DIRECT TAX (CA FINAL)

LAST DAY REVISION NOTES

93 Pages = 100 Marks

(for May 21 and Nov 21)

*INDEX*
Particular Page No. Particular Page No.
Part - A [35 Pages] Part - B [14 Pages]
1. Tax Rates - Normal 1 12. TDS, TCS and Advance Tax 36-41
2. Special Tax Rates (Sec 115 Series) 2-5 13. Taxation of Firm 42
3. Capital Gain 6-12 14. Taxation of AOP / BOI 42
4. Income from Other Sources 13-14 15. Taxation of Business Trust / Inv. Fund / 43-44
5. PGPB 15-21 Securitisation Trust
6. ICDS 22-23 16. Taxation of Political Party 44
7. Income from House Property 24-25 17. Taxation of Trust 45-48
8. Chapter VI-A Deductions 26-29 17. Minimum Alternate Tax (MAT) 49
9. Clubbing of Income 30-31 18. Alternate Minimum Tax (AMT) 49
10. Setoff and c/f of Losses 31-33
11. Misc Provision (Dividend, ESOP, Buyback 33-35
of Shares, Taxation of Units)
Part - C [22 Pages] Part - D [22 Pages]
19. Assessment 50-56 1. Residential Scope 72-75
20. Power of IT Authorities (S & Seizure) 57-60 2. Non Resident Taxation 76-81
21. Appeals and Revision 61-62 3. Double Taxation Relief [DTAA] 82-83
22. Penalties 62-64 4. Equalisation Levy 84-85
23. Offences 65 5. Advance Ruling 85-86
24. Settlement Commission 65-66 6. Transfer Pricing 87-92
25. GAAR 67-68 7. Misc Topics 93
26. Misc. Topics 69-71

About Notes:
1. This note is made for revision purpose which contains important points (crux).
2. Solve maximum practical question from question bank / mock test paper / revision test paper
3. Contact Details : Mobile No. 9765974365 / Email - [email protected]
 PART - A

1 Tax Rates, Surcharge and Rebate

Individual / HUF/ Partnership Firm /

Type Domestic Company Foreign Company
AOP / BOI / AJP LLP / Local Auth.
Tax Rate As per Slab 30% 25%* or 30% 40%

Surcharge, if NTI# < 50 Lakh = NIL If Total Income

If Total Income
>50L <1Cr = 10% >1 Cr but <10 Cr -
>1 Cr but <10 Cr - 7%
If Total Income 2%
>1Cr <2Cr = 15%
> 1 Cr then 12%
>2Cr <5Cr = 25% If Total Income
If Total Income
> 10 Cr - 12%
> 5 Crore = 37% > 10 Cr - 5%
* Turnover / GR up to 400 Crore in PY 18-19 #Net Taxable Income

• Surcharge on Individual and HUF

Where Total Income Where Total Income include Income u/s 111A & 112A and Dividend Income
does not include
Total Income Income u/s 111A & Any Other Income
112A and Dividend STCG u/s 111A, Dividend
[Total Income (-) LTCG u/s 112A,
Income LTCG u/s 112A Income
STCG u/s 111A, Dividend Income)
Up to 50 Lakh Nil Nil Nil Nil
> 50 Lakh but < 1 Cr 10% 10% 10% 10%
> 1 Cr but < 2 Cr 15% 15% 15% 15%
> 2 Cr but < 5 Cr 25% 15% 15% 25%

> 5 Cr 37% 15% 15% 37%

• Tax Rates for Co-Operative Society

Total Income Tax Rate Surcharge
Upto 10,000 10%
If Total Income
> 10,000 but < 20,000 20%
> 1 Cr then 12%
> 20,000 30%

Tax rates for Capital Gain

Long Term Short Term

Sec 112A - Listed Sec 111A - Listed Other STCG

(for R) Listed Other Eq. Share, Unit of
Eq. Share, Unit of Securities LTCG Busi. Trust, Eq.
Busi. Trust, Eq. (other than
O.Fund Sec 112 O.Fund
unit), ZCB
(if STT Paid) (if STT Paid) Normal Tax
Rate
20%
lower of ;
Income > 1 Lakh (No VI-A) 15%
@ 10% 10% without
(No VI-A Dedn)
indexation /
(No Indexation, No
VI-A, No 87A) 20% with
indexation ↓

Sec 87A - Rebate to Resident Individual Rebate :

a. If total income does not exceeds Rs. 5 Lakh a. Rs. 12,500 or b. Income Tax Payable
b. Applicable to Resident only Whichever is less
c. Rebate u/s 87A available against all types of Income except LTCG u/s 112A

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 1
• CBDT Circular
Date of Birth As on 31/03/2021 Status
01/04/1961 Completed 60 years age on 31/03/2021 - Senior citizen for FY 20-21
01/04/1941 Completed 80 years age on 31/03/2021 - Super Senior citizen for FY 20-21

2 Special Tax Rates (Sec 115 Series)

Nature of Income Rate TDS

Sec 115A Refer Part 'D' of LDR

Sec 115AB LTCG to Overseas Financial Institutions on Units of UTI / M.Fund @10% Sec 196B

Sec 115AC LTCG and Interest on Bonds (Acquired in foreign currency)

Interest - on Foreign Currency Convertible Bond (FCCB), GDR @10% Sec 196C
Long Term Cap Gain - on Foreign Currency Convertible Bond (FCCB), GDR @10% Sec 196C

Sec 115AD - Capital Gain & Interest on Security of FII

LTCG - Sale of Security by FIII @10% Sec 195
STCG - Sale of Security by FIII (111A) @15% Sec 195
STCG - Other (Preference share etc.) @30% Sec 195
Interest and Dividend - from FII @20% 196D-20%
Interest and Dividend - from Specified Fund @10% 196D-10%
Sec 115BB- Winning from lotteries, puzzles, Horse races @30% 194B, BB

Sec 115BBA - NR Sportsman, NR Sports Association, NR Entertainer @20% 194E

Umpire, NR Commentator and Referee are not sport persons

Sec 115 BBC - Anonymous Donations [Topic - Trust] @30%

Sec 115 BBD - Dividend from Specified Foreign Company [Topic - Dividend] @15%
Income of an Indian company by way of dividend declared, distributed or paid by specified foreign
company (in which the Indian company holds 26 percent or more of equity share capital)

Sec 115 BBE - Deemed Income [Sections 68, 69, 69A, 69B, 69C and 69D] @60%

Sec 115 BBF - Tax on Income by way of royalty in respect of patent developed @10%
a. Developed means 75% of the expenses incurred in India
b. No deduction for any expenditure.
Sec 115 BBG - Tax on Income from transfer of Carbon Credit @10%
No deduction for any expenditure.
Sec 115E - Taxation of NRI (Optional to NRI)
LTCG on Investment in F. Exchange Asset (Exp less करना) @10% Sec 195
Investment Income / LTCG Other @20% Sec 195

Sec 115JB - Minimum Alternate Tax (MAT) 15% / 9%

Sec 115JC - Alternate Minimum Tax (AMT) @ 18.5%

Sec 115F Similar to Sec 54F, LTCG on F. Exchange asset will be exempt if net proceeds re-invested

44AD applies --> Maintain books of account as per Sec 44A, Conduct u/s 44AB, Submit return u/s 139(1)

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 2
 Particulars Section 115BA Section 115BAA Section 115BAB
Applicability Domestic Manufacturing Company Any Domestic Company Domestic Manufacturing Company

Rate of Tax 25% 22% (22+10+4) --> 15% (15+10+4) --> 17.16%
25.168%
Surcharge 7% / 12% [Normal] 10% 10%
MAT Applicable (15%) Not Applicable Not Applicable
Sp. Rates Income Sec @ Special Rates + Surcharge, if @ Special Rates + 10% @ Special Rates + 10% Surcharge
112A, 111A applicable + 4% Cess Surcharge + 4% Cess + 4% Cess
HP, IFOS 25% + Surcharge, if applicable + 22% (22+10+4) --> 22% (22+10+4) --> 25.168%
4% Cess 25.168%
Condition 1 Company has been setup & No time limit specified Company should be setup &
registered on / after 01/03/16 registered on / after 01.10.19
Condition 2 Company engaged in the business Need not to be It should commence
of manufacture / production of manufacturing company manufacturing on or before the
any article or things 31.03.2023.

Condition 3 Once the option exercised, [Blank] It does not use any P&M
company cannot opt out for life previously used for any purpose,
time but where the person exception:
exercises option u/s 115BAA, the a. 20% of Total PM can be second-
option under this section may be hand.
withdrawn. b. Imported PM shall be treated as
new only for this section
Condition 4 [Blank] [Blank] It should not be engaged in any
business other than business of
manufacturing or production of
any article or things (See#)

Condition 5 [Blank] [Blank] It does not use any building

previously used as a hotel or a
convention centre.
Condition 6 [Blank] [Blank] It should not formed by splitting
up or reconstruction of business
already in existence
• Common Condition for Sec 115BA, Sec 115BAA and Sec 115BAB
Conditions 7 Company should not have claimed benefit of section 10AA (SEZ), 32(1)(iia) addn Depn, 32AD,
35(1) Sci. Research, 33AB, 33ABA, 35AD (Specified Busi), 35CCC, 35CCD and any dedn. in respect
of Income u/c VI-A other than Sec 80JJAA, 80LA and 80M
Conditions 8 Option has to be exercised up to due date of return filing of relevant PY
Conditions 9 Company cant setoff any loss c/f from any earlier AY if such loss is attributed to any dedn referred
above.

# Business of manufacture or production of any article or thing does not include business of
a. Development of b. Conversion of c. Bottling d. Printing of books or e. Mining f. Any other business
computer software in marble blocks or of gas into production of as may be notified by
any form or in any similar items into slabs cylinder cinematograph films the Central Govt, in
media this behalf

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 3
Section 115BAC: Tax on income of Individuals and HUF (w.e.f. AY 2021-22)
Basic At the option of the assessee, tax payable in respect of the total income of an individual or HUF
shall be
- Rebate u/s 87A is available even if assessee opt section 115BAC
- If assessee opt section 115BAC the Alternate Minimum Tax (AMT) is not applicable.
Tax Rate Total income Rate of tax
Upto Rs 2,50,000 Nil
From Rs 2,50,001 to Rs 5,00,000 5%
From Rs 5,00,001 to Rs 7,50,000 10%
From Rs 7,50,001 to Rs 10,00,000 15%
Note - Tax on Special Rate
From Rs 10,00,001 to Rs 12,50,000 20%
Income (Eg. 111A/112A) -->
From Rs 12,50,001 to Rs 15,00,000 25% Taxable at special rates only.
Above Rs 15,00,000 30%

Following deductions / exemptions are not allowed

Under the Head “Income from Salary” “Income from House Property”
• Leave travel concession u/s 10(5) Interest on loan taken for purchase /
• House rent allowance u/s 10(13A) construction / renewal / reconstruction of
• Allowances u/s 10(14) (a) self-occupied property
• Allowances to MPs/MLAs u/s 10(17) (b) property which could not be occupied due to
• Standard deduction, Entertainment Allowance and Employment / employment or business or profession carried
Professional Tax u/s 16 out at any other place

• Exemption of Rs. 50 per meal for free food and non-alcoholic beverage
provided by such employer through paid voucher

“Profits and Gains of Business and Profession” Others

• Sec 32(1)(iia): Additional depreciation • Deduction for Family pension u/s 57(iia)
• Sec 32AD: Deduction for new plant in notified backward areas of • Exemption for minor u/s 10(32)
specified states • Section 10AA available to SEZ unit
• Sec 33AB: Tea/Coffee/Rubber Development A/c • Chapter VI-A deductions other than
• Sec 33ABA: Site Restoration Account - Sec 80CCD(2) - employer contribution to NPS
• 35(1)(ii)/(iia)/(iii)/35(2AA): Research Expenses - Sec 80JJAA – New Workmen
• Sec 35AD: Specified business - Sec 80LA – IFSC related
• 35CCC: Agricultural extension project expense • Exemption/deduction for allowances or
perquisite provided under any other law

Losses will not be a. Carried forward Loss / Depreciation from any earlier year,
allowed --> if it is attributable to any of the deductions referred above which are not allowable

b. Loss under the head “Income from house property” with any other head of income
Such loss and depreciation shall be deemed to have been given full effect to and no further
deduction shall be allowed for any subsequent year:

Allowances shall be a. Transport Allowance granted to a handicapped employee

exempt even if this b. Conveyance Allowance for official purpose
section is opted for
c. Allowance granted to meet the cost of travel on tour or on transfer
d. Daily Allowance

Depreciation If depreciation allowance has not been given full effect to prior to AY 2021-22, corresponding
adjustment shall be made to WDV on 1.4.2020.

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 4
Section 115BAD: Tax on Income of Resident Co-operative Societies (w.e.f. AY 2021-22)
Basic At the option of the assessee, the income-tax payable in respect of the total income of co-operative
society resident in India shall be computed at the rate of 22%.
Effective Tax Rate - 25.168% (22% +10% Surcharge + 4% Cess)

Conditions • Section 10AA: deduction in case of SEZ Unit

Total income of the co- • Section 32(1)(iia): Additional depreciation
operative society is • Section 32AD: Dedn. for investment in new plant in notified backward areas of specified states
calculated without any
• Section 33AB: Deposit in Tea/Coffee/Rubber Development Account
deduction under the
provisions of • Section 33ABA: Deposit in Site Restoration Account
• Section 35(1)(ii)/(iia)/(iii)/ 35(2AA): Deduction in respect of scientific research
• Section 35AD: Specified business
• Section 35CCC: Expenditure on agricultural extension project
• Deductions under Chapter VI-A other than section 80JJAA and 80LA
Set off of losses: Set off of any loss carried forward from earlier year shall not be allowed if such loss is attributable
to any of the deductions referred above.
This loss shall be deemed to have been already given full effect to and no further deduction for
such loss shall be allowed for any subsequent year.

