taxable income and tax payable by :r# 6ranav for the assessment year 25$2-$+#
(:odified)
A:%w&-.
C'mu!"!)': '. T"+"?$& 0:#'m& ":* !"+ "E"?$& ?E M-. P-":"> .'- !C& A.5. 2012 (13
` `
1. 0:#'m& .-'m C")!"$ G"):%
?ess 9 Indexed cost of ac@uisition of land
` 1/&555 x 12/ . +2' $&/$&+/5#55
?ess 9 Indexed cost of improvement i#e# house
` $&2/&555 x 12/ . -2( 2&+5&+-5#55
$$&$2&+$5#55
?ess 9 9xemption under section /-
,ost of new residential house 2&55&555#55
L':g !&-m #")!"$ g"):% 3H18H310.00
2. 0:#'m& .-'m '!C&- %'u-#&%
Interest on )ank deposit -/&555
<dd9
Tax deducted at source /&555 /5&555#55
G-'%% !'!"$ ):#'m& 3H68H310.00
?ess9 4eduction under ,hapter 7I% G
4eduction under section 25,
Investment in C3, 25&555#55
T'!"$ 0:#'m& 3H48H310.00
C'mu!"!)': '. T"+ L)"?)$)!E
Tax on normal income of `+5&555 Cil
Tax on =T,>
=T,>-(:aximum amount not chargeable to tax - Cormal Income) V 25O u.s$$2 ++&((2#55
X T` +&$2&+$5 8 ($&25&555 8 +5&555)U x 25O
33H662.00
<dd 9 9ducation cess V 2O (1+#2-
3econdary and 0igher education cess V $O
++(#(2
T"+ L)"?)$)!E 34H671.86
L&%%: T/S 7H000.00
T"+ "E"?$& A-'u:*&* '.. u/% 2889B 29H670.00
PCC <U2E = 2009
;u&%!)': 3 A8 M"-k%B
:r# ;umar is the owner of a residential house which was purchased in 3eptember& $''+ for `/5&55&555# 0e
sold the said house on /
th
%ugust& 25$$ for ` 2-&55&555# 7aluation as per stamp valuation authority of the
said plot of land was ` +/&55&555# 0e invested ` 2&55&555 in C0%I )onds on $2
th
Panuary& 25$2# 0e
purchased a residential house on 2
th
3eptember& 25$$ for ` $2&55&555# 0e gives other particulars as followsG
Interest on )ank 4eposit ` +2&555
Investment in public provident fund ` $2&555
Jou are re@uested to calculate the taxable income for the assessment year 25$2-25$+ and the tax liability& if
any#
,ost inflation index for H#J# $''+-'- and 25$$-$2 are 2-- and 12/ respectively# (:odified)
A:%w&-.
C'mu!"!)': '. !'!"$ ):#'m& ":* !"+ $)"?)$)!E '. M-. Kum"- .'- !C& A.5. 2012(13
P"-!)#u$"-% ` `
Income Bnder The head ,apital >ains 2+'
C")!"$ G"):%:
3ale price of the residential house 2-&55&555
7aluation as per 3tamp 7aluation authority +/&55&555
(7alue to be taken is the higher of actual sale price or valuation
adopted for stamp duty purpose as per section /5,)
Therefore& ,onsideration for the purpose of ,apital >ains +/&55&555
=essG Indexed ,ost of %c@uisition X /5&55&555 x 12/ . 2-- $(5&2(&5((
L':g(!&-m C")!"$ L'%% (to be carried forward to the succeeding A127H86H066B
year for set-off against only long-term capital gains -can be
carried forward for a maximum of 2 years)
0:#'m& .-'m '!C&- %'u-#&%:
Interest on bank deposits +2&555
G-'%% T'!"$ 0:#'m& 32H000
=essG 4eduction under ,hapter 7I-%
3ection 25, 8 Investment in 66H $2&555
T'!"$ 0:#'m& 20H000
T"+ $)"?)$)!E (There is no tax liability since the total income is less than the basic exemption limit) 2)$
;u&%!)': 4 A3 M"-k%B
:r# %bhikQs father& who is a senior citi<en had pledged his residential house to a bank under a notified
reverse mortgage scheme# 0e was getting loan from bank in monthly installments# :r# %bhikQs father did not
repay the loan on maturity and gave possession of the house to the bank to discharge his loan# 0ow will the
treatment of long-term capital gain be made on such reverse mortgage transaction[
A:%w&-.
%s per section -1& any transfer of a capital asset in a transaction of reverse mortgage under a scheme made
and notified by the ,entral >overnment shall not be considered as a transfer for the purpose of capital gain#
%ccordingly& the transaction made by :r# %bhikQs father will not be regarded as a transfer# Therefore& no
capital gain will be charged on such transaction#
Hurther& section $5(-+) provides that the amount received as a loan& either in lump sum or in installment& in a
transaction of reverse mortgage would be exempt from income-tax#
0owever& capital gains tax liability would be attracted at the stage of alienation of the mortgaged property
by the bank for the purposes of recovering the loan#
PCC 218 = 2008
;u&%!)': 1 A2 M"-k%B
,apital gain of `1/ lakh arising from transfer of long term capital assets will be exempt from tax if such
capital gain is invested in the bonds redeemable after three years& issued by C0%I under section /-9, of the
%ct#
A:%w&-.
TC& %!"!&m&:! )% ."$%&.
The exemption under section /-9, has been restricted& by limiting the maximum investment on or after
5$#5-#2551 in long term specified assets (i#e# bonds of C0%I or *9,=& redeemable after + years) to `/5
lakh during any financial year# Therefore& in this case& the exemption under section /-9, can be availed
only to the extent of `/5 lakh#
Income Bnder The head ,apital >ains 2-5
PCC 218 = 2007
;u&%!)': 3 A8 M"-k%B
:rs# :alini 0ari shifted her industrial undertaking located in corporation limits of Haridabad& to a 3pecial
9conomic Wone (39W) on 5$#$2#25$$G
The following particulars are availableG `
(a) =andG 6urchased on 25#5$#255+ -&2(&555
3old for 22&55&555
(b) )uilding Y,onstruction completed on $-#5+#255'Z
W47 of building as on 5$#5-#25$$ 2&25&555
3old for $$&+'&555
(c) W47 of cars as on 5$#5-#25$$ 1&-5&555
3old for (&55&555
(d) 9xpenses on shifting the undertaking $&$/&555
(e) %ssets ac@uired for the undertaking in the 39W (on or before 2/#5(#25$2)G
(i) =and +&55&555
(ii) )uilding /&55&555
(iii) ,omputers $&55&555
(iv) ,ar -&25&555
(v) :achinery (3econd hand) 2&55&555
(vi) Hurniture /5&555
There is no intention of investing in any other asset in this undertaking#
,ompute the exemption available under section /->% for the assessment year 25$2-$+#
,ost inflation indices areG
Hinancial year Index
2552-5+ --1
25$$-$2 12/ (:odified)
A:%w&-.
Where an assessee shifts an existing undertaking from an urban area to a 39W and incurs expenses for
shifting and ac@uires new assets for the undertaking in the 39W& section /->% comes into play#
The capital gain& short-term or long-term& arising from transfer of land& building& plant and machinery in the
existing undertaking would be exempt under section /->% if the assessee& within a period of one year before
or three years after the date on which the transfer took place&
(i) ac@uires plant and machinery for use in the undertaking in the 39W"
(ii) ac@uires land or building or constructs building for the business of the undertaking in the 39W"
(iii) incurs expenses on shifting of the undertaking#
C'mu!"!)': '. #")!"$ g")::
(a) =andG
3ale price 22&55&555
Income Bnder The head ,apital >ains 2-$
=essG Indexed cost of ac@uisition -&2(&555 x 12/.--1 1&-2&$2$
=ong-term capital gain $-&/$&21'
(b) )uildingG
3ale value $$&+'&555
=essG Apening W47 2&25&555
3hort-term capital gain under section /5 +&$'&555
(c) 6lantG
,ar
3ale value (&55&555
=essG Apening W47 1&-5&555
3hort term capital loss under section /5 (-)$&-5&555
E+&m!)': u:*&- %&#!)': 74GA )% ">")$"?$& ): -&%&#! '. !C& .'$$'w):g "%%&!% "#Ju)-&* ":* &+&:%&%
):#u--&*: `
=and +&55&555
)uilding /&55&555
6lantG
,omputers $&55&555
,ar -&25&555
:achinery 2&55&555
9xpenses of shifting $&$/&555
T'!"$ E+&m!)': 16H37H000
9xemption has been taken first from long term gain and then from short term gain because it will be
beneficial to the assessee and balance amount of short term capital gain shall be ($-&/$&21' I +&$'&555 8
$(&+/&555) `$&+/&21'
9xemption shall be taken first and loss shall be ad?usted afterwards& hence loss on sale of motor car shall be
ad?usted to the extent of `$&+/&21' and balance loss `-&$2$ shall be carried forward

2'!&:
(i) Hurniture purchased is not eligible for exemption under section /->%#
(ii) There is no restriction regarding purchase of second hand machinery#
(iii) ,omputers and car are considered to be the type of plant and machinery hence exemption is allowed#
(details are given under the head )usiness.6rofession)
;u&%!)': 4. A9 M"-k%B
:r# Thomas inherited a house in Paipur under will of his father in :ay& 255+# The house was purchased by
his father in Panuary& $'2$ for ` 2&/5&555# 0e invested an amount of ` 1&55&555 in construction of one more
floor in this house in Pune& 255/# The house was sold by him in Covember& 25$$ for ` +1&/5&555# The
valuation adopted by the registration authorities for charge of stamp duty was ` -1&2/&555 which was not
contested by the buyer& but as per assessee!s re@uest& the %ssessing Afficer made a reference to 7aluation
Afficer# The value determined by the 7aluation Afficer was `-1&/5&555# )rokerage V $O of sale
consideration was paid by :r# Thomas to :r# 3unil# The market value of house as on 5$#5-#$'2$ was
`2&15&555#
Jou are re@uired to compute the amount of capital gain chargeable to tax for %#J# 25$2-$+ with the help of
given information and by taking ,II for the H#J# 25$$-$2 as 12/& H#J# 255+-5- as -(+ and for H#J# 255/-5(
as -'1# (:odified)
A:%w&-.
C'mu!"!)': '. L':g !&-m C")!"$ G"): .'- A.5. 2012(13
3ale consideration as per section /5, of the %ct -1&2/&555
(Cote (i))
=essG 9xpenses incurred on transfer being brokerage
V $O of sale consideration of ` +1#/5 lacs +1&/55
-(&21&/55
=essG Indexed cost of ac@uisition (Cote (ii))
2&15&555 x 12/.$55 X 2$&$'&/55
Indexed cost of improvement
1&55&555 x 12/.-'1 X $$&5/&(+- +2&2/&$+-
L':g !&-m #")!"$ g"): 14H62H366
2'!&%:
(i) %s per section /5,& where the consideration received or accruing as a result of transfer of a capital asset&
being land or building or both& is less than the valuation by the stamp valuation authority& such value adopted
or assessed by the stamp valuation authority shall be deemed to be the full value of consideration# Where a
reference is made to the valuation officer& and the value ascertained by the valuation officer exceeds the
value adopted by the stamp valuation authority& the value adopted by the stamp valuation authority shall be
taken as the full value of consideration#
3ale consideration ` +1&/5&555
7aluation made by registration authority for stamp duty ` -1&2/&555
7aluation made by the valuation officer on a reference ` -1&/5&555
%pplying the provisions of section /5, to the present case& ` -1&2/&555& being& the value adopted by the
registration authority for stamp duty& shall be taken as the sale consideration for the purpose of charge of
capital gain#
(ii) The house was inherited by :r# Thomas under the will of his father and therefore the cost incurred by
the previous owner shall be taken as the cost# 7alue as on 5$#5-#$'2$ accordingly shall be adopted as the
cost of ac@uisition of the house property#
Income Bnder The head ,apital >ains 2-+
140G02AL TEXT ASEL3 4EA/02GB
SECU40T0ES T4A2SACT012 TAX
Y&hapter D'' of K!nance (No. 2) <ctA 200(A as a;ended upto dateZ
96. E+!&:!H #'mm&:#&m&:! ":* "$)#"!)':#R($) This ,hapter extends to the whole of India#
(2) It shall come into force on such date as the ,entral >overnment may by& notification in the Afficial
>a<ette& appoint#
(+) It shall apply to taxable securities transactions entered into on or after the commencement of this
,hapter#
97. /&.):)!)':%#RIn this ,hapter& unless the context otherwise re@uires&R
($) M%ppellate TribunalN means the %ppellate Tribunal constituted under section 2/2 of the Income-tax %ct&
$'($ (-+ of $'($)"
(2) M%ssessing AfficerN means the Income-tax Afficer or %ssistant ,ommissioner of Income-tax or 4eputy
,ommissioner of Income-tax or Point ,ommissioner of Income-tax or %dditional ,ommissioner of Income-
tax who is authorised by the )oard to exercise or perform all or any of the powers and functions conferred
on& or assigned to& an %ssessing Afficer under this ,hapter"
(+) M)oardN means the ,entral )oard of 4irect Taxes constituted under the ,entral )oards of *evenue %ct&
$'(+ (/- of $'(+)"
(-) MderivativeN has the meaning assigned to it in clause (aa) of section 2 of the 3ecurities ,ontracts
(*egulation) %ct& $'/( (-2 of $'/()"
(/) Me@uity oriented fundN means a fundR
(!) where the investible funds are invested by way of e@uity shares in domestic companies to the
extent of more than sixty per cent of the total proceeds of such fund" and
(!!) which has been set up under a scheme of a :utual HundG
6rovided that the percentage of e@uity share holding of the fund shall be computed with reference to the
annual average of the monthly averages of the opening and closing figures"
(() M:utual HundN means a :utual Hund specified under clause (2+4) of section $5 of the Income-tax %ct&
$'($ (-+ of $'($)"
(1) Moption in securitiesN has the meaning assigned to it in clause (d) of section 2 of the 3ecurities ,ontracts
(*egulation) %ct& $'/( (-2 of $'/()"
(2) Moption premiumN means the premium payable by the purchaser of an Moption in securitiesN at the time
of such purchase"
(') MprescribedN means prescribed by rules made by the )oard under this ,hapter"
($5) Mrecognised stock exchangeN shall have the same meaning as in clause (f) of section 2 of the 3ecurities
,ontracts (*egulation) %ct& $'/( (-2 of $'/()"
($$) Msecurities transaction taxN means tax leviable on the taxable securities transactions under the
provisions of this ,hapter"
($2) Mstrike priceN means the price at which the Moption in securitiesN may be exercised on the expiry date of
such option"
($+) Mtaxable securities transactionN means a transaction ofR
(a) purchase or sale of an e@uity share in a company or a derivative or a unit of an e@uity oriented
fund& entered into in a recognised stock exchange" or
(3) sale of a unit of an e@uity oriented fund to the mutual Hund"
($-) words and expressions used but not defined in this ,hapter and defined in the 3ecurities ,ontracts
(*egulation) %ct& $'/( (-2 of $'/()" the Income-tax %ct& $'($ (-+ of $'($)" or the rules made thereunder&
shall apply so far as may be& in relation to securities transaction tax#
98. CC"-g& '. %&#u-)!)&% !-":%"#!)': !"+#RAn and from the commencement of this ,hapter& there shall be
charged a securities transaction tax in respect of the taxable securities transaction specified in column (2) of
Income Bnder The head ,apital >ains 2--
the Table below& at the rate specified in the corresponding entry in column (+) of the said Table& on the value
of such transaction and such tax shall be payable by the purchaser or the seller& specified in the
corresponding entry in column (-) of the said TableG
T"?$&
S$. 2'. T"+"?$& %&#u-)!)&% !-":%"#!)': 4"!& P"E"?$& ?E
A1B A2B A3B A4B
$# 6urchase of an e@uity share in a company or a unit of
an e@uity oriented fund& whereR

(a) the transaction of such purchase is entered
into in a recognised stock exchange" and
(3) the contract for the purchase of such share
or unit is settled by the actual delivery or
transfer of such share or unit#
5#$2/O (w#e#f# $-(-
255(& prior to which it
is 5#$O)
6urchaser
2# 3ale of an e@uity share in a company or a unit of an
e@uity oriented fund& whereR
(a) the transaction of such sale is entered into in
a recognised stock exchange" and
(3) the contract for the sale of such share or unit
is settled by the actual delivery or transfer
of such share or unit#
5#$2/O (w#e#f# $-(-
is 5#$O)
3eller
+# 3ale of an e@uity share in a company or a unit of an
e@uity oriented fund& whereR
(a) the transaction of such sale is entered into in
a recognised stock exchange" and
(3) the contract for the sale of such share or unit
is settled otherwise than by the actual
delivery or transfer of such share or unit#
5#52/O (w#e#f# $-(-
is 5#52O)
3eller
-# (a) 3ale of an option in securities
(b) 3ale of an option in securities& where option is
exercised
(c) 3ale of a futures in securities
5#5$1 per cent
5#$2/ per cent
5#5$1 per cent
3eller
6urchaser
3eller
/# 3ale of unit of an e@uity oriented fund to the :utual
Hund#
5#2/O (w#e#f# $-(-255(&
prior to which it is
5#2O)
3eller
99. 8"$u& '. !"+"?$& %&#u-)!)&% !-":%"#!)':%#RThe value of taxable securities transaction&R
(a) in the case of a taxable securities transaction relating to an option in securities& shall beR
(i) the option premium& in respect of transaction at item (a) of serial number - of the Table in section
'2"
(ii) the settlement price& in respect of transaction at item (b) of serial number - of the Table in section
'2"
(3) in the case of a taxable securities transaction relating to a derivative& being SfuturesS& shall be the price at
which such SfuturesS is traded" and
(c) in the case of any other taxable securities transaction& shall be the price at which such securities are
purchased or soldG
Income Bnder The head ,apital >ains 2-/
6rovided that the )oard may& having regard to the manner in which taxable securities transactions are settled
in a recognised stock exchange or such other factors which may be relevant for the purposes of determining
the price of such securities& specify& by rules made by it& the method of determining the price of such
securities for the purposes of this clause#
100. C'$$&#!)': ":* -&#'>&-E '. %&#u-)!)&% !-":%"#!)': !"+#R($) 9very recognised stock exchange shall
collect the securities transaction tax from every person& being a purchaser or a seller& as the case may be&
who enters into a taxable securities transaction in that stock exchange& at the rates specified in section '2#
(2) The prescribed person in the case of every :utual Hund shall collect the securities transaction tax from
every person who sells a unit to that :utual Hund& at the rate specified in section '2#
(+) The securities transaction tax collected during any calendar month in accordance with the provisions of
sub-section ($) or sub-section (2)& shall be paid by every recognised stock exchange or by the prescribed
person in the case of every :utual Hund& as the case may be& to the credit of the ,entral >overnment by the
seventh day of the month immediately following the said calendar month#
(-) %ny recognised stock exchange or the prescribed person in the case of any :utual Hund& who fails to
collect the tax in accordance with the provisions of sub-section ($) or sub-section (2)& shall notwithstanding
such failure be liable to pay the tax to the credit of the ,entral >overnment in accordance with the
provisions of sub-section (+)#
101. 4&#'g:)%&* %!'#k &+#C":g& '- mu!u"$ .u:* !' .u-:)%C -&%#-)?&* -&!u-:#R($) 9very recognised
stock exchange or the prescribed person in the case of every :utual Hund (hereafter in this ,hapter referred
to as assessee) shall& within the prescribed time after the end of each financial year& prepare and deliver or
cause to be delivered to the %ssessing Afficer or to any other authority or agency authorised by the )oard in
this behalf& a return in such form and verified in such manner and setting forth such particulars as may be
prescribed& in respect of all taxable securities transactions entered into during such financial year in that
stock exchange or& as the case may be& in respect of all taxable securities transactions& being sale of units to
such :utual Hund during such financial year#
(2) Where any assessee fails to furnish the return under sub-section ($) within the prescribed time& the
%ssessing Afficer may issue a notice to such assessee and serve it upon him& re@uiring him to furnish the
return in the prescribed form and verified in the prescribed manner setting forth such particulars within such
time as may be prescribed#
(+) %ny assessee who has not furnished the return within the time allowed under sub-section ($) or sub-
section (2)& or having furnished a return under sub-section ($) or sub-section (2)& discovers any omission or
wrong statement therein& may furnish a return or a revised return& as the case may be& at any time before the
assessment is made#
102. A%%&%%m&:!#R($) Hor the purposes of making an assessment under this ,hapter& the %ssessing Afficer
may serve on any assessee who has furnished a return under section $5$ or upon whom a notice has been
served under sub-section (2) of section $5$ (whether a return has been furnished or not)& a notice re@uiring
him to produce or cause to be produced on a date to be specified therein such accounts or documents or
other evidence as the %ssessing Afficer may re@uire for the purposes of this ,hapter and may& from time to
time& serve further notices re@uiring the production of such further accounts or documents or other evidence
as he may re@uire#
(2) The %ssessing Afficer& after considering such accounts& documents or other evidence if any& as he has
obtained under sub-section ($) and after taking into account any other relevant material which he has
gathered& shall& by an order in writing& assess the value of taxable securities transactions during the relevant
financial year and determine the amount of securities transaction tax payable or refundable on the basis of
such assessmentG
6rovided that no assessment shall be made under this sub-section after the expiry of two years from the end
of the relevant financial year#
(+) 9very assessee& in case any amount is refunded to it on assessment under sub-section (2)& shall& within
such time as may be prescribed& refund such amount to the concerned person from whom such amount was
collected#
Income Bnder The head ,apital >ains 2-(
103. 4&#!).)#"!)': '. m)%!"k&#R($) With a view to rectifying any mistake apparent from the record& the
%ssessing Afficer may amend any order passed by him under the provisions of this ,hapter within one year
from the end of the financial year in which the order sought to be amended was passed#
(2) Where any matter has been considered and decided in any proceeding by way of appeal relating to an
order referred to in sub-section ($)& the %ssessing Afficer passing such order may& notwithstanding anything
contained in any law for the time being in force& amend the order under that sub-section in relation to any
matter other than the matter which has been so considered and decided#
(+) 3ub?ect to the other provisions of this section& the %ssessing Afficer mayR
(a) make an amendment under sub-section ($) of his own motion" or
(3) make such amendment if any mistake is brought to his notice by the assessee#
(-) %n amendment& which has the effect of enhancing an assessment or reducing a refund or otherwise
increasing the liability of the assessee& shall not be made under this section unless the %ssessing Afficer
concerned has given notice to the assessee of his intention so to do and has allowed the assessee a
reasonable opportunity of being heard#
(/) Where an amendment is made under this section& an order shall be passed in writing by the %ssessing
Afficer#
(() 3ub?ect to the other provisions of this ,hapter& where any such amendment has the effect of reducing the
assessment& the %ssessing Afficer shall make any refund& which may be due to such assessee#
(1) Where any such amendment has the effect of enhancing the assessment or reducing the refund already
made& the %ssessing Afficer shall make an order specifying the sum payable by the assessee and the
provisions of this ,hapter shall apply accordingly#
104. 0:!&-&%! ': *&$"E&* "Em&:! '. %&#u-)!)&% !-":%"#!)': !"+#R9very assessee who fails to credit the
