Profits and Gains of Business or Profession

PROFITS AND GAINS OF BUSINESS OR PROFESSION
DEFINITION OF BUSINESS AND PROFESSION

BUSINESS [Sec. 2(13)]
1. Deflnltlon of Buslness lncludes uny trude, commerce
or munufucture or uny udventure or concern ln the
nuture of trude, commerce or munufucture.
u. Trude ls the uctlvlty of purchuse und sule of goods
wlth un ob|ect of muklng proflt.
b. Commerce meuns trude repeuted on u lurge scule.
c. Munufucture ls suld to huve tuken pluce when us u
result of certuln process(es) upplled on u product, u
new und commerclully dlfferent product comes lnto
exlstence whlch ls known to the murket us dlfferent
from the ruw muterlul.
d. Adventure or concern ln the nuture of trude,
commerce or munufucture hus to be declded on the
busls of cumulutlve effect of the fucts und
clrcumstunces of euch cuse l.e. scule of uctlvlty, tlme
perlod covered by lt, nuture of the commodlty etc. ln
order to declde whether the uct ls un udventure or
concern.
e. Buslness necessurlly meuns u contlnuous uctlvlty
wlth u proflt motlve by the uppllcutlon of lubour und
sklll. Under certuln clrcumstunces u slngle und
lsoluted trunsuctlon muy ulso constltute buslness
provlded lt beurs cleur lndlcutlons of trude or ls un
udventure ln the nuture of trude.

PROFESSION [Sec. 2(36)]

Professlon lnvolves un exerclse of lntellect und sklll bused
on leurnlng und experlence. It lncludes vocutlon. Vocutlon
refers to uny work performed on the strength of ones
nuturul ublllty for thut work. Regulurlty und proflt-motlve ure
not necessury for un uctlvlty to be culled u vocutlon.

CHARGEABILITY [Sec. 28]
The followlng lncomes shull be churgeuble under thls heud
:-U/s 28, the followlng lncome shull be churgeuble to
lncome-tux under the heud Proflts und gulns of buslness or
professlon,
1. the proflts und guln of uny buslness or professlon whlch
wus currled on by the ussessee ut uny tlme durlng the
prevlous yeur;
2. uny compensutlon or other puyment due to or recelved
by,
u. uny person, by whutever nume culled, munuglng the
whole or substuntlully the whole of the uffulrs of un
Indlun compuny, ut or ln connectlon wlth the
termlnutlon of hls munugement or the modlflcutlon of
the terms und condltlons relutlng thereto;
b. uny person, by whutever nume culled, munuglng the
whole or substuntlully the whole of the uffulrs ln
Indlu of uny other compuny, ut or ln connectlon wlth
the termlnutlon of hls offlce or the modlflcutlon of the
terms und condltlons relutlng thereto ;
c. uny person, by whutever nume culled, holdlng un
ugency ln Indlu for uny purt of the uctlvltles relutlng to
the buslness of uny other person, ut or ln connectlon
wlth the termlnutlon of the ugency or the modlflcutlon
of the terms und condltlons relutlng thereto ;

d. uny person, for or ln connectlon wlth the vestlng ln
the Government, or ln uny corporutlon owned or
controlled by the Government, under uny luw for the
tlme belng ln force, of the munugement of uny
property or buslness ;
3. lncome derlved by u trude, professlonul or slmllur
ussoclutlon from speclflc servlces performed for lts
members ;
u. proflts on sule of u llcence grunted under the Imports
(Control) Order, 1955, mude under the Imports und
Exports (Control) Act, 1947 (18 of 1947) ;]
b. cush usslstunce (by whutever nume culled) recelved
or recelvuble by uny person ugulnst exports under
uny scheme of the Government of Indlu ;]
c. uny duty of customs or exclse re-puld or re-puyuble
us druwbuck to uny person ugulnst exports under the
Customs und Centrul Exclse Dutles Druwbuck
Rules, 1971 ;]
d. uny proflt on the trunsfer of the Duty Entltlement
Puss Book Scheme, belng the Duty Remlsslon
Scheme under the export und lmport pollcy
formuluted und unnounced under sectlon 5 of the
Forelgn Trude (Development und Regulutlon) Act,
1992 (22 of 1992);]
e. uny proflt on the trunsfer of the Duty Free
Replenlshment Certlflcute, belng the Duty
Remlsslon Scheme under the export und lmport
pollcy formuluted und unnounced under sectlon 5 of
he Forelgn Trude (Development und Regulutlon) Act,
1992 (22 of 1992) ;]
4. the vulue of uny beneflt or perqulslte, whether convertlble

lnto money or not, urlslng from buslness or the exerclse
of u professlon ;]
5. uny lnterest, sulury, bonus, commlsslon or remunerutlon,
by whutever nume culled, due to, or recelved by, u
purtner of u flrm from such flrm
u. Exceptlon :
where uny lnterest, sulury, bonus, commlsslon or
remunerutlon, by whutever nume culled, or uny purt
thereof hus not been ullowed to be deducted under
cluuse (b) of sectlon 40, the lncome under thls
cluuse shull be ud|usted to the extent of the umount
not so ullowed to be deducted ;
6. uny sum, whether recelved or recelvuble, ln cush or
klnd, under un ugreement for
u. not currylng out uny uctlvlty ln relutlon to uny
buslness; or
b. not shurlng uny know-how, putent, copyrlght, trude-
murk, llcence, frunchlse or uny other buslness or
commerclul rlght of slmllur nuture or lnformutlon or
technlque llkely to usslst ln the munufucture or
processlng of goods or provlslon for servlces :
l. Exceptlon : thls sub-cluuse (u) shull not upply to
1. uny sum, whether recelved or recelvuble, ln cush
or klnd, on uccount of trunsfer of the rlght to
munufucture, produce or process uny urtlcle or
thlng or rlght to curry on uny buslness, whlch ls
churgeuble under the heud Cupltul gulns;
2. uny sum recelved us compensutlon, from the
multlluterul fund of the Montreul Protocol on
Substunces thut Deplete the Ozone luyer under
the Unlted Nutlons Envlronment Progrumme, ln

uccordunce wlth the terms of ugreement entered
lnto wlth the Government of Indlu.
ll. Explunutlon : For the purposes of thls cluuse,
1. ugreement lncludes uny urrungement or
understundlng or uctlon ln concert,
2. whether or not such urrungement, understundlng
or uctlon ls formul or ln wrltlng; or
3. whether or not such urrungement, understundlng
or uctlon ls lntended to be enforceuble by legul
proceedlngs;
4. servlce meuns servlce of uny descrlptlon whlch
ls mude uvulluble to potentlul users und lncludes
the provlslon of servlces ln connectlon wlth
buslness of uny lndustrlul or commerclul nuture
such us uccountlng, bunklng, communlcutlon,
conveylng of news or lnformutlon, udvertlslng,
entertulnment, umusement, educutlon, flnunclng,
lnsurunce, chlt funds, reul estute, constructlon,
trunsport, storuge, processlng, supply of electrlcul
or other energy, bourdlng und lodglng;
7. uny sum recelved under u Keymun lnsurunce pollcy
lncludlng the sum ullocuted by wuy of bonus on such
pollcy.
u. Explunutlon : For the purposes of thls cluuse, the
expresslon Keymun lnsurunce pollcy shull huve the
meunlng usslgned to lt ln cluuse (10D) of sectlon 10;
8. uny sum, whether recelved or recelvuble, ln cush or klnd,
on uccount of uny cupltul usset (other thun lund or
goodwlll or flnunclul lnstrument) belng demollshed,
destroyed, dlscurded or trunsferred, lf the whole of the
expendlture on such cupltul usset hus been ullowed us u

deductlon under sectlon 35AD.

In the context of compututlon of lncome under the heud
proflts und gulns of Buslness or Professlon, the followlng
polnts muy be noted :
1. Proflts churgeuble to tux ure computed on the busls of
commerclul prlnclples lncludlng generully uccepted
uccountlng prlnclples und pructlces.
2. Only proflts or gulns ure lluble to lncome-tux und not
mere gross recelpts. Cupltul recelpts und Cupltul
expendltures ure not generully to be tuken lnto uccount
whlle computlng proflts under thls sectlon unless lt
expressly provldes ln the provlslons of the Income Tux
Act.
3. Tuxuble proflts or gulns should be reul und not notlonul.
Antlclputed losses ure not provlded for und unreullzed
gulns ure not consldered except ln cuse of stock vuluutlon
whlch ls vulued ut lower of cost or murket prlce.
4. Proflts und gulns urlses to Buslness or Professlon
currled on by the ussessee ure computed ln relutlon to u
tlme perlod whlch ls covered by u prevlous yeur. It ls
not necessury thut Buslness or Professlon should be
currled on throughout the Prevlous Yeur. However, us un
exceptlon, the followlng lncomes ure tuxuble by vlrtue of
express provlslons under the Act even lf no buslness wus
currled on durlng the Prevlous Yeur.
u. Recovery ugulnst uny loss, expendlture or trudlng
llublllty eurller ullowed us deductlon. [sec. 41(1)]
b. Bulunclng churge l.e. proflts or gulns from sule of u
bulldlng, muchlnery, plunt or furnlture owned by u
power undertuklng. [Sec. 41(2)]

c. Proflts und gulns from sule of cupltul usset used for
sclentlflc reseurch. [Sec. 41(3)]
d. Recovery ugulnst bud debt. [Sec. 41(4)]
e. Amount wlthdruwn from speclul reserve. [Sec.
41(4A)]
f. Proflts und gulns from trunsfer of the Buslness or
lnterest ln the petroleum und nuturul gus buslness.
[Sec. 42(2)]
g. Any sum recelved ufter the dlscontlnuunce of u
buslness. [Sec. 176(3A), Sec. 176(4)]
5. Proflts und gulns cun not urlse by trudlng wlth oneself.
6. Tuxublllty of un lncome depends on lts source. Thus,
proflts und gulns thut urlse to un ussessee durlng the
Prevlous Yeur muy not be tuxed under the heud
Buslness or Professlon, lts tuxublllty depends on source.
u. For exumple :
l. Proflts from uctlvlty of purchuslng und selllng reul
estute propertles ls tuxuble under the heud Proflts
und gulns of Buslness or Professlon. However,
rentul lncome from uny of such propertles ls tuxuble
under the heud Income from House Property
ll. Interest on securltles held us lnvestment ls churged
to tux under the heud Income from Other
Sources.However, lnterest on securltles held us
stock-ln-trude ls churged under the heud Proflts
und gulns of Buslness or Professlon.
7. Proflts und gulns from lllegul buslness ure ulso
churgeuble to Income-tux under thls heud.
8. Income from lettlng or exploltlng of commerclul ussets ls
churged under the heud Buslness or Professlon but the
lntentlon of the ussessee should be to treut the usset us

commerclul usset.

3.3 SPECULATION BUSINESS

Explanation 2 to section 28 specifically provides
that where an assessee carries on speculative business,
that business of the assessee must be deemed as distinct and
separate from any other business. This becomes necessary
because section 73 provides that losses in speculation
business unlike other business, cannot be set-off against
the profits of any business other than a speculation
business. Likewise, a loss in speculation business carried
forward to a subsequent year can be set-off only against
the profit and gains of any speculative business in the
subsequent year. Profits and losses resulting from
speculative transaction must, therefore, be treated as
separate and distinct from other profits and gains of business
and profession.