Depreciation Depreciation u/s 32 shall be determined in prescribed manner - Depreciation in respect of block of
assets entitled to > 40% shall be restricted to 40% on WDV of such block of assets (w.e.f.
1.10.2020)

If depreciation allowance has not been given full effect to prior to AY 2021-22, corresponding
adjustment shall be made to WDV on 1.4.2020.
Misc. a. AMT not applicable if Co-operative Society opts Sec 115BAD
b. Surcharge applicable @ 10% irrespective of Total income.

Space for Your Notes

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 5
 3 Capital Gain

Chapter MAP
Part A Part B Part C
• 45(1) - Charging Section • 55 - Cost of Acquisition & COI • 47 - Exempt Transfer
• Exception to Sec 45(1) • 50B - Slump Sale (Solve Que) • 54 - Exemption Series
• Definition of Capital Asset, • 50C - SDV treated as FVOC • 55A - reference to Valuation Officer
Transfer, Urban Area • 51 - Advance Money forfeited • Tax Rates on Capital Gain (111A, 112A)
• Seven Proviso to Section 48

Sec 45 (1) Any profit and gain arising from Transfer of a Capital Asset shall be chargeable under the head
Charging Section capital gain in the P.Y. in which transfer took place

Exception to Sec As per sec 45 (1) Capital Gain is chargeable to tax in the year of transfer but
45(1) in the following 4 cases capital gain not taxable in the year of transfer
Year Sec 45(1A) Sec 45(2) Sec 45(5) Sec 45(5A)
Insurance claims for Conversion of Capital Compensation on Joint Development
Damage / Destruction Asset in to stock in trade Compulsory Acquisition Agreement (JDA)
of Capital Asset of Asset

Transfer Year Year of Destruction / Year of conversion of Year of in which Year in which
Damage Capital Asset into Stock Compulsorily Acquired possession transferred
in trade

Taxable in Year Year in which Claim Year in which Stock is Year in which Year in which
Received. sold. Compensation Received. Certificate of
Completion issued by
Authority.

Sec 2(14) 1. Property of any kind held by assessee, whether or not with Business / Profession.
Capital asset means 2. Any securities held by Foreign Institutional Investor (FII) .
But does not include
1. Any stock-in-trade
2. Movable personal property (including wearing apparel and furniture) held for personal use (but
excludes - jewellery, archaeological collections, drawings, paintings, sculptures or any work of art is
capital asset)

3. Rural agricultural land in India.

4. Deposit certificates issued under the Gold Monetisation Scheme, 2015
Urban Area means ? a. Any area (municipality, cantonment board etc.) which has a population of 10000 or more,
b. In the following area within the distance, measured aerially
Shortest distance Population according to
from area referred in last census
point (a)

2 kms 10,000 to 1,00,000

(Rural Area Means 6 kms 1,00,000 to 10,00,000
Area Which is Not a 8 kms More than 10,00,000
Urban Area)

Sec 2(47) 1. The sale, exchange or relinquishment of the asset, or

Definition of 2. The extinguishment of any right there in, or
Transfer 3. Compulsory acquisition there of under any law, or
4. Conversion of capital asset into stock in trade, or
5. Allowing the possession of any immovable property to be taken or retained in part performance
of a contract.
6. Any transaction (like becoming a member of, or acquiring shares in a Co. operative society)
which has the effect of transferring or enabling the enjoyment of immovable property.

7. The redemption of zero coupon Bonds (ZCB)

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 6
Sec 2(42A) Nature of Capital Assets
Period of Holding Particular Short Term Long Term
Listed Securities, Units of Equity Oriented Held for < 1 year Held for > 1 year
Mutual Fund, Unit of UTI, Zero Coupon Bond

Unlisted Share, Immovable Property Held for < 2 year Held for > 2 year
Unlisted securities, Other capital asset Held for < 3 year Held for > 3 year

• Proviso to Section 48
First Proviso Capital Gain in case of Non-Resident
(First proviso is Assessee Who is a Non Resident (includes foreign company)
mandatory) Asset Should be shares or debentures of Indian company
Such asset was acquired in foreign currency by way of purchase / re-
investment
Calculation of CG Then capital gain shall be calculated in foreign currency & after that it shall
be reconverted into Indian currency
Some Imp Points 1 First Proviso applies to STCG and LTCG
2. First Proviso applies to Listed and Unlisted Shares & Debentures
3. It not covered Units of UTI, Mutual Fund, Units of Business Trust

Rule 115A :Method of conversion

Type Amt Rate Date (for Rate)
Sale consideration xxx Avg of TTBR & TTSR Date of transfer
(-) Transfer expenditure (xxx) Avg of TTBR & TTSR Date of transfer
Net Consideration xxx
(-) COA (xxx) Avg of TTBR & TTSR Date of acquisition
CG into INR xxx TTBR Date of transfer
Note - Index benefit not available where first proviso applies

Second Proviso Long term capital asset - COA & COI should be indexed. FY 20-21 - 301
Second Proviso shall not apply where First Proviso applies.
Third Proviso First and second proviso NOT Applicable for computation of LTCG to in Sec 112A
- in case of Equity shares, Equity oriented units, Units of Business Trust Referred u/s 112A.

Fourth Proviso No indexation in case of Debentures & Bonds

Individual Other Assessee
On On Transfer On On Transfer b4
Category Redemption b4 Maturity Redemp- Maturity
tion

Capital Indexation Bonds & CG - No CG - Yes CG - Yes CG - Yes

Sovereign Gold Bonds issued by (Sec 47) (Indexation - (Indexn - (Indexation - No)
RBI Yes) No)

Other Debentures & Bonds CG - Yes CG - Yes CG - Yes CG - Yes

(Indexation - (Indexation - (Indexatio (Indexation - No)
No) No) n - No)

Fifth Proviso - Any gain arising on rupee appreciation against foreign currency
Foreign Exchange at the time of redemption of RDB of Indian company,
Fluctuation gain on shall be ignored for the purpose of computation of Full Value of consideration
RDB
[Note - Exemption is available if assessee is Non-resident]

Seventh Proviso Security Transactions Tax (STT) not Allowed

STT paid on sale/ purchase of shares/unit shall not be allowed under capital gain

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 7
Sec 55 Cost of Acquisition & Cost of Improvements
Cost of Acquisition Cost of Improvements
1. Intangible Assets 1. In case of Intangible Assets
a) Self Generated : Nil b) Purchased : Purchase Price - Always NIL

2. Bonus Share
a) Acquired before 01.04.2001 b) Acquired after 01.04.2001 2. In case of Other Assets
- FMV as on 1.4.2001 - NIL a) Improvements before 01.04.01
- NIL (Ignore)
3. Right Share
a) If acquired by shareholder - Amount Paid to Company
b) Renouncement of Right - NIL b) Improvements after 01.04.01
c) In the hands of purchaser of right - Amt paid to Co. for shares + - Actual
Amt paid for purchase of right
4. Demutualisation / Corporatisation of stock exchange
a) Equity shares allotted to member - Cost of his original membership of
stock exchange

b) Trading and Clearing Right - Nile

5. In relation to other Capital Assets

a) acquired before 01/04/2001 b) acquired on or after 01/04/2001
- Actual Cost / FMV, Whichever is higher - Cost of acquisition
[Amendment, added by FA 2020)
In case of a capital asset being land or building or both,
- If Stamp Duty Value (SDV) as on 01.04.01 is available then,
- FMV as on 1.4.2001 shall not exceed the SDV of such asset as on 1.4.2001.

Sec 50B Taxable @ 20% u/s 112

Slump Sale LTCG If transferred unit held > 36 Month
STCG If transferred unit held < 36 Month
Method Sale Consideration xxx
(-) Net worth xxx
Capital Gain xxx
Note If Net worth is -ve then take it 'Zero (NIL)'

Sec 50C Stamp duty value shall be treated as full value of consideration [FVOC]
It is applicable in If Sales consideration less than SDV - SDV shall be deemed to be FVOC
case of sale / If SDV doesn't > 110% of Consideration - Sale Consideration shall be treated as FVOC
transfer of
immovable property
i.e. land, building Where assessee claims that SDV is more than FMV of the property & such SDV has not been
disputed in any appeal then the A.O. may refer the valuation to valuation officer

[Similar to Sec 43CA] Value ascertained by Valuation Example (Rs. in Lakhs) Consideration should
Officer (V.O.) is SDV Value by VO FVOC be
Value by V.O. > SDV of stamp 15 17 15 SDV of stamp authority
valuation authority

Value by V.O. < SDV of stamp 15 13 13 Value ascertained by

valuation authority valuation officer

Sec 50CA Special provision for transfer of Unquoted Share

If Consideration For transfer of unquoted shares < FMV determined as per Rule 11UAA
Then --> FMV shall be deemed to be Sale consideration
Sec 51 - Forfeited before 01/04/14 Reduced from COA (before indexing)
Advance money Forfeited after 01/04/14 Taxable as IFOS
forfeited

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 8
Sec 55A FMV of asset exceeds value of is > 15% of the value of Rs. Whichever is lower ↓
Ref to Valuation asset as claimed by assesse the asset or 25,000,
Officer A.O May Refer Case to Valuation officer.
Misc. 1. Site and Building are separate assets for the purpose of capital gain.
If site acquired before 2 years and building constructed within 2 years, then calculate separate
capital gain for both the assets.

Capital gain on Land treated as LTCG

Capital gain on Building treated as STCG

Sec 47 - Certain Transaction not regarded as Transfer (Exempt Transfer)

1. Distribution of capital asset on the partial or total partition of HUF
2. Transfer of capital asset under gift, will, irrevocable trust
3. Transfer under amalgamation by amalgamating co to amalgamated co. provided amalgamated co. is Indian co.
4. Transfer of capital asset by holding co. to its subsidiary co. (Holds 100% Share) Transferee Co - Indian
5. Transfer of capital asset by subsidiary co. to its holding co. (Holds 100% Share) company, Lock-8 years
(Note : 8 year will start from the date of capital asset was transferred)

Reverse Mortgage Sec 47(xvi) - No Transfer, No CG Sec 10(43) - Senior Citizen, It will be exempt

• Condition in case of Conversion

Company to LLP Sole Proprietor to Company Partnership Firm to Company
Sec 47(xiiib) Sec 47(xiv) Sec 47(xiii)
1. All assets & liabilities become assets & 1. All assets & liabilities become 1. All assets & liabilities become
liabilities of LLP assets & liabilities of company the assets & liabilities of the
company
2. The shareholders of the Co. do not receive 2. Sole proprietor should receive only 2. The partner should receive only
any other consideration / benefit from the LLP share from company. shares from Company
other than capital contribution & profit sharing
in LLP, whether directly or indirectly

3. The aggregate profit sharing ratio of the 3. The sole proprietor becomes the 3. Aggregate (total) shareholding
shareholder of the Co. in such LLP shall not be shareholder in Co. & voting power in of such partner of the firm in the
less than 50% at any time during the period 5 Co. is not < 50% & such shareholding company is not < 50% of the total
years from the date of conversion is continued for period of min. 5 years voting power of the company &
from date of conversion. such shareholding is continued for
a period of minimum 5 years from
the date of succession

4. All shareholders of Co. becomes partners of 4. All partners become

LLP & their capital contribution & profit sharing shareholder in the same
ratio in LLP are in same proportion as their proportion in which their capital
[Blank]
shareholding in the Co. on the date of account stood in books of firm on
conversion. the date of such succession.

5. Total sales, turnover or gross receipts in 5. All the partners of the firm
the business of the company in any of the 3 becomes shareholder of Company
years preceding the year of conversion does [Blank]
not exceed ₹60 Lakhs.

6. No amount is paid, either directly or

indirectly, to any partner out of balance of
accumulated profit standing in the accounts of
[Blank] [Blank]
the company on the date of conversion for a
period of 3 years from the date of conversion.

7. Total value of the assets as appearing in

the books of account of company in any of the
3 previous years preceding the year of
[Blank] [Blank]
conversion takes place does not exceed Rs.
5 crores.