securities transaction tax or any part thereof as re@uired under section $55& to the account of the ,entral
>overnment within the period specified in that section& shall pay simple interest at the rate of one per cent of
such tax for every month or part of a month by which such crediting of the tax or any part thereof is delayed#
107. P&:"$!E .'- .")$u-& !' #'$$&#! '- "E %&#u-)!)&% !-":%"#!)': !"+#R%ny assessee whoR
(a) fails to collect the whole or any part of the securities transaction tax as re@uired under section $55" or
(3) having collected the securities transaction tax& fails to pay such tax to the credit of the ,entral
>overnment in accordance with the provisions of sub-section (+) of that section& shall be liable to pay&R
(!) in the case referred to in clause (a)& in addition to paying the tax in accordance with the provisions
of sub-section (-) of that section& or interest& if any& in accordance with the provisions of section $5-&
by way of a penalty& a sum e@ual to the amount of securities transaction tax that he failed to collect"
and
(!!) in the case referred to in clause (3)& in addition to paying the tax in accordance with the
provisions of sub-section (+) of that section and interest in accordance with the provisions of section
$5-& by way of penalty& a sum of one thousand rupees for every day during which the failure
continues& so& however& that the penalty under this clause shall not exceed the amount of securities
transaction tax that it failed to pay#
106. P&:"$!E .'- .")$u-& !' .u-:)%C -&%#-)?&* -&!u-:#RIf an assessee fails to furnish in due time the
return which it is re@uired to furnish under sub-section ($) of section $5$ or by notice given under sub-
section (2) of that section& it shall be liable to pay& by way of penalty& a sum of one hundred rupees for every
day during which the failure continues#
107. P&:"$!E .'- .")$u-& !' #'m$E w)!C :'!)#&#RIf the %ssessing Afficer in the course of any proceedings
under this ,hapter is satisfied that any person has failed to comply with a notice under sub-section ($) of
section $52& he may direct that such person shall pay& by way of penalty& in addition to any securities
transaction tax and interest& if any& payable by him& a sum of ten thousand rupees for each such failure#
108. P&:"$!E :'! !' ?& )m'%&* ): #&-!"): #"%&%#RCotwithstanding anything contained in the provisions of
section $5/ or section $5( or section $51& no penalty shall be imposable for any failure referred to in the said
provisions if the assessee proves that there was reasonable cause for the said failureG
6rovided that no order imposing a penalty under this ,hapter shall be made unless the assessee has been
given a reasonable opportunity of being heard#
109. A$)#"!)': '. #&-!"): -'>)%)':% '. A#! 43 '. 1961#RThe provisions of the following sections of the
Income-tax %ct& $'($ (-+ of $'($)" as in force from time to time& shall apply& so far as may be& in relation to
securities transaction tax as they apply in relation to income-taxGR
$25& $+$& $++%& $/(& $12& 225 to 221& 22'& 2+2& 2(5%& 2($& 2(2& 2(/ to 2('& 212)& 222 and 222 to 2'+#
110. A&"$% !' C'mm)%%)':&- '. 0:#'m&(!"+ AA&"$%B#R($) %ny assessee aggrieved by any assessment
order passed by the %ssessing Afficer under section $52 or any order under section $5+& or denying his
liability to be assessed under this ,hapter& or by an order levying penalty under this ,hapter& may appeal to
the ,ommissioner of Income-tax (%ppeals) within thirty days from the date of receipt of the order of the
%ssessing Afficer#
(2) 9very appeal under sub-section ($) shall be in the prescribed form and shall be verified in the prescribed
manner and shall be accompanied by a fee of one thousand rupees#
(+) Where an appeal has been filed under the provisions of sub-section ($)& the provisions of sections 2-' to
2/$ of the Income-tax %ct& $'($ (-+ of $'($)" shall& as far as may be& apply#
111. A&"$% !' !C& A&$$"!& T-)?u:"$#R($) %ny assessee aggrieved by an order passed by a
,ommissioner of Income-tax (%ppeals) under section $$5 may appeal to the %ppellate Tribunal against such
order#
(2) The ,ommissioner of Income-tax may& if he ob?ects to any order passed by the ,ommissioner of
Income-tax (%ppeals) under section $$5& direct the %ssessing Afficer to appeal to the %ppellate Tribunal
against such order#
(+) 9very appeal under sub-section ($) or sub-section (2) shall be filed within sixty days of the date on
which the order sought to be appealed against is received by the assessee& or by the ,ommissioner of
Income-tax& as the case may be#
(-) 9very appeal under sub-section ($) or sub-section (2) shall be in the prescribed form and shall be verified
in the prescribed manner and in the case of an appeal filed under sub-section ($) shall be accompanied by a
fee of one thousand rupees#
(/) Where an appeal has been filed before the %ppellate Tribunal under sub-section ($) or sub-section (2)&
the provisions of sections 2/2 to 2// of the Income-tax %ct& $'($ (-+ of $'($)" shall& as far as may be&
apply#
112. 3"$%& %!"!&m&:! ): >&-).)#"!)':H &!##R($) If a person makes a statement in any verification under this
,hapter or any rule made thereunder& or delivers an account or statement& which is false& and which he either
knows or believes to be false& or does not believe to be true& he shall be punishable with imprisonment for a
term which may extend to three years and with fine#
(2) Cotwithstanding anything contained in the ,ode of ,riminal 6rocedure& $'1+ (2 of $'1-)" an offence
punishable under sub-section ($) shall be deemed to be non-cogni<able within the meaning of that ,ode#
113. 0:%!)!u!)': '. -'#&&*):g%#R% person shall not be proceeded against for any offence under section
$$2 except with the previous sanction of the ,hief ,ommissioner of Income-tax#
114. P'w&- !' m"k& -u$&%#R($) The ,entral >overnment may& by notification in the Afficial >a<ette& make
rules- for carrying out the provisions of this ,hapter#
(2) In particular& and without pre?udice to the generality of the foregoing power& such rules may provide for
all or any of the following matters& namelyGR
(a) the time within which the return shall be delivered or caused to be delivered to the %ssessing
Afficer or to any other agency and the form and the manner in which such return shall be furnished
under sub-section ($) or sub-section (2) of section $5$"
(3) the time within which the return shall be furnished on receipt of notice under sub-section (2) of
section $5$"
(c) the form in which an appeal under section $$5 or section $$$ may be filed and the manner in
which they may be verified"
(d) any other matter which by this ,hapter is to be& or may be& prescribed#
(+) 9very rule made under this ,hapter and every notification issued under this ,hapter shall be laid& as
soon as may be after it is made or issued& before each 0ouse of 6arliament& while it is in session for a total
period of thirty days which may be comprised in one session or in two or more successive sessions& and if&
before the expiry of the session immediately following the session or the successive sessions aforesaid& both
0ouses agree in making any modification in the rule or notification or both 0ouses agree that the rule should
not be made or the notification should not be issued& the rule or notification shall thereafter have effect only
in such modified form or be of no effect& as the case may be" so& however& that any such modification or
annulment shall be without pre?udice to the validity of anything previously done under that rule or
notification#
117. P'w&- !' -&m'>& *)..)#u$!)&%#R($) If any difficulty arises in giving effect to the provisions of this
,hapter& the ,entral >overnment may& by order published in the Afficial >a<ette& not inconsistent with the
provisions of this ,hapter& remove the difficultyG
6rovided that no such order shall be made after the expiry of a period two years from the date on which the
provisions of this ,hapter come into force#
(2) 9very order made under this section shall be laid& as soon as may be after it is made& before each 0ouse
of 6arliament#
Income Bnder The head ,apital >ains 2-'
CAP0TAL GA02S ACC1U2TS SCHEMEH 1988
NGS4 724AEBH /ATE/ 22(6(1988O
In exercise of the powers conferred by sub-section (2) of section /-& sub-section (2) of section /-)& sub-
section (2) of section /-4& sub-section (-) of section /-H and sub-section (2) of section /-> of the Income-
tax %ct& $'($ (-+ of $'($)& the ,entral >overnment hereby frames the following 3cheme& namely GR
SC'-! !)!$&H #'mm&:#&m&:! ":* "$)#"!)':.
1. ($) This 3cheme may be called the ,apital >ains %ccounts 3cheme& $'22#
(2) It shall come into force on the date of its publication in the Afficial >a<ette#
(+) It applies to all assessees who are eligible for exemption under section /-& /-)& /-4& /-H or /-> of the
Income-tax %ct& $'($ (-+ of $'($)#
/&.):)!)':%.
2. In this 3cheme& unless the context otherwise re@uires&R
(a) MaccountN means a deposit account under this 3cheme"
(3) Maccount-%N means deposit account-% mentioned in paragraph - of this 3cheme"
(c) Maccount-)N means deposit account-) mentioned in paragraph - of this 3cheme"
(d) M%ctN means the Income-tax %ct& $'($ (-+ of $'($)"
(e) M4eposit AfficeN means any branch or branch office of the 3tate )ank of India constituted under
the 3tate )ank of India %ct& $'// (2+ of $'//) or of a subsidiary bank as defined in the 3tate )ank
of India (3ubsidiary )anks) %ct& $'/' (+2 of $'/')& or of a corresponding new bank constituted
under section + of the )anking ,ompanies (%c@uisition and Transfer of Bndertakings) %ct& $'15
(/ of $'15) or under section + of the )anking ,ompanies (%c@uisition and Transfer of
Bndertakings) %ct& $'25 (-5 of $'25)& authori<ed by the ,entral >overnment& by notification in
the Afficial >a<ette& to receive deposit and maintain account of the depositor& under this 3cheme"
(f) MdepositorN means an assessee who is eligible to make a deposit under section /-& /-)& /-4& /-H
or /-> of this %ct"
(g) all other words and expressions used herein but not defined and defined in the %ct shall have the
meanings respectively assigned to them in the %ct"
(h) MHormN means a form appended to this 3cheme#
/&'%)!% C'w !' ?& m"*&.
3. % deposit or deposits may be made under the provisions of section /- or section /-) or section /-4 or
section /-H or section /-> of the %ct by any depositor intending to avail of the benefit under the said
section or sections of the %ct& as the case may be& in accordance with the provisions of this 3cheme#
TE&% '. *&'%)!%.
4. ($) There shall be two types of deposit accounts& namely GR
(!) M4eposit account-%N" and
(!!) M4eposit account-)N#
(2) The deposit made under account-% shall be in the form of savings deposit! and sub?ect to the other
provisions of this 3cheme& withdrawals under this account can be made from time to time by the depositor#
(+) The deposit made under account-) shall be in the form of term deposit! with an option to the depositor
to keep the deposit as cumulative or non-cumulative deposit# 9xcept as provided under paragraph 1 and
paragraph '& withdrawals under this account can be made only after the expiry of the period for which the
deposit under this account has been made and accepted#
Income Bnder The head ,apital >ains 2/5
(-) 3uch deposits may be made in one lump sum or in instalments at any time on or before the due date of
furnishing the return of income under sub-section ($) of section $+' of the %ct as is applicable in the case of
the depositor#
A$)#"!)': .'- '&:):g "##'u:!.
7. ($) 9very depositor who is desirous of opening an account or accounts& as the case may be& under this
3cheme for the first time& shall apply to the deposit office in Horm % or as near thereto as possible& in
duplicate and tender the amount of deposit payable in the manner specified in sub-paragraph (-) and a
depositor intending to avail of the benefit under more than one section of the %ct& as referred to in paragraph
+& shall make separate applications in the same manner& for opening account or accounts under each of such
sections#
(2) While applying under sub-paragraph ($) the depositor shall exercise his option as to whether the amount
is to be deposited in account-% or in account-) or in both the accounts& and in case of the depositor
exercising his option to open account-)& the depositor shall also exercise his option as to whether the deposit
is to be made as cumulative or non-cumulative deposit as referred in sub-paragraph (+) of paragraph -#
(+) An receipt of an application under sub-paragraph ($)& the deposit office shall open an account or
accounts in the name of the depositor as opted by him under sub-paragraph (2)#
(-) The payment of amount of deposit shall be made by the depositor either in cash or by crossed che@ue or
by draft along with the application#
(/) 9very subse@uent deposit shall be made into the deposit office at which the account stands& in the same
manner as stipulated in sub-paragraph (-)#
(() If the deposit is made by a che@ue or a draft then& sub?ect to such che@ue or draft being realised& the
effective date of deposit for the purpose of claiming exemption under the %ct will be the date on which the
che@ue or draft is received by the deposit office along with the application under sub-paragraph ($) or sub-
paragraph (/)& as the case may be#
(1) The interest on the amount of deposit shall accrue and will be calculated sub?ect to the provisions of
paragraph 2& with effect from the date of deposit in cash or the date of reali<ation of the proceeds of the
che@ue or the draft tendered by the depositor#
(2) In the case of deposit under account-%& the deposit office shall issue a pass book to the depositor wherein
all amounts of deposits& withdrawals& together with interest due& shall be entered over the signature of the
authori<ed officer of the deposit office#
(') In the case of deposit under account-)& deposit office shall issue a deposit receipt wherein the principal
amount of deposit& date of deposit& date of maturity of deposit& shall be entered over the signature of the
authori<ed officer of the deposit office#
0%%u& '. *u$)#"!& "%% ?''k '- -&#&)!.
6. In the event of loss or destruction of the pass book receipt referred to in sub- paragraph (2) or sub-
paragraph (') of paragraph /& the deposit office may& on an application made to it in this behalf& issue a
duplicate thereof#
T-":%.&- ":* #':>&-%)': '. !C& "##'u:!.
7. ($) % depositor may& if he so desires& apply for transfer of his account or accounts& from one deposit office
to another deposit office of the same bank#
(2) % depositor having a deposit in account-) may& at any time& if he so desires& apply in Horm-) or as near
thereto as possible& together with his deposit receipt& for transfer of the amount standing to his credit in
account-) to his deposit in account-% opened under the same section of the %ct under which the said
account-) was opened and the re@uest of the depositor may be accepted sub?ect to the other provisions of
this 3cheme#
Income Bnder The head ,apital >ains 2/$
(+)(a) % depositor while applying under sub-paragraph (2) shall furnish in Horm ) the re@uisite particulars of
his account-% to which the amount from account-) is re@uired to be transferred"
(3) Where the depositor is not having a deposit in account-%& he shall state such fact and also make a re@uest
for opening an account-% in his name& as specified in Horm )#
(-) If the re@uest under sub-paragraph (2) has been made for transfer of amount standing to the credit in
account-)& before the expiry of the specified period for which the deposit in account-) was made& such
re@uest shall be treated as premature withdrawal of amount from deposit in the said account-) and the
amount of interest accrued& if any& in the said account-) shall be calculated by the deposit office in
accordance with the provisions of sub-paragraph (-) of paragraph 2#
(/) If the re@uest under sub-paragraph (2) has been made for transfer of amount standing to the credit in
account-) on or after the expiry of the specified period for which the deposit in account-) was made& the
amount of interest accrued in account-) shall be calculated at normal rate as specified by the *eserve )ank
of India in pursuance of paragraph 2 in respect of a deposit in account-)#
(() An receipt of an application under sub-paragraph (2)& the deposit office shall calculate the amount of
interest& if any& accrued in account-) till the date on which actual transfer of amount to account-% is made&
sub?ect to the provisions of paragraph 2 and close account-) after transferring the total amount standing to
the credit in account-) to account-%G
P-'>)*&* that where in such case of transfer the depositor does not have a deposit in account-%& an account-
% shall be opened in the name of the depositor and the amount standing to his credit in account-) shall then
be transferred to account-% as so opened#
(1) % depositor& if he so desires& may apply in Horm ) together with his pass book& for opening an account-)
in his name& by way of transfer of the whole or any part of the amount standing to his credit in account-%&
under the same section of the %ct under which his account-% has been opened#
(2) %fter the conversion of account-) to account-% or "!ce "ersa in the manner specified above& the interest
in newly opened account or accounts& as the case may be& shall accrue with effect from the date of opening
of such account or accounts#
0:!&-&%!.
8. ($) Interest at such rate as may be specified by the *eserve )ank of India& from time to time& shall be
allowed for each calendar month on the lowest balance at the credit of a depositor under account-%& between
the close of the $5th day and the end of the month and shall be credited to the account at the end of each
half-year#
(2) Interest at such rate& as may be specified by the *eserve )ank of India& from time to time& shall be
allowed in respect of deposit in account-)# In case of cumulative deposit in account-)& the amount of
interest accrued will be deemed to have been reinvested and in case of non-cumulative deposit in account-)&
the amount of interest will become due and payable at @uarterly intervals#
(+) Interest due at the end of each half year in respect of account-% will be credited only when the amount is
*e# $ or more and the total amount of interest payable in respect of account-% or account-) will be rounded
off to the nearest five paise#
(-) If a depositor applies under paragraph 1 or paragraph ' or paragraph $+ for conversion of the account or
withdrawal from the account or closure of the account& as the case may be& before completion of the period
for which the deposit in account-) has been accepted by the deposit office& the rate of interest payable in
respect of such deposit shall be the one applicable to the period for which the deposit remained with the
deposit office less one per cent penalty for a premature withdrawal on account of such conversion or
withdrawal or closure& as the case may be& and any ad?ustment re@uired to be made on account of such
premature conversion& withdrawal or closure with respect to amount of interest already credited to the
account of the depositor& shall be made by the deposit office against the amount lying to the credit of the
depositor in account-)#
6)!C*-"w"$ .-'m !C& "##'u:!.
9. ($) % depositor having account-% may& at any time after making the initial subscription& if he so desires&
apply in Horm , or as near thereto as possible& together with the pass book to the deposit office for the
withdrawal of amount from the balance to his credit in account-%& sub?ect to the other provisions of this
3cheme#
(2) An receipt of an application under sub-paragraph ($) the deposit office shall& sub?ect to the provisions of
sub-paragraph (+)& permit the withdrawal and enter the amount withdrawn in the pass book#
(+) %t the time of any withdrawal from account-%& other than the initial withdrawal& the depositor shall
furnish in Horm 4 in duplicate the details regarding the manner and extent of utilisation of the amount of
immediately preceding withdrawal# The deposit office will retain one copy of Horm 4 and return the other
copy to the depositor after duly authenticating it#
(-) Where the amount of withdrawal referred to in sub-paragraph (2) exceeds rupees twenty-five thousand&
the deposit office shall make payment to the depositor& sub?ect to the fulfilment of the conditions prescribed
in sub-paragraph (+)& by way of crossed demand draft drawn in favour of the person to whom the depositor
intends to make the payment#
(/) % depositor intending to make withdrawal from his deposit in account-)& shall first apply in the manner
prescribed in sub-paragraph (2) of paragraph 1 for transfer of the amount standing to his credit in account-)
to account-% and may withdraw the re@uisite amount in the same manner and sub?ect to the same conditions
as stipulated in sub-paragraphs ($) and (+) after the amount standing to the credit in his account-) has been
credited to his account-% by the deposit office#
(() In case the application under sub-paragraph (/) is made before the expiry of the specific period for which
the deposit in account-) was made& such withdrawal will be treated as premature withdrawal& and the
amount of interest accrued& if any& shall be calculated sub?ect to the provisions of sub-paragraph (-) of
paragraph 2#
(1) An receipt of the application under sub-paragraph (/)& the deposit office shall transfer the amount due
and payable& together with the amount of interest accrued& in account-)& to account-% in the same manner
and sub?ect to the same conditions as stipulated in paragraph 1 and thereafter allow the re@uest for
withdrawal made by the depositor in the same manner and sub?ect to the same conditions as stipulated in
sub-paragraphs ($)& (2)& (+) and (-)#
%#planat!on G Hor the removal of doubts& it is hereby clarified that the deposit office shall refuse the
depositor to withdraw any amount lying in his account& in case of failure on his part to furnish all the details
as re@uired by sub-paragraph (+)#
U!)$)%"!)': '. !C& "m'u:! '. w)!C*-"w"$.
10. ($) % depositor& withdrawing any amount out of the deposit made in pursuance of sub-section (2) of
section /- or sub-section (2) of section /-) or sub-section (2) of section /-4 or sub-section (-) of section
/-H or sub-section (2) of section /->& shall utili<e the whole or any part of the amount so withdrawn for the
purposes specified in sub-section ($) of the section in relation to which the deposit has been made#
(2) The amount withdrawn shall be utilised by the depositor within sixty days from the date of such
withdrawal for the purposes specified in sub-paragraph ($) and the amount or any part thereof which has not
been so utilised shall be re-deposited in account-% immediately thereafter#
2'm):"!)': ?E !C& *&'%)!'-.