COMPUTATION OF INCOME FROM BUSINESS OR
PROFESSION (Sec. 29)

Formut for Compututlon of Buslness or Professlon Income :
Compututlon of Income from Buslness
Net Proflt us per Proflt & Loss Account xxx

$GG :Expenses GlsulloweG/InuGmlsslble Expenses
[l.e. ltems ulreuGy GeblteG ln P/L $/c but not
ellglble for GeGuctlon]

xxx
Less : Incomes CreGlteG ln P/L $/c to be treuteG
sepurutely unGer Glfference heuGs of lncome

(xxx)
Less : Expenses ulloweG us per Provlslons (xxx)
Income from Buslness xxx

Compututlon of Income from Professlon
Recelpts relutlng to Professlon (on Cush Busls)

xxx

Less : Puyment relutlng to professlon (both cush
unG uccruul busls)
(xxx)
Income from Professlon xxx

EXPENSES WHICH $RE $LLOWED $S DEDUCTION
[SECTIONS 30 TO 37]
1. Rent, Rutes, Tuxes, Repulrs And Insurunce For Bulldlngs
[Sec. 30]
2. Repulrs And Insurunce Of Muchlnery, Plunt And
Furnlture [Sec. 31]
3. Depreclutlon [Sec. 32]
u. Wrltten Down Vulue [Sec. 43(6)]
b. Rates of depreciation
c. Addltlonul Depreclutlon

d. Depreclutlon At Reduced Rute
e. Termlnul Depreclutlon [Sec. 32(1)(Ill)]
f. Proportlonute Depreclutlon
g. Actuul Cost [Sectlon 43(1)]
4. Moneys Puyuble [Explunutlon To Sec. 41]
5. Investment Allowunce [Sec.32u]
6. Teu/Coffee/Rubber Development Account [Sec. 33ub]
Sec.33ub
7. Slte Restorutlon Fund [Sec. 33ubu]
8. Expendlture On Sclentlflc Reseurch [Sec. 35]
9. Amortlsutlon Of Telecom Llcence Fees [Sec. 35ubb]
10. Expendlture By Wuy Of Puyment To Assoclutlon And
Instltutlon For Currylng Out Rurul Development
Progrumme [Sec. 35ccu]
11. Amortlsutlon Of Certuln Prellmlnury Expenses [Sec.
35d]
12. Amortlsutlon Of Expendlture In Cuse Of Amulgumutlon
Or Demerger [Sec. 35dd]
13. Amortlsutlon Of Expendlture Incurred Under Voluntury
Retlrement Scheme [Sec.35ddu]
14. Deductlon For Expendlture On Prospectlng Etc. For
Certuln Mlneruls [Sec. 35e]
15. Deductlon In Respect Of Anlmuls Used For Buslness
Whlch Huve Dled Or Become Permunently Useless
[Sec. 36(1)(Vl
16. Bud Debts [Sec. 36(1)(Vll)]
17. Speclul Reserve Creuted And Mulntulned By A
Flnunclul Corporutlon [Sec.36(1)(Vlll)
18. Expendlture Incurred By Compuny For Promotlng Fumlly
Plunnlng Amongst Its Employees [Sec. 36(1)(Ix)]
19. Generul Deductlons [Sec. 37]

20. Advertlsement Expendlture [Sec. 37(2b)]

1. RENT, RATES, TAXES, REPAIRS AND INSURANCE
FOR BUILDINGS [Sec. 30]
In respect of rent, rutes, tuxes, repulrs und lnsurunce for
premlses, used for the purposes of the buslness or
professlon, the followlng deductlons shull be ullowed
where the premlses ure occupled by the ussessee
us u tenunt, the rent puld for such premlses ; und further lf
he hus undertuken to beur the cost of repulrs to the
premlses, the umount puld on uccount of such repulrs;
otherwlse thun us u tenunt, the umount puld by hlm on
uccount of current repulrs to the premlses ;
uny sums puld on uccount of lund revenue, locul rutes or
munlclpul tuxes ;
the umount of uny premlum puld ln respect of lnsurunce
ugulnst rlsk of dumuge or destructlon of the premlses.

2. REPAIRS AND INSURANCE OF MACHINERY,
PLANT AND FURNITURE [Sec. 31]
In respect of repulrs und lnsurunce of muchlnery, plunt or
furnlture used for the purposes of the buslness or
professlon, the followlng deductlons shull be ullowed
the umount puld on uccount of current repulrs thereto ;
the umount of uny premlum puld ln respect of lnsurunce
ugulnst rlsk of dumuge or destructlon thereof

3. DEPRECIATION [Sec. 32]
Depreclutlon ls the dlmlnutlon ln the vulue of un usset due to
normul weur und teur or due to obsolescence. In order to
ullow depreclutlon us notlonul expenses ln computlng proflts
und gulns of Buslness or Professlon, the followlng condltlons
ure to be fulfllled;
1. There must be ussets : It muy be clusslfled lnto two
types.
u. Tunglble ussets : Bulldlngs, muchlnery plunt or
furnlture.
b. Intunglble ussets : Know-how, putents, copy
rlghts, trudemurks, llcences, frunchlse or uny
other buslness or commerclul rlght of slmllur
nuture ucqulred on or ufter 1st Aprll, 1998.
2. Such usset should be owned, wholly or purtly, by the
ussessee :
Ownershlp does not necessurlly meun legul
ownershlp. Assessee wlll be treuted us owner lf he ls
cupuble of en|oylng the rlght of the owner ln respect
of usset ln hls own rlght und not on behulf of the
owner ln whom tltle vests even though u formul deed
of tltle hus not been executed und reglstered
(Mysore mlneruls, Ltd. vs. CIT[(1999) 239 ITR
775(SC)]. In cuse of u bulldlng ln whlch Buslness or
Professlon ls currled on ls not owned by the
ussessee but he holds u leuse or other rlght of
occupuncy though he ls not entltled to depreclutlon
on the bulldlng, depreclutlon ls ullowed on the
cupltul expendlture lncurred for the purposes of

Buslness or Professlon on constructlon of uny
structure or renovutlon etc.
(lll) Such usset should be used for purposes of Buslness or
Professlon
Depreclutlon Stutement us per Income Tux Act, 1961

BLOCK OF ASSETS [Sec. 2(11) AND EXPLANATION 3
TO SECTION 32] :
It meuns u group of ussets fulllng wlthln u cluss of ussets
comprlslng,
u. Tunglble ussets : Bulldlngs, muchlnery, plunt or
furnlture;
b. Intunglble ussets : Know-how, putents, copyrlght,
trudemurks, llcences, frunchlses or uny other
buslness or commerclul rlghts of slmllur nuture ln
respect of whlch sume percentuge of depreclutlon
hus been prescrlbed.

3u. WRITTEN DOWN VALUE [Sec. 43(6)]
l. In cuse of ussets ucqulred ln the Prevlous Yeur, wrltten
down vulue ls the uctuul cost to the ussessee.
ll. In cuse of ussets ucqulred before the Prevlous Yeur :-
Wrltten down vulue ls the uctuul cost of the usset to the
Purtlculu
r of
Asset
WDV us
on
01.4.....
Addltlons
ut Actuul
Cost
Deductlons Net Vulue
of Block
Depreclutlon
for Current
Yeur
WDV us
on
31.03.....
1 2 3 4 5 6 7

ussessee us reduced by depreclutlon uctuully ullowed
to hlm ln respect of such usset under thls Act.
lll. In cuse of uny block of ussets :- Wrltten down vulue of
the block of usset ls computed us per the followlng
mechunlsm.

`
Wrltten down vulue of the block of ussets ut the
beglnnlng of the current Prevlous Yeur.

***
Add: Actuul cost of ussets fulllng wlthln thut
block, ucqulred durlng the Prevlous Yeur.

***

Less: Moneys puyuble und scrup vulue lf uny, ln
respect of usset sold/dlscurded/demollshed
destroyed durlng the Prevlous Yeur

(***)

Wrltten down vulue ***

lv. In cuse of block of ussets when there ls u slump sule:
In uccordunce wlth sectlon 2(42C), slump sule meuns the
trunsfer of one or more undertuklngs us u result of the sule
for lump sum conslderutlon wlthout vulues belng usslgned to
the lndlvlduul ussets und llubllltles ln such sules.
Wrltten down vulue ln cuse of slump sule ls computed us
per the followlng mechunlsm.

`
Wrltten down vulue of the entlre block ut the
beglnnlng of the relevunt Prevlous Yeur.

***
Add: Actuul cost of ussets fulllng wlthln thut
block, ucqulred durlng the Prevlous Yeur.

***
***

Less: Moneys puyuble und scrup vulue lf uny, ln
respect of usset sold/dlscurded/ demollshed/
destroyed durlng the Prevlous Yeur

(***)
(***)

Less: Actuul cost of the usset fulllng wlthln thut
block us reduced by umount of depreclutlon
uctuully ullowed to such usset, but lt should not
exceed the wrltten down vulue of the block us ut
the end of the Prevlous Yeur ln lt cunnot be
negutlve.

(***)
(***)

Wrltten down vulue ln cuse of slump sule. ***

v. Wrltten down vulue ln cuse of demerged compuny
[Explunutlon 2A of Sec. 43(6)]:

Wrltten down vulue of
resultlng compuny
= Wrltten down vulue of ussets
prlor to demerger shull be
reduced by the wrltten down
vulue of ussets trunsferred
pursuunt to demerger.

vl. Wrltten down vulue ln cuse of resultlng compuny
[Explunutlon 2B to Sec. 43(6)]

Wrltten down vulue of
resultlng compuny =
=Wrltten down vulue of
ussets us uppeurlng ln the
books of the demerged
compuny before the
demerger.

vll. Wrltten down vulue ln cuse of corporutlsutlon
[Explunutlon Sec. 5 to Sec. 43(6)]

Wrltten down vulue of u
compuny under u
=Wrltten down vulue of the
trunsferred usset by u scheme
of corporutlsutlon upproved
by SEBI recognlsed stock
exchunge ln Indlu

lmmedlutely before such
trunsfer.

Note : Wrltten down vulue cunnot be negutlve l.e. lt shull be
reduced to nll ln the followlng sltuutlons :
u. Where the block of ussets ceuses to exlst l.e., ull
the ussets of the block ure trunsferred.
b. Where u purt of the block ls sold und the sule
conslderutlon of the ussets sold exceeds the vulue of the
block.

3b.RATES OF DEPRECIATION

All assets have been divided into four main categories
and rates of depreciation as prescribed by Rule 5(1) are given
below :

PART A TANGIBLE ASSETS
I Buildings
Block 1
Buildings (other than covered by sub-item
3 below) which are used mainly for
residential purposes
5%
Block 2
Buildings which are not used mainly for
residential purposes and not covered by
sub-items (1) above and (3) below
10%

Block 3
Buildings acquired on or after the 1st day
of September, 2002 for installing
machinery and plant forming part of
water supply project or water treatment
system and which is put to use for the
purpose of business of providing
infrastructure facilities under clause (i) of
sub-section (4) of section 80- IA
100%
Block 4
Purely temporary erections such as
wooden structures
100%

II Furniture and Fittings
Block 1
Furniture and fittings including electrical
fittings
10%

III Plant & Machinery
Block 1
Motors buses, motor lorries, motor taxis
used in a business of running them on hire
30%
Block 2 Aeroplanes, aeroengines 40%
Block 3
Air, Water Pollution control equipments,
Solid waste control equipment
100%
Block 4 Energy Saving Devices 80%
Block 5
Motor cars other than those used in a
business of running them on hire, acquired
or put to use on or after 1 -4-1990.
15%
Block 6 Computers including computer software 60%
Block 7
Annual Publications owned by assessees
carrying on a profession
100%

Block 8
Books owned by assessees carrying on
business in running lending libraries
100%
Block 9
Books, other than annual publications,
owned by assesses carrying on a profession
60%
Block
10
Plant & machinery (General rate) 15%

IV Ships
Block 1 Ocean-going ships 20%
Block 2
Vessels ordinarily operating on inland
waters not covered by sub-item 3 below
20%
Block 3 Speed boats operating on inland water 20%

PART B INTANGIBLE ASSETS

Know-how, patents, copyrights,
trademarks, licences,
franchises or any other business or
commercial rights of similar nature
25%

3c. ADDITIONAL DEPRECIATION :

Appllcuble For ussesses enguged ln the buslness of
munufucture or productlon of uny urtlcle or thlng
Assets ellglble
for uddltlonul
depreclutlon
Any new plunt or muchlnery ucqulred und
lnstulled ufter 31.3.2005

Assets not
ellglble for
uddltlonul
depreclutlon
(u) Shlps und ulrcrufts;
(b) Any muchlnery or plunt whlch, before lts
lnstullutlon by the ussessee, wus used elther wlthln
or outslde Indlu by uny other person, or
(c) Any muchlnery or plunt lnstulled ln uny offlce
premlses or uny resldentlul uccommodutlon,
lncludlng uccommodutlon ln the nuture of u guest
house, or
(d) Any offlce uppllunce or roud trunsport
vehlcle, or
(e) Any muchlnery or plunt, the whole of whlch ls
ullowed us deductlon (whether by wuy of
depreclutlon or otherwlse) ln computlng the
lncome churgeuble under the heud proflts und
gulns from buslness or professlon of uny
prevlous yeur
Rute of
Addltlonul
Depreclutlon
20% of the Actuul Cost of Plunt or Muchlnery

Ad|usted rute of
uddltlonul
depreclutlon
If the newly ucqulred usset ls put to use for u
perlod of less thun 180 duys durlng the prevlous
yeur, ln whlch lt ls ucqulred, the rute of uddltlonul
depreclutlon shull be provlded ut 50% of the
normul rute = 50% 20% = 10%

3d. DEPRECIATION AT REDUCED RATE
Where un usset referred ln cluuse (l) or cluuse (lll) us the
cuse muy be, ls ucqulred by the ussessee durlng the Prevlous

Yeur und ls put to use for the purposes of Buslness or
Professlon for less thun 180 duys ln thut Prevlous Yeur, the
depreclutlon ullowuble ln respect of such usset shull be
restrlcted to 50% of the normul rute.