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 9
 • Deduction - 54 Series •

Section & Type of Capital Gain New Asset (Invest) Condition

Sec 54 - Applicable to Individual / HUF One Residential HP in India Purchase -1 yr, +2 yr, Const +3
LTCG - from Residential Property IF LTCG <2cr - 2HP Deposit scheme is Applicable,
Lock - 3 years (cant trf new asset)

Sec 54F - Individual / HUF One Residential HP in India Purchase -1 yr, +2 yr, Const +3
LTCG - from Capital Asset (Should not House Deposit scheme is Applicable,
Property) Lock - 3 years (cant trf new asset)

Sec 54B - Individual / HUF - Any Agricultural Land (Urban/ Rural) Purchase within 2 years
LTCG / STCG - Sale of Urban Agri. Land Deposit scheme is Applicable
Lock - 3 years (cant trf new asset)

Sec 54D -Any person New Land / Buildings for Industrial Purchase within 3 years
LTCG / STCG - from Compulsory acquisition of Undertaking Deposit scheme is Applicable
Industrial Land & Building Lock - 3 years (cant trf new asset)

Sec 54EC - Any person NHAI/ RECL / PFCL / IRFCL Bonds Invest within 6 month,
LTCG - from Sale of Land / Building / Both Lock 5 Yrs (Redemption Period) Maximum exemption is 50 lakh
Deposit scheme is NOT Applicable

Sec 54EE - Any person Units of Funds Within 6 month, maximum 50 lakh
LTCG from any Capital Asset
Sec 54G - Any person PM/ Bldg. / Land / Incurring Notified Invest within -1 / +3 year
LTCG / STCG - Shifting of undertaking to Rural Expenses Deposit scheme is Applicable
area Lock - 3 years (cant trf new asset)

Sec 54GA - Any person PM/ Bldg. / Land / Incurring Notified Invest within -1 / +3 year
LTCG / STCG - Shifting undertaking from Expenses Deposit scheme is Applicable
Urban to SEZ Shift Lock - 3 years (cant trf new asset)

Sec 54GB - Individual / HUF Subscription in eq. shares of eligibleCompany within 1 year from date
LTCG - from Transfer of Residential Property Company (See definition u/s 80-IAC) & of subscription --> Purchase of
(House or Plot of Land) New Asset (P&M)
Note - Shares should be subscribed up Lock - 5 Yr for Eq Shares & P&M
to due date of return filing Lock - 3 Yr for Computers &
Software's

ROI filed after the due date of Sec. 139(1) --> Can we claim benefit of Sec 54 series --> Yes

• Segregated Portfolio Scheme (Finance Act, 2020)

Basic SEBI introduced the concept of 'side-pocketing' or 'segregated portfolio creation' under it, The Total
Portfolio will be separated in two -
1. Main Portfolio & 2. The segregated Portfolio
Investor will be issued same number of units of segregated portfolio as that of main portfolio

Section 49(2AG):
COA of units in = Actual Cost of NAV of the asset transferred to segregated portfolio
segregated portfolio original units x
NAV of the total portfolio immediately before segregation

Section 49(2AH): COA COA of original units in main portfolio = Actual cost (-) Amount arrived at u/s 49(2AG)
of Original Units

Period of Holding Period of Holding for unit/s in a segregated portfolio shall be include the period for which the
original unit or units in the main portfolio were held by the assessee.
Note No Capital gain shall arise to unitholder on segregation of portfolio

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• SDV shall be treated as sales consideration
Apply when, Section 43CA (PGBP Income) Section 50C (Capital Gain)
Apply in case of Immovable Property held as stock-in-trade. held as Capital Asset

Stamp duty value shall be treated as full value of consideration [FVOC]

If Sales consideration less than SDV - SDV shall be deemed to be FVOC
If SDV doesn't > 110% of Consideration - Sale Consideration shall be treated as FVOC

Tax on Capital Gain

• Summary
Particular LTCG 112A LTCG Other STCG 111A STCG Other
Benefit of unutilised Available Available Available Available
Basic Exemption
Rebate u/s 87A Not Available Available Available Available
Chapter VI-A Dedn Not Available Not Available Not Available Available
Tax Rate > 1 Lakh - 10% 20% 15% Normal Tax Rate

Sec 111A Tax on STCG of certain Asset

Basic • Apply on 'STCG on Specified Assets' • Tax Rate - 15%
• Chapter VI-A benefit not available • Benefit of unexhausted limit shall apply.
• Indexation benefit not available • Benefit of Rebate u/s 87A - Available

Which Asset ? Specified Assets

Asset Requirement of payment of STT
Equity share in a company STT has been paid on transfer
Unit of an equity oriented fund STT has been paid on transfer
Unit of a business trust STT has been paid on transfer
• The condition relating to payment of STT shall not apply to transfer undertaken
- on a recognised stock exchange in any International Financial ServicesCentre (IFSC) and
- where the consideration for such transfer is received or receivable in foreign currency

Sec 112 Tax on Long Term Capital Gain

Basic • Applies to All Assessee including non-resident
• Tax Rate - 20%
• Chapter VI-A benefit not available • Benefit of unexhausted limit shall apply.
Note Sec 112 shall not apply where sec 112A applies

Proviso to Sec 112 Tax on LTCG from Listed Securities or Zero Coupon Bond
Basic • Applies to All Assessee including non-resident
LTCG from Transfer of :
1. Listed Securities (Shares & Debentures ) other than Units or
2. Zero Coupon Bond
LTCG Payable 20% with Indexation or 10% without Indexation (Whichever is lower)
Applies in cases 1. Where listed equity shares are sold other than through recog. Stock market
Note : If listed equity shares sold on stock exchange then --> Sec 112A apply
2. Where listed Debentures / Bonds are sold.

Sec 112A Tax on LTCG of certain Asset

Basic • Apply on 'LTCG on Specified Assets' • This section overrides section 112
• Tax Rate - 10% LTCG < 1 Lakh - Exempt LTCG > 1 Lakh Taxable
Example - 3 lakh LTCG u/s 112A --> then 1 lakh is exempt and pay tax on balance 2 lakh
• Chapter VI-A benefit not available • Rebate u/s 87A will not be allowed
• Indexation benefit not available • benefit of unexhausted limit shall apply.

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 11
Which Asset ? Specified Assets
Asset Requirement of payment of STT
Equity share in a company STT has been paid on acquisition and transfer
Unit of an equity oriented fund STT has been paid on transfer
Unit of a business trust STT has been paid on transfer

• The condition relating to payment of STT shall not apply to transfer undertaken
- on a recognised stock exchange in any International Financial Services Centre (IFSC) and
- where the consideration for such transfer is received or receivable in foreign currency

• Condition of payment of STT on acquisition would not be applicable.

- Any equity shares acquired before 1/10/2004 eligible for benefit of sec 112A

Proviso not apply First Proviso to Section 48 – Calculation of Capital Gains in Foreign Currency
Second Proviso to Section 48 – Benefit of Indexation
Cost of Acquisition Higher of --> 1) Actual Cost or 2) Lower of
a. Fair Market Value of such asset on 31.01.18
b. Sale value (FVOC)

Computation of FMV Particular FMV

as on 31.01.18 a. Listed shares / Units on Highest price Quoted on 31/01/2018.
recognised stock exchange on Note : If no trading on 31/01/2018 then the highest price on
31/01/2018 such stock exchange on a date immediately preceding
31/01/2018 when such share /units was traded on such
exchange.

b. Unlisted Units NAV as on 31/01/2018

c. In Case of Share Not Listed on FMV = COA x Index 272 / CII respective
31/01/2018 but Listed on bate of
transfer

Benefit of Section In the following 3 cases, benefit of section 112A is not applicable.
112A is not applicable a) Where acquisition of existing listed equity share in company whose equity shares are not
frequently traded in recog. stock exchange of India is made through a preferential issue
b) Acquisition of existing listed equity share in a company, not entered through a recognised stock
exchange of India.
c) Acquisition of equity share of a company during the intervening period starting from the date on
which the company is delisted and ending on the date immediately preceding the date on which the
company is again listed in a recognised stock exchange.

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 4 Income from Other Sources

Chapter MAP
Part - A Part - B
a. 56(2)(x) - Taxability of Gifts a. 56(2)(viib) - Shares issued on Premium
b. Non- Applicability of Sec 56(2)(x) b. 56(2)(xi) - Compensation on termination of
c. Definition of property, relatives Employment

Section 56(2)(x) Gifts

Money Movable Property Immovable property [Land/Bldg/Both]
If aggregate value (i) Recd without (ii) Recd for (i) Recd without (ii) Received for
exceeds Rs. 50,000, consideration inadequate consideration (FREE): inadequate
Then whole of money (FREE): consideration: consideration:
shall be taxable
The aggregate FMV of If SDV of the property, if it If, SDV xx
the property, Aggregate FMV xx exceeds Rs. 50,000 (-) Consideration xx
If it exceeds Rs. (-) Consideration xx --------------------------
50,000. --------------------------
Diff. is > Rs. 50,000 Diff is > Rs. 50,000
AND
SDV is > 110% of
Note - Section 56(2)(x) is applicable even gift made outside India by Resident person to NR. consideration.

Non-applicability of Section 56(2)(x)

(i) from any relative; or (vii) from or by any trust / institution registered under
(ii) on the occasion of the marriage of individual; or section 12A or section 12AA; or

(iii) under a will or by way of inheritance; (viii) by any fund or trust or institution or any university or
(iv) in contemplation of death of the payer/ donor, as the other educational institution or any hospital or other medical
case may be; institution referred to in Section 10(23C)(iv)/(v)/(vi)/(via).

(v) from any local authority as defined in the Explanation (ix) by way of transaction not regarded as transfer u/s 47(i)/
to section 10(20); or (iv)/ (v)/ (vi)/ (via)/ (viaa)/ (vib)/ (vic)/ (vica)/ (vicb)/ (vid)/
(vii).
(vi) From any fund/ foundation / university / other
educational institution or hospital or other medical (x) from an individual by a trust created or established solely
institution/ any trust/ institution referred to in sec for the benefit of relative of the individual.
10(23C); or

Definitions of Movable Property [SAB DJ ke PAS aao] Immovable Property

Movable & S- Shares, Securities D-Drawing P-Painting Land
Immovable Property
A-Any work of Art J-Jewellery A-Archaeological colln. Building or
B-Bullion S-Sculpture Both

Meaning of Relatives Individual Assessee Spouse

Lineal Ascendant & Spouse Lineal Ascendant & Spouse
Mother & Father (Bro+Spouse, Sis+Spouse) Mother and Father Only
Brother + Spouse, Sister + Spouse Brother + Spouse, Sister + Spouse
Lineal Descendant & Spouse Lineal Descendant & Spouse
Note in case of HUF - Any members thereof

Sec 56(2)(xi) Compensation on termination of Employment

Basic Any compensation or other payment, due or received by any person in connection with termination
of his employment (or modification of terms of employment) is treated as income u/s 56(2)(xi) .

Received from ? from Employer - taxable u/s 17(3)(i) under the head "Salaries"
from Other - taxable u/s 56(2)(xi) under the head "IFOS"

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 13
Sec 56(2)(viib) Shares issued on Premium
Basic If any closely held company issues shares to any resident share holder on premium then,
Issue price of share xxx
(-) FMV of such shares xxx
Shall be taxable under IFOS xxx

Not apply to a. By venture capital undertaking from a venture capital company or a venture capital fund
b. from Non Resident
c. Specified-fund (see definition) *
d. Persons notified by CG - Start-up company (see definition) **
* Specified fund - a fund established or incorporated in India in the form of a trust or a company or a LLP or a body
means corporate
- which has-been granted a certificate of registration as a Category I or a Category II Alternative
Investment Fund
- and is regulated under the SEBI (Alternative Investment Fund) Regulations, 2012.
** Meaning of Start- A company would be considered as Start-up if the following conditions are satisfied:
up a. It would be considered as Start-up up to a period of 10 years from the date of incorporation/
Note - Pvt Ltd Co. registration, if it is incorporated as a Pvt Ltd Company (as defined in the Companies Act, 2013) in
shall not be India.
considered a "Start-
b. Turnover of the company for any of the financial years since incorporation/registration has not
up", if it formed by
exceeded 100 crore rupees.
splitting up or
reconstruction of an c. The company is working towards innovation, development or improvement of products or
existing business. processes or services, or if it is a scalable business model with a high potential of employment
generation or wealth creation.

Condition no. 1 for a. Aggregate amount of paid up capital and share premium of the start-up after issue or proposed
Start-up issue of shares, does not exceed, 25 crore rupees.
b. However, in computing the aggregate amount of paid up share capital, in respect of shares
[ Paid-up capital & issued to any of the following persons shall not be included:
Share Premium does - a non-resident
not exceed 25 Cr ]
- venture capital company or a venture capital fund
- a specified company
Condition no. 2 for 1. Building or land appurtenant thereto, being a residential house. [Allowed if Start-ups business is
Start-up renting or held by it as Stock in trade)
[It has not invested in 2. Land or building, or both, not being a residential house. [Allowed if Start-ups business is renting
any of the asset] or held by it as Stock in trade)
3. Loans & advances. [Allowed if Start-up business is lending of money]
4. Capital contribution made to any other entity.
[Means jo money 5 . Shares and securities
hamne shares issue pe 6. Motor vehicle, aircraft, yacht or any other mode of transport, the actual cost of which exceeds 10
liya hai wo is assets lakh rupees. [Allowed if Start-up business is plying, hiring, leasing]
me invest nahi karna
hai] 7. Jewellery. [Allowed if it held as stock-in-trade in the ordinary course of business]
8. Any other asset, whether in the nature of capital asset or otherwise, of the nature specified in
section 56(2)(vii)(d)(iv) to (ix) i.e., archaeological collections, drawings, paintings, sculptures, any
work of art or bullion.

However, the Start-up should not invest in any of the assets mentioned above for the period of 7
years from the end of the latest FY in which shares are issued at premium.
Proviso added by FA If company fails to comply with above conditions then, any consideration received for issue of share
2019 - If fails to that exceeds the FMV of such share shall be deemed to be the income of that company chargeable
comply to income-tax for the PY in which such failure has taken place

Deemed mis-reporting u/s 270A Penalty - 200% of Tax

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 14
 5 Profits and Gains of Business or Profession [PGBP]
Computation of Income from Business or Profession (Sec 29)
Profit Before Deductions xxx
Less : Admissible deductions (Sec 30 to 37) xxx
Add : Inadmissible deductions (Sec 40) xxx
Add : Expenses or payment not deductible in certain circumstances (Sec 40A) xxx
Profit Chargeable to Tax xxx

Speculation Business
Means Transaction in which a contract for the purchase or sales of any commodity including stocks and
shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the
commodity or scrips.

Transaction not 1. Hedging contract in respect of raw materials or merchandise or stocks and shares
deemed to be 2. Forward contract
speculative transaction
3. Trading in derivatives through recognised stock exchange.
4. Trading in commodity derivatives through recognized association, which is chargeable to
commodities transaction tax (CTT) However, the requirement of chargeability of CTT is not
applicable in respect of trading in agricultural commodity derivatives from A.Y.19-20.

Sec 32 - Depreciation
Furniture Plant & Machinery
Building Intangible assets
& Fittings 15% 20% 40%
Residential - 5% Motor Vehicles # Ships Aircraft,
General - 10% 10% Windmills * Computer & Laptop
25%
Temporary - 40% Oil wells Books
Other P&M Pollution control equip.