11. ($) % depositor may nominate in Horm 9 or as near thereto as possible& one or more persons but not
exceeding three to receive the amount standing to his credit in account-% or account-)& as the case may be&
in the event of his death before the amount has become payable or having become payable& has not been
paid#
(2) Co nominations shall be made in respect of an account opened on behalf of a minor or a 0indu
Bndivided Hamily or a firm or a company or an association of persons or a body of individuals#
Income Bnder The head ,apital >ains 2/+
(+) % nomination made by a depositor may be varied by a fresh nomination in Horm H or as near thereto as
possible& by giving notice in writing to the deposit office in which the account stands#
(-) 9very nomination and every cancellation or variation thereof shall be registered in the deposit office and
shall be effective from the date of such registration& the particulars of which in the case of a deposit in
account-% shall be entered in the pass book and in the case of a deposit in account-) shall be entered in the
deposit receipt issued by the deposit office#
(/) If the nominee is a minor& the depositor may appoint any person to receive the amount due under the
account in the event of the death of the depositor during the minority of the nominee#
(() Where the nomination is in favour of more than one person& the nominee first named shall alone have the
right to receive the amount standing to the credit in the account of the deceased depositor#
(1) Where the nominee first named has pre-deceased the depositor and the depositor has not cancelled the
nomination or substituted the nomination& the nominee second named shall be entitled to receive the amount
standing to the credit in the account of the deceased depositor and so on in respect of other successive
nominees G
P-'>)*&* that if any nominee is dead& the surviving nominee or nominees shall& in addition to the proof of
death of the depositor& also furnish proof of death of the deceased nominee or nominees& as the case may be#
CC"-g& '- "$)&:"!)':.
12. The amount standing to the credit of any depositor in any account shall not be placed or offered by him
as security for any loan or guarantee and shall not be charged or alienated in any manner whatsoever#
C$'%u-& '. !C& "##'u:!.
13. ($) If a depositor desires to close his account& an application shall be made with the approval of the
%ssessing Afficer who has ?urisdiction over the depositor to the deposit office in Horm > or as near thereto
as possible& and the deposit office shall pay the amount of balance including interest accrued& to the credit in
the account of the depositor by means of crediting such amount to any bank account of the depositor#
(2) If a depositor in respect of whose deposit account a nomination is in force& dies& the nominee& if he
desires to close the account or accounts and obtain the payment of the balance standing to the credit in the
account of the deceased depositor& shall make an application to the deposit office in Horm 0 or as near
thereto as possible with the approval of the %ssessing Afficer who has ?urisdiction over the deceased
depositor& and the deposit office shall pay the amount of balance standing to the credit in the account of the
deceased depositor including amount of interest accrued& by means of crediting such amount to any bank
account of the nominee#
(+) If a depositor& in respect of whose deposit no nomination is in force& the legal heir of the deceased
depositor shall make an application to the deposit office in Horm 0 or as near thereto as possible& with the
approval of the %ssessing Afficer who has ?urisdiction over the deceased depositor& and the deposit office
shall pay the balance standing to the credit in the account of the deceased depositor including the amount of
interest accrued& by means of crediting such amount to any bank account of the legal heir G
P-'>)*&* that where there are more than one legal heir of the deceased depositor& the legal heir making the
claim individually may do so by producing the letter of disclaimer or letter of authori<ation from other legal
heirs in his favour G
P-'>)*&* .u-!C&- that before granting the approval for closure of the account under this sub-paragraph& the
%ssessing Afficer shall obtain from the legal heir a succession certificate issued under 6art 7 of the Indian
3uccession %ct& $'2/& or a probate of the will of the deceased depositor& if any& or letter of administration to
the estate of the deceased in case there is no will in order to verify the claim of such legal heir to the account
of the deceased depositor#
(-) The depositor or the nominee or the legal heir& in order to obtain payment of the amount standing to the
credit in the account shall while applying in Horm > or Horm 0& also submit the pass book of account-% or
deposit receipt of account-)& as the case may be& to the deposit office#
Income Bnder The head ,apital >ains 2/-
(/) The payment made by the deposit office to the depositor or the nominee or the legal heir in accordance
with the provisions of this paragraph shall constitute a full discharge to the deposit office of its liability in
respect of the deposit#
(() Cothing contained in this paragraph or in paragraph $$ shall affect the right or claim which any person
may have against the person to whom any payment is made under this paragraph#
Income Bnder The head ,apital >ains 2//
REVERSE MORTGAGE SCHEME, 2008
NOTIFICATION NO. 93/2008, DATED 30-9-2008
In exercise of the powers conferred by clause (#"!) of section -1 of the Income-tax %ct& $'($ (-+ of $'($)&
the ,entral >overnment hereby makes the following scheme& namelyGR
SC'-! !)!$&H #'mm&:#&m&:! ":* "$)#"!)':
1. ($) This scheme may be called the *everse :ortgage 3cheme& 2552#
(2) It shall be deemed to have come into force from the $st day of %pril& 2552#
(+) 3ave as otherwise provided in the 3cheme& it shall be applicable to all eligible persons#
/&.):)!)':%
2. In this 3cheme& unless the context otherwise re@uires&R
(a) M%ctN means the Income-tax %ct& $'($ (-+ of $'($)"
(3) Mapproved lending institutionN meansR
(!) Cational 0ousing )ank established under section + of the Cational 0ousing )ank %ct& $'21 (/+
of $'21)"
(!!) a scheduled bank included in the second schedule to the *eserve )ank of India %ct& $'+-" or&
(!!!) a housing finance company registered with the Cational 0ousing )ank"
(c) M)oardN means the ,entral )oard of 4irect Taxes constituted under the ,entral )oard of *evenue %ct&
$'(+ (/- of $'(+)"
(d) M,apital assetN means a residential house property which is located in India"
(e) Meligible personN means
(!) any person& being an individual& who is of& or above& the age of sixty years" or
(!!) any married couple& if either of the husband or wife is of& or above& the age of sixty years"
(f) M*everse :ortgageN means mortgage of a capital asset by an eligible person against a loan obtained by
him from an approved lending institution"
(g) Mreverse mortgagorN means the eligible person who has mortgaged the capital asset for the purpose of
obtaining loan"
(h) Mreverse mortgage transactionN means a transaction in which the loan may be disbursed to the reverse
mortgagor but does not include transaction of sale& or disposal& of the property for settlement of the
loan"
(!) %ll other words and expressions used herein& but not defined and defined in the %ct& shall have the
meanings respectively assigned to them in the %ct#
A$)#"!)': ":* -'#&%%):g .'- -&>&-%& m'-!g"g& !-":%"#!)':
3. ($) %ny eligible person may enter into a reverse mortgage transaction by applying in writing to the
approved lending institution& if the capital asset& being mortgaged& isR
(!) owned by him" and
(!!) free from any encumbrances#
(2) The application under sub-rule ($) shall be processed by the approved lending institution and for this
purpose the institution may charge nominal amount as processing fees#
Income Bnder The head ,apital >ains 2/(
S":#!)': '. -&>&-%& m'-!g"g& $'":
4. ($) The approved lending institution& before taking mortgage of capital asset and before disbursing any
loan under reverse mortgage& shallR
(a) enter into a loan agreement in writing with the reverse mortgagor" and
(3) obtain and maintain the following particulars from the reverse mortgagor& namelyGR
(!) Came and address of the owner of the capital asset"
(!!) 6ermanent %ccount Cumber of the owner of the capital assetG
(!!!) Total area& including built up or covered area& of the capital asset"
(!") ,ost of ac@uisition and the year of ac@uisition of the capital asset"
(") ,ost of improvement and the year of improvement of the capital asset"
("!) Came& address and 6ermanent %ccount Cumber of all the legal heirs and estate of the owner of
the capital asset"
("!!) % copy of the registered will of the owner of the capital asset including any changes made therein
during the currency of the term of the loan#
/)%?u-%&m&:! '. $'":
7. ($) The approved lending institution may disburse the loan to the reverse mortgagor by any one or more
of the following modes& namelyGR
(!) periodic payments to be decided mutually between the approved lending institution and the reverse
mortgagor"
(!!) lump sum payment in one or more trenches& to the extent that the aggregate of the amount disbursed as
lump sum payments does not exceed fifty per cent of the total loan amount sanctioned#
P&-)'* '. -&>&-%& m'-!g"g& $'":
6. The loan under reverse mortgage shall not be granted for a period exceeding twenty years from the date of
signing the agreement by the reverse mortgagor and the approved lending institution#
4&"Em&:! '. $'":
7. The reverse mortgagor& or his legal heirs or estate& shall be liable for repayment of the principal amount of
loan along with the interest to the approved lending institution at the time of foreclosure of the loan
agreement#
G1L/ /EP1S0T SCHEME
)anks authori<ed by the *eserve )ank to deal in gold and have the re@uired infrastructure for managing the
scheme" expertise.experience in gold business and proper risk management systems may launch the >old
4eposit 3cheme# 9ach bank will& within the framework set out by the *eserve )ank guidelines& devise a
scheme in accordance with its own assessment of the market# )anks proposing to introduce a gold deposit
scheme will need to take the *eserve )ank approval for introducing the scheme#
The 3cheme seeks to provide depositors the opportunity to earn interest on their idle gold holdings along
with the benefits of safety and security of holding gold without any cost# *esident Indians (individuals&
0BH& trusts& companies) can invest in the scheme# Point tenders may be accepted and more than one
certificate issued in the case of ?oint holders#
Bnder the scheme& banks can either issue a passbook or a certificate.bond& which will be transferable by
endorsement and delivery# The banks will ensure to issue the passbook or certificate for deposit of gold to
the depositor within '5 days from the date of receipt of gold# The passbook.certificate will indicate& inter
alia& the name of the depositor.s& @uantum of gold deposit in grams& the date of deposit& the date of maturity
and the interest payable on the deposit# Comination facility will be allowed on the lines of the other usual
rupee deposit schemes# There will be an initial lock-in period& which will be decided by the banks#
Individual banks will be free to fix the interest rates in tune with their own costing considerations# Interest
will be payable in cash at fixed intervals or at maturity as decided by the bank# The deposits may be made
available within a maturity range from three to seven years# 4elivery atmaturity will be in standard gold bar
form of #''/ fineness or in rupees e@uivalent to the price of gold as on that date at the option of the
depositor& to be exercised at the time of application or once during the tenure of the bonds#
6remature payment.encashment in cash e@uivalent to the price of gold as on the date of encashment or in
gold would be allowed after the initial lock-in period# )anks may decide the penalty.swap cost to be levied
on such withdrawals depending on the period for which the deposit has run# *upee loans may be given
against collateral of gold deposits#
3cheme will be open for investment by resident Indians# Bnder the scheme& banks will either issue a
passbook or a certificate or bond which will be transferable by endorsement and delivery# )anks will be free
to fix their own interest rates on the gold deposit scheme# The scheme will have maturity range from + to 1
years with an initial lock-in period to be specified by each bank#
*upee loans will be available against collateral of the gold deposits# The scheme will be open-ended and
will be available on tap# To ensure wide reach for the scheme& banks which fulfil these criteria but have
limited branch network& may appoint other banks having the necessary infrastructure for collection& storage
and transportation of gold as collection agents only#
1!C&- .&"!u-&% '. %#C&m&:
The operation of the 3cheme will be open-ended& available on tap until further notice#
A%%"E: >old (bars& coins& ?ewelry& etc#) will be accepted in scrap form only# There will be a preliminary
assay to ascertain gold content.caratage in ?ewelry by a non-destructive techni@ue such as D-*ay.karatmeter
followed by a foolproof method like fire assay# The depositor may be given the option to withdraw the
tender depending on the results of the preliminary assay# If the option to withdraw is exercised& banks may
consider levying a nominal charge to defray the cost of preliminary assay# Hor assaying& banks may enter
into arrangements with existing units& or use the assaying infrastructure being ?ointly set up by the
designated banks#
/&$'Em&:! L &+'-!/)m'-! '. G'$*:
Hor the purpose of the scheme& banks have been allowed to export.import of gold scrap.refined gold which
will be exempt from ,ustoms duty# )anks have also been permitted to make payment in foreign exchange
for refining charges& including cost of insurance& transportation& etc#& sub?ect to 9xchange ,ontrol
regulations# )anks may deploy gold mobili<ed under the scheme as gold loans to domestic ?ewelry industry&
gold loans to ?ewelry exporters& outright sale of gold domestically& sale of gold to other nominated banks#
3"#)$)!)&% !' 9":k%:
)anks would be re@uired to put in place suitable risk management mechanisms to hedge the price risk
arising out of gold price movements# )anks are permitted to enter into forward contracts in India for buying
and selling of gold with only those banks which are authori<ed by the *eserve )ank to import gold# )anks
have also been allowed to access the international exchanges& =ondon )ullion :arket %ssociation or make
use of over-the-counter contracts to hedge exposures to bullion prices sub?ect to the 9xchange control
regulations# )anks would need to put in place suitable accounting systems& internal control and audit
mechanisms and disclosure norms to cover all its operations in respect of gold including the >old 4eposit
3cheme#
%uthori<ed banks will be exempted from maintaining the cash reserve ratio on liabilities under gold deposits
mobili<ed in India# In view of multiple prescriptions& however& banks will have to maintain a minimum ,**
of +#5 per cent on total net demand and time liabilities (including <ero ,** liabilities)# The authori<ed banks
will have to maintain 3=* of 2/#5 per cent on liabilities under the gold deposit scheme# It may be noted that
under the present law& banks have to maintain a minimum of 2/#5 per cent 3=*#
Income Bnder The head ,apital >ains 2/'
02 THE 0TAT MUM9A0 9E2CH Q0R ASPEC0AL 9E2CHB
0:#'m&(!"+ 1..)#&-S H 6"-*(19A3B(4H Mum?")
8%
M%. Su%C)$" M. <C">&-)
>#9# 799*%)0%4*%66%& 7I,9 6*93I49CT ;#,# 3IC>0%=& PB4I,I%= :9:)9* %C4 4*# A#;#
C%*%J%C%C& %,,ABCT%CT :9:)9*
IT %669%= CA# 22(/ (:B:#) AH 2552 Y%33933:9CT J9%* $''/-'(Z
%6*I= $1& 2551
S&#!)': 74H -&"* w)!C %&#!)': 743H '. !C& 0:#'m&(!"+ A#!H 1961 ( C")!"$ g"):% ( P-'.)! ': %"$& '.
-'&-!E u%&* .'- -&%)*&:!)"$ C'u%& ( A%%&%%m&:! E&"- 1997(96 ( 6C&!C&- &+&m!)': u:*&- %&#!)':% 74
":* 743 )% "$$'w"?$& ): -&%&#! '. ':& -&%)*&:!)"$ C'u%& ':$E ( H&$*H E&% ( 6C&!C&- ). "%%&%%&& C"%
u-#C"%&* m'-& !C": ':& -&%)*&:!)"$ C'u%&H !C&: #C')#& w'u$* ?& w)!C "%%&%%&& !' ">")$ &+&m!)': ):
-&%&#! '. &)!C&- '. C'u%&%H -'>)*&* '!C&- #':*)!)':% "-& .u$.)$$&* ( H&$*H E&% ( A%%&%%&& %'$* "
-&%)*&:!)"$ .$"! ":* -&):>&%!&* !'!"$ %"$& #':%)*&-"!)': ): u-#C"%):g !w' ):*&&:*&:!$E $'#"!&*
-&%)*&:!)"$ .$"!% ( A%%&%%&& #$")m&* &+&m!)': u:*&- %&#!)': 74 ): -&%&#! '. !'!"$ $':g(!&-m #")!"$
g"): "-)%):g .-'m %"$& '. -&%)*&:!)"$ .$"! ( 6C&!C&- "%%&%%&& w"% &:!)!$&* !' &+&m!)': ): -&%&#! '.
):>&%!m&:! ): ':$E ':& .$"! '. C&- #C')#& ( H&$*H E&%
3ACTS
The assessee was owner of a residential flat situated at :umbai# 4uring the previous year& the assessee had
sold the said flat and reinvested the total sale consideration in purchasing two residential flats at different
locations in :umbai# The assessee claimed exemption under section /- in respect of total long-term capital
gain arising from the sale of the residential flat at :umbai# The %ssessing Afficer held that exemption was
available only in respect of investment in one residential house# The %ssessing Afficer& therefore& allowed
exemption under section /- in respect of the house& which permitted higher exemption#
An appeal& the ,ommissioner (%ppeals)& following the decision of the :umbai )ench of the Tribunal
rendered in the case of 0atanchand Murarka v# Lt. &'T YIT %ppeal Co# --2/ (:um#) of $'''& dated $2-'-
255$Z& held that exemption was available in respect of investment made in both the flats#
An revenue!s appeal G
HEL/
3ection -/& which is charging section& uses the expression transfer of a capital asset!# 0ere the word a!
means every!& since capital gain of each capital asset has to be computed depending upon the period of
holding# 9xemption from the levy of capital gain tax is provided in sections /-& /-)& /-4& /-9& /-9%&
/-9)& /-H and /-0 as is apparent from section -/ itself# % perusal of the provisions of sections /-& /-)&
/-4& /-9& /-9%& /-9) and /-H clearly reveals that the =egislature has used the words a! and any! with
reference to investment of capital gain.sale consideration in certain asset or assets# The =egislature was not
oblivious regarding the meaning of these two words# The word any! has been used by the =egislature in
sections /-)& /-4& /-9& /-9% and /-9) while the word a! has been used in sections /- and /-H# This
clearly shows that the =egislature intended different meanings to be given to these two words# % close
reading of these sections shows that =egislature intended to allow exemption in respect of investment in
more than one asset by using the word any!# 3ection /-9 allows exemption in respect of investment in any
specified asset!# 9xplanation $ to section /-9 defines the specified asset!# It includes various assets in
which investment can be made by the assessees who are eligible for exemption under section /-9# There is
nothing to indicate that investment is restricted to any of the specified assets# 0ad the =egislature intended to
restrict investment in any one of the specified assets& it would have used the words in any one of the
specified assets! instead of in any specified asset!# This clearly shows that the word any! has been used
where the =egislature intended investment in more than one asset# 3imilarly& in section /-9)& the
Income Bnder The head ,apital >ains 2(5
=egislature has used the words in any of the assets specified by the )oard!# 3imilar is the position in section
/-9%# 3ection /-) and section /-4 also use the word any other land! and any other land and building!
respectively# The expression any other land! is an expression of widest amplitude and& therefore& its
meaning cannot be restricted to any one piece of land# An the other hand& the =egislature has used the word
a! in sections /- and /-H# 0ad the =egislature intended for investment in more than one asset& it could have
easily used the words in any residential house! in sections /- and /-H instead of the words a residential
house!# 3uperfluous words are not used by the =egislature# 4ifferent words like a! and any! have been
deliberately used by the =egislature to convey different meanings# Therefore& the =egislature used the word
a!& where it intended investment in one residential house only and used the word any!& where it intended
investment in one or more assets# Y6ara 2Z
Thus& the intention of the =egislature was to allow exemption under sections /- and /-H in respect of
investment in one single residential house# Y6ara 'Z
Therefore& the exemption under sections /- and /-H would be allowable in respect of one residential house
only# If the assessee has purchased more than one residential house& then the choice would be with assessee
to avail the exemption in respect of either of the houses& provided the other conditions are fulfilled#
0owever& where more than one unit are purchased which are ad?acent to each other and are converted into
one house for the purpose of residence by having common passage& common kitchen& etc#& then it would be a
case of investment in one residential house and conse@uently& the assessee would be entitled to exemption#
Y6ara $$Z
In the instant case& the investment was made in two flats located at different localities in :umbai#
%ccordingly& the assessee was entitled to exemption in respect of investment in one house only of her
choice# The %ssessing Afficer had already allowed exemption in respect of house& which permitted higher
exemption# Therefore& the order of the ,ommissioner (%ppeals) was to be reversed on this issue and the
order of %ssessing Afficer was to be restored# Y6ara $2Z
E/0T14RS 21TE
It was also held by the Tribunal that brokerage paid by the assessee was to be allowed while computing
capital gain as the assessee produced proof of payment along with her bank statement#
CASES 4E3E44E/ T1
J.&. Jaush!k v# P./. 0aneA K!fth 'TO Y$''5Z $2/ IT* -''./$ Taxman /$ ()om#) (para $)& 0atanchand
Murarka v# Lt. &'T YIT %ppeal Co# --2/ (:) of $'''& dated $2-'-255$Z (para $)& 'TO v# $aulat ?uthar!a YIT
%ppeal Co# '(+' ()) of $'2'& dated $(-/-$''(Z (para $)& 'TO v# /hupendra Patel YIT %ppeal Co# 15 (:) of
$''/& dated 2----2552Z (para $)& Kul1ant! &. 0athod v# 'TO YIT %ppeal Co# $5'2 (:) of $''/& dated +-/-
2552Z (para $)& 'TO v# Nans! Jr!t! S. YIT %ppeal Co# 2'/- (:) of $''/& dated 22-/-255/Z (para $)&
B!;;atlal B. Sheth v# 'TO YIT %ppeal Co# (1($ (:) of 2552& dated $/-2-255/Z (para $)& Pra3hakar S.
Mogre v# Lt. &'T YIT %ppeal Co# 21 (:) of 2555& dated 2-/-255/Z (para $)& $.. &'T v# Mohanlal J. Ma"er!
YIT %ppeal Co# 21-1 (:) of $''2& dated $/-$2-255/Z (para $)& Jr!shangopal Nagpal v# $.. &'T Y255-Z 2
3AT (22 (6une) (para $)& Mrs. Culshan3anoo 0. Mukh! v# Lt. &'T Y2552Z 2+ IT4 (-' (:um#) (para $)&
Maho;edall. Ta@3ho. v# &%PT Y$'/$Z 25 IT* 21- ()om#) (para /)& $r. <nand /asappa v# 'TO Y255-Z '$
IT4 /+ ()ang#) (para ()& &'T v# Natu Bansra@ Y$'1(Z $5/ IT* -+ (>u?#) (para ()& &'T v# T.N. <ra"!nda
0edd. Y$'1'Z $25 IT* -(. 2 Taxman /-$ (3,) (para ()& Jesha"@! 0ao@! N &o. v# &'T Y$''5Z $2+ IT* $. -'
Taxman 21 (3,) (para 1) and /./. Sarkar v# &'T Y$'2$Z $+2 IT* $/5. 1 Taxman 2+' (,al#) (para $5)#
9C"-"! 9Cu%C": and A*)!E" 8)k-"m for the <ppellant.
3)-'I 9. A:*CE"-u@):" for the 0espondent.