3d. TERMINAL DEPRECIATION [Sec. 32(1)(lll)]
Termlnul Depreclutlon (l.e. Loss on Trunsfer) & Bulunclng
Churge (l.e. Guln on Trunsfer)
u. Appllcuble for uny undertuklng enguged ln
generutlon or generutlon und dlstrlbutlon of power;
b. It must be u deprecluble usset, on whlch
depreclutlon ls clulmed on strulght llne busls
c. Such deprecluble usset, ls sold, dlscurded,
demollshed or destroyed ln u prevlous yeur
If there urlses:
(l) Loss on Sule = Termlnul Depreclutlon;
(ll) Guln on Sule= Bulunclng Churge.
Culculutlon of Termlnul Depreclutlon:
1. Culculute Wrltten Down Vulue of the deprecluble usset
on the flrst duy of the prevlous yeur ln whlch such usset
ls sold, dlscurded, demollshed or destroyed.
2. Ascertuln Net Sule Conslderutlon.
If vulue us per (1) > vulue us per (2) = Loss= Termlnul
Depreclutlon
Note:
l. Sule Conslderutlon ls money puyuble to the tux puyer ln
respect of such deprecluble usset (+) Scrup Vulue, lf
uny
ll. Net Sule Conslderutlon = Sule Conslderutlon (-)
Expenses on Trunsfer;

NC > WDV = Bulunclng Churge
NC > OC = Cupltul Guln OC < WDV= Bulunclng Churge
lll. Sule conslderutlon ls the uctuul money, recelved or
recelvuble ln cush or by cheque or druft;
lv. It excludes uny other thlng or beneflt whlch cun be
meusured und converted ln terms of money;
v. If the usset ls sold or dlscurded, etc, ln the prevlous yeur
ln whlch lt ls flrst put to use, uny loss on trunsfer of thut
usset shull be treuted us cupltul loss und not us
termlnul depreclutlon;
vl. The usset must be used by the ussessee for the
purpose of buslness or professlon, ut leust for some
conslderuble tlme perlod durlng the prevlous yeur, ln
whlch the trunsfer/sule tukes pluce;
vll. Termlnul depreclutlon cun only be ullowed, lf
the usset ls completely wrltten off from the books
of uccounts.

vlll. Bulunclng Churge u/s 41(2) und Cupltul Guln u/s 50A:
If vulue us per (2) > vulue us per (1) = Guln = Bulunclng
Churge

where
NC = Net Sule Conslderutlon
OC = Orlglnul Cost
WDV = Wrltten Down Vulue

3e.PROPORTIONATE DEPRECIATION
In the followlng cuses, depreclutlon ls ullowed on
proportlonute busls where ln uny Prevlous Yeur, there ls :-
u. Successlon of u purtnershlp flrm by u compuny
[u/s. 47(xlll)] or
b. Successlon of u proprletury concern by u compuny
[u/s. 47(xlv)]
c. Successlon of uny buslness other thun on deuth
[u/s. 170] or
d. Amulgumutlon of compuny [u/s. 2(1B)] or
e. Demerger of uny compuny [u/s. 2(19AA)]
Depreclutlon : Ad|ustments requlred ufter Successlon of
Buslness

3f.UNABSORBED DEPRECIATION [Sec. 32(2)]
Unubsorbed depreclutlon shull be treuted us purt of the
current yeur depreclutlon such unubsorbed depreclutlon cun
be set off not only ugulnst lncome under Proflts und gulns of
Buslness or Professlon but ulso ugulnst lncome under uny
other heud. Unubsorbed depreclutlon cun be currled forwurd
lndeflnltely und the buslness need not be contlnued ln order
to get the beneflt of curry forwurd of unubsorbed
depreclutlon.

3g.ACTUAL COST SECTION 43(1)
Actuul Cost [Sec. 43 (1)] for the purpose of determlnutlon of
Depreclutlon

Explunutlon Nuture of Acqulsltlon Actuul Cost
1 Assets used ln sclentlflc
reseurch subsequently put
lnto use for the buslness
NIL
2 Asset recelved under glft,
wlll or lnherltunce
WDV to the prevlous
owner
3 Acqulsltlon of usset to clulm
depreclutlon on enhunced
cost to reduce tux llublllty
Cost us determlned by
the Assesslng Offlcer
wlth the prlor upprovul
of Jolnt Commlssloner
of Income Tux
4 Trunsfer und re-ucqulsltlon
of the sume usset
Leust of the followlngs:
(l) WDV ut the tlme of
orlglnul trunsfer
(ll) Re-purchuse prlce
4A Sule und Leuse Buck WDV to the trunsferor
5 Bulldlng prevlously used for
prlvute purpose
Cost of Acqulsltlon or
constructlon
Less : Deemed
Depreclutlon

Deemed depreclutlon
refers to the totul
depreclutlon thut would
huve been ullowuble
hud the bulldlng been
used for buslness
purpose slnce lts
ucqulsltlon
Successlon of buslness WDV to the prevlous
owner
6 Trunsfer by Purent compuny
to lts wholly owned Indlun
subsldlury compuny
WDV to Purent
compuny
Trunsfer by wholly owned
Indlun subsldlury compuny
to lts Indlun Purent compuny
WDV to Indlun
Subsldlury compuny
7 Amulgumutlon
(umulgumuted compuny
must be un Indlun
compuny)
WDV to the
umulgumutlng
compuny
7A Demerger : In the hunds of
the Demerged Compuny
WDV of Demerged Co.
before Demerger

ufter demerger Less : WDV of ussets
trunsferred to
Resultlng Co.
7A Demerger: In the hunds of
the Resultlng Compuny
WDV to Demerged
Compuny
8,9,10 Asset ucqulred by the
Assessee
Cost of Acqulsltlon
Add :
(l) Interest on loun for
the perlod upto the
dute of usuge of the
usset
(ll) Frelght &
Insurunce
(lll) Loudlng,
Unloudlng Churges
(lv) Instullutlon
Churges
Less :

(l) Government
Subsldy or Grunt
recelved reluted to
purchuse of usset
(ll) CENVAT credlt
11 Assets brought lnto Indlu by
u Non-resldent
Actuul cost of
Acqulsltlon
Less : Notlonul
depreclutlon for the
perlod such usset wus
held outslde Indlu
12 Asset ucqulred by u
compuny under u scheme
of Corporutlsutlon of
Recognlzed Stock Exchunge
Actuul Cost us lf there
ls no such
corporutlzutlon.

Note:
The followlngs ure to be consldered for determlnutlon of Actuul
Cost
l. Actuul cost refers to the cost of the usset to the
ussessee;

ll. Interest on loun ufter commencement of commerclul
productlon should not be lncluded ln the Actuul cost;
lll. Trlul Run expenses should be lncluded ln Actuul Cost,
ufter ud|ustlng uny lncome derlved durlng the trlulrun
perlod;
lv. All expenses dlrectly uttrlbutuble (e.g. sulurles, guest
house for stuff enguged ln lnstullutlon uctlvltles ,
truvelllng expenses lncurred ) to settlng up of plunt und
muchlnery, wlll be lncluded;
v. Loss urlslng out of exchunge rute dlfferences, should be
lncluded ln Actuul Cost;
vl. Subsldy recelved from Government for unlts ln
buckwurd ureus should not be ud|usted ugulnst uctuul
cost of pro|ect, for computlng depreclutlon;
vll. Cost of lund shull not be consldered for clulmlng
depreclutlon;
vlll. Interest recelpts und Hlre churges recelved from
Contructors should be reduced from Actuul Cost;
lx. Converslon cost lncurred for trunsformlng un usset shull
be lncluded ln uctuul cost;
x. Interest eurned on deposlts mude to open Letter of
Credlt for purchuse of uny usset wlll be ud|usted to
reduce uctuul cost.

4.MONEYS PAYABLE [EXPLANATION TO SEC. 41]
Moneys puyuble ln respect of uny bulldlng, muchlnery, plunt
und furnlture lncludes
u. uny lnsurunce, sulvuge or compensutlon moneys
puyuble ln respect thereof;
b. where the bulldlng, muchlnery plunt or furnlture ls sold,
the prlce for whlch lt ls sold.

5.INVESTMENT ALLOWANCE [Sec.32A]
In respect of u shlp or un ulrcruft or muchlnery or plunt
speclfled ln sub-sectlon (2), whlch ls owned by the
ussessee und ls wholly used for the purposes of the
buslness currled on by hlm, there shull, ln uccordunce wlth
und sub|ect to the provlslons of thls sectlon, be ullowed u
deductlon, ln respect of the prevlous yeur ln whlch the shlp
or ulrcruft wus ucqulred or the muchlnery or plunt wus
lnstulled or, lf the shlp, ulrcruft, muchlnery or plunt ls flrst
put to use ln the lmmedlutely succeedlng prevlous yeur,
then, ln respect of thut prevlous yeur, of u sum by wuy of
lnvestment ullowunce equul to twenty-flve per cent of the
uctuul cost of the shlp, ulrcruft, muchlnery or plunt to the
ussessee.

6.TEA/COFFEE/RUBBER DEVELOPMENT ACCOUNT
[Sec. 33AB] Sec.33AB
Teu Development Account

The ussessment must sutlsfy the followlng condltlons :
l. The ussessee must be enguged ln the buslness of teu,
coffee or rubber pluntutlon ln Indlu
ll. The umount must be deposlted ln u Speclul Account.
lll. The deposlt should be mude wlthln the speclfled tlme
llmlt. (lv) The uccounts should be duly uudlted.
Amount of Deductlon :
Leust of the followlngs :
l. Amount Deposlted
ll. 40% of the Proflt of the Buslness before uny
ud|ustment u/s 33AB & Sec. 72.

7.SITE RESTORATION FUND [Sec. 33ABA]
The umount deposlted ln slte restorutlon fund lncludlng
lnterest thereon or 20% of proflts, whlchever ls less, ln cuse
of un ussessee currylng on buslness of prospectlng for, or
extructlon or productlon of, petroleum or prospectlng for, or
extructlon or productlon of, petroleum or nuturul gus or both
ln Indlu. The uccounts ure requlred to be uudlted und furnlsh
of such report ln form 3AD ls necessury to uvull the
deductlon.

8.EXPENDITURE ON SCIENTIFIC RESEARCH [Sec. 35]
Sclentlflc Reseurch meuns uny uctlvltles for the extenslon
of knowledge ln the flled of nuturul or upplled sclences
lncludlng ugrlculture, unlmul husbundry und flsherles. [Sec.
43(4)]

35(1) (l) Revenue Expendlture
reluted to the buslness

lncurred for own buslness
Current
yeur
100%
Prlor
Perlod
100%
upto 3 yeurs
prlor to
commencement
35(1) (ll) Any sum puld to
upproved sclentlflc Reseurch
Assoclutlon or Unlverslty or
College or Instltutlon
For
undertuklng
Sclentlflc
reseurch
125% of umount
puld

35(1) (llu) Any sum puld for
sclentlflc reseurch, to u compuny,
reglstered ln Indlu, huvlng un
ob|ect to curry out sclentlflc
reseurch und development
uctlvltles
For
undertuklng
Sclentlflc
reseurch
125% of umount
puld
35(1) (lll) Any sum puld to un
upproved Unlverslty, College or
other Instltutlon
For reseurch
ln soclul
Sclence or
stutlstlcul
reseurch
125% of umount
puld
35 (2) Cupltul expendlture
lncurred for own buslness
(excludlng cost of lund)
reluted to the
buslness
Current yeur
Prlor Perlod
100%
reductlon
100% upto
3 yeurs prlor to
commencement
35(2AA) Any sum puld to
Nutlonul Luborutory or Unlverslty
or IIT or u speclfled person
For
undertuklng u
progrumme
upproved
by the
prescrlbed
uuthorlty
125% of umount
puld

35(2AB) In house reseurch und
development or Blo-technology ln
the buslness of munufucturer or
productlon of uny urtlcle or thlng,
not belng un urtlcle or thlng
speclfled ln llst of Eleventh
Schedule
Blo-
technology or
ln-house
reseurch
159% of
expense
lncurred