# Dep on Motor Vehicle

Particular --> 1.4 to 22.8 23.8 - 3.10 4.10 - 31.3
a. On Motor vehicle used in business of running them on hire. 30% 30% 30% 15%
- but if Acquired & Put to use between 23.08.19 to 31.03.20 45% - 45% 22.5%
b. On other Motor vehicles 15% 15% 15% 7.5%
- but if Acquired & Put to use between 23.08.19 to 31.03.20 30% - 30% 15.0%

* Windmills & its equipment's. a) Installed before 01/04/14 15%

b) Installed on or after 01/04/14 40%

Note: EPABX & Mobile Phones are not computers, hence depreciation @ 40% is NOT allowed

If Forward Exchange Rate Contract is --> then the profit/loss arising on --> The same shall not be
taken for payment of foreign c. loan taken for cancellation of contract, shall be deducted / added to the WDV of
acquiring an asset from outside India & the business income/business loss. Block of assets.
said contract is cancelled,

Proviso to Sec. 32(1) Depreciation is restricted to 50% if asset put to use for < 180 days in the year of acquisition,
Restriction applies only in the year of acquisition.
Example:- We purchased asset in FY 19-20 and If in FY 20-21 such asset has been put to use less
180 days still we can claim full depreciation in FY 20-21.

Additional Depreciation @20% allowed on Plant & Machinery

PM does not Include i. Second hand P&M ii. Ships, aircraft & transports vehicles
ii. Any P&M installed in office premises or residential accommodation.
iv. P & M on which 100% deduction allowed
Note 1. Additional depreciation is allowed Only in the First year in which it is put to use.
2. If undertaking is set-up between 01/04/2015 and 31/03/2020 in the notified back ward area of
Bihar, Andhra Pradesh, Telangana or West Bengal for manufacturing of any article ---> Additional
depreciation @ 35% available

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 15
Sec 32AD Investment in New Plant or Machinery in Notified backward Areas in Certain States.
Note --> This section was relevant upto AY 2020-21. Study from main book.

Sec 43(1) Actual Cost of Asset

Basis Actual Cost means the actual cost of the asset to the assessee, reduced by that portion of the cost
which has been directly or indirectly met by any other person.
Asset purchased in Where the assessee acquire any asset in respect of which payment made in cash exceeds Rs.
Cash 10,000 (Payment or aggregate of payment made to person in Day), Such expenditure shall be
ignored for the purpose of determination of actual cost

Note अगर asset purchase करते समय 2 लाख के ऊपर cash payment िकया तो Sec 43 (1) के साथ Sec 269ST
को भी apply करना.

Sec 33AB - Tea/Coffee/Rubber Sec 33ABA - Deduction for Petroleum &

Particular
Development Account Natural Gas Business
Deduction amount Lower of : Lower of :
(i) Actual amt deposited or (i) Actual amt deposited or
(ii) 40% of PGBP (before this deduction) (ii) 20% of PGBP (before this deduction)
Deposit in NABARD up to due of return filing / 6 m. from SBI [Site Restoration A/C) up to the end of PY
end of PY, whichever earlier

Common Points • Withdrawal Condition : Utilisation for following purpose will be taxable
a. Any PM installed in office premises or residential accommodation including guest house
b. Any office appliances (other than computer)
c. P&M on which 100% deduction already allowed under the head PGBP.

• Deduction to be allowed before setting off the brought forward losses

• Lock in Period
Where asset purchased is sold/ transferred before expiry of 8 years from end of P.Y. in which it was
acquired, such part of asset as is relatable to deduction allowed, shall be deemed to be income of
P.Y. in year of sale / transfer of asset.

Restriction of 8 years shall NOT apply:-

(i) Where asset is sold/ transferred to Govt/ Local Authority/ Statutory corporation, Govt. Co.
(ii) Transfer is by succession of firm to company whereby all assets and liabilities of firm are
transferred to company and all shareholders of the company were partners of the firm immediately
before succession

Rule 7
Rule / Nature Business Income Agriculture Income
7A - Rubber - Growing & manufacturing 35% 65%
7B - Coffee - Grown & cured 25% 75%
7B - Coffee - Grown, Cured, Roasted, Grounded 40% 60%
7C - Tea - Growing and Manufacturing 40% 60%

Sec 35 Expenditure on Scientific Research

• Expenditure on research carried by the assessee
Section 35(1)(i) Pre commencement - Revenue Exp 100% Material & Salary only Max 3 years
Section 35(1)(iv) Pre commencement - Capital Exp 100% Land - not allowed Max 3 years
Section 35(2AB) In-house research activity - Revenue 100%
- Company Engaged in In-house research activity - Building / Land 100%
Bio-Techn. Busi. In-house research activity - Other Capex 100%
Section 35(2AB) In-house research activity - Revenue 100%
- Other Assessee In-house research activity - Building - Land - not allowed
In-house research activity - Other Capex 100%

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 16
• Contribution to Outsiders
Section 35(1)(iia) Domestic Company for Scientific research 100%
Section 35(1)(ii) To University, College, Research Association for Scientific research 100%
Section 35(1)(iii) To University, College, Research Association for Social science research 100%
Section 35(2AA) National Laboratory, IIT for Scientific research 100%

Section Sec 35CCC Sec 35CCD

Project Expenditure on agriculture extension project Expenditure on skill development project
Applicable to All assessee Company only
Deduction 100% from AY 21-22 100% from AY 21-22
Not applies to Land and Building expenses Land and Building expenses

Sec 35D Amortisation of Preliminary Expenses - Allowed in 5 instalments

Indian Company Other Resident COP - Cost of Project
Actual Preliminary Expenses or Actual Preliminary Expenses or CE - Capital Employed
5 % of COP / CE [Whichever is higher] 5 % of Cost of Project
Whichever is lower Whichever is lower

Capital employed = Issued Share capital + Debenture + Long term borrowing on 31st March of commencement
Note : Share Premium collected on Subscribed issued share capital will not be pat of Capital
Employed. Case - Berger Paints India Ltd.

Section Sec 35DD Sec 35DDA

Details Amortisation of Amalgamation or Demerger Amortisation of VRS - Voluntary Retirement
Expenses Scheme Expenses.

Applicable to Indian Company Any assessee

Deduction 1/5th of such expenditure for 5 years 1/5th of such expenditure for 5 years

Sec 35AD 100% deduction available to Assessee carrying on Specified Business (14 business)
Revenue Expenditure 100% deduction available u/s 30 to 37
Capital Expenditure 100% Capital Expenditure eligible for Deduction (After commencement of business only)
Except --> Land Goodwill Financial Instruments
Conditions to be 1. Not formed by splitting / reconstruction of business already in existence.
satisfied for claiming 2. New Plant and Machinery should be used but exceptions;
deduction
a. Imported old Plant and Machinery
b. 20% of total Plant and Machinery can be old.
Not Allowed 1. Depreciation not allowed if deduction claimed u/s 35AD
3. Any expenditure through cash exceeds Rs. 10,000
2. If deduction u/s 35AD is claimed then deduction u/s 80IA to 80RRB & 10AA (SEZ) shall not be
allowed
Carry forward and set- 1. Loss of specified business of sec 35AD can be set-off in current year and future year only against
off of losses the profit of any specified business u/s 35AD.
2. Loss of specified business u/s 35AD can be carried forward indefinitely.
Lock in Period Lock in period for asset used in specified business - 8 years
Slump sale u/s 50B If assets on which sec 35AD is claimed is sold in Slump Sale, then for computing net worth u/s 50B,
its cost shall be taken NIL

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 17
 Section 36 Series (Only Imp Provisions)

Sec 36(1)(i) Premium for Insurance of Stock in Trade --> Allowed

Note: • Keyman Insurance Policy Premium is Allowed

Sec 36(1)(ii) Premium for Insurance on Health of Employees Note: Should not be in Cash

Sec 36(1)(iii) Interest on Borrowed Capital --> Allowed Subject to Sec 43B

Sec 36(1)(v) Employer's Contribution towards pension scheme

If Gratuity Fund is Approved --> Allowed

Sec 36(1)(vi) Animals used in Business otherwise than as Stock-in-Trade

When ? Animals used in Business other wise than as stock-in-trade and they died or
permanently useless
Deduction = Actual cost (-) amount realised from their sale, if Any

Sec 36(1)(viia) Provision for bad and doubtful debts in relation to bank
Indian Bank 8.5% of Total Income computed under this section and before chpt VI-A
+ 10% of Average aggregate advance made by rural branches
F. Bank, PFI, NBFC 5% of the total income computed before making any dedn. Under this clause & Chpt VI-A

Illustration:
(i) Provision for bad and doubtful debts under section 36(1)(viia) up to A.Y.2020-21 100 Lakh
(ii) Gross Total Income of A.Y.2021-22 [before deduction under section 36(1)(viia) [8.5%] 800 Lakh
(iii) Aggregate average advances made by rural branches of the bank [10%] 300 Lakh
(iv) Bad debts written off (for the first time) in the books of account (in respect of urban advances
210 Lakh
only) during the previous year 2020-21

Solution :
Bad debts w/off (for the first time) in the books of account 210 Lakh
Less : Credit Balance in the Provision for bad and doubtful debt u/s 36(1)(viia)
(i) Provision for bad and doubtful debts under section 36(1)(viia) up to A.Y.2020-21 100 Lakh
(ii) Current year provision [800 Lakh x 8.5% + 300 Lakh x 10%] 98 Lakh 198 Lakh
Deduction u/s 36(1)(viia) 12 Lakh

Sec 36(1)(viii) Special deduction to Specified Entities engaged in eligible business

a. Actual amount transferred to special reserve
Whichever
b. 20% of the profit derived from eligible business computed under the head 'PGBP'
is lower
c. [200% of paid up share capital and general reserve] - Opening balance in special reserve.

Sec 36(1)(xvi) Commodities Transaction Tax (CTT)

Commodities are held as stock in Trade Allowed
Commodities are held as investment Not Allowed

Sec 36(1)(xviii) Marked to Market Losses or other expected losses

AS per ICDS Allowed Other Not Allowed

Bonus, Buyback share issue expenses Revenue expenditure Case. General Insurance Corp
Right share issue expenses Capital expenditure Case. Brooke Bond India Ltd.

Category Tax Interest Penalty

Direct Tax Not allowed Not allowed Not allowed
Indirect Tax Allowed (Subject to 43B) Not allowed

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 18
• Disallowance of expenditure (Non-deduction / Non-payment of tax - TDS)
Sec 40(a)(i) Payment made to Non resident 100% disallowance
Sec 40(a)(ia) Payment made to Resident 30% disallowance
Sec 40(a)(ib) Equalisation Levy 100% disallowance
Sec 40(a)(iii) TDS on Salary payable to outside India or to NR 100% disallowance

40A(2) Excess expenses / unreasonable payment (paid to specified persons)

40A(3) Cash expenditure / Payment in excess of Rs. 10,000 to single person in a single day.
Note in case of transporters of Goods - Limit is Rs. 35,000

Sec 43CB - Income from construction and service contract

Method Condition
Project Completion Method If the duration of the contract is not more than 90 days
Straight Line Method If the contract involves interminate no. of acts over a specific period of time

Sec 44B - Shipping Business (NR) Income - 7.5% of Total freight +demurrage + handling charges
Sec 44BB - Exploitation of m.oil (NR) Income - 10% of Service charges received
Sec 44BBA - Aircraft Business (NR) Income - 5% of Total freight
Note : 28 to 43A not applicable in above section
[For detailed --> See NR Taxation]

Sec 44C Taxation of Branches of Foreign Company - Head Office Expenses

Allowed - Whichever is 5% of Adjusted Total Income (ATI) or
lower Actual expenses
ATI means :- Total Income before giving effect to:
B/f Depreciation B/f Losses Deduction under chapter VI-A
Note If ATI is loss, then last 3 average ATI shall be considered.

Sec 44AA Maintenance of Accounts by Certain Persons on Carrying Profession / Business

If fails to comply sec 44AA Penalty u/s 271A Rs. 25,000
Specified Assessee Individual & HUF Other Assessee
When ? When ? When ?
If gross receipt is > 1,50,000 in any of the - PGBP is > 2,50,000 or - PGBP is > 1,20,000/- or
3 immediately preceding years. - Total Sale / GR is > 25,00,000 - Sales / GR is > 10 Lakh
For newly set-up professional - gross receipt > in any of the 3 years preceding the PY in any of the 3 years preceding
1,50,000 in the year of set up or likely to exceeding in case of newly the PY or likely to exceeding in
setup business/ profession. case of newly setup business/
Specified Professions : Medical, Legal, profession.
Accountancy, Film Artist, Engineering, CS,
Interior decorator

• Assessee is required to maintain any books of accounts for a period of 6 Years from the end of R.A.Y. unless
assessment has been opened u/s 147 in which case the same is to be maintained till its Completion.

Sec 44AB - Audit of Accounts of certain persons carrying on business or profession

Applicable to → Threshold limit
For business : - Receipts in Cash is < 5% of Total receipts during the PY. Rs. 5 Crore.
- Payment in Cash is < 5% of Total payments during the PY.
In any other case Rs. 1 Crore.

Profession : Gross receipts exceed ₹ 50 Lakhs in previous year.

Lower profit : Declared u/s 44AE / 44BB / 44BBB / 44ADA / 44AD(4)
Penalty u/s 271B : 0.5% of the total sales, turnover or gross receipts in such previous year/s or
₹1,50,000/- whichever is less
Time Limit to furnish Specified date means date 1 month prior to the due date for furnishing the return of income u/s
Audit Report : 139(1).

