INCOME for the Purpose of Tax


As per section 2(24), the term income means and includes :

1.    Profits and gains;

2.    Dividend;

3.    Voluntary contributions: Voluntary contributions received by : a trust created wholly or partly for

charitable or religious purposes a scientific research association; or a fund or trust or institution established for charitable purposes and notified under section 10(23C)(iv) or (v) or any university or other educational institution or by any hospital referred to in Section 10(23C)(iiad)(vi)(iiiae)(iva); or An electoral trust.

4.    The value of any perquisite or profit in lieu of salary taxable.

5.    Any special allowance or benefit specifically granted to the assessee to meet expenses wholly, necessarily and exclusively for the performance of the duties of an office or employment of profit.

6.    City Compensatory Allowance/ Dearness allowance: Any allowance granted to the assessee either to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at a place where he ordinarily resides or to compensate him for the increased cost of living.

7.    Benefit or Perquisite to a Director: The value of any benefit or perquisite, whether convertible into money or not, obtained from a company by: (a) a director, or (b) a person having substantial interest in the company, or (c) a relative of the director or of the person having substantial interest, and any sum paid by any such company in respect of any obligation which, but for such payment, would have been payable by the director or other person aforesaid;

8.    Any Benefit or perquisite to a Representative Assessee: the value of any benefit or perquisite (whether convertible into money or not) obtained by any representative assessee under Section 160(1)(iii)/(iv) or beneficiary, or any amount paid by the representative assessee in respect of any obligation which, but for such payment, would have been payable by the beneficiary;

9.    Any sum chargeable under section 28, 41 and 59 :

  Any sum chargeable to tax as business income under Section 28(ii), any amount taxable in the hands of a trade, professional or similar association (for specific services performed for its members) as its income from business under Section 28(iii), and deemed profits which are taxable under Sections 41 and 59 of the Act; Any sum chargeable to income-

tax under clause (iiia) of Section 28, i.e. profits on sale of a licence granted under the Imports (Control) Order, 1955, made under the Imports and Exports (Control) Act, 1947 [inserted by the Finance Act, 1990, with retrospective effect from 1.4.1962];

        –  any sum chargeable to income-tax under clause (iiib) of Section 28 i.e., cash assistance (by whatever name called), received or receivable by any person against exports under any scheme of the Government of India.

  any sum chargeable to income-tax under clause (iiic) of Section 28 i.e., any duty of customs or excise re-paid or re- payable as drawback to any person against exports under the Customs and Central Excise Duties Drawback Rules, 1971.

      –  the value of any benefit or perquisite whether convertible into money or not; taxable as income under Section 28(iv) in the case of person carrying on business or exercising a profession;

  any sum chargeable to income-tax under clause (v) of Section 28;

10.      Capital Gain: Any capital gains chargeable to tax under Section 45; since the definition of income in Section 2(24) is inclusive and not exhaustive capital gains chargeable under Section 46(2) are also assessable as income.

       11.      Insurance Profit: The profits and gains of any business of insurance carried on by a mutual insurance company or by a co-operative society computed in accordance with the provisions of Section 44 or any surplus taken to be such profits and gains by virtue of the profits contained in the First Schedule to the Income-tax Act;

       12.      Banking income of a Co-operative Society: The profits and gains of any business of banking (including) providing credit facilities carried on by a cooperative society with its members.

       13.      Winnings from Lottery: Any winnings from lotteries, crossword puzzles, races, including horse-races, card-games and games of any sort or from gambling or betting of any form. (i) "lottery" includes winnings, from prizes awarded to any person by draw of lots or by chance or in any other manner whatsoever, under any scheme or arrangement by whatever name called; (ii) "card game and other game of any sort" includes any game show, an entertainment programme on television or electronic mode, in which people compete to win prizes or any other similar game;

14.      Employees Contribution Towards Provident Fund: Any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set-up under the provisions of the Employees State Insurance Act, 1948 (34 of 1948) or any other fund for the welfare of such employees.

15.      Amount Received under Keyman Insurance Policy: Any sum received under a Keyman Insurance Policy including the sum allocated by way of bonus on such policy. Keyman Insurance Policy means a life insurance policy taken by a person on the life of another person who is or was the employee of the first mentioned person or is or was connected with the business of the first mentioned person in any manner whatsoever.

16.      Amount received for not carrying out any activity: Any sum referred to in Section 28(va), i.e. any sum, whether received or receivable in cash or kind, under an agreement for (i) not carrying out any activity in relation to any business; or (ii) not sharing any know-how, patent, copyright, trade-mark, license, franchise or any other business or commercial right of similar nature or information or technique likely to assist in the manufacture or processing of goods or provision for services:

17.      Gift received for an amount exceeding ` 50,000: Any sum of money or value of property referred to in clause (vii) or clause (viia) of sub-section (2) of Section 56.

18.      Consideration received for issue of shares: Any consideration received for issue of shares as exceeds the fair market value of the shares referred in section 56(2)(viib)

Demo Classes of Tax by Prof. Vinit Sir:

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