9.AMORTISATION OF TELECOM LICENCE FEES [Sec.
35ABB]
Amortlzutlon of Telecom Llcence Fees [Sec 35ABB]
Expendlture lncurred for obtulnlng llcence to operute
telecommunlcutlon servlces shull be ullowed for
deductlon/umortlzutlon, lf the followlng condltlons ure
sutlsfled:
l. Expendlture should be cupltul ln nuture;
ll. Expendlture should huve been lncurred for purpose of
ucqulrlng uny rlght to operute telecommunlcutlon
servlces;
lll. Puyment should huve been uctuully mude to obtuln u
llcence;
lv. Expendlture muy be lncurred elther before
commencement of buslness or ut uny tlme durlng the
prevlous yeur.
Mode of culculutlng deductlon :
l. If llcence fees ls uctuully puld before commencement
of buslness
= Llcence fees uctuully puld before commencement of
buslness

Amount of deductlon

Unullowed umount less Net
conslderutlon
Remulnlng perlod of llcence
No. of yeurs from the prevlous yeur of commencement of
buslness to the prevlous yeur ln whlch llcence explres
ll. If llcence fees ls puld ufter commencement of buslness
= Llcence fees uctuully puld ufter commencement of
buslness
No. of yeurs from the prevlous yeur ln whlch llcence fee
uctuully puld to the prevlous yeur ln whlch llcence explres

In cuse of trunsfer :
u. Culculute Unullowed umount = Actuul cost of llcence
fee puld less umount of deductlon ulreudy clulmed u/s
35ABB
b. For conslderutlon recelved on trunsfer:
l. If whole llcence ls trunsferred und net conslderutlon ls
less thun Unullowed umount Buslness Expendlture =
Unullowed umount less Net conslderutlon
ll. Where purt of llcence ls trunsferred und net
conslderutlon ls less thun Unullowed umount

(lll) Where whole or purt of llcence ls trunsferred und net
conslderutlon ls more thun Unullowed umount

Net conslderutlon more thun
Unullowed umount but
less thun Orlglnul Cost of
llcence
Buslness Income = Net
Conslderutlon less
Unullowed umount
Net Conslderutlon ls more
thun Orlglnul Cost of llcence
und Un ullowed umount
Buslness Income =
Orlglnul cost of llcence
less
Unullowed umount
Cupltul Guln = Net
Conslderutlon less Orlglnul
Cost of llcence

The followlng tuble would expluln the vurlous sltuutlons

A B C D
Trunsfer of llcence Full In Purt Full In purt
Llcence perlod (yeurs)

7

7 7 7
Acqulsltlon cost

140

140

140

140

Deductlon clulmed so fur (4 yeurs)

80 80 80 80

Unumortlsed vulue

60
60

60
60

Sule prlce current yeur

140 45 50 30
Amount remulnlng to be umortlsed

15 30
Amount deductlble U/s.35ABB(3)

10
Amount churgeuble to tux us
buslness lncome
80
Amount to be umortlsed ln remulnlng
3 yeurs
5 10

10.EXPENDITURE BY WAY OF PAYMENT TO
ASSOCIATION AND INSTITUTION FOR CARRYING OUT
RURAL DEVELOPMENT PROGRAMME [Sec. 35CCA]

Where un ussessee lncurs uny expendlture by wuy of
puyment of uny sum-
u) to un ussoclutlon or lnstltutlon enguged ln uny
progrumme of rurul development, or
b) to un ussoclutlon or lnstltutlon whlch undertukes
trulnlng of persons for lmplementlng uny progrumme of
rurul development or
c) to Nutlonul fund set up for rurul development notlfled ln
thls behulf by the Centrul Government or to the Nutlonul
urbun poverty Erudlcutlon fund set up und notlfled by
the Centrul Government he wlll be ullowed u deductlon
of the umount of such expendlture lncurred durlng the
Prevlous Yeur.

Investment-llnked tux lncentlve for speclfled buslness - cold
chuln fucllltles, wurehouslng fucllltles for storuge of
ugrlculturul produce, und cross-country nuturul gus or crude or
petroleum oll plpellne network for dlstrlbutlon, lncludlng

storuge fucllltles [Sectlon 35AD, 28(vll) und 73A] [W.e.f.
A.Y. 2010-11]

The Income tux Act provldes for u number of proflt-llnked
exemptlons/deductlons. Such beneflts ure lnefflclent,
lnequltuble, lmpose hlgher compllunce und udmlnlstrutlve
burden, result ln revenue loss, lncreuse lltlgutlons und leud to
competltlve demund for slmllur tux beneflts. Further, these
beneflts ulso encouruge dlverslon of proflts from the tuxed
sector to the exempt/untuxed sector. However, lnvestment-
llnked lncentlves ure relutlvely less dlstortlonury ln thelr
lmpuct.

11.AMORTISATION OF CERTAIN PRELIMINARY
EXPENSES [Sec. 35D]
The deductlon ls ullowed under thls sectlon only ln cuse of un
Indlun compuny or u person (other thun compuny) resldent ln
Indlu. The deductlon ls ln respect of the expendlture
lncurred ufter 31.3.1970 und expendlture muy be of the type
whlch wus lncurred
(l) before the commencement of the buslness, or
(ll) ufter the commencement of hls buslness, ln
connectlon wlth the extenslon of exlstlng lndustrlul
unlt.

The followlng expenses shull be ellglble for deductlon u/s
35D(2):
A. expendlture ln connectlon wlth-
u. prepurutlon of feuslblllty report;
b. prepurutlon of pro|ect report;

c. conductlng murket survey or uny other survey
necessury for the buslness of the ussessee;
d. englneerlng servlces relutlng to the buslness of the
ussessee.
B. Legul churges for druftlng uny ugreement between the
ussessee und uny other person for uny purpose
relutlng to the settlng up or conduct of the buslness of
the ussessee.
C. The followlng expenses ln cuse of compuny ussessees
:
u. legul churges for druftlng the Memorundum und
Artlcles of Assoclutlon of the compuny;
b. on prlntlng of the Memorundum und Artlcles of
ussoclutlon;
c. by wuy of fees for reglsterlng the compuny under
the provlslon of the Compunles Act, 1956;
d. ln connectlon wlth the lssue, for publlc subscrlptlon,
of shures ln or debentures of the compuny belng
underwrltlng commlsslon, brokeruge und churges
for druftlng, typlng, prlntlng und udvertlsement of
the prospectus.
D. Such other ltem of expendlture (not belng expendlture
ellglble for uny ullowunce or deductlon under uny other
provlslon of thls Act) us muy be prescrlbed.
Mode of Deductlon:
Deductlon of quullfled umount ls ullowed ln 5 equul
lnstulements beglnnlng wlth the Prevlous Yeur ln whlch the
buslness ls commenced.
Amount of expendlture quullfylng for deductlon :-
The uggregute umount of expendlture referred to cluuse (u)
to (d) ubove shull not exceed 5% cost of pro|ect lf such

expendlture lncurred ufter 1.4.1998. But ln cuse of un Indlun
compuny, 5% of the cost of the pro|ect or 5% of the cupltul
employed ut the optlon of the compuny.
Cupltul employed meuns the uggregute of lssued cupltul
debentures und long term borrowlngs (repuyuble durlng u
perlod of not less thut 7 yeurs) us on the lust duy of relevunt
Prevlous Yeur. The quullfylng umount of prellmlnury
expendlture ls ullowed us deductlon over u perlod of 5
yeurs ln equul lnstullments.
In cuse of un Indlun compuny under
umulgumutlon/demerger, no deductlon shull be ullowed to
umulgumutlng/ demerged compuny for the Prevlous Yeur ln
whlch umulgumutlon/demerger tukes pluce. Deductlon ls
ullowed to the umulgumuted compuny/ resultlng compuny ln
the sume munner us ullowuble to umulgumutlng/demerged
compuny. Audlt of uccounts ls necessury for clulmlng
deductlon where uccounts ure not uudlted under uny other
luw.

12.AMORTISATION OF EXPENDITURE IN CASE OF
AMALGAMATION OR DEMERGER [Sec. 35DD]
Where un Indlun compuny lncurs uny expendlture on or
ufter 1.4.1999, wholly und excluslvely for the purposes of
umulgumutlon or demerger of un undertuklng, the ussessee
compuny ls ullowed deductlon ln respect of such expendlture
over u perlod of flve yeurs equully beglnnlng wlth the
Prevlous Yeur ln whlch umulgumutlon or demerger tukes
pluce.

13.AMORTISATION OF EXPENDITURE INCURRED
UNDER VOLUNTARY RETIREMENT SCHEME
[Sec.35DDA]
Where uny expendlture ls lncurred by wuy of compensutlon
to un employee under VRS ln uccordunce wlth uny scheme ls
ullowed deductlon over u perlod of 5 yeurs equully from the
yeur ln whlch compensutlon ls puld. W.e.f. Assessment Yeur
2001-02 lnserted by the Flnunce Act, 2002 to provlde thut
where un undertuklng of un Indlun compuny, entltled to
deductlon for umortlsutlon of voluntury retlrement expenses,
ls trunsferred before the explry of the perlod speclfled to
unother Indlun compuny ln u scheme of umulgumutlon or
demerger, the deductlon shull contlnue to be uvulluble to the
umulgumuted compuny or the resultlng compuny us lf the
umulgumutlon or demerger hud not tuken pluce.

In cuse of reorgunlsutlon of certuln form of buslness where
by u flrm for u proprletury concern ls succeeded by u
compuny, the deductlon shull contlnue to be uvulluble to the
successor compuny. Deductlon ls not uvulluble to
umulgumutlng compuny or demerged compuny or to the flrm
or proprletury concern, us the cuse muy be, ln the yeur of
trunsfer.

14.DEDUCTION FOR EXPENDITURE ON
PROSPECTING Etc. FOR CERTAIN MINERALS [Sec.
35E]
Where un ussessee belng u Indlun compuny or u person
other thun u compuny who ls resldent ln Indlu, ls enguged ln
uny operutlon relutlng to prospectlng for, extructlon or
productlon of uny mlnerul und lncurs ufter 31.3.1970 uny

expendlture durlng the perlod of 5 yeurs endlng wlth the
yeur of commencement of commerclul productlon ls ullowed
us deductlon over u perlod of 10 yeurs ln equul
lnstullments.

15.DEDUCTION IN RESPECT OF ANIMALS USED
FOR BUSINESS WHICH HAVE DIED OR BECOME
PERMANENTLY USELESS [Sec. 36(1)(vl)]
In respect of unlmuls used for the purpose of Buslness or
Professlon (but not stock ln trude) who huve dled or become
permunently useless, the dlfference between the uctuul
cost to the ussessee of the unlmuls und the umount, lf uny,
reullsed ln respect of curcusses or unlmuls, wlll be ullowed
us u deductlon.

16.BAD DEBTS [Sec. 36(1)(vll)]
Any bud debt or purt thereof whlch ls wrltten off us
lrrecoveruble ln the uccounts of the ussessee for the
Prevlous
Yeur wlll be ullowed us deductlon lf
u. the debt ls lncldentul to buslness,
b. lt should huve been tuken lnto uccount ln computlng
lncome of the ussessee, or lt should represent money
lent ln the ordlnury course of bunklng or money
lendlng buslness,
c. lt should be wrltten off ln the books of uccount
d. the buslness ln respect of whlch the debt ls lncurred
should be contlnued durlng, the Prevlous Yeur.
The successor of u buslness ls entltled to clulm deductlon ln
respect of debt creuted by the predecessor CIT Vs. T.
Veerubhudru Ruo, K. Koteswuru Ruo & Co. 155 ITR 152.

PROVISION FOR BAD AND DOUBTFUL DEBTS MADE
BY [Sec. 36(1)(vllu)] :-
l. Schedule bunk (not lncorporuted outslde Indlu) or
non-schedule bunk or u co-operutlve bunk other
thun u prlmury ugrlculturul credlt soclety or u
prlmury co-operutlve ugrlculturul und rurul
development bunk, upto 7.5% of lts totul lncome
und un uddltlon ut 10% uveruge udvunces mude by
the rurul brunches of such bunk. Optlon hus ulso
been glven to bunk to clulm deductlon ln respect of
uny provlslon for doubtful or loss of ussets us per
RBI guldellnes, upto u muxlmum of 5% of such
ussets ut the end of the relevunt Prevlous Yeur for
the AY 2000-01 to 2002-03 und upto 10% of such
ussets for AY 2003-04 und 2004-05.
ll. A bunk lncorporuted outslde Indlu upto 5% of lts
totul lncome.
lll. A Publlc Flnunclul Instltutlon on u Stute Flnunclul
Corporutlon or u stute lndustrlul lnvestment
corporutlon, upto 5% of lts totul lncome. Optlon ls
ulso glven to Flnunclul Instltutlon/Corporutlon to
clulm deductlon ln respect of uny provlslon for
doubtful or loss ussets us per RBI guldellnes, upto
u muxlmum of 10% of such ussets ut the end of
the Prevlous Yeur relevunt to Assessment Yeur
2003-04 or 2004-05.
Totul lncome for thls purpose meuns lncome computed
before muklng uny deductlon under chupter VIA.