14/E4
J.&. S!nghalA Lud!c!al Me;3er. - The 0on!ble 6resident& Income-tax %ppellate Tribunal& has constituted this
)ench to decide this appeal as well as to ad?udicate the following @uestion of law G
Income Bnder The head ,apital >ains 2($
SWhether& the phrase Sa residential houseS used in sub-section ($) of sections /- and /-H means one
residential house or more than one residential house independently located in the same
building.compound.city [S
%t the outset& we would like to point out the reasons for constituting this )ench# This appeal came up before
the 4ivision )ench# The revenue contended that exemption under section /-./-H of the Income-tax %ct&
$'($ (%ct!) would be available only in respect of investment made in one residential house# *eliance was
placed on the ?udgment of the 0on!ble Purisdiction 0igh ,ourt in the case of J.&. Jaush!k v# P./. 0aneA
K!fth 'TO Y$''5Z $2/ IT* -''
$
()om#)# An the other hand& the assessee contended that the exemption under
the aforesaid sections would be available even if investment is made in the two house properties though
distantly located from each other# *eliance was placed on the following decisions of the TribunalG
(!) 0atanchand Murarka v# Lo!nt &'T YIT% Co# --2/.:.$'''& dated $2-'-255$Z %ssessment year $''(-'1"
(!!) 'TO v# $aulat ?uthar!a YIT% Co# '(+'.).$'2'& dated $(-/-$''(Z"
(!!!) 'TO v# /hupendra Patel YIT% Co# 15.:.$''/& dated 2----2552Z"
(!") Kul1ant! &. 0athod v# 'TO YIT% Co# $5'2.:.$''/& dated +-/-2552Z"
(") 'TO v# Nans! Jr!t! S. YIT% Co# 2'/-.:.$''/& dated 22-/-255/Z"
("!) B!;;atlal B. Sheth v# 'TO YIT% Co# (1($.:.2552& dated $/-2-255/Z"
("!!) Pra3hakar S. Mogre v# Lo!nt &'T YIT% Co# 21.:.2555& dated 2-/-255/Z"
("!!!) $.. &'T v# Mohanlal J. Ma"er! YIT% Co# 21-1.:.$''2& dated $/-$2-255/Z#
The 4ivision )ench also noticed that :umbai )ench of the Tribunal in the case of 0atanchand Murarka
(supra) had also considered the decision of the 0on!ble )ombay 0igh ,ourt in the case of J.&. Jaush!k
(supra) and distinguished the same and thereby held that exemption under section /-./-H was available in
respect of investments made in two house properties even if they were distantly located from each other# The
4ivision )ench also found that contrary opinion has also been expressed by other )enches of the Tribunal in
the case of Jr!shangopal Nagpal v# $.. &'T Y255-Z 22 TTP (6une) -2$
$
& as well as in the case of Mrs.
Culshan3anoo 0. Mukh! v# Lt. &'T Y2552Z 2+ IT4 (-' (:um#) even after considering the earlier decision of
the Tribunal in the case of 0atanchand Murarka ( supra)# 3ince inconsistent views were expressed by the
different )enches& the 4ivision )ench referred the matter to the 0on!ble 6resident& IT%T& under section
2//(+) of the %ct for constituting the 3pecial )ench to ad?udicate the aforesaid @uestion# The 0on!ble
6resident& IT%T& was pleased to constitute this )ench to decide this appeal including the @uestion mentioned
in para $ above#
2. The @uestion referred is an abstract @uestion without reference to the facts of the case# 3ince the 0on!ble
6resident& IT%T& has also directed to dispose off the appeal& it would be appropriate to refer to the facts of
the present case# The assessee and her husband were co-owners of a residential flat at S>ulistanS situated at
)hulabhai 4esai *oad& :umbai& having /5 per cent share each# In the year under consideration& the said flat
was sold for a total consideration of *s# +#5+ crores on $2-2-$'2-# The share of the assessee in the sale
consideration amounted to *s# $#/$/ crores# The assessee re-invested the sale proceeds in purchase of `
share in a flat at 7arun %partment& 7arsova& on $2-/-$''- for *s# 22#(/ lakhs and another ` share in a flat at
9rlyn %partment& )andra& on $-$2-$''- for *s# -1#1' lakhs# The other ` share in these two flats were
purchased by the husband of the assessee# The assessee claimed exemption under section /- of *s# 1(#--
lakhs against long-term capital gain arising from the sale of her share in the residential flat at )hulabhai
4esai *oad& :umbai# 0owever& the %ssessing Afficer was of the view that exemption was available only in
respect of investment in one residential house# %ccordingly& he restricted the exemption to *s# -1#1' lakhs
being the investment in the flat at 9rlyn %partment& )andra# In taking this view& the %ssessing Afficer relied
on the ?udgment of the ?urisdictional 0igh ,ourt in the case of J.&. Jaush!k (supra)# An appeal& the learned
,IT(%)& following the order of the Tribunal in the case of 0atanchand Murarka (supra)& held that exemption
was available in respect to investment made in both the flats# %ggrieved by the same& the revenue is in
appeal before the Tribunal#
3. )oth the parties have been heard at length# %t the outset& the learned 3r# 4#*# drew our attention to the
@uestion referred to point out that this )ench is concerned with a situation where investment is made by the
assessee in two residential houses independently located at different places either in the same building or in
the city# Therefore& those decisions of the Tribunal would not be applicable where the investments had been
made in two flats ad?acent to each other intended to be used as one residential house having same kitchen
and common passage# %ccordingly& the decisions of the Tribunal at 3l# Cos# (!!) to ("!!) in the list mentioned
in the earlier paragraph would not be relevant in ad?udicating the @uestion referred before this )ench
inasmuch as in all those cases& the flats purchased were either ad?acent to each other or on two floors having
common staircase# 6roceeding further& it was submitted that the language of the provisions of section /-./-H
is plain and unambiguous since the word SaS means only one# 9ven if the word SaS means SanyS& it does not
mean many# %ccording to him& the word SanyS would mean one out of many# Thus& he pressed into service
the cardinal rule of interpretation that where language of a statute is unambiguous& then its plain and natural
meaning should be applied# If so construed& then Sa residential houseS would only mean one residential
house# In support of his contention& he relied on the decision of the Tribunal in the case of Mrs.
Culshan3anoo 0. Mukh! (supra) as well as another decision in the case of Jr!shangopal Nagpal (supra)&
wherein it has been held that exemption is available only in respect of investment in one residential house#
4. An the other hand& the learned 3r# counsel& :r# Hiro< )# %ndhyaru?ina& appearing on behalf of the assessee
has supported the order of the learned ,IT(%) by raising various submissions mentioned hereafter and
relying on various decisions of the Tribunal including the one in the case of 0atanchand Murarka (supra)#
Hirstly& it was submitted by him that the ?udgment of the 0on!ble )ombay 0igh ,ourt in the case of J.&.
Jaush!k (supra) cannot be applied to the present case since the @uestion considered by the 0on!ble )ombay
0igh ,ourt was entirely different# 0e drew our attention to the facts in the case of J.&. Jaush!k (supra)&
wherein the assessee had sold his flat for *s# $#2/ lakhs on 2--$5-$'1' and on the same day purchased
another flat at ;har& )ombay& for a some of *s# $#$$ lakhs# 0e resided in that flat from Actober $'1' to Puly
$'25 and thereafter sold the same on 2(-1-$'25 for a sum of *s# $#25 lakhs and purchased another flat on
the same date at 3antacru<& )ombay for *s# $#25 lakhs# It was claimed by the assessee that the capital gain
arising on the sale of his flat on 2--$5-$'1' was not taxable as he had invested more than the capital gain in
the purchase of flat at 3antacru< on 2(-1-$'25# The %ssessing Afficer partly accepted the claim by holding
that the surplus invested in the purchase of a flat at ;har and not in the purchase of a flat at 3antacru< was
eligible for exemption# Thus& the exemption was allowed with reference to the investment in the flat at ;har
and conse@uently& the profit arising from the sale of flat at ;har was held to be taxable as short-term capital
gain# The matter reached the 0igh ,ourt before whom the following two @uestions had arisen for
considerationG
S$# Whether& the petitioner had a choice to choose the property against which the capital gain which had
arisen on the transfer of a capital asset are to be ad?usted[ and
2# Whether& the property purchased but not actually used for residence for three years fulfils the
re@uirement of section /-($) of the Income-tax %ct& $'($ were raised before the ,IT#S
In view of the above @uestions the learned 3r# counsel for the assessee vehemently submitted that the
@uestions for consideration before the 0igh ,ourt were entirely different from the @uestion to be ad?udicated
by the 3pecial )ench# Therefore& the decision of the 0on!ble )ombay 0igh ,ourt should be understood in
the context of the @uestions referred# %ccording to him& it was with reference to @uestion Co# $ that the
0on!ble 0igh ,ourt held that if the assessee purchased two house properties within one year of the sale of
his house& the assessee has choice to claim exemption under section /- of the %ct against the purchase of
any one of the properties# Thus& according to him& the said decision is @uite distinguishable and cannot be
applied to the present case#
Income Bnder The head ,apital >ains 2(+
7. ,oming to the decision of the Tribunal in the case of Mrs. Culshan3anoo 0. Mukh! (supra)& it has been
pointed out by him that the )ench relied on the principles of interpretation to the effect that if the language
employed by the =egislature is plain and simple and does not create any ambiguity& then its plain and natural
meaning has to be applied# %ccording to the said )ench& the plain and natural meaning of the word Sa
residential houseS meant one residential house only# 0ad the =egislature intended to give exemption for
more than one residential house& then it could have used the words Sresidential house or housesS# The
learned counsel for the assessee has assailed the said order of the Tribunal by submiting that expression Sa
residential houseS is not unambiguous inasmuch as the word SaS is an indefinite word as held by the 0on!ble
)ombay 0igh ,ourt in the case of the Maho;edal! Ta@3ho. v# &%PT Y$'/$Z 25 IT* 21-& wherein the
expression Sa decisionS in section $5%(+) of the 9xcess 6rofit Tax %ct was held to mean Sany decisionS
which in turn could mean more than one decision# In view of the same& the 0igh ,ourt held that 9xcess
6rofit Tax Afficer was competent to pass both the orders# An the basis of this decision& it was contended that
the word SaS would include more than one and conse@uently& the decision of the Tribunal in the case of Mrs.
Culshan3anoo 0. Mukh! (supra)& cannot be said to have laid down the correct law#
6. 6roceeding further& it was submitted that the expression Sa residential houseS should be understood with
reference to the ob?ect of the =egislature as held by the Tribunal in the case of 0atanchand Murarka (supra)#
%ccording to him& the ob?ect is to reinvest the capital gain.sale consideration in any residential house and the
same cannot be restricted to one house only# 0ad the =egislature intended to restrict the investment in one
house& it could do so by employing the expression Sone residential houseS# 0e invited our attention to the
provisions of section /($)(!") of the Wealth- tax %ct& $'/(& where the =egislature has used the expression
Sone residential houseS# In support of his submission& he relied on the commentary of 6ithisaria K
,haturvedi& 6age 222+ and the decisions of the Tribunal namely - 0atanchand Murarka ( supra)& $r. <nand
/asappa v# 'TO Y255-Z '$ IT4 /+ ()ang#) and other decisions referred to before the 4ivision )ench
mentioned earlier# 0e also referred to the decision of the 0on!ble >u?arat 0igh ,ourt in the case of &'T v#
Natu Bansra@ Y$'1(Z $5/ IT* -+ to contend that if substantial compliance is made& then exemption cannot
be denied# 0e referred to the decision of 0on!ble %llahabad 0igh ,ourt to submit that there is a distinction
between the provision of section /($)(!") of the Wealth-tax %ct& $'/( and the provisions of section /-./-H of
the %ct inasmuch as the =egislature used the word SoneS in Wealth-tax %ct& $'/(& while used the word SaS in
section /-./-H of the %ct# %ccording to him& if the =egislature intended to restrict the exemption to
investment in one residential house& it could easily use the words Sone residential houseS in section /-./-H#
0e also referred to the decision of the 0on!ble 3upreme ,ourt in the case of &'T v# T.N. <ra"!nda 0edd.
Y$'1'Z $25 IT* -(
$
& to contend that the %pex ,ourt allowed exemption under section /- even where house
was purchased by different deeds# *eference was made to the decision of the 0on!ble ,alcutta 0igh ,ourt
to submit that expression was allowed even where assessee purchased a house and made further investment
in construction of additional floor thereon# =astly& it was contended that as compared to the word SaS& the
word StheS is definite word# If the =egislature had intended to restrict the exemption to one residential house&
it could use the word StheS instead of SaS# It was vehemently contended that the word SaS has been used to
stress the nature of house !.e.A residential# %lternatively& it was suggested that =egislature could use the word
SunitS instead of ShouseS if it had intended to allow exemption in respect of one house# Hinally& he concluded
his arguments by submitting that the word SaS should be construed with reference to the ob?ect of the
=egislature which according to him is to re-invest the amount of capital gain.sale consideration in the
residential properties irrespective of their locations#
7. *ival submissions have been considered carefully# The real controversy is about the meaning of the
expression Sa residential houseS used by the =egislature in sections /- and /-H of the %ct# %ccording to the
revenue& it means& one residential house while& according to the assessee& the word SaS means SanyS which in
turn means Sone or more than oneS# There cannot be dispute to the cardinal rule of interpretation that where
the language used by the =egislature is plain& simple and unambiguous& then the plain and natural meaning
of the words used should be applied in construing the provisions of a statute and& therefore& the ,ourts
Income Bnder The head ,apital >ains 2(-
should not look into the intention of the =egislature# It is also e@ually true that where the language is
ambiguous than the ,ourts can have recourse to the aids to the interpretation to unearth the intention of the
=egislature in enacting such provisions# *eference can be made to decision of the 0on!ble 3upreme ,ourt in
the case of Jesha"@! 0ao@! N &o. v# &'T Y$''5Z $2+ IT* $
$
# The relevant observations are @uoted below G
S%s long as there is no ambiguity in the statutory language& resort to any interpretative process to unfold
the =egislative intend becomes impermissible# The supposed intention of the =egislature cannot then be
appealed to whittle down the statutory language which is otherwise unambiguous# If the intendment is
not in the words& it is nowhere else# The need for interpretation arises when the words used in the statute
are& on their own terms& ambivalent and do not manifest the intention of the =egislature#S
It is& therefore& necessary to see whether there is any ambiguity about the word SaS#
8. %ccording to the 'llustrated O#ford $!ct!onar.& it means G
S$# Ane& some& any (when referring to something for the first time in a text or conversation)& 2# one like&
+# one single (not a thing or sight)& -# the same (all of a si<e)& /# in& to& or far each (twice a year& seven a
side)#S
%s per 2e3sterOs %nc.cloped!c Ena3r!dged $!ct!onar.& it meansG
SIndefinite article - $# not any particular or certain one of a class or group" a man& a chemical& a horse& 2#
another typically representing" +# one" a certain" a particular G one at a time" two of a kind& -# (used before
plural& noun that are preceded by a @uantifier singular in term) G a hundred men" a do<en times& /#
idefinitely or non-specifically G a great many years G a few stars& (# any" a single G not a one" 1# (when
stressed) each& every& perG ten cents a dance& three time a day#S
%s per Lud!c!al $!ct!onar. by ;#P# %iyer (2th 9dition)& it meansR
S3ometimes& SaS is read as StheS& sometimes as SsomeS but more fre@uently as SanyS# 3imilarly meaning
is given by the ?a1 ?e#!con.S
6erusal of the above clearly shows that the word SaS is ambiguous as it has no definite meaning# 7arious
meanings are given to the word SaS# It not only means SoneS or SanyS but it has various other meanings
depending upon the context in which it is to be used# Therefore& the cardinal principle of interpretation
cannot be applied and conse@uently& the intention of the =egislature has to be discovered by resorting to the
aids to the interpretation# Ane of the rules of interpretation is to find out the context in which such word is
used by the =egislature#
)efore coming to the context in which word SaS is used in section /-./-H& we would like to mention that
much emphasis was made on the word SanyS# It has been contended that the word SaS means SanyS which in
turn means SmanyS or Smore than oneS# This appears to be partially true# %s per various dictionary
meanings& it also includes SoneS or Sone out of manyS# %ccording to ?a1 ?e#!con& the word SanyS may have
several meanings according to the circumstances# It may mean SallS& SeachS& SsomeS or Sone or more out of
severalS# It further says that it is not confined to a plural sense# %ccording to 'llustrated O#ford $!ct!onar. as
well as 2e3sterOs %nc.cloped!c Ena3r!dged dictionary also& the word SanyS has various meanings including
SoneS# This clearly shows that the word SanyS does not always mean more than one# It may also be used to
denote SoneS# 3o& both the words SaS as well as SanyS are ambiguous and& therefore& the meaning of these
words has to be seen with reference to the context in which these words are used#
=et us& therefore& consider the scheme of the exemption under ,hapter I7-9 relating to the capital gains#
3ection -/ which is charging section uses the expression Stransfer of a capital assetS# 0ere the word SaS
means SeveryS since capital gain of each capital asset has to be computed depending upon the period of
holding# 9xemption from the levy of capital gain tax is provided in sections /-& /-)& /-4& /-9& /-9%&
/-9)& /-H and /-0 as is apparent from section -/ itself# The relevant portion of these sections are being
extracted below G
Income Bnder The head ,apital >ains 2(/
S/-# 3ub?ect to the provisions of sub-section (2)& where& in the case of an assessee being an individual or
a 0indu undivided family& the capital gain arises from the transaction of a long-term capital asset being
buildings or lands appurtenant thereto& and being a residential house& the income of which is chargeable
under the head SIncome from house propertyS (hereafter in this section referred to as the original asset)&
and the assessee has 1!th!n a per!od of Gone .ear 3efore or t1o .ears after the date on 1h!ch the transfer
took place purchasedPA or has 1!th!n a per!od of three .ears after that date constructedA a res!dent!al
houseA thenZ& instead of the capital gain being charged to income-tax as income of the previous year in
which the transfer took place& it shall be dealt with in accordance with the following provisions of this
section& that is to say#####S
S/-)# Y3ub?ect to the provisions of sub-section (2)& where the capital gain arisesZ from the transfer of a
capital asset being land which& in the two years immediately preceding the date on which the transfer
took place& was being used by the assessee or a parent of his for agricultural purposes (hereinafter
referred to as the original asset)& and the assessee has& within a period of two years after that date&
purchased an. other land for 3e!ng used for agr!cultural purposesA then& instead of the capital gain being
charged to income-tax as income of the previous year in which the transfer took place& it shall be dealt
with in accordance with the following provisions of this section& that is to say######S
S/-4# Y3ub?ect to the provisions of sub-section (2)& where the capital gain arisesZ from the transfer by
way of compulsory ac@uisition under any law of a capital asset& being land or building or any right in
land or building& forming part of an industrial undertaking belonging to the assessee which& in the two
years immediately preceding the date on which the transfer took place& was being used by the assessee
for the purposes of the business of the said undertaking (hereafter in this section referred to as the
original asset)& and the assessee has within a period of three years after that date purchased an. other
land or 3u!ld!ng or an. r!ght !n an. other land or 3u!ld!ng or constructed an. other 3u!ld!ng for the
purposes of shifting or re-establishing the said undertaking or setting up another industrial undertaking&
then& instead of the capital gain being charged to income-tax as the income of the previous year in which
the transfer took place& it shall be dealt with in accordance with the following provisions of this section&
that is to say########S
S/-9%# ($) Where the capital gain arises from the transfer of a long-term capital asset Ybefore the $st day
of %pril& 2555Z (the capital asset so transferred being hereafter in this section referred to as the original
asset) and the assessee has& at any time within a period of six months after the date of such transfer&
invested the whole or any part of the net consideration in an. of the G3ondsA de3enturesA shares of a
pu3l!c co;pan. or un!ts of an. ;utual fund referred to !n clause (2$) of sect!on 10Z specified by the
)oard in this behalf by notification in the Afficial >a<ette (such assets hereafter in this section referred
to as the Yspecified securitiesZ)& the capital gain shall be dealt with in accordance with the following
provisions of this section& that is to say######S
S/-9)# ($) Where the capital gain arises from the transfer of a long-term capital asset Ybefore the $st day
of %pril& 2555Z (the capital asset so transferred being hereafter in this section referred to as the original
asset)& and the assessee has& at any time within a period of six months after the date of such transfer
!n"ested the 1hole or an. part of cap!tal ga!nsA !n an. of the assets spec!f!ed 3. the /oard in this behalf
by notification in the Afficial >a<ette (such assets hereafter in this section referred to as the long-term
specified assets)& the capital gain shall be dealt with in accordance with the following provisions of this
section& that is to say#######S
S/-9# ($) Where the capital gain arises from the transfer of a Ylong-term capital assetZ (before the $st day
of %pril& $''2)& (the capital asset so transferred being hereafter in this section referred to as the original
asset) and the assessee has& within a period of six months after the date of such transfer& !n"ested or
depos!ted the G1hole or an. part of the net cons!derat!onP !n an. spec!f!ed asset (such specified asset
Income Bnder The head ,apital >ains 2((
being hereafter in this section referred to as the new asset)& the capital gain shall be dealt with in
accordance with the following provisions of this section& that is to say#######S
S/-H# ($) Y3ub?ect to the provisions of sub-section (-)& where& in the case of an assessee being an
individual or a 0indu undivided familyZ& the capital gain arises from the transfer of any long-term capital
asset& not being a residential house (hereafter in this section referred to as the original asset)& and the
assessee has& 1!th!n a per!od of one .ear 3efore or Gt1o .earsP after the date on 1h!ch the transfer took
place purchasedA or has 1!th!n a per!od of three .ears after that date constructedA a res!dent!al house
(hereafter in this section referred to as the new asset)& the capital gain shall be dealt with in accordance
with the following provisions of this section& that is to say######S Y9mphasis suppliedZ
6erusal of the above provisions clearly reveals that the =egislature has used the words SaS and SanyS with
reference to investment of capital gain.sale consideration in certain asset or assets# The =egislature was not
oblivious regarding the meaning of these two words# The word SanyS has been used by the =egislature in
sections /-)& /-4& /-9& /-9% and /-9) while the word SaS has been used in sections /- and /-H of the
%ct# This clearly shows that the =egislature intended different meanings to be given to these two words# %
close reading of these sections shows that =egislature intended to allow exemption in respect of investment
in more than one asset by using the word SanyS# 3ection /-9 allows exemption in respect of investment in
any specified asset# %#planat!on $ to section /-9 defines the Sspecified assetS# It includes various assets in
which investment can be made by the assessee who are eligible for exemption under section /-9# There is
nothing to indicate that investment is restricted to any of the specified assets# 0ad the =egislature intended to
restrict investment in any one of the specified assets& it would have used the words Sin any one of the
specified assetsS instead of Sin any specified assetS# This clearly shows that the word SanyS has been used
where the =egislature intended investment in more than one asset# 3imilarly& in section /-9)& the
=egislature has used the words Sin any of the assets specified by the )oardS# 3imilar is the position in
section /-9%# 3ection /-) and section /-4 also used the words Sany other landS and Sany other land and
buildingS respectively# The expression Sany other landS is an expression of widest amplitude and& therefore&
its meaning cannot be restricted to any one piece of land# An the other hand& the =egislature has used the
word SaS in sections /- and /-H# 0ad the =egislature intended for investment in more than one asset& it could
have easily used the words Sin any residential houseS in sections /- and /-H instead of the words Sa
residential houseS# 3uperfluous words are not used by the =egislature# 4ifferent words SaS and SanyS have
been deliberately used by the =egislature to convey different meanings# Therefore& in our humble view& the
=egislature used the word SaS where it intended investment in one residential house only and used the word
SanyS where it intended investment in one or more assets#
9. 0aving held that intention of the =egislature was to allow exemption under sections /- and /-H in respect
of investment in one single residential house& it is not necessary for us to deal with the other submissions of
the learned 3r# counsel for the assessee since they loses their significance in view of the above finding#
10. 0owever& we are in agreement with certain decisions of the Tribunal relied on by the learned counsel for
the assessee wherein exemption was allowed in respect of investments in two ad?acent or contiguous units
converted into one residential house by having common passage.stair case& common kitchen& etc# intended to
be used as single house for the residence of the family# %s already observed& the intention of the =egislature
is that investment should be made in one residential house# 3o long as the house purchased is one even after
conversion& the exemption would be available# An the other hand& if the investment is made in two
independent residential houses& even located in the same complex& then& in our opinion& exemption cannot be
allowed for investment in both the houses# 0owever& the choice would be with assessee to avail exemption
in respect of any one house as held by the 0on!ble )ombay 0igh ,ourt in the case of J.&. Jaush!k (supra)#
The view taken by us in this para is also ?ustified by the decision of the 0on!ble ,alcutta 0igh ,ourt in the
case of /./. Sarkar v# &'T Y$'2$Z $+2 IT* $/5
$
& wherein purchase of ground floor of a house and thereafter
construction of first floor was held to be an investment in one house only# Their =ordships at page $/(
observed as under G
SIf a floor is constructed to the new house or if it is renovated it remains a house and this will not be two
houses#S
11. In view of the above discussion& it is held that exemption under sections /- and /-H of the %ct would be
allowable in respect of one residential house only# If the assessee has purchased more than one residential
house& then the choice would be with assessee to avail the exemption in respect of either of the houses
provided the other conditions are fulfilled# 0owever& where more than one unit are purchased which are
ad?acent to each other and are converted into one house for the purpose of residence by having common
passage& common kitchen& etc#& then& it would be a case of investment in one residential house and
conse@uently& the assessee would be entitled to exemption#
12. ,oming to the facts of the present case& we find that investment was made in two flats located at
different localities in :umbai# %ccordingly& the assessee was entitled to exemption in respect of investment
in one house only of her choice# The %ssessing Afficer has already allowed exemption in respect of house
which permitted higher deduction# Therefore& on the basis of opinion expressed by us& we reverse the order
of the learned ,IT(%) on this issue and restore the order of %ssessing Afficer#
13. The next issue relates to the disallowance of *s# $&/$&/55 being brokerage paid in computing the capital
gain# The %ssessing Afficer disallowed the claim merely on the ground that assessee failed to produce the
proof of payment# The Derox copy of the brokerage bill was not considered as an evidence# An appeal& the
assessee produced proof of payment along with bank statement of assessee# In view of such evidence& the
learned ,IT (%ppeals) allowed the claim of assessee# %ggrieved by the same& the revenue is in appeal before
the Tribunal on this issue#
14. %fter hearing both the parties& we don!t find any infirmity in the order of the learned ,IT (%ppeals)# The
%ssessing Afficer has not disputed the allowability of the claim of assessee# The claim had been disallowed
on the ground that assessee failed to produce the proof of payment# The learned ,IT (%ppeals) has allowed
the claim after considering the proof of payment# It is also not the case of revenue that provisions of rule
-(% had been violated by the learned ,IT (%ppeals)# Thus no interference is called for#
17. In the result& appeal is partly allowed#
[2009] 180 TAXMAN 4 (KAR.)