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 19
Presumptive Schemes
Sec 44AD Sec 44ADA Sec 44AE
• Applicable to : • Applicable to : • Applicable to :
Resident Individual / Resident HUF / Resident Any Resident assessee Who is Any assessee in the business of
Firm but not LLP and engaged in specified professions as per plying, hiring, leasing goods
Turnover / G. Receipts is up to 2 crore. sec. 44AA. carriages owning not > 10 goods
vehicles any time during the year
Any Business Except :
Business in Sec. 10AA, 44AA, 44AE, Agency, Total gross receipts does not exceed ₹
Commission & Brokerage busi. 50 lakhs in a PY
• Income will be: • Income will be : • Income will be:
8% / 6% (ECS) of the total turnover or gross 50% of the Total gross receipts or sum a. Heavy G. vehicles
receipts or a sum higher amount higher claimed to have been earned Rs. 1000 per ton of gross wght pm
b. Other vehicles
Rs. 7500 pm or part of the month
• Advance Tax : • Advance Tax : • Advance Tax :
One Instalment - 15th March One Instalment - 15th March Normal
• Misc. • Misc. • Misc.
a. Deduction of expenses u/s 30 to 38 shall a. Deduction of expenses u/s 30 to 38 a. Deduction of expenses u/s 30
not be allowed shall not be allowed to 38 shall not be allowed
b. Partners Remuneration, Salary, interest etc. b. Partners Remuneration, Salary, b. Partners Remuneration, Salary,
as per Sec. 40(b) shall not be deductible while interest etc. as per Sec. 40(b) shall
interest etc. as per Sec. 40(b)
computing income u/s 44Ab not be deductible while computing shall be deductible while
income u/s 44Ab computing income under Sec.
44Ab
c. If assessee declares income for any P.Y as c. If assessee declares income lower c. Heavy G. vehicle ?
per 44AD and he doesn't declare income as than 50% & his NTI is > basic means any goods carriage, the
per 44AD in any of the 5 consecutive exemption he is required to maintain gross vehicle weight of which
P.Y.s, books of A/cs & get it audited. exceeds 12000 kilograms
- then he shall not eligible to claim benefit
of sec. 44AD for 5 years subsequent to the
year in which assessee not declare
income as per Sec. 44AD. Note - Calculation on "Date of
Purchase" of the vehicle.
Note : If above point is applicable & NTI of Don’t use "Date of Put to use"
assessee is > basic exemption then assessee
is required to maintain books of accounts &
get it audited.

• Taxation of Film Producer & Film Distributor

Situation Film Producer / Distributor sells all rights of He himself exhibits the film on a commercial
exhibition of the film basis in some of the areas and sells the
rights of exhibition of the film in respect of
some of the areas

Example Dharma Production Produced movie and Sells all Dharma Production Produced movie and Exhibits
right to UFO Digital for Movie distribution film under own banner in Maharashtra State and
Sells right to UFO Digital for Distribution in
Gujarat State
Film released before Quantum of Deduction : Quantum of Deduction :
01 Jan 2021 Entire cost of Production / Acquisition Entire cost of Production / Acquisition
Film released after 01 Quantum of Deduction : Deduction will be lower of
Jan 2021 Entire cost of Production / Acquisition a) Cost of Production / Acquisition
b) Amount realized by exhibiting film & sale of
exhibition rights
Balance will be allowed in the next year.

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 20
 Proforma for computation of income under the head
"Profits and gains from business or profession"

Particular Rs.
Net profit as per statement of profit and loss xxx

Add: Expenses debited to statement of profit and loss but not allowable
• Depreciation as per books of accounts xxx
• Income-tax [disallowed u/s 40(a)(ii)] xxx
• 30% of sum payable to residents on which tax is not deducted at source or after deduction has not been
remitted on or before the due date u/s 139(1), would be disallowed u/s 40(a)(ia) [The same is allowable in xxx
the year in which the tax is deducted and remitted]
• Any expenditure incurred, in respect of which payment is made for goods, services or facilities to a related
person, to the extent the same is excessive or unreasonable, in the opinion of the A.O, having regard to its xxx
FMV [disallowed u/s 40A(2)]
• Any expenditure incurred in respect of which payment or aggregate of payments to a person exceeding Rs
10,000 in a single day is made otherwise than by way of A/c payee cheque/bank draft or use of ECS xxx
through bank A/c [disallowed u/s 40A(3)]
• Certain sums payable by the assessee which have not been paid during the relevant P.Y. in which the
liability was incurred or on or before the due date for filing return u/s 139(1) in respect of that P.Y. [disallowed xxx
u/s 43B]
• Personal expenses/ capital expenditure [not allowable as per section 37] xxx
• Repairs of capital nature [not allowable as per sections 30 & 31] xxx
• Amortisation of preliminary expenditure u/s 35D/ expenditure incurred under voluntary retirement scheme
xxx
u/s 35DDA [4/5th of such expenditure to be added back]
• Fine or penalty paid for infringement or breach of law [However, penalty in the nature of damages for delay
xxx
in completion of a contract, being compensatory in nature, is allowable]
• All expenses related to income which is not taxable under this head e.g. municipal taxes in respect of house
xxx
property
• Any sum paid by the assessee as an employer by way of contribution to pension scheme u/s 80CCD
xxx
exceeding 10% of the salary of the employee
xxx

Less: Expenditure allowable as deduction but not debited to statement of profit and loss
• Depreciation u/s 32 computed as per Rule 5 of Income-tax Rules, 1962 (xxx)
• Additional depreciation @ 20% of actual cost of new P & M acquired by an assessee engaged in the
business of manufacture or production of any article or thing or generation, transmission or distribution of
power (10% of actual cost, if put to use for less than 180 days in the year of acquisition) /
(xxx)
35% of actual cost (17.5% if put to use for less than 180 days in the year of acquisition), if the manufacturing
undertaking is set up in a notified backward area in the State of A.P./Bihar/Telangana/West Bengal on or
after 1.4.2015 [Balance additional depreciation can be claimed in the next year]
• Deduction@15% of actual cost of new P&M u/s 32AD in case of a manufacturing undertaking/ enterprise set
(xxx)
up in a notified backward area in the State of A.P./Bihar/ Telangana/West Bengal on or after 1.4.2015
• Weighted deduction for expenditure on/contribution for research u/s 35(1)(ii), 35(2AA), 35(2AB) in
(xxx)
excess of the amount already debited to statement of profit & loss
• Investment-linked tax deduction in respect of specified businesses u/s 35AD (xxx)
xxx

Less: Income credited in statement of P & L but not taxable/ taxable under any other head
• Dividend income exempt u/s 10(34)/ taxable u/s 115BBDA (xxx)
• Agricultural income exempt u/s 10(1) (xxx)
• Interest on securities/savings bank account/ FD taxable under the head “IFOS” (xxx)
• Profit on sale of capital asset taxable under the head “Capital Gains” (xxx)
• Rent from house property taxable under the head “Income from house property” (xxx)
• Winnings from lotteries, horse races, games etc., taxable under the head “IFOS” (xxx)
• Gifts exempt or taxable under the head “Income from other sources” (xxx)
• Income-tax refund not taxable (xxx)
• Interest on income-tax refund taxable under the head “Income from other sources” (xxx)
xxx

Add: Deemed Income

• Bad debt allowed as deduction u/s 36(1)(vii) in an earlier PY, now recovered xxx
[deemed as income u/s 41(4)]
• Remission or cessation of a trading liability [deemed as income u/s 41(1)] xxx
xxx

Net Profit Taxable xxx

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 21
 6 Income Computation & Disclosure Standards (ICDS)

Applicability ICDS are applicable to all taxpayers except Ind / HUF who are not liable to tax audit.
ICDS applies only to taxpayers following mercantile system of accounting.
Provisions of ICDS shall not apply for computation of book profit u/s 115JB of the Act.
ICDS is also applicable to Assessee showing Presumptive Income [Sec. 44AD / 44AE / 44ADA / 44B
/ 44BB / 44BBA].

Purpose All notified ICDS are applicable for computation of income chargeable under the head "PGBP" or
"IFOS" and not for the purpose of maintenance of books of account.

Conflict Conflict between ICDS and Income Tax - IT Act shall prevail
Conflict between ICDS and Case Laws - ICDS shall prevail
Types / Category ICDS AS Name
I 1 Accounting Policies
II 2 Valuation of Inventories
III 7 Construction Contracts
IV 9 Revenue Recognition
V 10 Tangible Fixed Asset
VI 11 Effects of changes in Foreign Exchange Rates
VII 12 Government Grants
VIII 13 Securities
IX 16 Borrowing costs
X 29 Provisions, Contingent Liabilities & Asset

ICDS - I • It doesn't recognize concepts of "Materiality" & "Prudence" in selection of accounting policies
Accounting Policies • Expected Loss or mark to market losses shall not be recognized unless permitted by another
ICDS. However ICDS is silent about mark to market Gains.
ICDS - II • ICDS requires inventory to be valued at Cost or Net Realizable value, whichever is lower
Valuation of • Cost of inventories shall comprise of all costs of purchase, costs of services, costs of conversion &
Inventories other costs incurred in bringing the inventories to their present location & condition.

ICDS - III • It recognizes % of completion method (POCM) for recognizing contract revenue & contract
Construction costs associated with a construction contract.
Contracts • Retention money is considered as part of contract revenue & hence shall be recognized under
POCM under ICDS. [As per AS-7 there is no treatment of retention money]

यह ICDS Imp है • Contract amount = Revenue agreed + retention + variations + claims + incentive
• Contact cost shall not be reduced by incidental income like interest, dividend
• Penalties arising from delay in contract completion shall not be reduced from contract revenue.

ICDS - IV Service Contracts - Duration < 90 days Service Contracts - Duration > 90 days
Revenue Recognition Shall be recognised When service are rendered Shall be recognised on the basis of %
and complete or substantially complete. completion method.

यह ICDS Imp है
• Revenue from Sale of Goods - When there is reasonable certainty of its ultimate collection.
• Dividend - Recognised as per Income Tax Act
• Interest - On Time basis determined by amount outstanding and rate applicable
• Interest on refund of Taxes, Duties, cess - Recognized on receipt basis
• ICDS IV is not applicable on recogn of lottery receipt

ICDS - V • Revaluation of Assets is not permitted as per ICDS.

Tangible Fixed Asset • In case of exchange of assets cost of assets shall be FMV of assets received in Return.
• Income arising from transfer of tangible assets shall be computed as per Income Tax Act.
• The ICDS also contains disclosure requirements in respect of such assets, like the description of
asset or block of assets, rate of depreciation, actual cost or written down value, as the case may
be, etc.

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 22
ICDS - VI Particular Monetary Item Non-Monetary Item
Effects of changes Example Cash, Debtors, Creditors Fixed Assets, Inventories, Equity
in Foreign Ex. Rates Rate Closing Date 31.03 Transaction Date
Treatment - as on Recognized as Income or as Expense Not recognized as income or as
31.03 expenses. (Except Inventory)

ICDS - VII • Government Grants - Related to assets

Government Grants a. Against Depreciable Assets - Should be deducted from actual cost of asset.
b. Against Non -Depreciable Assets - To be recognized as Income over same period which the cost
of meeting such obligation is charged to Income

• Government Grants - Related to expenditures

- Pro rata reduction should be made in the same proportion as such assets bears to all assets with
reference to which govt grants is so received

ICDS - VIII • ICDS Prescribe valuation category wise and not security wise as required by AS
Securities Securities being Valuation as on 31.03
यह ICDS Imp है a. Security listed --> Cost / NRV, whichever is less
b. Security Not listed / Listed but not quoted --> Actual Cost
c. Security PFI, Sch Bank --> RBI Guidelines
M2M = Market to d. Derivatives --> At Purchase price (M2M not allowed)
Market

ICDS - IX • Borrowing cost - Directly Attributable to the acquisition --> to be capitalized as part of the cost of
Borrowing costs that asset.

• Other Borrowing Cost --> Recognised as per Income Tax Act

ICDS - X • AS-29 - Contingent Assets are recognized on the basis of Virtual certainty
Provisions, • ICDS - Contingent Assets are recognized on the basis of Reasonable certainty
Contingent • Employee benefit shall be governed by Act not ICDS
Liabilities &
• Disclosure requirements of this ICDS includes, each class of provision made, asset and income
Contingent Asset
recognized.

Space for Your Notes

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 23
 7 Income from House Property

Sec 22 - Charging Annual value of any property comprising of building / land appurtenant thereto, of which assessee
Section is owner, is chargeable to tax under the head “Income from House Property”.
Types of House 1. Self Occupied 2. Let Out 3. Deemed to be Let out
Property
Computation of GAV - Particular Amount
Gross Annual Value Municipal Value / Fair Rent ↑ xxx
Standard Rent xxx
Lower is Expected Rent xxx
Actual Rent xxx
Higher = GAV (Sec 23) xxx
Municipal Tax xxx
Net Annual Value (NAV) xxx
Dedn 30% u/s 24(a) xxx
Interest u/s 24(b) xxx
Income from House Property xxx

Note : 1. Let out property vacant hai - Vacancy hai toh Actual Rent lena
2. Let out- Vacant--SOP - ER or AR ka higher

• Misc.
Where the house - and the property / any part of the property is not let during the whole / any part of the previous
property is held as year,
stock-in-trade
- the annual value of such property or part of the property,
- for the period up to 2 Years from the end of the FY in which the certificate of completion of
construction of the property is obtained from the competent authority,
- shall be taken to be NIL.
Pre-construction / It is allowed in 5 equal instalments from the year in which construction was completed.
Acquisition interest Example - Loan taken on 5 Oct 2020, Construction Completed on 10 June 2021
Interest paid from 05 Oct 2020 to 31 March 2021 - allowed in 5 equal instalments

Claim annual value of If assessee has more than two house properties, he can claim that the annual value of any 2 house
any of the 2 house properties shall be nil which
properties as NIL
• Conditions:
(a) are in occupation of the owner for the purpose of his own residence; or
(b) cannot actually be occupied by the owner owing to his employment, business or profession
carried on at any other place and he has to reside at that other place in a building not belonging to
him.