17.SPECIAL RESERVE CREATED AND MAINTAINED
BY A FINANCIAL CORPORATION [Sec.36(1)(vlll)
Deductlon under thls sectlon ls ullowed ln respect of uny
speclul reserve creuted und mulntulned by :

u. to u flnunclul corporutlon whlch ls enguged ln
provldlng long tlme flnunce for lndustrlul or
ugrlculturul or development ln Indlu or for
development for lnfrustructure fuclllty ln Indlu; or
b. by u publlc compuny formed und reglstered ln
Indlu wlth the muln ob|ectlve of currylng on the
buslness of provldlng long tlme flnunce for
constructlon of purchuse of houses ln Indlu for
resldentlul purposes.

The deductlon under thls sectlon shull be un umount
trunsferred to reserve uccount or un umount not exceedlng
20 % of the proflts derlved from such buslness whlch ever
ls less. If the umount of reserve ls more thun twlce
the puld up shure cupltul und generul reserve, the excess
umount ls not deducted.
Speclul deductlon under sectlon 36(1)(vlll) ullowed to
Nutlonul Houslng Bunk of un umount not exceedlng 20% of
the proflts sub|ect to creutlon of u reserve [Sectlon
36(l)(1)(vlll)[W.e.f. A.Y. 2010-11]
Sectlon 36(l)(vlll) provldes speclul deductlon to flnunclul
corporutlons und bunklng compunles of un umount not
exceedlng 20% of the proflts sub|ect to creutlon of u
reserve.

18.EXPENDITURE INCURRED BY COMPANY FOR
PROMOTING FAMILY PLANNING AMONGST ITS
EMPLOYEES [Sec. 36(1)(lx)]
The compuny ussessee ls entltled to clulm deductlon ln
respect of bonuflde revenue expendlture lncurred by lt ln u
Prevlous Yeur for the purposes of promotlng fumlly plunnlng
umongst lts employees. In cuse of expendlture of u cupltul
nuture, the deductlon ls ullowed ln 5 equul yeurly
lnstullments commenclng from the prevlous yeur ln whlch
such expendlture ls lncurred.
The cupltul expendlture under thls sectlon ls governed
by the sume condltlons us ure uppllcuble to cupltul
expendlture for sclentlflc reseurch. The unubsorbed
expendlture under thls sectlon cun be currled forwurd und
set off ln the followlng yeurs llke unubsorbed depreclutlon
ullowunce.
Commodltles Trunsuctlon Tux not operutlonullsed (Sectlon
36(1)(xvl)) [W.r.e.f. A.Y. 2009-10]
The provlslons for levy of Commodltles Trunsuctlon Tux
were lntroduced by Chupter VII of Flnunce Act, 2008.
However, the levy hus not yet been operutlonullsed. In vlew
of the recommendutlons of the Prlme Mlnlsters Economlc
Advlsory Councll, u new sectlon 121A ln Chupter VII of
Flnunce Act, 2008 hus been lnserted to provlde thut the
Chupter relutlng to levy of Commodltles Trunsuctlon Tux
shull not upply on or ufter 1-4-2009.
The Act hus mude lt consequentlul umendment ln cluuse
(xvl) ln sub-sectlon (1) of sectlon 36 of the Income-tux
Act by omlttlng the suld cluuse, where CTT wus ullowuble
us deductlon.

19.GENERAL DEDUCTIONS [Sec. 37]
Any expendlture (not belng expendlture of the nuture
descrlbed ln sec. 30 to 36), und not belng ln the nuture of
cupltul expendlture or personul expenses of the ussessee
puld out or expended wholly und excluslvely for the purposes
of the buslness professlon shull be ullowed ln computlng the
lncome churgeuble under the heud Proflts und gulns of
Buslness or Professlon- Sec. 37(1).
The condltlons to be fulfllled for generul deductlons u/s. 37
ure us follows
u. It should be ln respect of u buslness currled on by
un ussessee;
b. It should huve been puld out or expended wholly
und excluslvely for the purpose of the buslness;
c. It must huve been lncurred durlng the Prevlous
Yeur; und
d. It should not be ln the nuture of cupltul
expendlture or personul expenses of the
ussessee.

Thus expenses lncurred on the occuslon of Dewull or Muhurut
sub|ect to belng sutlsfled thut the expenses ure not expenses
of u personul, soclul or rellglous nuture- ullowed deductlon
u/s.37.
Loss through embezzlement by un employee or recurrlng
expenses lncurred on lmpurtlng buslc trulnlng to upprentlces
under the Apprentlces Act, 1961 ure generul deductlons u/s.
37.
Any expendlture lncurred by un ussessee for uny purpose
whlch ls un offence or whlch ls prohlblted by luw shull not be
deemed to huve been lncurred for the purpose of buslness or

professlon und no deductlon or ullowunce shull be mude ln
respect of such expendlture [Explunutlon to Sec. 37(1)].

20.ADVERTISEMENT EXPENDITURE [Sec. 37(2B)]

No ullowunce shull be mude ln respect of expendlture
lncurred by un ussessee on udvertlsement ln uny Souvenlr,
Brochure, Pumphlet or the llke publlshed by u polltlcul
purty.

INADMISSIBLE EXPENDITURE [Sec. 40, 40A, 43B]
1. Sectlon 40(A)
2. Dlsullowunce In The Cuse Of Purtnershlp Flrms
(Includlng Llmlted Llublllty Purtnershlp) [Sec. 40(B)]
[W.E.F. A.Y. 2010-11
3. Dlsullowunce In The Cuse Of Assoclutlon Of
Persons And Body Of Indlvlduuls [Sec. 40(Bu)]
4. Sectlon 40u(1)
5. Sectlon 40u(2)

6. Dlsullowunce Of Cush Expendlture Exceedlng ` 20,000
[Sec. 40u(3), Rule 6dd]
7. Provlslon For Grutulty [Sec. 40u(7)]
8. Non Stututory/Unrecognlsed Welfure Fund
Contrlbutlons [Sec. 40u(9)]

1.SECTION 40(u)
1. Interest, sulury, royulty, fees for beneflclul servlces or
uny other sum puyuble outslde Indlu ls not deductlble
unless tux ls deducted ut source or tux ls puld.
2. Income Tux und Weulth Tux ure not deductlble.
3. Any tux puld by the employer on the perqulsltes not
provlded by wuy of monetury puyment ls not deductlble
ln computlng buslness lncome of the employer w.e.f.
Assessment Yeur 2003-04.

2. DISALLOWANCE IN THE CASE OF
PARTNERSHIP FIRMS (INCLUDING LIMITED
LIABILITY PARTNERSHIP) [Sec. 40(b)] [w.e.f. A.Y. 2010-
11]
(l) Interest to u purtner by u flrm ls not deductlble unless
the followlng condltlons ure fulfllled:
1. It should be uuthorlsed by the purtnershlp deed.
2. It should relute to u perlod fulllng ufter the dute of the
Purtnershlp deed.
3. It should not exceed 18% p.u. (12% p.u. w.e.f.
1.6.2002) slmple rute of lnterest.

Explunutlon 1 : If u person ls u purtner ln hls representutlve
cupuclty ln the flrm und lf he recelves lnterest ln hls

lndlvlduul cupuclty from the flrm such lnterest should not be
dlsullowed.

Explunutlon 2 : If u person who ls u purtner ln hls lndlvlduul
cupuclty recelves lnterest for und on behulf of some one else
from the flrm ln whlch he ls u purtner such lnterest should
not be dlsullowed.

(ll) Any umount puld by wuy of sulury, bonus, commlsslon
or remunerutlon by u flrm to u purtner ls not deductlble ln
the compututlon of lncome of the flrm unless the followlng
condltlons ure fulfllled :
1. It should be uuthorlsed by purtnershlp deed.
2. It should relute to u perlod fulllng ufter the dute of the
purtnershlp deed.
3. It should be wlthln the prescrlbed llmlts us follows :
The Act hus mude upwurd revlslon of the exlstlng llmlts of
the remunerutlon. Further, unlform llmlts huve been
prescrlbed for both professlonul und non-professlonul flrms
for slmpllclty und udmlnlstrutlve cuse. The revlsed llmlts ure
us under :

4. It should be puld to u worklng purtner.

(u) On the flrst ` 3,00,000 of the
book-proflt or ln cuse of u loss
` 1,50,000 or ut the rute of 90% of
the book-proflt, whlchever ls more;
(b) On the bulunce of the book-
proflt
At the rute of 60%.

Explunutlon 3 : Book proflt meuns the net proflt, us
shown ln the proflt und loss uccount for the relevunt
Prevlous Yeur, computed ln the munner luld down ln Chupter
IV-D us lncreused by the uggregute umount of the
remunerutlon puld or puyuble to ull the purtners of the flrm
lf such umount hus been deblted whlle computlng the net
proflt.
Explunutlon 4 : Worklng purtner meuns un lndlvlduul who
ls uctlvely enguged ln conductlng the uffulrs of the
Buslness or Professlon of the flrm of whlch he ls u purtner.
CBDT lssued clrculur no. 739 dt. 25.3.96 stutlng thut
dlsullowunce of sulury to purtners shull be mude ln the cuse
of u flrm lf the purtnershlp deed does not speclfy the umount
of remunerutlon puyuble to euch lndlvlduul worklng purtner
or lt does not luy down the munner of quuntlfylng such
remunerutlon.

3.DISALLOWANCE IN THE CASE OF ASSOCIATION
OF PERSONS AND BODY OF INDIVIDUALS [Sec.
40(bu)]
Any puyment by wuy of lnterest, sulury, bonus, commlsslon
or remunerutlon puld by un ussoclutlon of persons or body
of lndlvlduuls to uny of lts members shull be dlsullowed.
Explunutlon 1 : If the member who recelved lnterest from
the AOP or BOI ulso puys lnterest to the AOP or BOI durlng
the sume Prevlous Yeur only the net excess lnterest puld by
the AOP to such member should be dlsullowed.
Explunutlon 2 : If u person ls u member ln hls
representutlve cupuclty ln the AOP or BOI und lf he
recelved lnterest ln hls lndlvlduul cupuclty from the AOP or
BOI such lnterest should not be dlsullowed.

Explunutlon 3 : If u person who ls u member ln hls lndlvlduul
cupuclty recelved lnterest for und on behulf of some one else
from the AOP or BOI ln whlch he ls u member such lnterest
should not be dlsullowed.

4.SECTION 40A(1)
Expenses or puyment us provlded ln subsectlon (2), (3), (7)
und (9) of Sectlon 40A ure not deductlble.

5.SECTION 40A(2)
Where un ussessee lncurs uny expendlture, ln respect of
whlch puyment hus been mude or ls to be mude to certuln
speclfled persons und ln the oplnlon of Assesslng Offlcer
such expendlture ls excesslve or unreusonuble huvlng regurd
to the fulr murket vulue of the goods, servlces or fucllltles for
whlch the puyment ls mude, then so much of expendlture
whlch ls consldered by the Assesslng Offlcer to be excesslve
or unreusonuble, shull not be ullowed us deductlon.

Assessee Speclfled persons
(l) Indlvlduul (u) uny relutlve (l.e., spouse, uny brother, slster,
llneul uscendunt descendunt) of such lndlvlduul;
(b) uny person ln whose buslness or professlon the
ussessee (l.e. lndlvlduul) hlmself or hls relutlve hus
substuntlul lnterest.

(ll) Compuny,
flrm, AOP or
HUF
(u) uny dlrector of the compuny, purtner of the flrm,
or member of the ussoclutlon, or
fumlly, or uny relutlve of such dlrector, purtner or
member;
(b) uny person ln whose Buslness or Professlon the
ussessee or dlrector, purtner or member of the
ussessee or uny relutlve of such person hus u
substuntlul lnterest.
(lll) All
ussessees
(u) uny lndlvlduul who hus substuntlul lnterest ln the
Buslness or Professlon of the ussessee;
(b) u compuny, flrm, AOP or HUF huvlng u
substuntlul lnterest ln Buslness or Professlon of the
ussessee or uny dlrector, purtner or member of uny
such person or uny relutlve of uny.

6.DISALLOWANCE OF CASH EXPENDITURE
EXCEEDING ` 20,000 [Sec. 40A(3), RULE 6DD]

Where the ussessee lncurs uny expendlture lncurred over `
20,000 otherwlse thun by uccount puyee cheque druwn on u
bunk or uccount puyee bunk druft, 100% deductlon wlll be
dlsullowed ln respect of such expendlture.