HIGH COURT OF KARNATAKA
Commissioner of Income-tax
v.
D. Ananda Basappa*
K. SREEDHAR RAO AND C.R. KUMARASWAMY, JJ.
IT APPEAL NO. 113 OF 2004
OCTOBER 20, 2008
S&#!)': 74 '. !C& 0:#'m&(!"+ A#!H 1961 ( C")!"$ g"):% ( P-'.)! ': %"$& '. -'&-!E u%&* .'- -&%)*&:!)"$
u-'%& ( A%%&%%m&:! E&"- 1996(97 ( 6C&!C&- &+-&%%)': Q" -&%)*&:!)"$ C'u%&R "% '##u--):g ): %&#!)':
74A1B %C'u$* ?& u:*&-%!''* ): " %&:%& !C"! ?u)$*):g %C'u$* ?& -&%)*&:!)"$ ): :"!u-& ":* Q"R %C'u$* :'!
?& u:*&-%!''* !' ):*)#"!& " %):gu$"- :um?&- ( H&$*H E&% ( 6C&!C&- wC&: ": HU3R% -&%)*&:!)"$ C'u%& )%
%'$* ":* m&m?&-% '. HU3H k&&):g ): >)&w .u!u-& :&&*% ): &>&:! '. %&"-"!)':H ):>&%! #")!"$ g"): ):
u-#C"%):g m'-& !C": ':& -&%)*&:!)"$ ?u)$*):gH ?&:&.)! '. &+&m!)': u:*&- %&#!)': 74A1B w'u$* ?&
">")$"?$& !' HU3 ( H&$*H E&%
3ACTS
The assessee& an 0BH& had sold a residential house and purchased two residential flats ad?acent to each other
under two different sale deeds# 0owever& the vendor had certified that necessary modifications had been
done to the said two flats to make the same as one residential apartment# The assessee claimed exemption
under section /-# 0owever& the %ssessing Afficer allowed exemption to the extent of purchase of one
residential flat holding that section /-($) does not permit exemption on the purchase of more than one
residential premises# An appeal& the ,ommissioner (%ppeals) confirmed the order of the %ssessing Afficer#
0owever& on second appeal& the Tribunal set aside the order of the ,ommissioner (%ppeals) and held that the
purchase of two flats by the assessee should be treated as one single residential unit" and that the assessee
was entitled for full exemption#
An revenue!s appeal to the 0igh ,ourt#
HEL/
< pla!n read!ng of sect!on )((1) d!scloses that 1hen an !nd!"!dual assessee or an BEK assessee sells a
res!dent!al 3u!ld!ng or land appurtenant theretoA he can !n"est cap!tal ga!n for purchase of a res!dent!al
3u!ld!ng to seek e#e;pt!on of the cap!tal ga!n ta#. Sect!on 1 of the Ceneral &lauses <ct declares that
1hene"er the s!ngular !s used for a 1ordA !t !s per;!ss!3le to !nclude the plural. Y6ara /Z
The content!on of the re"enue that the phrase Qa res!dent!al houseO 1ould ;ean one res!dent!al houseA does
not appear to the correct understand!ng. The e#press!on Qa res!dent!al houseO should 3e understood !n a
sense that 3u!ld!ng should 3e res!dent!al !n nature and QaO should not 3e understood to !nd!cate a s!ngular
nu;3er. Y6ara (Z
That 1hen an BEKOs res!dent!al house !s soldA the cap!tal ga!n should 3e !n"ested for the purchase of onl.
one res!dent!al houseA !s an !ncorrect propos!t!on. <fter allA the propert. of the BEK !s held 3. the ;e;3ers
as @o!nt tenants.
'f the ;e;3ersA keep!ng !n "!e1 the future needs !n e"ent of separat!onA purchase ;ore than one res!dent!al
3u!ld!ngA !t cannot 3e sa!d that the 3enef!t of e#e;pt!on !s to 3e den!ed under sect!on )((1). Y6ara 1Z
'n the !nstant caseA the apart;ents 1ere s!tuated s!de 3. s!de. The 3u!lder had also stated that he had
effected ;od!f!cat!on to the flats to ;ake the; as one un!t 3. open!ng the door !n 3et1een the t1o
apart;ents. The fact that at the t!;e 1hen the !nspector !nspected the pre;!sesA the flats 1ere occup!ed 3.
t1o d!fferent tenants 1as not the ground to hold that the apart;ents 1ere not one res!dent!al un!t. The fact
that the assessee could ha"e purchased 3oth the flats !n one s!ngle sale deed or could ha"e narrated the
Income Bnder The head ,apital >ains 2('
purchase of t1o pre;!ses as one un!t !n the sale deed 1as not the ground to hold that the assessee had no
!ntent!on to purchase the t1o flats as one un!t. Y6ara 2Z
ThereforeA the Tr!3unalOs order 1as to 3e upheld.
M.8. S&%C"#C"$" for the <ppellant. K.4. P-"%"* for the 0espondent.
<U/GME2T
1. The respondent-assessee is a 0indu undivided family# The assessee sold a residential house for *s#
2&$2&/5&555 in the year Actober& $''/# The assessee purchased two residential flats ad?acent to each other
from :.s# Armonde 6rivate 4evelopers =td# The assessee has& however& taken two separate registered sale
deeds in respect of the two flats situate side by side purchased on the same day# The vendor has certified that
he has effected necessary modifications to the two flats to make it one residential apartment# The assessee
sought for exemption under section /- of the Income-tax %ct#
2. The assessing authority gave exemption for capital gains to the extent of purchase of one residential flat#
It was found in the inspection by the inspector that the residential flats were in occupation of two different
tenants disclosing separate en?oyment# Therefore& it is held that section /-($) of the Income-tax %ct does not
permit exemption for the purchasers for more than one residential premises# The ,ommissioner of Income-
tax confirmed the order of the assessing authority# The Tribunal& in appeal set aside the order of the
,ommissioner of Income-tax and held that the purchase of the two flats made by the assessee has to be
treated as one single residential unit and that the assessee is entitled for full exemption#
3. The following are the substantial @uestions of law framed for consideration GR
S(a )Whether the Tribunal was correct in holding that out of the sale proceeds of the property bearing
Co# '& )runton *oad& )angalore& owned by the assessee he could invest the same in two residential
flats bearing Co# >-5$ and >-52& and claim deduction in respect of both these flats in accordance
with section /- read with section /-H of the %ct for the assessment year $''(-'1[
(3 )Whether the proviso to section /-H of the %ct& as it stood prior to the amendment brought about by
the Hinance %ct& 2555& can be read to mean that for the assessment year $''(-'1 the assessee would
be entitled to relief in respect& of more than one dwelling unit for the purpose of claiming
exemption under the head ,apital >ains![S
4. In the provision of section /-($) of the Income-tax %ct& the relevant portion is extracted herein for
convenient reference GR
S3ub?ect to the provisions of sub-section (2)& where& in the case of an assessee being an individual or a
0indu undivided family& the capital gain arises from the transfer of a long-term capital asset& being
buildings or lands appurtenant thereto& and being a residential house& the income of which is chargeable
under the head Income from house property! (hereafter in this section referred to as the original asset!)&
and the assessee has within a period of one year before or two years after the date on which the transfer
took place purchased or has within a period of three years after that date constructed a residential house&
then& instead of the capital gain being charged to income-tax as income of the previous year in which the
transfer took place& it shall be dealt with in accordance with the following provisions of this section& that
is to sayRS
7. % plain reading of the provision of section /-($) of the Income-tax %ct discloses that when an individual-
assessee or 0indu undivided family-assessee sells a residential building or lands appurtenant thereto& he can
invest capital gains for purchase of residential building to seek exemption of the capital gains tax# 3ection $+
of the >eneral ,lauses %ct declares that whenever the singular is used for a word& it is permissible to include
the plural#
6. The contention of the revenue is that the phrase SaS residential house would mean one residential house
and it does not appear to the correct understanding# The expression SaS residential house should be
understood in a sense that building should be of residential in nature and SaS should not be understood to
indicate a singular number# The combined reading of sections /-($) and /-H of the Income-tax %ct discloses
that& a non-residential building can be sold& the capital gain of which can be invested in a residential building
to seek exemption of capital gain tax# 0owever& the proviso to section /- of the Income-tax %ct& lays down
that if the assessee has already one residential building& he is not entitled to exemption of capital gains tax&
when he invests the capital gain in purchase of additional residential building#
7. When a 0indu undivided family!s residential house is sold& the capital gain should be invested for the
purchase of only one residential house is an incorrect proposition# %fter all& the 0indu undivided family
property is held by the members as ?oint tenants# The members keeping in view the future needs in event of
separation& purchase more than one residential building& it cannot be said that the benefit of exemption is to
be denied under section /-($) of the Income-tax %ct#
8. An facts& it is shown by the assessee that the apartments are situated side by side# The builder has also
stated that he has effected modification of the flats to make it as one unit by opening the door in between
two apartments# The fact that at the time when the inspector inspected the premises& the flats were occupied
by two different tenants is not the ground to hold that the apartment is not a one residential unit# The fact
that the assessee could have purchased both the flats in one single sale deed or could have narrated the
purchase of two premises as one unit in the sale deed is not the ground to hold that the assessee had no
intention to purchase the two flats as one unit#
9. Hor the reasons and discussion made above& the substantial @uestions of law are answered in favour of the
assessee# The appeal is dismissed#
HIGH COURT OF KARNATAKA
Commissioner of Income-tax, Bangalore
v.
Smt. K.G. Rukminiamma ?
N. KUMAR AND V. JAGANNATHAN, J.
IT APPEAL NO. 783 OF 2008 c
AUU!T 27, 2010
S&#!)': 74 '. !C& 0:#'m&(!"+ A#!H 1961 ( C")!"$ g"):% ( P-'.)! ': %"$& '. -'&-!E u%&* .'- -&%)*&:!)"$
C'u%& ( A%%&%%m&:! E&"- 2004(07 ( 6C&!C&- &+-&%%)': Q" -&%)*&:!)"$ C'u%&R ): %&#!)': 74 :&#&%%"-)$E
C"% !' ):#$u*& ?u)$*):g% '- $":*% "u-!&:":! !C&-&!'X )! #"::'! ?& #':%!-u&* "% ':& -&%)*&:!)"$ C'u%&
( H&$*H E&% ( A%%&%%&& C"* " -&%)*&:!)"$ -'&-!E ': " %)!& ( U:*&- " @'):! *&>&$'m&:! "g-&&m&:!H %C&
g">& !C"! -'&-!E !' " ?u)$*&- .'- u!!):g u .$"!% ( U:*&- "g-&&m&:!H &)gC! -&%)*&:!)"$ .$"!% w&-& !'
?& u! u ': !C"! -'&-!E ":* .'u- .$"!% -&-&%&:!):g 48 &- #&:! w"% %C"-& '. "%%&%%&& ":* -&m"):):g
72 &- #&:! -&-&%&:!):g ":'!C&- .'u- .$"!% w"% %C"-& '. ?u)$*&- ( TCu%H #':%)*&-"!)': .'- %&$$):g 72 &-
#&:! '. %)!& w"% .'u- -&%)*&:!)"$ .$"!% -&-&%&:!):g 48 &- #&:! ( 6C&!C&- .'- u-'%& '. %&#!)': 74H .'u-
-&%)*&:!)"$ .$"!% "#Ju)-&* ?E "%%&%%&& #'u$* :'! ?& #':%!-u&* "% .'u- -&%)*&:!)"$ C'u%&% ?u! ':$E "% Q"
-&%)*&:!)"$ C'u%&R ":*H !C&-&.'-&H "%%&%%&& w"% &:!)!$&* !' ?&:&.)! u:*&- %&#!)': 74 ): -&%&#! '. &:!)-&
>"$u& '. .'u- .$"!% ( H&$*H E&%
3ACTS
The assessee had a residential property on certain land# Bnder a ?oint development agreement& she gave that
property to a builder for putting up flats# The builder agreed to construct residential apartments and agreed to
deliver -2 per cent of the super built area to the assessee in the form of residential apartments# The entire
cost of construction and other expenses were to be borne by the builder# %ccordingly& the builder constructed
eight flats and handed over four flats to the assessee# The assessee claimed benefit of section /-H and&
therefore& she declared capital gain as QN!lO# The %ssessing Afficer disallowed the assessee!s claim and
computed capital gain by taking cost of construction of four flats as sale consideration for transfer of
property# An appeal& the ,ommissioner (%ppeals) held that since the asset transferred was a residential
house and the consideration received in the form of four flats was also residential flats& the assessee was
entitled to deduction under section /- and not under section /-H# The Tribunal dismissed the revenue!s
appeal#
An appeal to the 0igh ,ourt& the revenue contended that under section /-& the expression used is a
residential house! which would mean that if more than one residential house is ac@uired as in the instant
case& the benefit can be extended only in respect of one residential flat#
HEL/
< read!ng of sect!on )( ;akes !t "er. clear that the propert. sold !s referred to as or!g!nal asset !n the
sect!on. That or!g!nal asset !s descr!3ed as 3u!ld!ngs or lands appurtenant thereto and 3e!ng a res!dent!al
house. ThereforeA !t !s not ;erel. Qa res!dent!al houseO. The res!dent!al house ;a. !nclude 3u!ld!ngs or lands
appurtenant thereto. The stress !s on the use to 1h!ch the propert. !s put to. Onl. 1hen that asset !s used as
a res!dent!al houseA 1h!ch ;a. cons!st of 3u!ld!ngs or lands appurtenant theretoA the !nco;e der!"ed fro;
the sale of such a res!dent!al house !s chargea3le under the head Q!nco;e fro; house propert..O 'f the
assessee hasA 1!th!n a per!od of one .ear 3efore or t1o .ears after the date on 1h!ch the transfer took placeA
purchased or has 1!th!n a per!od of three .ears after that dateA constructed a res!dent!al houseA then !nstead
of the cap!tal ga!n 3e!ng charged to !nco;e=ta# as !nco;e of the pre"!ous .ear !n 1h!ch the transfer took
placeA !t shall 3e dealt 1!th !n accordance 1!th the aforesa!d pro"!s!ons. 'n th!s part of the sect!on alsoA the
e#press!on Qa res!dent!al houseO !s aga!n used. The sa!d res!dent!al house necessar!l. has to !nclude
3u!ld!ngs or lands appurtenant thereto. 't cannot 3e construed as one res!dent!al house. Y6ara 'Z
The conte#t !n 1h!ch the e#press!on Qa res!dent!al houseO !s used !n sect!on )( ;akes !t clear that !t 1as not
the !ntent!on of the leg!slat!on to con"e. the ;ean!ng that !t refers to a s!ngle res!dent!al house. 'f that 1as
the !ntent!onA the. 1ould ha"e used the 1ord QoneO. <s !n the earl!er partA the 1ords used are 3u!ld!ngs or
lands 1h!ch are plural !n nu;3er and that !s referred to as Qa res!dent!al houseOA the or!g!nal assetA an asset
ne1l. ac,u!red after the sale of the or!g!nal asset also can 3e 3u!ld!ngs or lands appurtenant theretoA 1h!ch
also should 3e Ra res!dent!al houseS. ThereforeA the letter QaO !n the conte#t !t !s used should not 3e
construed as ;ean!ng Qs!ngularO. /utA 3e!ng an !ndef!n!te art!cleA the sa!d e#press!on should 3e read !n
consonance 1!th the other 1ords Q3u!ld!ngsO and QlandsO andA thereforeA the s!ngular Qa res!dent!al houseO
also per;!ts use of plural 3. "!rtue of sect!on 1(2) of the Ceneral &lauses <ct. Y6ara $5Z
'n the !nstant caseA the cons!derat!on for sell!ng )2 per cent of the s!te 1as four flats represent!ng (7 per
cent. <ll the four flats 1ere s!tuated !n a res!dent!al 3u!ld!ng. Those four res!dent!al flats const!tuted Qa
res!dent!al houseO for the purpose of sect!on )(. Prof!t on sale of propert. 1as used for res!dence. The four
res!dent!al flats could not 3e construed as four res!dent!al houses for the purpose of sect!on )(. The. had to
3e construed onl. as Qa res!dent!al houseO and the assessee 1as ent!tled to the 3enef!t accord!ngl.. Y6ara $2Z
'n that "!e1 of the ;atterA the Tr!3unal as 1ell as the appellate author!t. 1ere @ust!f!ed !n hold!ng that there
1as no l!a3!l!t. to pa. cap!tal ga!n ta# as the case s,uarel. fell under sect!on )(. Y6ara $+Z
K.8. A-">):* and M.8. S&%C"#C"$" for the <ppellant.