Section 27 Deemed Ownership (Income from House Property)

1 2 3. Holder of an impartible estate,
Transfers any house Spouse Minor child
property to 4. Member of a co-operative society.
Without Consideration / Consideration /
Inadequate considn. Inadequate considn. 5. Person in possession of
Exception Transfer in connection Other than minor property even if sale deed has not
of live apart married daughter been executed in favour of buyer

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 24
• Interest on housing loan (Deduction benefit) - Master chart
Section --> 24b 80C 80EE 80EEA
Deduction for Interest on Loan Principal Repayment Interest on Loan Interest on Loan
Type of House RHP, CHP RHP RHP-SOP RHP
Person to whom dedn Every assessee Individual or HUF Individual Individual
is available
Loan from Any person Bank, FI, NHB, LIC from Banks / FI Banks / FI
certain employers

Due or paid basis Due basis Paid basis Paid basis Paid basis
Deduction from where Available from House Available from GTI Available from GTI Available from GTI
Property
Conditions • Amt. of loan ≤ 35 lacs • SDV of HP ≤ 45 lacs
• Value of HP ≤ 50 lacs • Loan must be
• Loan must be sanctioned in 2019-21
sanctioned in 2016-17 • Not own any RHP on
• Not own any RHP on date of loan sanction.
date of loan sanction

Maximum Limit Let-out - No Limit 150000 50000 150000

SOP - 30K / 2 Lakh

Deductions allowed from NAV

Standard Deduction u/s Interest on borrowed

24(a) i.e. 30% of NAV capital u/s 24(b)

Let-out SOP - Loan SOP - Loan for Acquisition,

Let out SOP
for Repair, Construction
Recons.
Allowed Not Fully
Allowed Allowed Loan before Loan after 1.4.99
1.4.99
Max
30,000
for 1 or 2 Acq / Const
SOP's Max Completed Acq / Const
30,000 within 5 Completed
for 1 or 2 Years - No within 5
SOP's Years - Yes

Max
30,000 Max
for 1 or 2 200,000
SOP's for 1 or 2
SOP's

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 25
 8 Deduction under Chapter VI-A
Chapter MAP
Part - A Part - B Part - C
[80C, 80CCC, 80CCD, 80CCE] 80IBA, [80JJA, 80JJAA] [80LA, 80M] 80-IA / 80-IAB / 80-IAC /
[80D, 80DD, 80DDB, 80U,] [80P, 80PA] [80GGB / 80GGC], 80-IB / 80-IC / 80-IE
[80E, 80EEA, 80EEB] [80G] [80TTA / 80TTB] [80QQB / 80RRB]

Part - A

Imp Points 1. As per Sec 80AC - Deduction u/s 80-IA to 80RRB is not allowed unless assessee furnishes
Return of Income within due date u/s 139(1)
2. Deduction under chapter VI-A is Not Allowed against LTCG u/s 112 and 112A, STCG u/s 111A &
Special rates of tax income.

Sec 80C - Specified Eligible Assessee: Individual & HUF

Investments Max Deduction Rs. 150000
Life Insurance Premium for --> In case Individual - Self, Spouse, Children
Life Insurance Premium for --> In case HUF - Any member of HUF
• Imp Investments
LIC, Public Provident Fund, SPF, RPF, Investment in NSC, NABARD Bond, Deposit in Sukanya
samridhi Scheme a/c, Housing Loan Repayment, Stamp Duty- Regn Fees of HP

Sec 80CCC - Eligible Assessee: Individual

Contribution to Max Deduction Rs. 150000
Pension Fund

Sec 80CCD(1) - Contribution to Pension Se 80CCD(1B) - Additional Sec 80CCD(2) - Employer's

Scheme / ATAL Pension Yojna / NPS. deduction other than Sec 80CCD(1) contribution to NPS

Eligible Assessee: Individual Additional deduction up to Rs. 50,000 Eligible Individual (Salaried)
• Deduction for Salaried Employee • Deduction - Lower of
Lower of → His Contribution or 10% of Salary allowed other than contributions - Employer's Contribution or
covered u/s 80CCD - 10% of Salary *
• Deduction for Other Individuals
Lower of → His Contribution or 20% of GTI Salary = Basic + DA (In terms)
Salary = Basic salary+ DA (In terms) * 14% in case contr. made by CG

80CCE - Cap Limit Aggregate deduction u/s 80C + 80CCC + 80CCD (1) is restricted to Maximum 1,50,000.

Sec 80D Eligible Assessee: Individual & HUF

For whom --> In case Individual - Self, Spouse, Dependent Children [ S+S+C] and Parents
For whom --> In case HUF - Any member of HUF
1 2 3 4
S+S+C S+S+C Parent Parent
Particular
Age < 60 Age > 60 Age < 60 Age > 60
Medical Insurance Premium 25,000 50,000 25,000 50,000
CG. Health Scheme 25,000 25,000 - -
Note - Parent का age Preventive Health check-up [Cash allowed] 5,000 5,000 5,000 5,000
60+ है लेकीन parent Maximum Allowed --> 25,000 50,000 25,000 50,000
अगर NR है तो 25,000 Medical Expenditure of Senior citizen** - 50,000 - 50,000
तक का ही deduction
Final Deduction --> 25,000 50,000 25,000 50,000
िमलेगा

** Medical Expenditure is allowed if no amt has been paid towards health insurance.

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 26
80DD - Deduction in respect of Medical 80DDB - Deduction in respect of Medical Sec 80U - Deduction
treatment & Maintenance of Handicapped treatment of specified Disease for handicapped
dependent relative [For others] Assessee [Own]
Eligible Assessee: Individual & HUF Eligible Assessee: Individual & HUF Resident Individual
• In case Individual - Spouse, • In case Individual - Spouse, Children, Brother,
Children, Brother, Sister, Mother, Sister, Mother, Father • Deduction - Flat
Father
• In case HUF - Any Member • In case HUF - Any Member Deduction
a. Normal Disability -
• Deduction - Flat Deduction • Deduction - Lower of Rs. 75000
a. Normal Disability - Rs. 75000 a. Rs. 40000 or Expenses b. Severe Disability -
b. Severe Disability - Rs. 125000 b. Rs. 100000 or Expenses (Senior Citizen) Rs. 125000

Sec 80E - Deduction in respect of Interest Eligible Assessee: Individual Dedn - Interest Paid
on loan for higher education in India Deduction is allowed if loan taken for education of self, spouse, children,
and any student from whom assessee is legal guardian.

80EEA - Deduction Eligible Assessee: Individual (other than covered in 80EE)

in respect of
Interest on housing
Conditions :
Loan
1. Loan should be taken from Bank, Financial Inst. for acquisition of house property
2. Stamp duty value of HP should be ≤ 45 Lakhs
Amt of Deduction : 3. Loan should be sanction between 01/04/19 to 31/03/2021
Max 1.5 Lakhs 4. Assessee does not own any residential HP on date of sanction of loan
5. Where dedn under this sec. is allowed for any interest, deduction shall not be allowed in respect
of such int. under any other provision of this act for the same or any AY
6. First deduction should be claimed u/s 24(b) of House Property and remaining interest dedn. u/s
80EEA

80EEB - Deduction Eligible Assessee: Individual

in respect of
Interest on Electric
Conditions :
Vehicle Loan
1. Loan should be taken from Bank, Financial Inst. including NBFC for purchase of e- vehicle
2. Loan should be sanction between 01/04/19 to 31/03/2023
Amt of Deduction : 3. Where dedn under this sec. is allowed for any interest, deduction shall not be allowed in respect
Max 1.5 Lakhs of such int. under any other provision of this act for the same or any AY

80G - Donation Deduction Available :

100% Without any limit 100% of the restricted amount
50% Without any limit 50% of the restricted amount

Steps for calculating Adjusted GTI - Reduce the following;

1. Chpt VI-A deduction except 80G 4.Any income on which IT not Payable
2. STCG u/s 111A 5. Income referred in Section 115A,115AB,
3. LTCG 112 & 112A 115AC, 115AD, 115D

No deduction shall be allowed in respect of donation of any sum exceeding Rs. 2,000 unless
such sum is paid by any mode other than cash.

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 27
 Part - B

80-IBA - Developing Amt of Deduction - 100% of Profit Project should be completed within 5 years
and Building • Approval should be between 01-06-16 to 31-03-21
Housing Project Technical Limit 4 Metro City (D,M,K,C) Other Place
Minimum size of Plot of Land 1000 sq mt 2000 sq mt
D - Delhi Residential Unit Carpet Area Max 30 sq. mt Max 60 sq mt
M - Mumbai Minimum % of permissible floor area not less than 90% not less than 80%
K - Kolkata Max - Higher of 3% of aggr carpet area ya 5000
C - Chennai Shop, commercial establishment
sq foot

• If project approved on or after 01.09.2019

D - Delhi (Noida, 4 Metro City
Gaziabad, Gurugram, Technical Limit Other Place
(D,M,K,C,H,B)
Faridabad)
Minimum size of Plot of Land 1000 sq mt 2000 sq mt
M - Mumbai (Whole) Residential Unit Carpet Area Max 60 sq. mt Max 90 sq mt
K - Kolkata Minimum % of permissible floor area not less than 90% not less than 80%
C - Chennai Max - Higher of 3% of aggr carpet area ya 5000
Shop, commercial establishment
H - Hyderabad sq foot
The stamp duty value of residential unit in the housing project does not exceed 45 lakh
B - Bengaluru rupees.

• Other conditions (same for both) :

1. Not more than one residential unit in the housing project is allotted to any person not being an
individual
2. It should not be a mere work contract.
3. Maintain separate Books of accounts in respect of housing project.
4. Where residential unit in the housing project is allotted to an individual, no other residential
units shall be allotted to that individual / his spouse / minor children
80JJA: Business of Deduction : 100% of Profit Period : 5 Consecutive years
Processing of bio-
degradable waste

Sec 80 JJAA - Applies to whom Sec 44AB applies Deduction : 30% of additional employee cost
30% Additional Additional employee does not includes;
Employee Cost
a. Employee whose total emoluments are > Rs. 25,000 per month; or
b. Employee does not participate in RPF; or
Eligible Business - Any c. Employee employed for a period of <240 days during the previous year (In case of
business but not apparel manufacturing business footwear or leather products – 150 days)
profession
d. Emoluments are paid in Cash [otherwise than by an account payee cheque or account payee
bank draft or by use of electronic clearing system through a bank account]
e. Employee for whom the entire contribution is paid by the Govt. under the Employees' Pension
Scheme notified in accordance with the provisions of the EPF Act, 1952

Sec 80-LA - Applies to : Offshore Banking Unit (in SEZ) & International Financial Services Centre
Deduction in (IFSC-Ahmedabad)
respect of Income
Deduction : Banking unit in SEZ --> Initial 5 year - 100%, Next 5 year - 50%
of IFSC and
Offshore Banking IFSC --> 100% for 10 Consecutive year out of 15 year
Unit
Sec 80M - Applicable to : Domestic Company only.
If Company Allowed when : Deduction shall be allowed only if the dividends are distributed and not
receiving Dividend just declared on or before the due-date.
Distributed one
month prior to the Deduction shall not As per Sec 80A(2), It shall not exceed the amount included in Gross Total
Due date of exceeds : Income.
Furnishing return Note : 1. Deduction u/s 80M will be available even if the Company has opted for
u/s 139(1) section 115BAA / 115BAB.
(Applicable on Both - 2. Sec 80M shall also allowed for Dividend u/s 115BBD, Deemed Dividend
Pref Shares / Equity) u/s 2(22)(a)/(b)/(c)/(d)/(e).

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 28
80P - General Deduction : Consumer Society Rs. 100,000 Other Rs. 50,000
Deduction in Allowed to : Primary Agriculture Credit Society [PACS] or
respect of certain
Primary Co-op Agriculture & Rural Development Bank [PCA-RDB]
Income of Co-
Operative Society
Without aid power --> 100% With aid power --> No Deduction

80-PA - Turnover less than 100 Crore in any previous year for AY 19-20 to 24-25
Deduction in Deduction = 100% of the profits and gains attributable to following eligible businesses
respect of certain
a) the marketing of agricultural produce grown by the members; or
Income of Producer
Companies b) the purchase of agricultural implements, seeds, livestock or other articles intended for
agriculture for the purpose of supplying them to the members; or
c) the processing of the agricultural produce of the members

Sec 80GGB Donation to Political Parties or Electoral Trust by Indian Company 100% Dedn.
Sec 80GGC Donation to Political Parties or Electoral Trust by Any Person * 100% Dedn.
[No dedn if in cash] * Other than Indian company

Sec 80TTA Interest on Saving a/c Ind + HUF Limit Rs. 10,000
Sec 80TTB Interest on Saving a/c + Int FD R. Senior Limit Rs. 50,000

Sec 80QQB Royalty Income of Author Rs. 3 Lakhs / Actual whichever is lower
Sec 80RRB Royalty Income on Patent Rs. 3 Lakhs / Actual whichever is lower

Part - C

80-IA - Business Deduction Period

Profits from Infrastructure Facility 100% of profit 10 / 20 year
enterprises engaged
Industrial Park, SEZ, Power Generating 100% of profit 10 / 15 year
in infrastructure
development, etc.