Enhuncement of llmlt for dlsullowunce of expendlture mude
otherwlse thun by un uccount puyee cheque or uccount
puyee bunk druft for plylng, hlrlng or leuslng goods
currluges ln the cuse of trunsporters to ` 35,000 from the

exlstlng llmlt of ` 20,000 (Sectlon 40A(3) und (3A)
(uppllcuble to trunsuctlons effected on or ufter 1-
10-2009)

Under the exlstlng provlslons of the Income-tux Act, where
un ussessee lncurs uny expendlture, ln respect of whlch
puyment ln excess of ` 20,000 ls mude otherwlse thun by un
uccount puyee cheque or uccount puyee bunk druft, such
expendlture ls not ullowed us u deductlon. Glven the speclul
clrcumstunces of trunsport operutors for lncurrlng
expendlture on long huul |ourneys for plylng, hlrlng or leuslng
goods currluges, the Act hus lnserted provlso 2 to sectlon
40A(3) und (3A) ln order to rulse the llmlt of puyment to such
trunsport operutors otherwlse thun by un uccount puyee
cheque or uccount puyee bunk druft to ` 35,000 from the
exlstlng llmlt of ` 20,000.
The exlstlng llmlt for other cutegorles of puyments wlll
remuln ut ` 20,000 sub|ect to the exceptlons declured ln
Rule 6DD of the Income-tux Rules.

Exceptlons under rule 6DD
1. Puyments mude to bunks, lncludlng cooperutlve
bunk or lund mortguge bunk, Llfe Insurunce
Corporutlon und flnunclul lnstltutlon llke IDBI, UTI,
Industrlul Development Corporutlons und Stute
Flnunclul Corporutlons, prlmury ugrlculturul credlt
soclety.
2. Puyments mude to Government, where such
puyment ls requlred to be mude ln legul tender e.g.
puyment of sules-tux, customs duty, exclse duty,
etc.

3. Puyments under contructs entered lnto before
1.4.1969.
4. Puyments mude by wuy of uny Letter of Credlt,
telegruphlc trunsfer, trunsfer from one bunk
uccount to unother, or through Blll of Exchunge
puyuble to u bunk.

5. Where the puyment ls mude by wuy of ud|ustment
ugulnst the umount of uny llublllty lncurred by the
puyee for uny goods supplled or servlces rendered
by the ussessee to such puyee.
6. Puyment for purchuse of
l. ugrlculturul or forest produce,
ll. the produce of unlmul husbundry (lncludlng
hldes und sklns), dulry or poultry furmlng,
lll. flsh or flsh-products, or
lv. products of hortlculture, or uplculture lf the
puyment ls mude to the cultlvutor, grower or
producer of such urtlcles, produce or products.

7. Puyment mude for purchuse of products
munufuctured or processed wlthout the uld of
power ln u cottuge lndustry, lf the puyment ls
mude to the producer of such products.

8. Where the puyment ls mude ln u vllluge or town,
whlch ls not served by uny bunk, to uny person
who ordlnurlly resldes or ls currylng on uny
buslness, professlon or vocutlon ln uny vllluge or
town.

9. Puyment by wuy of grutulty, retrenchment
compensutlon or slmllur termlnul beneflts mude to
un employee or hls legul helrs, lf the lncome under
the heud sulury of the employee does not exceed `
7500 for the current yeur us well us for the
lmmedlutely precedlng Prevlous Yeur.

10. Puyment mude by wuy of sulury to lts
employees ufter deductlng the lncome-tux from the
sulury, when such un employee ls temporurlly
posted for u contlnuous perlod of flfteen duys or
more ln u pluce other thun hls normul pluce of duty
or on u shlp und the employee does not mulntuln
uny uccount ln uny bunk ut such pluce.

11. Where the puyment ls requlred to be mude on
u duy on whlch the bunks were closed, elther on
uccount of hollduy or strlke.

12. Puyments mude by uny person to hls ugent
who ls requlred to muke puyments ln cush for
goods or servlces on behulf of such person.

13. Where the puyment ls mude by un uuthorlsed
deuler or u money chunger ugulnst purchuse of
forelgn currency or truvellers cheques ln the normul
course of hls buslness. [Notlflcutlon No. 11476,
duted 6.9.2000 uppllcuble retrospectlvely from
25.7.1995]

7.PROVISION FOR GRATUITY [Sec. 40A(7)]

No deductlon shull be ullowed ln respect of uny provlslon
mude by the ussessee for the puyment of grutulty to hls
employees on thelr retlrement or on termlnutlon of thelr
employment for uny reuson. However, uny provlslon mude
by the ussessee for the purpose of puyment of uny
contrlbutlon towurds un upproved grutulty fund or for the
purpose of puyment of uny grutulty whlch hus become
puyuble durlng the Prevlous Yeur shull be ullowed us
deductlon.

8.NON STATUTORY/UNRECOGNISED WELFARE FUND
CONTRIBUTIONS [Sec. 40A(9)]
Any contrlbutlon mude by the ussessee to unrecognlsed or
non-stututory welfure fund uccounts ls not deductlble.

Speclul provlslon for computlng deductlons ln the cuse of
buslness reorgunlzutlon of co-operutlve bunks [Sec.
44DB]
After sectlon 44DA of the Income-tux Act, the followlng
sectlons shull be lnserted wlth effect from the 1st duy of
Aprll, 2008, numely :

44DB. Speclul provlslon for computlng deductlons ln the
cuse of buslness reorgunlzutlon of co-operutlve bunks.
(1) The deductlon under sectlon 32, sectlon 35D, sectlon
35DD or sectlon 35DDA shull, ln u cuse where buslness
reorgunlzutlon of u co-operutlve bunk hus tuken pluce

durlng the flnunclul yeur, be ullowed ln uccordunce wlth the
provlslons of thls sectlon.

(2) The umount of deductlon ullowuble to the predecessor
co-operutlve bunk under sectlon 32, sectlon 35D, sectlon
35DD or sectlon 35DDA shull be determlned ln uccordunce
wlth the formulu

A

B
C

where
A = the umount of deductlon ullowuble to the
predecessor co-operutlve bunk lf the buslness
reorgunlsutlon hud not tuken pluce;
B = the number of duys comprlsed ln the perlod
beglnnlng wlth the 1st duy of the flnunclul yeur und endlng
on the duy lmmedlutely precedlng the dute of buslness
reorgunlsutlon; und
C = the totul number of duys ln the flnunclul yeur ln
whlch the buslness reorgunlsutlon hus tuken pluce.

(3) The umount of deductlon ullowuble to the successor
co-operutlve bunk under sectlon 32, sectlon 35D, sectlon
35DD or sectlon 35DDA shull be determlned ln uccordunce
wlth the formulu

B

A C

where
A = the umount of deductlon ullowuble to the predecessor
co-operutlve bunk lf the buslness reorgunlsutlon hud not
tuken pluce;
B = the number of duys comprlsed ln the perlod beglnnlng
wlth the dute of buslness reorgunlsutlon und endlng on the
lust duy of the flnunclul yeur; und
C = the totul number of duys ln the flnunclul yeur ln whlch
the buslness reorgunlsutlon sectlon ls trunsferred before the
explry of the perlod speclfled thereln to u successor co-
operutlve bunk on uccount of buslness reorgunlsutlon, upply
to the successor co-operutlve bunk ln the flnunclul yeurs
subsequent to the yeur of buslness reorgunlsutlon us they
would huve upplled to the predecessor co-operutlve bunk, us
lf the buslness reorgunlsutlon hud not tuken pluce.

DEEMED PROFIT/DEEMED INCOME [Sec 41(1)]

Where deductlon hus been mude ln respect of loss,
expendlture or trudlng llublllty for uny yeur und subsequently
the ussessee or successor of the buslness hus obtulned uny
umount ln respect of such loss expendlture or some beneflt ln
respect of such trudlng llublllty by wuy of remlsslon or

cessutlon thereof, the umount obtulned or the vulue of
beneflt uccrued shull be deemed to be lncome.
The provlslons ure uppllcuble even to the successor who
recelves the umount/beneflt. The successor ln buslness,
for thls purpose, meuns
(u) Where there hus been un umulgumutlon of u
compuny wlth unother compuny, the
umulgumuted compuny;
(b) Where uny person ls succeeded by unother
person ln currylng on the Buslness or
Professlon, such other person;
(c) Where u flrm currylng on u Buslness or
Professlon ls succeeded by unother flrm, such
other flrm.
(d) Where there hus been u demerger, the resultlng
compuny.
If there ls u remlsslon or cessutlon of u trudlng llublllty
whlch wus eurller ullowed us deductlon, lt ls churgeuble to
tux. Even lf the remlsslon or cessutlon ls effected by u
unlluterul Act of wrltlng off of such llublllty by the ussessee,
the umount so wrltten off ls churgeuble to tux.
The ubove mentloned sub-sectlon covers loss, expendlture
und trudlng llublllty.e.g.

l. If stock ls destroyed by flre und ullowed us trudlng loss
but luter lnsurunce compensutlon ls recelved, the sume
ls ussessuble u/s. 41(1).

ll. (ll) If credlt purchuse of ruw muterlul ls mude und
clulmed us deductlon but luter, u lesser umount ls
settled to the suppller credltor, the beneflt uccrulng on

remlsslon of the trudlng llublllty wlll be deemed us
lncome u/s. 41(1).

SECTION 41(2)
In t cus of un undertuklng enguged ln t e generutlon or
generutlon und dlstrlbutlon of power, optlon ls uvulluble to clulm
depreclutlon on strulght llne method wlth reference to euch
lndlvlduul usset If such optlon ls exerclsed, block of usset concept
does not upply. In the cuse of such un ussessee, where uny
bulldlng, muchlnery, plunt or furnlture ls trunsferred for u
conslderutlon whlch ls more thun the deprecluted vulue, the
surplus to the extent of depreclutlon ulreudy ullowed shull be
ussessed us buslness lncome. Thls ls normully descrlbed us
bulunclng churge.

SECTION 41(3)
Any umount reullsed on trunsfer of un usset used for sclentlflc
reseurch ls tuxuble us buslness lncome to the extent of deductlon
ullowed u/s. 35 ln the yeur ln whlch the trunsfer tukes pluce.

SECTION 41(4)
Any umount recovered by the ussessee ugulnst bud debt eurller
ullowed us deductlon shull be tuxed us lncome ln the yeur ln
whlch lt ls recelved.

SECTION 41(4A)
Under sec. 36(1)(vlll) uny speclul reserve creuted und mulntulned
by u flnunclul corporutlon or publlc compuny speclfled there under
quullfles for deductlon sub|ect to the llmlt prescrlbed. Sub-sectlon
(4A) ls lntroduced ln sec. 41 to muke lt cleur thut where u
deductlon hus been so ullowed, uny umount subsequently
wlthdruwn from such speclul reserve shull be deemed to be the
proflts of the yeur of such wlthdruwul und shull be churged to tux
uccordlngly. The churgeublllty upplles even lf the buslness ls no
longer ln exlstence durlng the relevunt Prevlous Yeur.

SECTION 41(5)
In the cuse of un ussessee who ls churgeuble to tux ln respect of
uny umount deemed us proflt u/s. 41 relutlng to u dlscontlnued

buslness, uny loss lncurred ln the yeur ln whlch the buslness wus
dlscontlnued shull be ullowed to be set off ugulnst such proflt und
only the bulunce, lf uny, shull be tuxed.

SECTION 176(3A)
Where uny buslness ls dlscontlnued ln uny yeur, uny sum
recelved ufter dlscontlnuunce shull be deemed to be the lncome of
the reclplent und churged to tux uccordlngly ln the yeur of recelpt,
lf such sum would huve been lncluded ln the totul lncome of the
person who currled on the buslness hud such sum been recelved
before such dlscontlnuunce.

SECTION 176(4)
Where uny professlon ls dlscontlnued ln uny yeur on uccount of the
cessutlon of the professlon by, or the retlrement or deuth of, the
person currylng on the professlon, uny sum recelved ufter the
dlscontlnuunce shull be deemed to be the lncome of the reclplent
und churged to tux uccordlngly ln the yeur of recelpt, lf such sum
would huve been lncluded ln the totul lncome of the uforesuld
person hud ln been recelved before such dlscontlnuunce.