<U/GME2T
2. Kum"-H <. - This appeal is by the revenue challenging the order passed by the %ppellate Tribunal as well
as the %ppellate %uthority holding that& in the facts and circumstances of this case& the assessee is entitled to
deduction under section /- and the capital gains would be n!l#
2. %ssessee 3mt# *ukminiyamma had a property at )asavanagudi# 3he entered into a ?oint development
agreement with builder :#%# :ohan ;umar on 2-1-2552 to develop the said property# %ccording to the
agreement& the assessee is the owner of the property bearing Co# (' (old $1 and later -() situated at
>ovindappa *oad& )asavanagudi& )angalore-2& measuring +5Q d $$5Q# The builder agreed to construct
residential apartment and agreed to deliver -2 per cent of the super built area to the assessee in the form of
residential apartments# The entire cost of construction and other expenses are to be borne by the builder#
%ccordingly& as agreed& the builder constructed eight flats and handed over four flats to the assessee# Aut of
the four flats& she gifted three flats to her sons and retained one flat for her use# The builder& out of four flats
retained by him& has sold three flats for a consideration of *s# $1&2$&2/5#
3. The assessee filed her return of income for the assessment year 255--5/ on $-+-255/ and had declared the
income from capital gains as n!l# The sale value of /2 per cent of the site was valued at *s# 22&'+&(/5 and
arrived at capital gains at *s# $+&'-&1+(# 3ince the amount was invested in residential flat& the net taxable
capital gains was declared as n!l# The assessee had worked out the capital gains at *s# 2&52&'$2# In the note
furnished& she had mentioned that& out of the four flats allotted to her& three flats were gifted to her sons and
retained one flat for her use# The return was processed under section $-+($) on (-2-255(# The case was
selected for scrutiny as per )oard!s instruction since the assessee had claimed exemption under section /-H
being the capital gain invested in residential property# Cotices under sections $-+(2) and $-2($) were issued#
The assessee entered appearance with her counsel# %t the time of hearing& the assessee was re@uested to
furnish a valuation report from the registered valuer to arrive at the cost of construction of four flats# The
assessee produced a valuation report showing the cost of construction of four flats at *s# -5&/-&255# The
builder had given a sum of *s# $&25&555 on 2-1-2552 as refundable deposit# Aut of the said amount& she had
repaid *s# /5&555 to the builder and still she was due to refund *s# 15&555#
4. The assessing authority& on the aforesaid facts& held that the consideration received by the assessee is *s#
-5&/-&255 as against *s# 22&'+&(/5 declared by her being the value of $&('' feet of land being /2 per cent of
site transferred to the builder# %ccordingly& a sum of *s# 2$&1+&225 was held to be the capital gain#
Therefore& it was concluded that the assessee had furnished inaccurate particulars of income by declaring the
value of portion of site transferred to the builder at *s# 22#' lakhs as against the correct figure of *s# -5#/
lakhs for which initiation of action under section 21$($)(c) of the Income-tax %ct was directed#
7. %ggrieved by the said order of the assessing authority& the assessee preferred an appeal before the
,ommissioner (%ppeals)# The appellate authority held that it is clear from the facts that the asset transferred
was a residential house and the consideration received in the form of four flats are also residential flats#
Thus& the appellant is entitled for deduction under section /- and certainly not under section /-H# *egarding
the @uantum of deduction& he held that the appellant is entitled to deduction under section /- in respect of
the entire value of four flats received by her being consideration for transfer of undivided interest in $&(''
s@# ft# of property owned by her to the developer# 0e further held that the ?udgment of this court in the case
of <nand /asappa v# 'TO Y255/Z $ ($$) IT,= 22+& s@uarely applies to the facts of the case and accordingly&
the appeal was allowed and the assessee was granted the relief of *s# 2&1+&225#
6. %ggrieved by the said order of the appellate authority& the revenue preferred an appeal before the
%ppellate Tribunal# The Tribunal& on reappreciation of the facts and the law on the point& has held that& in a
case of this nature& what is to be examined is whether the conditions of section /- are satisfied at the time of
investment in the property and when the assessee sold the original property and earned capital gain out of
sale& what is to be seen is whether the sale proceeds of original assets has been utili<ed in ac@uiring another
house property# The apartments were ac@uired simultaneously and hence the conditions for ac@uiring a
residential house within the time specified are complied with and& therefore& the assessee is eligible for
deduction under section /- in respect of all the apartments simultaneously ac@uired# %ccordingly the
%ppellate Tribunal dismissed the appeal# %ggrieved by the same& the revenue is before this court#
7. The learned counsel for the revenue assailing the impugned orders passed by the appellate authority&
contended that& under section /-& the word used is Ma residential houseN# The letter a! in the said word is to
be given a meaning# The only meaning that can be given to the said letter is that the assessee would be
entitled to the benefit of exemption from payment of capital gains only when he or she ac@uired a residential
house# If more than one residential house is ac@uired& as in the present case& when four residential flats are
ac@uired& the benefit can be extended only in respect of one residential flat and in respect of the remaining
three residential flats& the assessee is not entitled to the benefit and& therefore& he submits that the impugned
?udgments are erroneous and re@uires to be set aside#
8. Hor a proper appreciation of the aforesaid contention& it is necessary to have a careful look at section /- of
the Income-tax %ct& which reads as underG
M/-# Prof!t on sale of propert. used for res!dence.($) 3ub?ect to the provisions of sub-section (2)&
where& in the case of an assessee being an individual or a 0indu undivided family& the capital gain arises
from the transfer of a long-term capital asset& being buildings or lands appurtenant thereto& and being a
residential house& the income of which is chargeable under the head MIncome from house propertyN
(hereafter in this section referred to as the original asset)& and the assessee has within a period of one
year before or two years after the date on which the transfer took place purchased& or has within a period
of three years after that date constructed& a residential house& then& instead of the capital gain being
charged to income-tax as income of the previous year in which the transfer took place& it& shall be dealt
with in accordance with the following provisions of this section& that is to say&R
(! ) FFF.S
9. % reading of the aforesaid provision makes it very clear that the property sold is referred to as original
asset in the section# That original asset is described as buildings or lands appurtenant thereto and being a
residential house# Therefore& it is not mere Ma residential houseN# The residential house may include
buildings or lands appurtenant thereto# The stress is on the use to which the property is put to# Anly when
that asset was used as a residential house& which may consist of buildings or lands appurtenant thereto& the
income derived from the sale of such a residential house is chargeable under the head Mincome from house
property#N If the assessee has within a period of one year before or two years after the date on which the
transfer took place purchased& or has within a period of three years after that date constructed a residential
house& then& instead of the capital gain being charged to income-tax as income of the previous year in which
the transfer took place& it shall be dealt with in accordance with the aforesaid provisions# In this part of the
section also& the words Ma residential houseN is again used# The said residential house necessarily has to
include buildings or lands appurtenant thereto# It cannot be construed as one residential house# In this
context& it is useful to refer to section $+ of the >eneral ,lauses %ct& $2'1& which reads as underG
M$+# Cender and nu;3er.In all ,entral %cts and *egulations& unless there is anything repugnant in the
sub?ect or contextR
($)words importing the masculine gender shall be taken to include females" and
(2)words in the singular shall include the plural& and "!ce "ersa.N
10. The context in which the expression a residential house! is used in section /- makes it clear that& it was
not the intention of the legislation to convey the meaning that it refers to a single residential house# If that
was the intention& they would have used the word MoneN# %s in the earlier part& the words used are buildings
or lands which are plural in number and that is referred to as Ma residential houseN& the original asset# %n
asset newly ac@uired after the sale of the original asset also can be buildings or lands appurtenant thereto&
which also should be Ma residential houseN# Therefore& the letter a! in the context it is used should not be
construed as meaning MsingularN# )ut& being an indefinite article& the said expression should be read in
consonance with the other words buildings! and lands! and& therefore& the singular a residential house! also
permits use of plural by virtue of section $+(2) of the >eneral ,lauses %ct# This is the view which is taken
by this court in the aforesaid <nand /asappaOs case& in I#T#%#Co# $$+.255-& disposed of on 25-'-2552#
11. We& therefore& do not see any merit in the submission of the learned counsel for the revenue#
12. In the instant case& the facts are not in dispute# An a site measuring +5Q d $$5Q& the assessee had a
residential premises# Bnder a ?oint development agreement& she gave that property to a builder for putting up
flats# Bnder the agreement eight flats are to be put up in that property and four flats representing -2 per cent
is the share of the assessee and the remaining /2 per cent representing another four flats is the share of the
builder# 3o& the consideration for selling /2 per cent of the site is four flats representing -2 per cent# %ll the
four flats are situate in a residential building# These four residential flats constitute Ma residential houseN for
the purpose of section /-# 6rofit on sale of property is used for residence# The four residential flats cannot be
construed as four residential houses for the purpose of section /-# It has to be construed only as Ma
residential houseN and the assessee is entitled to the benefit accordingly#
13. In that view of the matter& the Tribunal as well as the appellate authority were ?ustified in holding that
there is no liability to pay capital gain tax as the case s@uarely falls under section /- of the Income-tax %ct#
0ence& we do not see any substantial @uestion of law arising for consideration in this appeal# %ccordingly&
the appeal is dismissed#
Y$'2$Z 1 Taxman 2+' (,al#)
IC T09 0I>0 ,AB*T AH ,%=,BTT%
9.9. S"-k"-
"#
C'mm)%%)':&- '. 0:#'m&(!"+
3%)J%3%,0I :B;0%*PI %C4 3B40IC4*% :A0%C >B0%& PP#
:%J / K (& $'2$
3ection /- Yas it stood before amendment made by the Hinance %ct& $'12Z& read with section $//(2)& of the
income-tax act# $'($R,apital gainsR%rising from sale of property used for residenceR,apital gains
partly invested on purchasb of another house and partly on construction of additional floor to the same house
within the prescribed time limitR ITA restricted exemption to investment on purchase only holding that
exemption under section /- is admissible either for purchase or for construction but not for bothRWhether
exemption admissible for both itemsR0eld& yesRWhether by virtue of section $//(2) assessment could be
rectified to grant exemption in respect of amount spent on both purchase and construction within stipulated
timeR0eld& yesRWhether in such a case conditions of section $/- have to bb independently fulfilled tooR
0eld& no
3"#!%
The assessee sold his dwelling house on 2(-1-$'1- for a consideration of *s# +&$/&555# The entire capital
gain of *s# 2&+$&$'' resulting from the transaction was utilised by him on the purchase of a house property
on $+-(-$'1/& !.e.A within one year of sale of the house property (*s# $&2+&55$)& and on construction of an
additional floor to the same house before +$-+-$'1(& !.e.A within two years of the sale (*s# $&52&+55)# The
new house property was used by the assessee for the purpose of his own residence# The assessee initially
claimed exemption under section /- (as it stood prior to amendment made by the Hinance %ct& $'12 with
retrospective effect from $---$'1-) for the amount of *s# $&2+&55$ spent on the purchase of the new house&
and this was allowed by the ITA on the basis of a Tribunal order# 3ubse@uently& the assessee represented that
the sum of *s# $&52&555 spent on the construction of additional floor was also eligible for exemption& since
the expenditure was incurred within two years of sale of old house as re@uired under section /-& and hence
re@uested the ITA to amend the assessment under section $//(2) so as to allow this exemption# The ITA
re?ected the assesseeQs plea on the ground that section /- contemplated exemption either for the purchase of
a new house or for the construction of a new house& but not for both# An appeal& the ,ommissioner
(%ppeals) affirmed the view taken by the ITA and held that the use of the con?unctive SorS instead of SandS
in section /- made it clear that the section provided for two clear-cut independent contingencies& "!T.A
Spurchase of houseS or Sconstruction of houseS# An further appeal& the Tribunal& however& reiected the appeal
preferred by the assessee on the entirely different ground that the @uestion of allowing exemption under
section /- for both purchase and construction of a house was a debatable point of law& and hence the
provisions of section $//(2) could not be invoked to amend the assessment# In taking this view& the Tribunal
was of the opinion that section $//(2) contemplated application of section $/- and that& under section $/-&
an order could not be rectified unless the mistake was free from doubt#
An reference G
H&$*
1. 'f an assessee !s ent!tled to rel!ef on fulf!l;ent of e!ther of the t1o cond!t!onsA i#e#& e!ther purchas!ng a
house propert. 1!th!n one .ear or construct!ng the house 1!th!n t1o .earsA !t 1ould 3e !;proper to read
that on fulf!l;ent of 3oth the cond!t!onsA he 1ould 3e d!sent!tled to that rel!ef. Sect!on )( does not
conte;plate t1o k!nds of rel!ef" !t onl. conte;plates fulf!l;ent of t1o alternat!"e cond!t!ons. 'f 3oth the
cond!t!ons are sat!sf!ed 1!th!n the t!;e st!pulatedA the assessee does not 3eco;e d!sent!tled to the rel!ef !f the
other cond!t!ons are fulf!lled. 'f a floor !s constructed to the ne1 house or !f !t !s reno"ated !t re;a!ns as one
house onl.A espec!all. 1hen there !s no e"!dence that t1o d!fferent houses 3ear!ng t1o d!fferent ;un!c!pal
nu;3ers 1ere constructed.
2. 'f the !nterpretat!on of the 1ords Upurchased a houseU ;eant to refer a s!ngle transact!on as contended 3.
the re"enueA then the transact!on 1ould not !nclude purchas!ng the land f!rst and then construct!ng a house
thereonA and th!s 1ould 3e an a3surd construct!on defeat!ng the purpose of the sche;e of sect!on )(. 't !sA
thereforeA not a ,uest!on of read!ng the 1ord UorU as con@unct!"eA 3ut to carr. out the !ntent!on of the
?eg!slatureA !t ;a. 3e necessar. to read UandU !n place of UorU and vice versa !n s!tuat!ons of th!s t.pe.
3. The ;o;ent cond!t!ons la!d do1n !n sect!on )( are fulf!lledA ;!stake apparent fro; record 1ould 3e
dee;ed 3. the f!ct!on created 3. sect!on 1))(7). 2hen th!s su3=sect!on states that the pro"!s!ons of sect!on
1)( shallA so far as ;a. 3eA appl.A !t ;eans that the po1er of rect!f!cat!on en@o!ned 3. sect!on 1)( 1ould 3e
;ade appl!ca3le !f the cond!t!ons la!d do1n !n sect!on 1))(7) are fulf!lled. The Tr!3unal 1as thus clearl.
1rong !n constru!ng that !n order to attract sect!on 1))(7)A sect!on 1)( 1ould 3e appl!ca3le !n !ts full force.
4. <ccord!ngl.A the assessee 1as ent!tled to e#e;pt!on under sect!on )( !n respect of 3oth the house
purchased and the floor constructed thereon s!nce he fulf!lled the 3as!c cond!t!ons la!d !n the sa!d sect!on.
KurtherA !n "!e1 of th!s clear ent!tle;entA he 1ould 3e ent!tled to ha"e h!s assess;ent rect!f!ed 3. "!rtue of
sect!on 1))(7) to ena3le !t to ha"e the 3enef!t of aforesa!d e#e;pt!on under sect!on )(. 't 1ould 3e
unnecessar. !n such a s!tuat!on to cons!der 1hether there 1as a ;!stake apparent fro; the record !n the
conte#t of sect!on 1)(.
C"%& -&>)&w
&'T v# T.N. <ra"!nda 0edd. Y$'1'Z $25 IT* -( (3,) appl!ed.
C"%&% -&.&--&* !'
&'T v# T.N. <ra"!nda 0edd. Y$'1'Z $25 IT* -( (3,)& T.S. /alara;A 'TO v# Dolkart /ros. Y$'1$Z 22 IT* /5
(3,)& 2ork;en of $!;akuch! Tea %state v# Manage;ent of $!;akuch! Tea %state %I* $'/2 3, +/+& Ne1
'nd!a Sugar M!lls v# &ST %I* $'(+ 3, $251 and &'T v# Natu Bansra@ Y$'1(Z $5/ IT* -+ (>u?#)#
IT *9H9*9C,9 CA# 2-( AH $'25
S. 9C"!!"#C&-@)H 2.CH P'**"- and 4.2. S"C" for the <ppl!cant.
A@)! Kum"- S&: Gu!" and M.L. 9C"!!"#C&-@&& for the 0espondent.
<u*gm&:!