80IAB - Profit to Deduction : 100% Profit Period 10/15 Year

Developer of SEZ
80-IAC - Specified business: Innovation / development / Improvement of product/ processes
Specified Business Condition -
Dedn - 100% Profit 1. It is incorporated on /after the 1st day of April, 2016 but before the 1st day of April, 2021
Period - 3 / 10 Yr. 2. Total turnover of its business does not exceed Rs. 100 Crore in the PY for which such
deduction is claimed and
3. Hold Certificate from Inter-Ministerial Board of Certification (IMBC)
80-IB - Deduction : Initial 5 AY - 100% Next 5 AY- Company - 30% / Other 25%
Industrial Next 7 AY- Co-op Soc - 25%
Undertaking in
Condition : Value of Old machinery should not > 20%
Jammu & Kashmir
Not includes : Cash compensatory support (CCS), Profit-Sale-Import entitlement, Duty
Drawback, Duty exemption passbook (DEPB)
Subsidy Allowed : Transport, Power, Interest, Insurance

Sec 80-IC - Deduction : First 5 year - 100% Next 5 AY - Company- 30%

Undertaking - Next 5 AY - Other - 25%
Himachal Pradesh
Condition : 1. Undertake expansion or Manufacture / process any article/thing
or Uttaranchal
2. Commence before 31.03.12 Substantial expansion at least 50%
increase in P&M
Subsidy Allowed : Transport, Power, Interest, Insurance

Sec 80-IE - Deduction : First 10 year - 100%

Undertaking in Condition : 1. Undertake sub expansion to Manufacture / process any eligible article /
North Eastern States carry eligible business except - Tobacco, Pan M., Plastic
2. Commence before 31.03.17 Substantial expansion at least 25%
increase in P&M

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 29
• General Points on Sections 80-IA / 80-IAB / 80-IAC / 80-IB / 80-IC / 80-IE / Sec 10AA
Not form part of the a. Cash compensatory support (CCS), b. Duty Drawback,
Profit c. Profit-Sale-Import entitlement, d. Duty exemption passbook (DEPB)

9 Clubbing of Income

Sec 64(1)(ii) Income of Individual to include income of Spouse from concern in which individual has
substantial interest

In the Income of Individual there shall be included

Income of Spouse By way of Salary / Commission / Fees or any form of Remuneration.
Mode in Cash or Kind
Substantial Interest From a concern in which the individual has substantial interest. Means 20% Voting power / share in
means ? profit at any time during PY)
If both have Then income will be clubbed in the hands of the individual whose income excluding such
substantial int ? remuneration is greater.

It not include No clubbing if Spouse possesses technical or professional qualification and such income is
attributable to his or her technical or professional knowledge and experience.

64(1)(iv) Income of Individual include Income of Spouse from asset transferred without adequate
consideration (This section applies to all assets except House Property)

Asset of Individual --> Transferred without adequate consideration --> To Spouse

Income from such asset Shall be clubbed in the hands of Transferor.
Except Where transfer is in connection with an agreement to live apart
Relationship existence Relationship must exist both at the time of transfer of asset and at the time when
income accrues.

64(1)(vi) Income of Individual include Income of Son's wife from asset transferred without
adequate consideration

Asset of Individual --> Transferred without adequate consideration --> To Son's wife
Income from such asset Shall be clubbed in the hands of Transferor.
Relationship existence Relationship must exist both at the time of transfer of asset and at the time when
income accrues.

64(1)(A) Clubbing of Income from minor child (Exemption u/s 10(32) - Rs. 1500)
Income of Minor child including minor married daughter, shall be clubbed with the income of parent
Exception a. Minor child suffering from disability specified u/s 80U
b. Such income on account of manual work / activity involving of his skills, talent, specialized
knowledge and experience.

Note िजस parents का other income ादा होगा उसम club िकया जाएगा.

64(2) Conversion of self acquired property into HUF's property without adequate consideration
Such income derived from the converted property shall be deemed to be the income of the individual till the time partition
takes place.

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 30
 SUMMARY OF CLUBBING OF INCOME

An Individual --> Transfer Asset --> For Inadequate consideration or Without consideration to ↓
Transferred to Asset Transferred Section Remark
- Minor Married Son House Property Sec 27 Transferor is deemed as owner of H.P.
- Minor Unmarried Son
- Minor Unmarried Daughter
- Minor Married Son Other Asset Sec 64(1A) Club with income of parent whose other incomes
- Minor Unmarried Son (Other than House are greater. Sec 10(32) - Rs. 1500 benefit
Property) available.
- Minor Unmarried Daughter
Spouse (other than agreement to House Property Sec 27 Transferor is deemed as owner of H.P.
live apart) Other Asset Sec 64 Income clubbed with Income of transferor.
(Other than HP)
Minor Married Daughter Any Asset Sec 64(1A) Club with income of parent whose other incomes
are greater. Sec 10(32) - Rs. 1500 benefit
available.

- AOP / BOI for immediate / Any Asset Sec 64 Income clubbed with Income of transferor.
deferred benefit of spouse
- Son's Wife
- AOP / BOI for immediate /
deferred benefit of son's wife

Son's Minor Child Any Asset 64(1A) Income clubbed with Son / Son's wife
- Major Son / Daughter Any Asset - There will No Clubbing
- Friend

10 Setoff and c/f of Losses

Years/ Mandatory Current year Losses B/f Losses

Head
Return Filing (Y/N) set off from ↓ (Any A.Y.)
Sec 73 - Loss from Speculative Business 4 years (Yes) Only Speculative Income Only Speculative
Sec 74A - Loss from Horse Race 4 years (Yes) Only Horse Race Only Horse Race
Sec 71B - Loss from House Property 8 years (No) Any Head up to 2 lakh Only HP
Sec 72 - Other Business Loss 8 years (Yes) Except Salary Only Business
Sec 74 - Short Term Capital Loss 8 years (Yes) STCG / LTCG STCG / LTCG
Sec 74 - Long Term Capital Loss 8 years (Yes) Only LTCG Only LTCG
Sec 73A - Loss of Specified Business-35AD Indefinitely Only Specified Business
Sec 32(2) - Unabsorbed Depreciation Indefinitely (No) Any Income (No Salary)

Note : Filing of ROI u/s 139(1) within due date is mandatory for carry forward of above losses except
HP Loss Unabsorbed Dep

• The priority to setoff - 1. Current year depreciation 2. B/ forward business losses 3. B/ forward depreciation

Sec 78(1) does not permit c/f of losses pertaining to the share of retired / deceased partner

A company has two business, 1. Textile business 2. Trading of shares

1. If Trading of shares is not principal business --> Income / Loss will be treated as speculative
2. If Trading of shares is principal business --> Income / Loss will not be treated as speculative

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 31
Sec 79 Carry Forward and Set-Off of Losses in the case of certain companies
Basic Provisions of Sec 79 apply to company, not being a company in which public are
substantially interest.
Condition to be In order to carry forward losses & set off against the income of the PY,
fulfilled Companies • following condition needs to be fulfilled:
other than Start-up
- 51% of the voting power of the company are beneficially held, as on the last day of the PY in
which the loss is sought to be set off,
- by the same person who holds at least 51% of the shares on the last day of financial year in
which the loss was incurred.

Example - Losses of PY 18-19 can be set against income of PY 19-20, If 51% or more equity shares
held by same persons on 31/03/19 and 31/03/20.
Condition to be - Even if the above-referred condition is not satisfied by ‘eligible start-ups’,
fulfilled - Start-up* - the loss incurred in any year (prior to the previous year) shall be allowed to be carried forward &
(See Definition) set off against the income of the previous year,
• if the following condition is satisfied:

- All shareholders having voting power on the last day of the PY in which loss was incurred
continue to be holding shares on the last of day of the PY in which income is to be set off.
- The above relief is available in case the loss is incurred during the period of 7 years beginning
from the year of incorporation.
* Eligible Start Up It means Company / LLP engaged in eligible business which fulfils the following conditions:
means a) Incorporated on or after the 01.04.2016 but before the 31.03.2021.
b) Total turnover of its business does not exceed Rs. 100 crore in the PY for which deduction
under section 80-IAC is claimed and
c) Holds certificate of eligible business from the Inter-Ministerial Board of Certification as notified in
the Official Gazette by the CG.

• Following changes in Shareholding shall not be considered as a change in shareholding for the purpose of Sec 79
Death 1. Where change in voting power & shareholding takes place in a PY consequent upon on Account
of Death of a shareholder
Gift 2. When change in voting power & shareholding takes place in a PY on account of share transfer
resulted due to gift to any relative of the shareholder making such gift.
Amalgamation / 3. In case of a change in shareholding of an Indian company (being a subsidiary of a foreign
Demerger of Indian company) due to demerger or amalgamation of a foreign company.
Company (being
subsidiary of foreign Condition --> The demerger or amalgamation is undertaken with condition that 51% shareholding
company) of amalgamating or demerged foreign company would continue to be the shareholders of the
amalgamated or the resulting foreign company.
Resolution Plan under 4. When the change in shareholding takes place based on a resolution plan which is approved
IBC under the Insolvency and Bankruptcy Code.
Tribunal Suspended 5) When company & It's subsidiary (including a subsidiary of such subsidiary) in case:
BOD and i) The Tribunal (on application u/s 241) has suspended the BOD of the company and has appointed
new directors; and
Tribunal approved
resolution plan under ii. Change in shareholding of company & its subsidiary (including a subsidiary of such subsidiary) on
companies act the basis of resolution plan approved by Tribunal u/s 242 of the companies act.

• Summary of Sec 72A

Accumulated
Case Can be c/f by Time Limit
Business Loss
Sec 2(B) - Amalgamation Amalgamating Co. Amalgamated Company Fresh Period of 8 Years
Sec 2(19AA) - Demerger Demerged Company Resulting Company Remaining Period of 8 Yr
Conversion of Firm to Company Firm Successor Company Fresh Period of 8 Years
Conversion of Proprietorship to Proprietary concern Successor Company Fresh Period of 8 Years
Company
Conversion of Unlisted Company Unlisted Company LLP Fresh Period of 8 Years
into LLP

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 32
Sec 72AA Carry forward & set off of accumulated loss & unabsorbed depreciation allowance in
scheme of amalgamation in certain cases
Type of Amalgamation a. Any bank is amalgamated with a nationalised bank as per scheme of Central Government u/s
45(7) of Banking Regulation Act.

b. Any nationalised bank is amalgamated with another nationalised bank.

c. Any government company carrying on general insurance business is amalgamated with another
government company carrying on general insurance business.

Then - The accumulated losses under the head P/G/B/P and

- Unabsorbed depreciation of amalgamating entity
will be deemed as current year loss or current year depreciation of the amalgamated entity of the
previous year in which amalgamation takes place.

Not Applicable The conditions of section 72A are not applicable.

The conditions given in definition of amalgamation in section 2(1B) are not applicable.

11 Misc. Provisions [Dividend, Units, ESOP, Buyback, Bonus Stripping]

Chapter MAP
Part - A Part - B Part - C
• Tax on Dividend recd from Foreign Co. • Interest & Bonus Stripping • Taxation of ESOP
• Taxation of Dividend Income • Sec 115QA - Buy back of shares
• Taxation of Income on Units

Part - A

Sec 115BBD - Basic Indian co. holds 26% or more in nominal value of equity share capital of the
Dividend received Foreign Company
by Indian company
Taxable @ 15% + (Surcharge if applicable) + 4% HEC
from Foreign
company Note No other expenses allowed against dividend, means gross dividend is taxable
If Foreign Co. gives loan then Sec 2(22)(e) will attract. Don’t apply Sec 115BBD

• Sec 115-O - Dividend Taxation

Particular 2(22)(a)/(b)/(c)/(d) 2(22)(e)
Applicable to --> All companies --> Closely held company
Treated as Deemed --> To the extent of accumulated profit --> To the extent of accumulated profit
Dividend (Capitalised or not)
In the hands of DDT is not applicable (FA 2020) DDT is not applicable (FA 2020)
Company -->
In the hands of Share Taxable at Normal Rate Taxable at Normal Rate
holders -->

#Note - Surcharge on Dividend Income is restricted to 15% (Refer Chapter 1)

• Determination of PY in which Type Deemed Income of Previous Year

Dividend is Taxable in the Deemed Dividend PY in which it is so distributed or paid by the company
hands of Shareholders
Final Dividend PY in which it is so declared at AGM
Interim Dividend PY in which it is received by the shareholders

• Allowability of Expenses from Dividend Income

Deduction u/s 57 As per Sec 57, while computing Dividend Income, deduction of max 20% of Dividend Income is
allowed on account of Interest expense.

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 33
• TDS on Dividend (Sec 194)
Rate 10% on Payment to Resident Shareholders
Not applicable when a. Dividend is paid by any mode other than CASH and
b. Dividend amount does not exceeds Rs. 5000

• Taxation of Dividend Income in the hands of Non-Resident & Foreign Company (Sec 115A)
Taxable @ 20% u/s 115A TDS @ 20% u/s 195

• Deemed Dividend
2(22)(a) Any distribution of Asset by Company to its Shareholders
2(22)(b) Distribution of Bonus to Pref. shareholders, (To the extent of
Distribution of Debenture, Debn Stock to any Shareholders accumulated profit,
2(22)(c) Asset distribution in case of Liquidation capitalised or not)
2(22)(d) Reduction of share Capital.
2(22)(e) Loans and advance by closely held company (To the extent accumulated profit)

Part - B

• Tax - Fee Interest Stripping Transaction and Bonus Stripping

Type Applies to Condition
Interest Stripping Security & Unit Buy security / Unit 3 months prior to record date
Sec 94(7) Sells Security - 3 month / Unit 9 month after
record date
Bonus Stripping Unit only Buy Unit 3 months prior to record date
Sec 94(8) Sells Unit 9 month after record date

• Sec 115QA - Buy back of Shares No Gross up Pay tax within 14 days
Shares of Domestic Company Shares or Specified Securities
In the hand of
(Listed* or Unlisted ) (Other than Domestic Company)
Company Tax @23.296% (20%+12%+4%) No Tax Treatment
Shareholders Exempt u/s 10(34A) - No CG Capital Gain u/s 46A
* from 05.07.19

• Taxation of Income on Units

Particular In the Hands of Specified Company In the Hands of Unit holders
Chargeability Income of All Mutual Funds are exempt u/s Distributed Income is taxable in the hands of
10(23) Unit holders.
TDS Not Applicable U/s 194K @ 10% if Income > Rs. 5000

Part - C
• Taxation in case of ESOP
Basic As per section 17(2) ESOPs or Sweat equity shares are taxable as perquisite in hands of
employee in the year in which shares allotted to employee.
Taxable Amount FMV of shares on the date on which option Exercised xxx
(-) Amount paid by Employee for ESOP's xxx
Taxable Amount xxx

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 34
Calculation of FMV • On the date of exercising the option - Company is listed on recognised stock exchange
as per Rule 3(8) a. Company listed on recognised - FMV shall be Average of Opening + Closing of share on that
stock exchange date on said stock exchange
b. Company listed on more than - FMV shall be Average of Opening + Closing of the share on
one stock exchange the recognised stock exchange which records the highest
volume of trading in the share.