CASH CREDITS [Sec. 68]
Where uny sum ls found credlted ln the books of un ussessee,
mulntulned for uny Prevlous Yeur, und the ussessee offers no
explunutlon ubout the nuture und source thereof or the
explunutlon offered by hlm ls not, ln the oplnlon of the
Assesslng Offlcer, sutlsfuctory, the sum so credlted muy be
churged to lncome-tux us the lncome of the ussessee of thut
Prevlous Yeur.

UNEXPLAINED INVESTMENTS [Sec. 69]
Where ln the flnunclul yeur lmmedlutely precedlng the
Assessment Yeur, the ussessee hus mude lnvestments whlch ure
not recorded ln the books of uccount, lf uny, mulntulned by hlm for
uny source of lncome und the ussessee offers no explunutlon
ubout the nuture und source of the lnvestments or the explunutlon
offered by hlm ls not, ln the oplnlon of the Assesslng Offlcer,

sutlsfuctory, the vulue of the lnvestments muy be deemed to be
the lncome of the ussessee of such flnunclul yeur.

UNEXPLAINED MONEY ETC. [Sec. 69A]
Where ln uny flnunclul yeur, the ussessee ls found to be the owner
of uny money, bulllon, |ewellery or other vuluuble urtlcle und such
money, bulllon, |ewellery or vuluuble urtlcle ls not recorded ln the
uccounts, lf uny mulntulned by hlm for uny source of lncome,
und the ussessee offers no explunutlon ubout the nuture und
source of ucqulsltlon of the money, bulllon, |ewellery or other
vuluuble urtlcle, or the explunutlon offered by hlm ls not, ln the
oplnlon of the Assesslng Offlcer, sutlsfuctory, the money und
the vulue of the bulllon, |ewellery or other vuluuble urtlcles muy
be deemed to be the lncome of the ussessee for such Flnunclul
Yeur.

INVESTMENTS, ETC. NOT FULLY DISCLOSED IN BOOKS
OF ACCOUNT [Sec. 69B]
Where ln uny Flnunclul Yeur, the ussessee hus mude lnvestments
or ls found to be the owner of uny bulllon, |ewellery or other
vuluuble urtlcle, und the Assesslng Offlcer flnds thut the umount
expended on muklng such lnvestments or ln ucqulrlng such bulllon,
|ewellery or other vuluuble urtlcle exceeds the umount recorded ln
hls behulf ln the books of uccount mulntulned by the ussessee for
uny source of lncome und the ussessee offers no explunutlon ubout
such excess umount or the explunutlon offered by hlm ls not, ln the
oplnlon of the Assesslng Offlcer, sutlsfuctory, the excess umount
muy be deemed to be the lncome of the ussessee for such
Flnunclul Yeur.

UNEXPLAINED EXPENDITURE [Sec. 69C]
Where ln uny Flnunclul Yeur, un ussessee hus lncurred uny
expendlture und he offers no explunutlon ubout the source of such
expendlture or purt thereof, or the explunutlon, lf uny, offered by
hlm ls not, ln the oplnlon of the Assesslng Offlcer, sutlsfuctory, the
umount covered by such expendlture or purt thereof, us the cuse

muy be, muy be deemed to be the lncome of the ussessee for
such Flnunclul Yeur.

Further, notwlthstundlng unythlng contulned ln uny other provlslon
of the Income Tux Act, such unexplulned expendlture whlch ls
deemed to be the lncome of the ussessee, shull not be ullowed us
u deductlon under uny heud of lncome.

UNEXPLAINED AMOUNT BORROWED OR REPAID ON
HUNDI [Sec. 69D]
Where uny umount ls borrowed on u hundl from, or uny umount
due thereon ls repuld to, uny person otherwlse thun through un
uccount puyee cheque druwn on u bunk, the umount so borrowed
or repuld shull be deemed to be the lncome of the person
borrowlng or repuylng the umount uforesuld for the Prevlous Yeur,
ln whlch the umount wus borrowed or repuld, us the cuse muy be,
provlded thut, lf ln uny cuse uny umount borrowed on u hundl hus
been deemed under the provlslons of thls Sectlon to be the
lncome of uny person, such person shull not be lluble to be
ussessed uguln ln respect of such umount under the provlslons of
thls Sectlon on repuyment of such umount.

Explunutlon : For the purposes of the Sectlon, the umount repuld
shull lnclude the umount of lnterest puld on the umount borrowed.

EXCHANGE RATE FLUCTUATION [Sec. 43A]
Where un ussessee ucqulres un usset from ubroud und ln
consequence of the vurlutlon ln exchunge rute, the llublllty of the
ussessee ln terms of puyment towurds the ucqulsltlon of thut usset
lncreuses or decreuses, then the uctuul cost of thut usset shull be
lncreused or decreused uccordlngly. The effect of exchunge rute
fluctuutlon shull be tuken lnto conslderutlon for the purpose of
deductlon u/s. 32, 35, 35A, 36(1)(lx) und for the purpose of
compututlon of cupltul gulns u/s. 48 or u/s. 50 us the cuse muy
be.

The lncreuse or decreuse ln llublllty due to exchunge rute
fluctuutlon shull be tuken lnto uccount ut the tlme of muklng
puyment ulso.

SECTION 43B
Certuln expenses ure ullowed only on puyment busls wlthln u
stlpuluted tlme perlod lrrespectlve of method of uccountlngund the
evldence of such puyment ls furnlshed ulongwlth the return of
lncome.

Nuture of Expense Stlpuluted tlme perlod
1. Any sum puyuble by wuy of tux,
duty, cess or fee, by whutever nume
culled, under uny luw for the tlme
belng ln force.
Due umount should be puld
on or before the due dute of
furnlshlng the return of
lncome u/s. 139(1) ln
respect of the Prevlous
Yeur.
2. Any sum puyuble to un employee
us bonus or commlsslon for
servlces rendered.
In whlch the llublllty to puy
such sum wus lncurred und
proof of puyment should be
uttuched ulongwlth the
return of lncome.

3. Any sum puyuble by the ussessee
us lnterest on uny loun or
borrowlng from uny publlc
flnunclul lnstltutlon or Stute
Flnunclul Corporutlon or Stute
Industrlul Investment Corporutlon
llke IDBI, IFCI, UPSIDC, Delhl
Flnunclul Corporutlon, etc. ln
uccordunce wlth the terms und
condltlons of the ugreement
governlng such loun or borrowlng.
However, ln cuses (1) to
(5), lf the puyment of
outstundlng llublllty ls
mude ufter the due dute,
deductlon cun be clulmed ln
the yeur of puyment.
us lnterest on uny term loun from u
scheduled bunk ln uccordunce wlth
the terms und condltlons of the
ugreement governlng such loun.
-do-
us un employer ln lleu of uny leuve
ut the credlt of hls employee
(lnserted w.e.f. AY 2002-03)
However, lf the deductlon
hus ulreudy been ullowed
on due busls before thls
umendment, the sume wlll
not be ullowed uguln when
the sum ls uctuully puld.

us un employer by wuy of
contrlbutlon to uny provldent fund
of superunnuutlon fund or grutulty
fund or uny other fund for the
welfure of employees.
Puyments should be mude
ln cush or by lssue of u
cheque or druft, or by uny
other mode on or before the
due dute by whlch the
employer ls requlred to
credlt un employees
contrlbutlon to the
employees uccount ln the
relevunt fund under the
respectlve Act, rule, order
or notlflcutlon. Where the
puyment hus been mude
otherwlse thun ln cush, the
sum should be reullsed
wlthln flfteen duys from the
relevunt due dute
COST OF ACOUISITION OF CERTAIN ASSETS [Sec. 43C]

Mode of
ucqulsltlon
Cost of ucqulsltlon
1) Amulgumutlon (u) Cost to the umulgumutlng
compuny
(b) Cost of lmprovement
(c) Expenses lncurred for trunsfer

2) Glft (u) Cost to the donor,
(c) Expenses lncurred for ucceptlng
the glft und the glft tux puld by the
donor
3) Purtltlon of HUF (u) Cost to the HUF
(c) Expenses lncurred for purtltlon.
4) Wlll (u) Cost to the prevlous owner
(c) Expenses lncurred for probutlng
the wlll
5) Irrevocuble trust (u) Cost to the prevlous owner
(c) Expenses lncurred for
estubllshlng the trust.

SPECIAL PROVISIONS FOR DEDUCTION IN CASE OF
TRADE, PROFESSIONAL OR SIMILAR ASSOCIATION
[Sec.44A]
Amount recelved from members of trude, professlonul or slmllur
ussoclutlons by wuy of subscrlptlon or membershlp fee fulls short of
the expendlture lncurred, such deflclt wlll be ullowed us deductlon
ln computlng the lncome under the heud Proflts und gulns of
Buslness or Professlon. If there ls no lncome under thut heud or
lf the lncome under thut heud ls lnudequute to ubsorb the deflclt, lt
cun be set off ugulnst the lncome of the ussoclutlon computed
under uny other heud of lncome.
In uny cuse uny loss or ullowunce brought forwurd from eurller
ussessment yeur, the deductlon permlsslble under thls provlslon
cunnot exceed 50% of the totul lncome for thut prevlous yeur
computed before ullowlng thls deductlon.

Sec, 44 ls uppllcuble only to the trude, professlonul or slmllur
ussoclutlon the lncome of whlch or uny purt thereof ls not
dlstrlbuted to lts members except us grunts to uny ussoclutlon or
lnstltutlon uffllluted to lt.
Excess over expendlture recelved by u club from fucllltles
extended to members us purt of udvuntuges uttuched to such
membershlp shull not be churgeuble to tux on the prlnclple of
mutuullty- CIT vs. Bunklpur Club Ltd. 226
ITR 97

COMPULSORY MAINTENANCE OF ACCOUNTS [Sec. 44AA,
RULE 6F]
Appllcublllty of thls sectlon depends on the type of uctlvlty currled
on by the person. For thls purpose. Persons ure clusslfled us
follows :-

PERSON
SPECIFIED PROFESSION
NON-SPECIFIED PROFESSION
Other thun Speclflfled Professlon
Legul Englneerlng
Archltecturul
Accountuncy

Note : Fllm Artlst Meuns

(An Actor / Actress; A Cumerumun;A Muslc Dlrector; An Art
Dlrector; A Dunce Dlrector, An Edltor; A Story Wrlter, A Screen
pluy wrlter, A Dlulogue wrlter A Dress Deslgner)

Requlrement of Compulsory mulntenunce of Books of Account :
Cutegory Clusslflcutlon Condltlon
A Speclfled Person

Not Requlred to
Mulntuln uny Books of
Account.
Gross Recelpts 1,50,000 ln
uny of the three yeurs
lmmedlutely preceedlng the
prevlous yeur
If newly set up ln the prevlous
yeur, then hls Gross totul
recelpts ln the protectlon for
thut yeur ure not llkely to
exceed the suld umount

B Speclfled Person

Requlred to mulntuln
such Books of Account
us prescrlbed ln Rule
6F.
Gross Recelpts 1,50,000 ln
ull the three yeurs
prevlous yeur
C Non-Speclfled Person

Not Requlred to
Mulntuln uny Books of
Account
Income from such Buslness or
Professlon 1,20,000 or totul
sule or turnover or Gross
recelpts there of ure less thun
` 10,00,000 (utpto A.Y.
2010-11) + 15,00,000 (for
A.Y. 2011-12), us uppllcuble
ln ull the three yeurs
prevlous yeur

Rule 6F(2) prescrlbes the books to be mulntulned ure us follows
:-
(u) Cush Book
(b) Ledger
(c) Journul (lf mercuntlle system ls udopted)
(d) Bllls und vouchers ln respect of expenses lncurred
(e) Coples of bllls lssued for umounts exceedlng ` 25.

D Non-Speclfled Person

Requlred to mulntuln
such Books of Account
us prescrlbed ln Rule
6F.
Thls cutegory lncludes
un ussessee covered u/s
44Ad, 44AE, 44AF,
44BB,
44BBB
Income from such Buslness or
Professlon 1,20,000
or totul sule or turnover or
Gross recelpts there of
ure less thun ` 10,00,000
(utpto A.Y. 2010-11)
+15,00,000 (for A.Y. 2011-
12), us uppllcuble ln ull the
three yeurs lmmedlutely
preceedlng the prevlous
yeur

In cuse of medlcul pructltloner, the followlng uddltlonul books ure
to be mulntulned.
(u) Dully cuse reglster (Form 3C)
(b) Inventory us on the flrst und lust duy of the Prevlous
Yeur, showlng the stock of medlclnes (where drugs und
medlclnes ure dlspensed durlng the course of pructlce)

Rule 6F(5) provldes thut the books of uccount und documents ure
requlred to be kept for elght yeurs from the end of the relevunt
Assessment Yeur und for cush book und ledger for u perlod of 16
yeurs
In cuse of ussessment relutlng to uny Assessment Yeur reopened
u/s. 147 of the I.T. Act wlthln the perlod speclfled ln sectlon 149
of the Act, the books und documents relutlng to thut yeur ure
requlred to be kept und mulntulned tlll the ussessment so
reopened hus been completed.