Mukhar@!A L. The assessee in this case is an individual and the reference related to the assessment year
$'1/-1(# The assessee sold his dwelling house at $& 6ark =ane& ,alcutta on 2(-1-$'1- for a consideration of
*s# +&$/&555# 0e also purchased one house property at '$& 3hyamba<ar 3treet& ,alcutta& on $+-(-$'1/ for a
consideration of *s# $&2+&55$ and invested a further sum of *s# $&52&+55 within 21-+-$'1( for construction
of an additional floor thereon# The latter house was being used for the purpose of the assesseeQs residence#
3ince the purchase price together with the cost of development of the house property at $& 6ark =ane&
,alcutta was *s# 2+&25$& the ITA determined the capital gains at *s# 2&+$&$'' by deducting the sum of *s#
2+&25$ from *s# +&$/&555# In the subse@uent assessment year& the ITA determined that amount as the capital
gain and re?ected the assesseeQs claim for deduction of *s# $&2+&55$ under section /-($) of the Income-tax
%ct (hereinafter referred to as Sthe %ctS) being the cost of the newly purchased house on the ground that the
latter house was purchased in the subse@uent assessment year# The assessment order was passed on +5-2-
$'1/# An appeal& the %%, concurred with the view taken by the ITA# The assessee went up in further appeal
before the %ppellate Tribunal and the Tribunal directed the ITA to deduct the sum of *s# $&2+&55$ from the
capital gains so determined#
2. Thereafter& the assessee preferred a petition under section $//(2) of the %ct to the ITA on 2(-2-$'11 to
amend the order of assessment for exclusion of the capital gains since& according to the assessee& the cost of
construction of *s# $&52&+55 was also eligible for deduction under section /-($)# It may& however& be
mentioned that the further construction of the additional floor of the house property was made within 21-+-
$'1(# The ITA re?ected the Y claim of the assessee as he was of the opinion that under the law the assessee
could get deduction for the cost of purchase of one house or the cost of construction of one house only#
There was an appeal before the ,ommissioner (%ppeals) who affirmed the action of the ITA# 0e in his order
stated& !nter al!aA as follows G
S3hri 3# )hattacharaya& %dvocate& learned representative of the appellant& pleaded that there is nothing in
the %ct which prohibits the assessee from claiming the deduction in respect of both the amounts& !.e.A
purchase price of the house property and the cost of construction# I have considered the arguments and
have perused the assessment records# In section /-($)& the words used is QorQ and not Qand.orQ# In my view&
the appellant is entitled to get deduction only in respect of purchase of one house only# To me it appears
that section provided for clear cut two contingencies G (a) purchase of house& or ( 3) construction of
house# I& therefore& hold that the Income-tax Afficer rightly re?ected the petition of the appellant#S
3. The assessee thereafter went up in further appeal before the Tribunal and contended that he was entitled to
deduction for cost of construction of the additional floor on one dwelling house which was constructed
within two years of the sale of one house# It was urged that in order to be entitled to deduction under section
/- the only condition to be fulfilled was that the assessee must construct the dwelling house within two
years of the sale of the house which was being used as the residential house of the assessee or by his parents#
It was pointed out that the new house though partly purchased and partly constructed later on was one house&
the construction of which took place within two years from the date of the sale of the old house# Therefore&
the Tribunal proceeded on the basis that the new house which the assessee purchased originally was partly
constructed and further construction of the new house of the dwelling house was completed within a period
of two years# It was claimed by the assessee that one house partly purchased and partly constructed was to
be regarded as a house constructed for the purpose of deduction under section /-# The Tribunal observed
that section /- provided the concession in the matter of exclusion of capital gains arising from transfer of
residential house if the assessee purchased one residential house within one year& or constructed the
residential house within two years& of the aforesaid transfer# The Tribunal was of the opinion that it was not
at all clear from the language of section /- whether the assessee was entitled to the benefit under section /-
of both& that is& the purchase of# a house within one year or for making further construction in the same
house within a period of two years from the date of sale of he old house# The Tribunal& therefore& came to a
finding regarding the allowability of the assesseeQs claim that for exclusion of *s# $&52#+55& being the cost of
additional floor of the newly purchased house& was a debatable @uestion of law and& therefore& the ITA was
not within his power to invoke the provisions of section $//(2) of the %ct in which section $/- of the %ct
has also been made applicable# The Tribunal was of the opinion that under section $/-& an order cannot be
rectified unless there was a mistake which was free from doubt# %ccordingly& the Tribunal held that the
income tax authorities were ?ustified in refusing to allow the assesseeQs claim for exclusion of *s# $&52&+55
from the capital gains so determined though on different ground# Bpon these& the following three @uestions
have been referred to this ,ourt under section 2/(($) of the %ct G
S1. Whether& on the facts and in the circumstances of the case& the Tribunal was ?ustified in holding that
the Income-tax Afficer did not have the power to invoke the provisions of section $//(2) to amend the
assessment order#
2. Whether& on the facts and in the circumstances of the case& having regard to the fact that the provisions
of section $//(2) are man datory in nature& the Tribunal was ?ustified in voking the provisions of section
$/- in their totality when section $//(2) itself restricted the operation of section $/- by the use of the
words Qand the provisions of section $/- shall& so far as may be& apply theretoQ#
. Whether& on the facts and in the circumstances of the case& the Tribunal was ?ustified in not
ad?udicating the issue whether the appellant was entitled under section /- to the deduction not only for
the cost (*s# $&2+&55$ incurred for the purchase on $+-(-$'1/ of the house property at '$& 3hyamba<ar
3treet& ,alcutta) but also for the cost of further construction (*s# $&52#+55) in spite of the fact that the
,ommissioner (%ppeals) decided this issue and that this issue formed a ground of appeal before the
Tribunal#S
4. The @uestion involves a simple interpretation of the provisions of section /- read with section $//(2)# The
scheme seems to be that where an assessee transfers a property and purchases a property within two years of
the transfer of his own or of his parentsQ residence and a profit in the nature of a capital gain arises to him
then he would be not liable to such claim or would be entitled to the relief& as the case may be& if he fulfils
certain conditions& that is to say& if he purchases a house within one year after transfer of the original
residential house or constructs within two years of the sale a new residential house then he would be entitled
to certain relief as indicated in clauses (!) and (!!) of section /-# In our opinion& this being the purpose of
section /-& it appears that in order to be eligible for relief& as contemplated under clause (!) or (!!) of section
/-& one must fulfil certain conditions# In order to appreciate this point it would be relevant to refer to the said
section# 3ection /- reads as follows G
S/-# Prof!t on sale of propert. used for res!dence.RWhere a capital gain arises from the transfer of a
capital asset to which the provisions of section /+ are not applicable& being buildings or lands
appurtenant thereto the income of which is chargeable under the head QIncome from house propertyQ
which in the two years immediately preceding the date on which the transfer took place& was being used
by the assessee or a parent of his mainly for purposes of his own or the parentQs own residence& and the
assessee has within a period of one year before or after that date purchased or has within a period of two
years after that date constructed& a house property for the purposes of his own residence& then& instead of
the capital gain being charged to income-tax as income of the previous year in which the transfer took
place& it shall be dealt with in accordance with the following provisions of this section& that is to say&R
(!)if the amount of the capital gain is greater than the cost of the new asset& the difference between the
amount of the capital gain and the cost of the new asset shall be charged under section -/ as the
income of the previous year " and for the purpose of computing in respect of the new asset any
capital gain arising from its transfer within a period of three years of its purchase or construction&
as the case may be& the cost shall be n!lV or
(!!)if the amount of the capital gains is e@ual to or less than the cost of the new asset& the capital gain
snail not be charged under section -/ " and for the purpose of computing in respect of the new
asset any capital gain arising from its transfer within a period of three years of its purchase or
construction& as the case may be& the cost shall be reduced by the amount of the capital gain#S
In such cases& rectification has to be done in accordance with section $//# 3ub-section (2) of section $//
reads as follows G
S(2) Where in the assessment for any year& a capital gain arising from the transfer of any such capital
asset as is referred to in section /- is charged to tax and within a period of one year after the date of the
transfer the assessee purchases& or within two years from that date constructs& a house property for the
purpose of his own residence& the Income-tax Afficer shall amend the order of assessment so as to
exclude the amount of the capital gain not chargeable to tax under the provisions of section /- " and the
provisions of section $/- shall& so far as may be& apply thereto& the period of four years specified in sub-
section (1) of that section being reckoned from the date of the assessment#S
It may be mentioned in this connection that section $/- of the %ct deals with rectification of mistake and in
order to be applicable the section en?oins that Swith a view to rectifying any mistake apparent from the
recordS# Therefore& section $/- on its own force to be applicable is attracted only where there is a mistake
apparent from the record# It is well-settled& and it has been so held by several ?udicial decisions& that the
@uestion& on which a debate is possible& cannot be said to be a mistake apparent from the record in terms of
section $/-# The said section is headed as S*ectification of mistakeS while the section $// is headed as
SAther amendmentsS& that is to indicate the conse@uences of other amendments made subse@uently in the
assessment orders# These assessment orders are to be altered and modified as contemplated by the
YY different sub-sections of section $//# Cow adverting back to the provisions of section /-& in our opinion&
the language contemplates that in order to be entitled to relief& the assessee must fulfil either of these
conditions G either the assessed or his parents must be using or residing in a house and it was being used as
the residential house within two years prior to the date of the transfer# This is a mandatory provision in order
to attract the provisions of section /-# If a house was so used then on transfer of that house or one year prior
to the transfer or one year after the transfer& the assessee has& within one year& either purchased a house& or
within a period of two years after the date& constructed a house property for the purpose of his own
residence& then in respect of the value of the new asset& that is to say& the house property purchased or
constructed& he would be entitled to claim relief as contemplated in clauses (!) and (!!) of the section# In the
facts and circumstances of the case& clause (!!) would be attracted if the assesseeQs contention is accepted#
Cow& if an assessee is entitled to relief on fulfilment of either of the two conditions& that is to say& either
purchasing a house property within one year or constructing the house within two years& in our opinion& it
would be improper to read that on fulfilment of both the conditions& he would be disentitled to that relief#
The mistake seems to be that the authorities below found as if two kinds of relief are contemplated in section
/-# It is the fulfilment of two alternative conditions that is contemplated by section /-# )ut& if both the
conditions are fulfilled within the time stipulated then& in our opinion& the assessee does not become
disentitled to the relief if the other conditions are fulfilled& "!T.A the house which was transferred was being
used as residential house either for himself or by his parents within the period of two years before the
transfer# It is in this context that section /- would be applicable#
An behalf of the revenue& it was sought to be urged that what was re@uired to be fulfilled was that house
property was to be used for the residence of the assessee# The revenue is right that it must be a house
property# If floor is constructed to the new house or if it is renovated& it remains a house and this will not be
two houses# There is no evidence that two different houses were constructed with two different municipal
numbers& that is to say& giving two different municipal numbers in respect of the two houses# If the
interpretation sought to be urged by the revenue is given to the expression Sa house was constructedS& then
the expression Spurchased a houseS would not include purchasing the land first and constructing a house
thereon# That would be an absurd construction defeating the purpose of the scheme of section /-# In such a
case& the @uestion of reading the expression SorS as con?unctive does not arise# It is not a @uestion of reading
SorS as con?unctive# It is a @uestion of interpreting the section which stipulates that& on fulfilment of either of
the two alternative conditions& the assessee would be entitled to relief# )y saying that would not mean that
the fulfilment of both the conditions disentitled the assessee to the relief in @uestion# Therefore& the principle
of how the expression SandS or SorS should be construed as was mentioned in Ma#1ell on The 'nterpretat!on
of StatuteA $2th edition& page 2++ are not attracted# In any event as the learned editor of that well-known
book emphasises that to carry out the intention of the =egislature& it may be necessary to read SandS in place
of SorS and "!ce "ersa. Hrom the scheme and from the purpose of section /- which& in our opinion it is read
in its entirety of the section (s!c) A would be defeated if the construction sought for by the revenue is
accepted# )ut it is only on the fulfilment of this that section $//(2) would be attracted#
7. The Tribunal& in our opinion& made a mistake in construing that in order to attract sub-section (2) of
section $//& section $/- would be applicable in its full force# That is not the case# The moment conditions of
section /- areS fulfilled& mistake apparent from the record would be deemed by the fiction created by sub-
section (2) of section $//& that is to say& where in the assessment for any year a capital gain& arising from the
transfer of any such capital asset as is referred to in section /-& is charged to tax and within a period of one
year after the date of the transfer the assessee& purchases or& within two years from that date& constructs& a
house property for the purpose of his own residence& the ITA shall amend the order of assessment so as to
exclude the amount of the capital gain not chargeable to tax under the provisions of section /- and in such a
situation the provisions of section $/- shall& so far as may be& apply thereto& the period of four years
specified in sub-section (1) of that section being reckoned from the day of the assessment# We are not
concerned with that from the point of view of the order made in this year# When sub-section (2) of section
$// states that the provisions of section $/- shall& so far as may be& apply& it means that the power of
rectification en?oined by section $/- would be made applicable if the conditions stipulated in sub-section (2)
of section $// are fulfilled and not only that& it would have to fulfil sub-section ($) of section $/-& that is to
say& the ITA would again have to redetermine whether there was any mistake apparent from the records
irrespective of the conditions stipulated under sub-section (2) of section $//# Therefore& in our opinion& the
Tribunal was clearly wrong on this aspect of the matter#
6. To borrow the expression of :r# Pustice ;rishna Iyer in the case of &'T v# T.N. <ra"!nda 0edd. Y$'1'Z
$25 IT* -( (3,) at p# -2 Sthe significance of a word of completely plural semantic shades may& in a given
context& depend on the pressure of the context or the other indiciaS# 0ere& the purpose of the expression used
in section /- and the context in which it is used& in our opinion& leaves no doubt as to the conditions that are
re@uired to attract the provisions of sub-section (2) of section $// and understood in that manner# %gain& in
the words of :r# Pustice Iyer& Sthe speech of the lay is also the language of the lawS# %s :r# Pustice Iyer
saysG SIf you sell your house and make a profit& pay ,aesor what is due to him# )ut if you buy or build
another sub?ect to the conditions of section /-($)& you are exemptS# That is to say& in our opinion& if you buy
and then further construct a house which is used for your residence& then you are exempt and we agree with
:r# Pustice Iyer with great respect Sthe language is plain& the purpose is plain& the symmetry is simpleS and
as if it is so there is no @uestion of any debate in the applicability of the provision in the facts and
circumstances of the case# That being the position& it is not necessary for us to consider what is the meaning
of the mistake apparent from the record in the context of section $/- for which our attention was drawn to
T.S. /alara;A 'TO v# Dolkart /ros. Y$'1$Z 22 IT* /5 (3,)# It is well-settled that the words of a statute& when
there is doubt about their meaning& are to be understood in the sense they best harmonise with the ob?ect of
the enactment and the ob?ect which the =egislature has in view# ;eeping this principle in mind& the
conclusion we have arrived at& in our opinion& is the correct one and fulfils the ob?ect which the =egislature
had in view# If that meaning is not so found in a strictly grammatical or etymological propriety of language
nor even in its popular use& as in the sub?ect on which they are used& one must try to harmonise with the
ob?ect to be attained In this connection& reference may be made to the decision in the case of 2ork;en of
$!;akuch! Tea %state v# Manage;ent of $!;akuch! Tea %state %I* $'/2 3, +/+# The expressions used in a
statute should ordinarily be understood in the sense in which they best harmonise with the ob?ect of the
statute and which effectuate the ob?ect of the =egislature# (See in this connection also the observations of the
3upreme ,ourt in the case of Ne1 'nd!a Sugar M!lls v# &ST %I* $'(+ 3, $251#) It is& therefore& necessary
to read section /- in the context of the sub?ect-matter and its setting in the scheme of capital gains and the
ob?ect of exemption and to ascertain the true import of the relevant part thereof# (See the observations of the
4ivision )ench of the >u?arat 0igh ,ourt in the case of &'T v# Natu Bansra@ Y$'1(Z $5/ IT* -+ at p# -'#)
7. The main purpose of the statute is to give relief for the ac@uisition of a new residential house# In that
context it does not really matter whether the new residential house is partly constructed or partly purchased#
8. In the premises& Euestion Co# $ is answered in the negative and in favour of the assessee# Euestion Co# 2
is also answered in the negative and in favour of the assessee and Euestion Co# + is also answered in the
nega tive and in favour of the assessee#
9. In the facts and circumstances of the case& the parties will pay and bear their own costs#
>uha& P#- I agree#
C0T >% 9. C. S-):)>"%" S&!!E ASCB
Su-&m& C'u-! /&#)%)': *!.19(02(1981
128 0T4 294ASCB
21 CT4 138ASCB
<U/GME2T
The ?udgment of the court was delivered by
6%T0%; P#-The @uestion in these appeals is whether the transfer of the goodwill of a newly commenced
business can give rise to a capital gain taxable under s# -/& I#T# %ct& $'($#
The assessee& a registered firm& manufactured and sold agarbattis# ,lause ($+) of the instrument of
partnership executed on the 22th Puly& $'/-& showed that the goodwill of the firm had not been valued& and
the valuation would be made on dissolution of the partnership# The period of the partnership was extended
by an instrument dated# +$st :arch& $'(-& and it contained a similar cl# ($+)# 3ubse@uently& the assessee-firm
was dissolved by a deed dated +$st 4ecember& $'(/# %t the time of dissolution& it seems& the goodwill of the
firm was valued at *s# $&/5&555# % new partnership by the same name was constituted under an instrument
dated 2nd 4ecember& $'(/& and it took over all the assets& including the goodwill and liabilities of the
dissolved firm#
The ITA made an assessment on the dissolved firm for the assessment year $'((-(1 but did not include any
amount on account of the gain arising on transfer of the goodwill# The ,ommissioner& being of the view that
the assessment order was pre?udicial to the revenue& decided to invoke his revisional ?urisdiction and& setting
aside the assessment order directed the ITA to make a fresh assessment after taking into account the capital
gain arising on the sale of the goodwill#
In appeal before the Income-tax %ppellate Tribunal& the assessee maintained that the sale did not attract tax
on capital gains under s# -/ of the I#T# %ct& $'($# %ccepting the contention& the Tribunal allowed the appeal#
%t the instance of the ,ommissioner& it referred a @uestion of law to the 0igh ,ourt of ;arnataka which& as
reframed by the 0igh ,ourt& reads as followsG
S Whether& on the facts and in the circumstances of the case& the Tribunal was right in holding that no capital
gains can arise under s# -/ of the Income-tax %ct& $'($& on the transfer by the assessee-firm of its goodwill
to the newly constituted firm [ S
)y its ?udgment dated -th Puly& $'1-& the 0igh ,ourt answered the @uestion in the affirmative& holding that
the value of the consideration received by the assessee for the transfer of its goodwill was not liable to
capital gains tax under s# -$ of the %ct# ,ivil %ppeal Co# $$-( of $'1/ is directed against that ?udgment#
,ivil %ppeal Co# $+12 of $'1( arises out of a ?udgment by the same 0igh ,ourt in which it has followed its
earlier view#
,ivil %ppeal Co# '2( of $'1+ has been preferred against the ?udgment of the ;erala 0igh ,ourt where a
similar opinion has been expressed& but in respect of the provisions of s# $2)& Indian I#T# %ct& $'22#
%t the relevant time s# -/ I#T %ct& $'($& providedG
S -/# ($) %ny profits or gains arising from the transfer of a capital asset effected in the previous year shall&
save as otherwise provided in sections /+ and /-& be chargeable to income-tax under the head Q,apital gainsQ&
and shall be deemed to be the income of the previous year in which& the transfer took place#S
The section operates if there is a transfer of a capital asset giving rise to a profit or gain# The expression
Scapital asset S is defined in s# 2($-) to mean S property of any kind held by an assessee S# It is of the widest
amplitude& and apparently covers all kinds of property except the property expressly excluded by cls# (i) to
(iv) of the sub-section which& it will be seen& does not include goodwill# )ut the definitions in s# 2 are sub?ect
to an overall restrictive clause# That is expressed in the opening words of the sectionG S unless the context
otherwise re@uires S# We must& there fore& en@uire whether contextually s#-/& in which the expression S
capital asset S is used& excludes goodwill#
>oodwill denotes the benefit arising from connection and reputation# The original definition by =ord 9ldon
in ,ruttwell v# =ye Y$2$5Z $1 7es ++/ that goodwill was nothing more than S the probability that the old
customers would resort to the old placesS was expanded by Wood 7#,# in ,hurton v# 4ouglas Y$2/'Z Pohn
$1- to encompass every positive advantage S that has been ac@uired by the old firm in carrying on its&
business& whether connected with the premises in which the business was previously carried on or with the
name of the old firm& or with any other matter carrying with it the benefit of the business#S In Trego v# 0unt
Y$2'(Z %, 1 (0=) =ord 0erschell described goodwill as a connection which tended to become permanent
because of habit or otherwise# The benefit to the business varies with the nature of the business and also
from one business to another# Co business commenced for the first time possesses goodwill from the start# It
is generated as the business is carried on and may be augmented with the passage of time# =awson in his
Introduction to the =aw of the 6roperty describes it as property of a highly peculiar kind# In ,IT v# ,hunilal
6rabhudas K ,o# Y$'15Z 1( IT* /(( the ,alcutta 0igh ,ourt reviewed the different approaches to the
concept (pp# /11& /12)G
S It has been horticulturally and botanically viewed as Qa seed sproutingQ or an Qa corn growing into the
mighty oak of goodwillQ# It has been geographically described by locality# It has been historically explained
as growing and crystallising traditions in the business# It has been described in terms of a magnet as the
Qattracting forceQ# In terms of comparative dynamics& goodwill has been described as the Qdifferential return of
profitQ# 6hilosophically it has been held to be intangible# Though immaterial& it is materially valued#
6hysically and psychologically& it is QhabitQ and sociologically it is a QcustomQ# )iologically& it has been
described by =ord :acnaghten in Trego v# 0unt Y$2'(Z %, 1 (0=) as the Qsap and lifeQ of the business#
%rchitecturally& it has been described as the QcementQ binding together the business and its assets as a whole
and going and developing concern#S
% variety of elements goes into its making& and its composition varies in different trades and in different
businesses in the same trade& and while one element may preponderate in one business& another may
dominate in another business# %nd yet& because of its intangible nature& it remains insubstantial in form and
nebulous in character# Those features prompted =ord :acnaghten to remark in I*, v# :uller K ,o#Qs
:argarine =td# Y$'5$Z %, 2$1 (0=)& that although goodwill was easy to describe& it was none the less
difficult to define# In a progressing business goodwill tends to show progressive increase# %nd in a failing
business it may begin to wane# Its value may fluctuate from one moment to another depending on changes in
the reputation of the business# It is affected by everything relating to the business& the personality and
business rectitude of the owners& the nature and character of the business& its name and reputation& its
location& its impact on the contemporary market& the prevailing socioeconomic ecology& introduction to old
customers and agreed absence of competition# There can be no account in value of the factors producing it#
It is also impossible to predicate the moment of its birth# It comes silently into the world& unheralded and
unproclaimed and its impact may not be visibly felt for an undefined period# Imperceptible at birth it exists
enwrapped in a concept& growing or fluctuating with the numerous imponderables pouring into& and
affecting& the business# Bndoubtedly& it is an asset of the business& but is it an asset contemplated by s# -/ [
3ection -/ charges the profits or gains arising from the transfer of capital asset to income-tax# The asset
must be one which falls within the contemplation of the section# It must bear that @uality which brings s# -/
into play# To determine whether the goodwill of a new business is such an asset& it is permissible& as we shall
presently show& to refer to certain other sections of the head S ,apital gains S# 3ection -/ is a charging
section# Hor the purpose of imposing the charge& 6arliament has enacted detailed provisions in order to
compute the profits or gains under that head# Co existing principle or provision at variance with them can be
applied for determining the chargeable profits and gains# %ll transactions encompassed by s# -/ must fall
under the governance of its computation provisions# % transaction to which those provisions cannot be
applied must be regarded as never intended by s# -/ to be the sub?ect of the charge# This inference flows
from the general arrangement of the provisions in the I#T# %ct& where under each head of income the
charging provision is accompanied by a set of provisions for computing the income sub?ect to that charge#
The character of the computation provisions in each case bears a relationship to the nature of the charge#
Thus& the charging section and the computation provisions together constitute an integrated code# When
there is a case to which the computation provisions cannot apply at all& it is evident that such a case was not
intended to fall within the charging section# Atherwise& one would be driven to conclude that while a certain
income seems to fall within the charging section there is no scheme of computation for @uantifying it# The
legislative pattern discernible in the %ct is against such a conclusion# It must be borne in mind that the
legislative intent is presumed to run uniformly through the entire conspectus of provisions pertaining to each
head of income# Co doubt there is a @ualitative difference between the charging provision and a computation
provision# %nd ordinarily the operation of the charging provision cannot be affected by the construction of a
particular computation provision# )ut the @uestion here is whether it is possible to apply the computation
provision at all if a certain interpretation is pressed on the charging provision# That pertains to the
fundamental integrality of the statutory scheme provided for each head#
The point to consider then is whether if the expression S asset S in s# -/ is construed as including the
goodwill of a new business& it is possible to apply the computation sections for @uantifying the profits and
gains on its transfer#
The mode of computation and deductions set forth in s# -2 provide the principal basis for @uantifying the
income chargeable under the head S,apital gains S# The section provides that the income chargeable under
that head shall be computed by deducting from the fall value of the consideration received or accruing as a
result of the transfer of the capital asset G
S(ii) the cost of ac@uisition of the capital asset###S
What is contemplated is an asset in the ac@uisition of which it is possible to envisage a cost# The intent goes
to the nature and character of the asset& that it is an asset which possesses the inherent @uality of being
available on the expenditure of money to a person seeking to ac@uire it# It is immaterial that although the
asset belongs to such a class& it may& on the facts of a certain case& be ac@uired without the payment of
money# That kind of case is covered by s# -' and its cost& for the purpose of s# -2& is determined in
accordance with those provisions# There are other provisions which indicate that s# -2 is concerned with an
asset capable of ac@uisition at a cost# 3ection /5 is one such provision# 3o also is sub-s# (2) of s# //# Cone of
the provisions pertaining to the head S ,apital gains suggests that they include an asset in the ac@uisition of
which no cost at all can be conceived# Jet there are assets which are ac@uired by way of production in which
no cost element can be indentified or envisaged# Hrom what has gone before& it is apparent that the goodwill
generated in a new business has been so regarded# The elements which create it have already been detailed#
In such a case& when the asset is sold and the consideration is brought to tax& what is charged is the capital
value of the asset and not any profit or gain#
In the case of goodwill generated in a new business there is the further circumstance that it is not possible to
determine the date when it comes into existence# The date of ac@uisition of the asset is a material factor in
applying the computation provisions pertaining to capital gains# It is possible to say that the S cost of
ac@uisition S mentioned in s# -2 implies date of ac@uisition& and that inference is strengthened by the
provisions of ss# -' and /5 as well as sub-s# (2) of s# //#
It may also be noted that if the goodwill generated in a new business is regarded as ac@uired at a cost and
subse@uently passes to an assessee in any of the modes specified in sub-s# ($) of s# -'& it will become
necessary to determine the cost of ac@uisition to the previous owner# 0aving regard to the nature of the asset&
it will be impossible to determine such cost of ac@uisition# Cor can sub-s# (+) of s# // be invoked& because
the date of ac@uisition by the previous owner will remain unknown#
We are of opinion that the goodwill generated in a newly commenced business cannot be described as an S
asset S within the terms of s# -/ and& therefore& its transfer is not sub?ect to income-tax under the head S
,apital gains S#
The @uestion which has been raised before 7s has been considered by some 0igh ,ourts& and it appears that
there is a conflict of opinion# The :adras 0igh ,ourt in ,IT v# ;# *athnam Cadar Y$'('Z 1$ IT* -++& the
,alcutta 0igh ,ourt in ,IT v# ,hunilal 6rabhudas K ,o# Y$'15Z 1( IT* /((& the 4elhi 0igh ,ourt in Pagdev
3ingh :umick v# ,IT Y$'1$Z 2$ IT* /55& the ;erala 0igh ,ourt in ,IT v# 9# ,# Pacob Y$'1+Z 2' IT* 22
YH)Z& the )ombay 0igh ,ourt in ,IT v# 0ome Industries and ,o# Y$'11Z $51 IT* (5' and ,IT v# :ichel
6ostel Y$'12Z $$2 IT* +$/ and the :adhya 6radesh 0igh ,ourt in ,IT v# Paswantlal 4ayabhai Y$'12Z $$-
IT* 1'2& have taken the view that the receipt on the transfer of goodwill generated in a business is not
sub?ect to income-tax as a capital gain# An the other side lies the view taken by the >u?arat 0igh ,ourt in
,IT v# :ohanbhai 6amabhai Y$'1+Z '$ IT* +'+ and the ,alcutta 0igh ,ourt in ;# C# 4aftary v# ,IT Y$'11Z
$5( IT* ''2& that even if no cost is incurred in building up the goodwill of the business& it is nevertheless a
capital asset for the purpose of capital gains& and the cost of ac@uisition being nil the entire amount of sale
proceeds relating to the goodwill must be brought to tax under the head S ,apital gains S# It is apparent that
the preponderance of ?udicial opinion favours the view that the transfer of goodwill initially generated in a
business does not give rise to a capital gain for the purposes of income-tax#
Bpon the aforesaid consideration& ,ivil %ppeal Co# $$-((T) of $'1/ and ,ivil %ppeal Co# $+12 of $'1(
must be dismissed#
,ivil %ppeal Co# '2( of $'1+ raises the same @uestion with reference to s# $2)& Indian I#T# %ct& $'22# %s the
relevant statutory provisions of the Indian I#T# %ct& $'22& are substantially similar to the corresponding
provisions of the I#T# %ct& $'($& that appeal is also liable to be dismissed#
%ccordingly& the appeals are dismissed with costs#
%ppeals dismissed#
02 THE H0GH C1U4T 13 <U/0CATU4E AT 91M9A5
14/02A45 140G02AL C080L <U40S/0CT012
02C1ME TAX APPEAL 21.3378 13 2010
TC& C'mm)%%)':&- '. 0:#'m& T"+(12H
A"E"k"- 9C">":H M.K.4'"*H Mum?"). ..A&$$":!.