AUDIT OF ACCOUNTS [Sec. 44AB

In cuse of followlng person currylng on buslness or professlon
ure requlred to get hls uccounts uudlted before the speclfled dute
by un uccountunt und to furnlsh such report ln the prescrlbed form
duly slgned und verlfled by such uccountunt und settlng forth
such purtlculurs us muy be prescrlbed before the speclfled dute.
u. Currylng on buslness where totul sules turnover or gross
recelpts exceeds ` 60,00,000;
b. Currylng on professlon where gross recelpts exceed `
15,00,000; or
c. Currylng on buslness referred to ln sectlon 44AD or
44AE or 44AF und clulmlng hls lncome to be lower thun
the lncome prescrlbed under the relevunt sectlon.

Types of Audlt report [Rule 6G]
(u) Form No. 3CA : For the person who currles on Buslness
or Professlon und who ls requlred by or under uny other luw
to get hls uccounts uudlted.

(b) Form No. 3CB : For the person currylng on Buslness or
Professlon who ure not requlred to get hls uccount uudlted
under uny other luw.
(c) Form No. 3CD : The purtlculurs of whlch ure requlred to
be furnlshed u/s. 44AB.

SPECIFIED DATE [EXPLANATION TO SEC. 44AB]
Speclfled dute ln relutlon to the uccounts of the ussessee of the
Prevlous Yeur relevunt to the Assessment Yeur, meuns the 30th
September of the Assessment Yeur.
It muy ulso be noted thut the requlrement of Audlt u/s. 44AB
does not upply to person who derlves lncome referred to ln Sec.
44B, 44BB, 44BBA und 44BBB.
In cuse of un ugent who eurns only commlsslon lncome, the uudlt
of uccounts ls requlred only lf the commlsslon exceeds ` 60 lukhs.
[CBDT clrculur No. 452 dt. 17.3.1986]

INCOME PARTLY AGRICULTURE AND PARTLY BUSINESS

Rule
7A :
Income from munufucture of Rubber :-
35% of such lncome shull be deemed to be buslness
lncome und lluble to tux. 65% of such lncome shull be
deemed to be Agrlculturul lncome.
Rule
7B :
Income from the munufucture of coffee :-
lncome und lluble to tux.
60% of such lncome shull be deemed to be ugrlculturul
lncome.

Rule 8
:
Income from the munufucture of teu :-
lncome und lluble to tux.
60% of such lncome shull be deemed to be ugrlculturul
lncome.

PRESUMPTIVE INCOME

PROFITS AND GAINS OF BUSINESS OF CIVIL
CONSTRUCTION (SEC.44AD)
Appllcuble only lf the gross recelpts puld or puyuble (to the
ussessee) does not exceed ` 60 lukhs.
Income : 8% of such gross recelpts. However, lf the usssessee,
declures hlgher lncome, thut shull be consldered.

PROFITS AND GAINS OF BUSINESS OF PLYING, HIRING OR
LEASING GOODS CARRIAGES (SEC.44AE)
Appllcuble to un ussessee who owns not more thun 10 goods
currluges ut uny tlme durlng the prevlous yeur und who ls enguged
ln the buslness of plylng, hlrlng or leuslng of such goods
currluges:
(I) For heuvy goods vehlcle- ` 5,000 for every month or purt of
u month durlng whlch the heuvy vehlcle ls owned by the
ussessee ln the prevlous yeur.
(II) For goods currluge other thun heuvy goods vehlcle- ` 4,500
for every month or purt of u month durlng whlch the goods
currluge ls owned by the ussessee.

PROFITS AND GAINS OF RETAIL BUSINESS (SEC.44AF)
Appllcuble only lf the turnover of such retull trude does not
exceed ` 60 lukhs ln the prevlous yeur.
Income : 5% of the turnover. However, lf the ussessee, declures
hlgher lncome, thut shull be consldered.

PRESUMPTIVE INCOME FOR TRUCK OWNERS [SECTION
44AE] [W.E.F A.Y. 2011-12]
Under the exlstlng provlslons of sectlon 44AE, u presumptlve
scheme ls uvulluble to ussesses enguged ln buslness of plylng,
hlrlng or leuslng goods currluges. The scheme upplles to un
ussessee, who owns not more thun 10 goods currluges ut uny tlme
durlng the prevlous yeur.
The Act hus enhunced the presumed lncome per vehlcle for the
owners of
(u) Heuvy goods vehlcle to ` 5,000 p.m.; und
(b) Other thun heuvy goods vehlcles to ` 4,500 p.m.
The Act hus further provlded un untl-uvoldunce cluuse stutlng thut
u prescrlbed flxed sum or u sum hlgher thun the uforsuld sum
clulmed to huve been eurned by the ussessee shull be deemed to
be proflts und gulns of such buslness.
Presumptlve lncome scheme for retull buslness merged wlth
sectlon 44AD [Sectlon 44AF] [W.e.f. A.Y. 2011-12]

SPECIAL PROVISIONS FOR COMPUTING PROFITS & GAINS
FOR NON-RESIDENTS

Sectlon Nuture of Buslness Proflt- %
on Turnover
44B Shlpplng buslness ln cuse of non-resldent. 7-1/2%
44BBB Buslness of provldlng servlces or fucllltles ln
connectlon wlth or supplylng plunt und
muchlnery on hlre used ln
the prospectlng for or extructlon or productlon
of mlnerul olls ln cuse of non-resldent.
10%
44BBA Buslness of operutlon of ulrcruft ln cuse of
non-resldent.
5%

44BBB In cuse of forelgn compuny enguged ln
l) Clvll constructlon
ll) erectlon of plunt or muchlnery
lll) testlng or commlsslonlng thereof ln
connectlon wlth
turnkey power pro|ect upproved by the
Centrul Government, lncome ls determlned ut
10% of the gross umount.
10% of the
gross
umount puld
or puyuble
ln Indlu or
out of Indlu.

REOUIREMENT AS TO MODE OF ACCEPTANCE, PAYMENT OR
REPAYMENT IN CERTAIN CASES TO COUNTERACT EVASION
OF TAX
Mode of tuklng or ucceptlng certuln louns und deposlts [Sec. 269SS]
No person shull, ufter the 30th duy of June, 1984, tuke or uccept from
uny other person (hereufter ln thls sectlon referred to us the
deposltor), uny loun or deposlt otherwlse thun by un uccount puyee
cheque or uccount puyee bunk druft lf,
(u) the umount of such loun or deposlt or the uggregute umount of
such loun und deposlt ; or
(b) on the dute of tuklng or ucceptlng such loun or deposlt, uny
loun or deposlt tuken or uccepted eurller by such person from
the deposltor ls remulnlng unpuld (whether repuyment hus
fullen due or not), the umount or the uggregute umount
remulnlng unpuld ; or
(c) the umount or the uggregute umount referred to ln cluuse (u)
together wlth the umount or the uggregute umount referred to ln
cluuse (b), ls twenty thousund rupees or more :

Provlded thut the provlslons of thls sectlon shull not upply to uny loun
or deposlt tuken or uccepted from, or uny loun or deposlt tuken or
uccepted by,
1. Government ;
2. uny bunklng compuny, post offlce suvlngs bunk or co-operutlve
bunk ;
3. uny corporutlon estubllshed by u Centrul, Stute or Provlnclul Act
;

4. uny Government compuny us deflned ln sectlon 617 of the
Compunles Act, 1956 (1 of 1956) ;
5. such other lnstltutlon, ussoclutlon or body or cluss of lnstltutlons,
ussoclutlons or bodles whlch the Centrul
Government muy, for reusons to be recorded ln wrltlng, notlfy ln thls
behulf ln the Offlclul Guzette :

Provlded further thut the provlslons of thls sectlon shull not upply to
uny loun or deposlt where the person from whom the loun or deposlt ls
tuken or uccepted und the person by whom the loun or deposlt ls
tuken or uccepted ure both huvlng ugrlculturul lncome und nelther of
them hus uny lncome churgeuble to tux under thls Act.
Mode of repuyment of certuln louns or deposlts [Sec. 269T]
No brunch of u bunklng compuny or u co-operutlve bunk und no other
compuny or co-operutlve soclety und no flrm or other person shull
repuy uny loun or deposlt mude wlth lt otherwlse thun by un uccount
puyee cheque or uccount puyee bunk druft druwn ln the nume of the
person who hus mude the loun or deposlt lf
(u) the umount of the loun or deposlt together wlth the lnterest, lf
uny, puyuble thereon, or
(b) the uggregute umount of the louns or deposlts held by such
person wlth the brunch of the bunklng compuny or co-operutlve bunk
or, us the cuse muy be, the other compuny or co-operutlve soclety or
the flrm, or other person elther ln hls own nume or |olntly wlth
uny other person on the dute of such repuyment together wlth the
lnterest, lf uny, puyuble on such louns or deposlts, ls twenty thousund
rupees or more :

Provlded thut where the repuyment ls by u brunch of u bunklng
compuny or co-operutlve bunk, such repuyment muy ulso be mude by
credltlng the umount of such loun or deposlt to the suvlngs bunk
uccount or the current uccount (lf uny) wlth such brunch of the person
to whom such loun or deposlt hus to be repuld :
Provlded further thut nothlng contulned ln thls sectlon shull upply to
repuyment of uny loun or deposlt tuken or uccepted from
1. Government;
2. uny bunklng compuny, post offlce suvlngs bunk or co-operutlve
bunk;

3. uny corporutlon estubllshed by u Centrul, Stute or Provlnclul
Act;
4. uny Government compuny us deflned ln sectlon 617 of the
Compunles Act, 1956 (1 of 1956);
5. such other lnstltutlon, ussoclutlon or body or cluss of lnstltutlons,
ussoclutlons or bodles whlch the Centrul
Government muy, for reusons to be recorded ln wrltlng, notlfy ln thls
behulf ln the Offlclul Guzette.

Mode of repuyment of Speclul Beurer Bonds, 1991 [Sec. 269TT]
Notwlthstundlng unythlng contulned ln uny other luw for the tlme belng
ln force, the umount puyuble on redemptlon of Speclul Beurer Bonds,
1991, shull be puld only by un uccount puyee cheque or uccount puyee
bunk druft druwn ln the nume of the person to whom such puyment ls
to be mude.

INCOME FROM BUSINESS OR PROFESSION AND TAX
PLANNING

Followlng ure certuln meusures should be kept ln mlnd for tux
plunnlng for lncome from buslness or professlon.
1. Nuture of buslness: Economlc fuctors such us scope,
profltublllty, feuslblllty fuctors, etc. ure lmportunt for determlnlng
the nuture of buslness but the beneflts und concesslons uvulluble
to euch llne of buslness muy ulso be presumed before expundlng
un exlstlng llne of buslness.
2. Locutlon of buslness: Although certuln fuctors such us neurness
to the source of ruw muterluls or murkets or uvullublllty of
lnfrustructure muy be useful ln tuklng declslon on the locutlon of
buslness, tux conslderutlon ls ulso equully lmportunt. If un
lndustry ls locuted ln buckwurd ureu, deductlon under sectlon 80-
IB ls uvulluble.
3. Sources of funds: There ure dlfferent sources of funds
dependlng upon the needs, uvullublllty, terms, etc. However for
uvulllng the tux beneflts, there should be proper debt- equlty mlx
ln the cupltul structure und u cleur pollcy on return on cupltul
employed.
4. Truvel Expenses: The truvel expenses of spouse were held us
lnudmlsslble, lf such truvel ls not for buslness conslderutlon. She

muy be mude u purtner ln the flrm to clulm buslness expendlture
on truvel und further the shure of proflt of the spouse cunnot be
clubbed wlth thut of the husbund us the sume ls exempt u/s
10(2A).
5. Employee welfure funds: The contrlbutlon of the employees
welfure funds should be puld wlthln tlme llmlts prescrlbed under
the relevunt Acts. It would be better to borrow und puy the tux
llublllty on or before relevunt due dute. Contrlbutlon mude to the
welfure funds ufter the due dute does not quullfy for deductlon
even ln the yeur of puyment. However lnterest on money
borrowed for meetlng such llublllty quullfles us buslness
expenses.

Profits and Gains of Business or Profession

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PROFITS AND GAINS OF BUSINESS OR PROFESSION

DEFINITION OF BUSINESS AND PROFESSION

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