8/%.
M":@u$" <. SC"C
309H M"-):& CC"m?&-%H 11
2&w M"-):& L):&%H Mum?")(400 020. ..4&%':*&:!.
M-. 9.M. CC"!!&-@&& .'- !C& "&$$":!.
M-. H)-' 4") w)!C M-. Su?C"%C S. SC&!!E ":* M":*"- 8")*E" .'- !C& -&%':*&:!.
C14AM : <.P. /E8A/HA4 A2/
K.K. TATE/H <<.
/ATE/ : 11TH 1CT19E4H 2011
<U/GME2T APE4 <.P. /E8E/HA4H <.B
$) %lthough several @uestions of law are raised by the revenue in this appeal& counsel for the revenue presses
only the last @uestion#
The said @uestion (as reframed) reads thus G-
MWhile computing the capital gains arising on transfer of a capital asset ac@uired by the assessee under a
gift& whether the indexed cost of ac@uisition has to be computed with reference to the year in which the
previous owner first held the asset or the year in which the assessee became the owner of the asset [N
The appeal is admitted on the above substantial @uestion of law and taken up for final hearing by consent of
both the parties#
2) The assessment year involved herein is %J 255--5/#
+) The relevant facts are that the assessee is an individual who derived income from business& house
property& capital gains and other sources#
-) In the assessment year in @uestion& the assessee had declared total income of `25&'2&-55.-# The said return
of income included long term capital gains arising from the sale of a residential flat bearing Co#$252-%
(Qcapital assetQ for short) at ,haitanya Towers& 6rabhadevi& :umbai# The said flat was originally purchased
by the daughter of the assessee (Qprevious ownerQ for easy reference) on 2'.$.$''+ at a cost of `/5&-2&+/5.-#
)y a gift deed dated $.2.255+& the previous owner gifted the said capital asset to the assessee# An +5.(.255+&
the assessee sold the said capital asset for a total consideration of `$&$5&55&555.- and offered the long term
capital gains to tax#
/) 4uring the assessment proceedings& the assessee contended that though the capital asset in @uestion was
ac@uired by the assessee under a gift deed dated $.2.255+ and transferred on +5.(.255+& under 3ection -2
read with 3ection -' and 3ection 2(-2%) of the Income Tax %ct& $'($ (Qthe %ctQ for short)& the gains arising
therefrom were liable to be computed as long term capital gain& by deducting from the total consideration
received& inter alia& the amount of indexed cost of ac@uisition# The assessee contended that the indexed cost
of ac@uisition has to be determined with reference to the cost inflation index for the year in which the cost of
ac@uisition was incurred# In the present case& the cost of ac@uisition was incurred on 2'.$.$''+ and& hence&
cost inflation index for $''+-'- would be applicable# The assessing officer was of the opinion that under
9xplanation (iii) to 3ection -2 of the %ct& the indexed cost of ac@uisition has to be determined with reference
to the cost inflation index for the first year in which the asset was first held by the assessee# %ccording to the
assessing officer& the asset was held by the assessee from $.2.255+ and& therefore& the cost inflation index for
2552-5+ would be applicable in determining the indexed cost of ac@uisition#
() An appeal filed by the assessee& the ,IT(%) allowed the claim of the assessee by holding that the long
term capital gain has to be determined by computing the indexed cost of ac@uisition with reference to the
cost inflation index for $''+-'- instead of the cost inflation index for %J 2552-5+ as held by the assessing
officer#
1) An further appeal filed by the revenue& the IT%T concurred with the decision of ,IT(%) and dismissed the
appeal filed by the revenue# ,hallenging the aforesaid order& the present appeal is filed by the revenue#
2) %ccording to :r# ,hatter?ee learned counsel for the revenue& 9xplanation (iii) to 3ection -2 specifically
provides that the indexed cost of ac@uisition has to be determined with reference to the first year in which
the capital asset was held by the assessee# In the present case& admittedly& the capital asset was ac@uired by
the assessee under a gift on $.2.255+ and& therefore& the first year of holding the capital asset by the assessee
is HJ 2552-5+# Therefore& the indexed cost of ac@uisition in the present case has to be computed with
reference to the cost inflation index for 2552-5+# :r# ,hatter?ee further submits that the deeming fiction
contained in 9xplanation $(i)(b) to 3ection 2(-2%) of the %ct cannot be applied in determining the indexed
cost of ac@uisition& in view of the specific words used in clause (iii) of the 9xplanation to3ection -2 of the
%ct& The submission is that the deeming fiction under 9xplanation $(i)(b) to 3ection 2(-2%) of the %ct to
include the period for which the asset was held by the previous owner in the period for which the asset was
held by the assessee under a gift or will& is for the limited purpose of determining as to whether the asset was
held as a short term capital asset or long term capital asset and that the said fiction cannot be applied in
determining the indexed cost of ac@uisition in view of the express language used in 9xplanation (iii) to
3ection -2 of the %ct# It is contended that to determine the Qindexed cost of ac@uisitionQ what is relevant
under 9xplanation (iii) to 3ection -2 of the %ct is the cost inflation index for the first year in which the
capital asset was held by the assessee and not the first year in which the capital asset was held by the
previous owner# %ccordingly& it is contended that when the words used in 9xplanation (iii) to 3ection -2 of
the %ct are clear and unambiguous& it would not be proper to interpret 3ection -2(iii) of the %ct by importing
the meaning given in 9xplanation $(i)(b) to 3ection 2(-2%) of the %ct#
') In support of the above contention& :r# ,hatter?ee relied upon a decision of the :umbai )ench of the
IT%T in the case of $&'T D-s. J!shore Janungo reported in (200*) 102 'T$ (6 (Mu;)A wherein it has been
held that under 9xplanation (iii) to 3ection -2& the indexed cost of ac@uisition has to be determined with
reference to the cost inflation index for the first year in which the asset was held by the assessee andnot with
reference to the cost inflation index for the first year in which the asset was held by the previous owner#
*elying upon a decision of the %pex ,ourt in the case of &'T D-s. <n@u; M.B. Chas1ala N Ors. reported in
2)2 'T0 1 (S.&.)A :r# ,hatter?ee submitted that where the language of a statute is clear and unambiguous&
one has to apply the literal interpretation and not the purposive interpretation# :r# *ai& learned counsel for
the assessee& on the other hand& supported the order passed by the IT%T by detailed submissions which are
dealt with in the subse@uent paragraphs of this ?udgment#
$5) )efore dealing with the rival contentions& we may refer to the relevant provisions of the %ct relating to
the taxability of the gains arising on transfer of the capital assets under the head Qcapital gainsQ# 3ection -/ of
the %ct provides that any profits or gains arising from the transfer of a capital in the previous year shall be
chargeable to income tax under the head Qcapital gainsQ# Where the gains arise on transfer of a short term
capital asset as defined under 3ection 2(-2%) of the %ct& the gains are taxed as short term capital gains#
Where the gains arise on transfer of long term capital asset& as defined under 3ection 2(2'%) of the %ct& the
said gains are taxed as long term capital gains# 3ection -1(iii) of the %ct provides that where a capital asset
is transferred under a gift or will& then& such transaction shall not be regarded as transfer and in such a case
the liability to pay capital gains tax would not arise# =iability to pay capital gains tax& however& would arise
when the assessee transfers the capital asset ac@uired under a gift or will for valuable consideration#
$$) The mode and the manner of computing the capital gains is provided under 3ection -2 of the %ct# %s per
3ection -2& the income chargeable under the head Scapital gainsS is liable to be computed by deducting from
the full value of the consideration received on transfer of the capital asset& the amount of expenditure
incurred wholly and exclusively in connection with such transfer and the cost of ac@uisition of the asset and
the cost of any improvement thereto# Where the assessee ac@uires any capital asset under a gift or will
without incurring any cost of ac@uisition& there would be no capital gains liability# 0owever& 3ection -'($)
(ii) of the %ct provides that in the case of an assessee ac@uiring an asset under a gift or will& the cost of
ac@uisition of the asset shall be deemed to be the cost for which the previous owner of the property ac@uired
it& as increased by the cost of any improvement of the asset incurred or borne by the previous owner or the
assessee as the case may be# Thus& on account of the deeming fiction contained in 3ection -'($)(ii) of the
%ct& gains arising on transfer of a capital asset ac@uired by the assessee under a gift or will would arise# In
such a case& the capital gains under 3ection -2 of the %ct would have to be determined by deducting from
the total consideration received by theassessee& inter alia the deemed cost of ac@uisition#
$2) Where the gains are long term capital gains (other than long term capital gains arising to a non resident
from the transfer of shares in& debentures of an Indian ,ompany)& then& as per the second proviso to 3ection
-2 of the %ct& the capital gains have to be computed by deducting from the full value of consideration the
Qindexed cost of ac@uisitionQ and the Qindexed cost of any improvementQ instead of deducting the Qcost of
ac@uisitionQ and Qcost of improvementQ#
$+) In the present case& the capital asset in @uestion (Hlat Co#$252-%) was originally ac@uired by the
previous owner (daughter) on 2'.$.$''+ and the same was ac@uired by the assessee under a gift deed dated
2.$.255+ without incurring any cost# The assessee sold the said capital asset on +5.(.255+ for
*s#$&$5&55&555.-# 3ince the assessee held the capital asset for less than thirty six months (2.$.255+ to
+5.(.255+) in the ordinary course& as per 3ection 2(-2%) of the %ct the assessee would have held the asset as
a short term capital asset and accordingly liable for short term capital gains tax# 0owever& in view of
9xplanation $(i)(b) to 3ection 2(-2%) of the %ct which provides that in determining the period for which
any asset is held by an assessee under a gift& the period for which the said asset was held by the previous
owner shall be included& the assessee is deemed to have held the asset as along term capital asset and
accordingly& liable for long term capital gains tax# Thus& by applying the deeming provision contained in the
9xplanation $(i)(b) to 3ection 2(-2%) of the %ct& the assessee is deemed to have held the asset from
2'.$.$''+ to +5.(.255+ (by including the period for which the said asset was held by the previous owner)
and accordingly held liable for long term capital gains tax#
$-) It is not disputed by the revenue that the assessee must be deemed to have held the capital asset from
2'.$.$''+ (though actually held from $.2.255+) by applying the 9xplanation $(i)(b) to 3ection 2(-2%) of the
%ct and hence liable for long term capital gains tax# 0owever& the revenue disputes the applicability of the
deemed date of holding the asset from 2'.$.$''+ while determining the indexed cost of ac@uisition under
clause (iii) of the 9xplanation to 3ection -2 of the %ct#
$/) Hor better appreciation of the dispute& we @uote the relevant part of 3ection -2 herein G-
U Mode of &o;putat!on.
-2# The income chargeable under the head Scapital gainsS shall be computed& by deducting from the full
value of the consideration received or accruing as a result of the result of the transfer of thecapital asset the
following amounts& namelyG-
(i) expenditure incurred wholly and exclusively in connection with such transfer"
(ii) the cost of ac@uisition of the asset and the cost of any improvement thereto"
P-'>)*&* !C"! ########
P-'>)*&* .u-!C&- that where long-term capital gain arises from the transfer of a long-term capital asset&
other than capital gain arising to a non-resident from the transfer of shares in& or debentures of& an Indian
company referred to in the first proviso& the provisions of clause (ii) shall have effect as if for the words
Scost of ac@uisitionS and Scost of any improvementS& the words Sindexed cost of ac@uisitionS and Sindexed
cost of any improvementS had respectively been substitutedG
6rovided also ########
6rovided also ########
YP-'>)*&* "$%' ########Z
%#planat!on = Hor the purposes of this 3ection& -
(i) ###########
(ii) ############
(iii) Sindexed cost of ac@uisitionS means an amount which bears to the cost of ac@uisition the same
proportion as ,ost Inflation Index for the year in which the asset is transferred bears to the ,ost Inflation
Index for the first year in which the asset was held by the assessee or for the year beginning on the $st day of
%pril& $'2$& whichever is later"
(iv) Sindexed cost of any improvementS means an amount which bears to the cost of improvement the same
proportion as ,ost Inflation Index for the year in which the asset is transferred bears to the ,ost Inflation
Index for the year in which the improvement to the asst took place"
(v) Q,ost Inflation IndexQ& in relation to a previous year& means such Index as the ,entral >overnment may&
having regard to seventy-five per cent of average rise in the ,onsumer 6rice Index for urban non-manual
employees for the immediately preceding previous year to such previous year& by notification in the Afficial
>a<ette& specify& in this behalf# S
$() It is the contention of the revenue that since the indexed cost of ac@uisition as per clause (iii) of the
9xplanation to 3ection -2 of the %ct has to be determined with reference to the ,ost Inflation Index for the
first year in which the asset was held by the assessee and in the present case& as the assessee held the asset
with effect from $.2.255+& the first year of holding the asset would be HJ 2552-5+ and accordingly& the cost
inflation index for 2552-5+ would be applicable in determining the indexed cost of ac@uisition#
$1) We see no merit in the above contention# %s rightly contended by :r# *ai& learned counsel for the
assessee& the indexed cost of ac@uisition has to be determined with reference to the cost inflation index for
the first year in which the capital asset was Qheld by the assesseeQ# 3ince the expression Qheld by the assesseeQ
is not defined under 3ection -2 of the %ct& that expression has to be understood as defined under 3ection 2
of the %ct# 9xplanation $(i)(b) to 3ection 2(-2%) of the %ct provides that in determining the period for
which an asset is held by an assessee under a gift& the period for which the said asset was held by the
previous owner shall be included# %s the previous owner held the capital asset from 2'.$.$''+& as per
9xplanation $(i)(b) to 3ection 2(-2%) of the %ct& the assessee is deemedto have held the capital asset from
2'.$.$''+# )y reason of the deemed holding of the asset from 2'.$.$''+& the assessee is deemed to have
held the asset as a long term capital asset# If the long term capital gains liability has to be computed under
3ection -2 of the %ct by treating that the assessee held the capital asset from 2'.$.$''+& then& naturally in
determining the indexed cost of ac@uisition under 3ection -2 of the %ct& the assessee must be treated to have
held the asset from 2'.$.$''+ and accordingly the cost inflation index for $''2-'+ would be applicable in
determining the indexed cost of ac@uisition#
$2) If the argument of the revenue that the deeming fiction contained in 9xplanation $(i)(b) to 3ection
2(-2%) of the %ct cannot be applied in computing the capital gains under 3ection -2 of the %ct is accepted&
then& the assessee would not be liable for long term capital gains tax& because& it is only by applying the
deemed fiction contained in 9xplanation $(i)(b) to 3ection 2(-2%) and 3ection -'($)(ii) of the %ct& the
assessee is deemed to have held the asset from 2'.$.$''+ and deemed to have incurred the cost of
ac@uisition and accordingly made liable for the long term capital gains tax# Therefore& when the legislature
by introducing the deeming fiction seeks to tax the gains arising on transfer of a capital asset ac@uired under
a gift or will and the capital gains under 3ection -2 of the %ct has to be computed by applying the deemed
fiction& it is not possible to accept the contention of revenue that thefiction contained in 9xplanation $(i)(b)
to 3ection 2(-2%) of the %ct cannot be applied in determining the indexed cost of ac@uisition under 3ection
-2 of the %ct#
$') It is true that the words of a statute are to be understood in their natural and ordinary sense unless the
ob?ect of the statute suggests to the contrary# Thus& in construing the words Qasset was held by the assesseeQ in
clause (iii) of 9xplanation to 3ection -2 of the %ct& one has to see the ob?ect with which the said words are
used in the statute# If one reads 9xplanation $(i)(b) to 3ection 2(-2%) together with 3ection -2 and -' of the
%ct& it becomes absolutely clear that the ob?ect of the statute is not merely to tax the capital gains arising on
transfer of a capital asset ac@uired by an assessee by incurring the cost of ac@uisition& but also to tax the
gains arising on transfer of a capital asset inter alia ac@uired by an assessee under a gift or will as provided
under 3ection -' of the %ct where the assessee is deemed to have incurred the cost of ac@uisition# Therefore&
if the ob?ect of the legislature is to tax the gains arising on transfer of a capital ac@uired under a gift or will
by including the period for which the said asset was held by the previous owner in determining the period
for which the said asset was held by the assessee& then that ob?ect cannot be defeated by excluding the period
for which the said asset was held by the previous owner while determining the indexed cost of ac@uisition of
that asset to the assessee#
In other words& in the absence of any indication in clause (iii) of the 9xplanation to 3ection -2 of the %ct
that the words Qasset was held by the assesseeQ has to be construed differently& the said words should be
construed in accordance with the ob?ect of the statute& that is& in the manner set out in 9xplanation $(i)(b) to
section 2(-2%) of the %ct#
25# To accept the contention of the revenue that the words used in clause (iii) of the 9xplanation to 3ection
-2 of the %ct has to be read by ignoring the provisions contained in 3ection 2 of the %ct runs counter to the
entire scheme of the %ct# 3ection 2 of the %ct expressly provides that unless the context otherwise re@uires&
the provisions of the %ct have to be construed as provided under 3ection 2 of the %ct# In 3ection -2 of the
%ct& the expression Qasset held by the assesseeQ is not defined and& therefore& in the absence of any intention
to the contrary the expression Qasset held by the assesseeQ in clause (iii) of the 9xplanation to 3ection -2 of
the %ct has to be construed in consonance with the meaning given in 3ection 2(-2%) of the %ct# If the
meaning given in 3ection 2(-2%) is not adopted in construing the words used in 3ection -2 of the %ct& then
the gains arising on transfer of a capital asset ac@uired under a gift or will be outside the purview of the
capital gains tax which is not intended by the legislature# Therefore& the argument of the revenue which runs
counter to the legislative intent cannot be accepted#
2$) %part from the above& 3ection //($)(b)(2)(ii) of the %ct provides that where the capital asset became the
property of the assessee by any of the modes specified under 3ection -'($) of the %ct& not only the cost of
improvement incurred by the assessee but also the cost of improvement incurred by the previous owner shall
be deducted from the total consideration received by the assessee while computing the capital gains under
3ection -2 of the %ct# The @uestion of deducting the cost of improvement incurred by the previous owner in
the case of an assessee covered under 3ection -'($) of the %ct would arise only if the period for which the
asset was held by the previous owner is included in determining the period for which the asset was held by
the assessee#
Therefore& it is reasonable to hold that in the case of an assessee covered under 3ection -'($) of the %ct& the
capital gains liability has to be computed by considering that the assessee held the said asset from the date it
was held by the previous owner and the same analogy has also to be applied in determining the indexed cost
of ac@uisition#
22) The ob?ect of giving relief to an assessee by allowing indexation is with a view to offset the effect of
inflation# %s per the ,)4T ,ircular Co#(+( dated +$.2.$''2 Ysee $'2 IT* $ (3t)Z a fair method of allowing
relief by way of indexation is to link it to the period of holding the asset# The said circular further provides
that the cost of ac@uisition and the cost of improvement have to be inflated to arrive at #the indexed cost of
ac@uisition and the indexed cost of improvement and then deduct the same from the sale consideration to
arrive at the long term capital gains# If indexation is linked to the period of holding the asset and in the case
of an assessee covered under 3ection -'($) of the %ct& the period of holding the asset has to be determined
by including the period for which the said asset was held by the previous owner& then obviously in arriving
at the indexation& the first year in which the said asset was held by the previous owner would be the first
year for which the said asset was held by the assessee#
2+) 3ince the assessee in the present case is held liable for long term capital gains tax by treating the period
for which the capital asset in @uestion was held by the previous owner as the period for which the said asset
was held by the assessee& the indexed cost of ac@uisition has also to be determined on the very same basis#
2-) In the result& we hold that the IT%T was ?ustified in holding that while computing the capital gains
arising on transfer of a capital asset ac@uired by the assessee under a gift& the indexed cost of ac@uisition has
to be computed with reference to the year in which the previous owner first held the asset and not the year in
which the assessee became the owner of the asset#
2/) %ccordingly& we dispose off the appeal by answering the @uestion in the affirmative i#e# in favour of the
assessee and against the revenue with no order as to costs#
(;#;# T%T94& P#) (P#6# 497%40%* P#)

Capital Gains

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Capital Gains

Uploaded by

Copyright:

Available Formats

M.K.

GUPTA TAX CLASSES

(01) (06) (07) (08) (10) (11) (12)

(01 (07 (08 (10 (11 (12 (1

You might also like