Provided further that where, on the date of exercising of the option, there is no trading in the
share on any recognized stock exchange, the fair market value shall be :
(a) the closing price of the share on any recognised stock exchange on a date closest to the date
of exercising of the option and immediately preceding such date; or
(b) the closing price of the share on a recognised stock exchange, which records the highest
volume of trading in such share, if the closing price, as on the date closest to the date of
exercising of the option and immediately preceding such date, is recorded on more than one
recognized stock exchange

• On the date of exercising the option - Company is not listed on recognised stock exchange
FMV shall be such value of the share in the company as determined by a merchant banker on the
specified date.
Sale of Shares by Computation of Capital Gain
Employee Full Value of Consideration xxx (Sale Value of Consideration)
(-) Cost of Acquisition xxx (FMV of Shares as per rule 3[8])
Capital Gain xxx

Period of Holding ? [Sec 2(42A)]

From --> Date of Allotment of ESOPS --> Till --> Date of Trf. of shares by Employee.
Taxability of ESOPS Eligible Start-up require to deduct TDS in case of ESOPS within 14 days from:
in case of Start-ups (i) After expiry of 48 months from the end of the relevant AY; or
referred u/s 80-IAC
(ii) From the date of sale of such specified security/ sweat equity share by the assessee; or
(iii) From the date of the assessee ceasing to be the employee of the start-up
- whichever is the earliest,
- on the basis of rates in force for the financial year in which the said specified security or sweat
equity share is allotted to employee.

Space for Your Notes

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 35
 PART - B

12 TDS, TCS and Advance Tax

HIJAC
Some deductors shall be liable to deduct tax only if Gross receipts / Turnover from the business / profession exceed Rs. 1
crore (in case of business) or Rs. 50 Lakhs (in case of profession) during the preceding financial year
194H 194-I 194J 194A 194C
Commission or Rent Professional Fees, Interest other than Payments to
Brokerage etc. on securities Contractors
For Individuals / HUF Ind / HUF / AOP / BOI
Subject to Sec 194M --> Applicability of section 194M has to be checked.

• TDS / TCS Rates reduced

Section 197B Lower Deduction in Certain Cases for a Limited Period
For Period 14/05/2020 to 31/03/2021
25% Dedn. --> Sec 193 194, 194A, 194C, 194DA, 194D, 194EE, 194F
Means Sec 194G 194H 194-I 194-IB 194-IC 194J 194K 194LA
Rate cutter applies 194LBA 194LBB 194LBC 194M 194-O
TCS - 206C(1) (Except Liquor) 206C(1C) 206C(1F) 206C(1H)

Rate cutter not applies Sec 192 192A 194B 194BB 194N 194E
to Section --> Sec 206C(1) - Alcoholic Liquor for Human Consumption 206C(1G)

Column 1 Column 2
192A - PF Rate : 10% --> No PAN then MMR
Accumulated Note - No TDS if amount is < Rs. 50,000
Balance [R+NR]

• Interest related
193 - Interest on a. Interest from PFCL, IRFC (u/s 54EC) will be exempt --> TDS deduction not required
Securities [R] b. Int Paid on on Security Listed & Held in Security is not Listed and Not in Dematerialized
Rate : 10% Security issued by Dematerialized Form Form (In case of Ind / HUF)
Company :
Rate cutter applies TDS will be Exempt TDS only if Int is > Rs. 5000

194A - TDS on Note :

Interest other than • TDS is also to be deducted from interest on Fixed Deposits & Recurring Deposits with banks and
on Securities [R] Co-operative banks (but excludes interest on savings account)

Rate : 10% • Interest Paid by Individual / HUF --> Liable to deduct TDS only
Rate cutter applies - If Total Turnover from Business exceed Rs. 1 Cr in Preceding FY.
- If Total Gross receipt from Profession exceed Rs. 50 Lakh in Preceding FY.

Category I --> a) Interest Paid by Co-operative Bank

Paid to Member / Paid to another Co-op Society
Paid to Other

Deduct TDS if, TDS to be deducted if;

Aggregate Interest Paid to ↓ 1. Interest is > Rs. 40000 AND
Senior Citizen : > Rs. 50,000 2. Total Sales, Gr. Receipts or Turnover of Payer Co-op. Bank
Paid to Other : > Rs. 40,000 exceeds Rs. 50 crores during the preceding FY

Category II --> b) Interest Paid by Primary Agricultural Credit Society / Primary Credit Society /
Co- Operative Land Mortgage Bank / Co- Operative Land Development Bank
the above forms of co-operative societies shall also be liable to deduct TDS if:
Aggregate Interest Paid to ↓ Total Sales, Gross Receipts or Turnover of Payer
Senior Citizen : > Rs. 50,000 AND Society exceeds Rs. 50 crores during the
preceding FY
Paid to Other : > Rs. 40,000

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 36
Category III --> c) Other Co-operative Society [Not Covered in Category I and II)
Paid to Member Paid to another Co-op Society
TDS to be deducted if; TDS to be deducted if;
1. Interest is > Rs. 40000 1. Interest is > Rs. 40000 AND
(Rs. 50000 in case Sr Citizen) AND 2. Total Sales, Gross Receipts or Turnover of
2. Total Sales, Gross Receipts or Turnover of Payer Society exceeds Rs. 50 crores during the
Payer Society exceeds Rs. 50 crores during the preceding FY
preceding FY

Note - Paid to Other --> TDS shall be deducted if Interest is > Rs. 5000

194 - TDS on • This section not apply in case:

Dividend [R] a. Dividend paid to any Insurance Company
b. Resident Individual (If Dividend is paid other than Cash AND Dividend is < Rs. 5000)
Rate : 10%
Rate cutter applies c. Dividend referred to in section 115-O
c. Dividend payable by Foreign Company / Co- operative Society
• Special Income 194B - Lottery, Puzzles Rate : 30% Limit : Rs. 10,000
Related [R+NR] 194BB - Horse Race Rate : 30% Limit : Rs. 10,000
• Commission 194D - Insurance Commission [R] Rate : 5% Limit : Rs. 15,000
related 194H - Commission / Brokerage [R] Rate : 5% Limit : Rs. 15,000
Rate cutter applies
194G - Lottery Sale Commission [R+NR] Rate : 5% Limit : Rs. 15,000
194DA - Maturity TDS @ 5% on Income Component (Maturity Less Premium paid)
proceed of LIP [R] Amount Received from Insurance Company xxx
(-) Amount of Premium Paid (xxx)
Rate 5% Balance Amount xxx <-- TDS @ 5% on Balance Amount
Rate cutter applies
Note: No TDS if --> 1. If Amount less than Rs. 100,000
2. If sum is received on the occasion of death of the insured person.
3. If Amount exempt < 01.04.12 20% of sum assured
us 10(10D) -- > > 01.04.12 10% of sum assured
> 01.04.13 (Disabled) 15% of sum assured
[Note: Exemption 10(10D) shall not apply to Maturity Proceeds of Keyman Insurance Policy.]
Sec 194C - Condition: 1. If such sum does not exceed 2. the aggregate amount during FY doesn’t
Payments to ₹30,000/- exceeds ₹1,00,000/-
contractors [R]
Note :
Rate - 1% Ind / HUF No TDS required to be deducted by Individual / HUF under contract for Personal purpose even if his
Rate - 2% Others total sale / gross receipt exceeded Rs. 1 Cr / Rs. 50 Lakh Respectively in Preceding FY. (Subject to
sec 194M)
Rate cutter applies
Sec 194J - Condition :
Professional Fees TDS on Rate Exemption
[R]
Fees for Professional Service 10% Amt is up to Rs.30,000 p.a.
Rate - 10% Fees for Technical Services which are 10%
Rate - 2% - Operation Professional Services
Amt is up to Rs.30,000 p.a.
of Call Centre Fees for Technical Services (not being 2% (Limit for Both)
Rate cutter applies Professional Services)
Royalty - consideration for sale, distribution or 2%
exhibition of cinematographic films Amt is up to Rs.30,000 p.a.
(Limit for Both)
Royalty - Other 10%
Non-compete Income relating to Business or 10% Amt is up to Rs.30,000 p.a.
Profession
Remuneration, fees, commission to director 10% No Exemption
except those on which tax is deductible u/s 192.

No TDS required to be deducted by Individual / HUF under contract for Personal purpose even if his
total sale / gross receipt exceeded Rs. 1 Cr / Rs. 50 Lakh Respectively in Preceding FY. (Subject to
sec 194M)

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 37
194K - Income in Rate : 10% Rate cutter applies Limit : Rs. 5000
Respect of Units Note : TSD shall be deducted on dividend - Mutual Fund
[R] income in respect of Units paid by; --> - Administrator of Specified Undertaking
- Specified Company
Sec 194M - Payment Payer : Individual / HUF (Other than those required to TDS u/s 194C / 194H / 194J)
to Contractor / Payee : Any resident person
Commission /
Condition : Aggregate amount paid in the year is more than 50 lakh (Up to 50 lakh no TDS)
Brokerage /
Professional Fees Rate : 5% Rate cutter applies
Note : Deductor is not required to apply for TAN

Sec 194N - Cash Payer : Bank / Co-op Bank / Post office

withdrawal Payee : Any Person (R + NR)
exceeding 1 Crore
Condition : Cash withdrawals exceeds Rs. 1 crore during the previous year.
Rate : 2% Note.
(No PAN - 20%) If recipient has not filed returns of income by due date specified u/s 139(1) for all of the PY ending
on 31.3.2019, 31.3.2018 and 31.3.2017. (has not filed returns for the 3 PY)
Note : new provision Cash withdrawn during the PY TDS Rate
comes into force from upto Rs. 20 lakhs Nil
1.7.2020
Above Rs. 20 lakhs but upto Rs. 1 crore 2% of cash withdrawn
Above Rs. 1 crore Rs. 2 lakhs + 5% of cash withdrawn
in excess of Rs. 1 cr.

Note : Cash withdrawals from two different banks/co-operative banks shall not be aggregated.

Sec 194O - Payment • Applicability, when:

of Certain Sums 1. e-commerce participant (Godrej) is a NR : Sec 194-O is not applicable
2. e-commerce participant (Godrej) conducts : Sec 194-O is not applicable
by E-commerce
business through its own website.
Operator
3. e-commerce operators (Flipkart) is R / NR. : Sec 194-O is applicable
to E-commerce 4. Buyer (Sanjay) is Resident / NR : Sec 194-O is applicable
Participant
(w.e.f. 01.10.20)
Godrej Industries Flipkart Sanjay
Rate : 1% of Gross e-commerce Participant e-commerce Operator Buyer
amount
Note - If PAN / Adhaar
• This Section applies if all the following conditions are fulfilled:
not given --> Rate is
5% - There is a sale of goods or provision of services.
Rate cutter applies - Such sale or provision of services is of an e-commerce participant.
- Such sale or provision of services is facilitated by an e-commerce operator.
Note - Sect 194-O - Such facilitation is through digital or electronic facility or platform of the e-com. operator.
overrules the entire
chapter of TDS
• Exception --> No deduction shall be made if ALL the following conditions are satisfied:
a) The e-commerce participant is an individual or HUF.
b) The gross amount of such sale or services or both during the PY does not exceed Rs. 5 lakh.
c) The e-commerce participant has furnished his PAN / Aadhaar to the e-commerce operator.
Note : Exception to "Hosting advertisements"

Sec 195 - Payments Condition : Rate : Rate in Force

made to Non 1. Rates in force: rates of TDS given in Finance Act every year
Resident or Foreign
2. If the rates given in DTAA are lower, then such lower rates will apply.
Company
3. TDS provisions will apply only if sum received by NR / Foreign Company is taxable in India.

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 38
 Immovable Property related
194-IA - Sale of Immovable Property 1. No TDS on Rural Agri Land
2. No TDS if consideration less than 50 Lakh (50 lakh exact TDS yes)
Rate : 1% of sale price
Rate cutter applies 3. Term “consideration for immovable property” shall include all charges of
the nature of club membership fee, car parking fee, electricity & water
facility fees, maintenance fee, advance fee or any other charges of similar
nature, which are incidental to transfer of the immovable property.
194-IB : TDS on rent of Immovable Deductee : Ind+HUF who are not liable to audit
Property No TDS if rent doesn’t exceed Rs 50,000 pm or Part of the month
Rate : 5% / No PAN : 20%
Rate cutter applies
Tax shall be deducted at earliest of -
Note - Deduction not to exceed rent for last a) time of credit of rent for March of the previous year or
month b) last month of tenancy, if the property is vacated during the year or
c) at the time of payment
194-IC : Consideration for agreement as 1. No TDS if consideration is in kind i.e. allotment of flats in building or
per section 45(5A) giving any other property
Rate : 10% and Applicable to Resident only • Sec 45(5A) refers to transfer under joint development agreement
Rate cutter applies
194LA - Compulsory Acquisition of 1. No TDS if amt up to 250,000
Immovable Property 2. No TDS on Rural or Urban Agri Land
Rate : 10% of sale price
Rate cutter applies

Sec 194I - Rent [R] Condition :

Rate - 2% - P & M 10% - Building 1. if such sum does not exceed ₹240,000/-
Rate cutter applies

You are Individual / HUF ? → No 'HIJAC' is Applicable to You [194H, 194I, 194J, 194A, 194C]
↓
Yes
Section 44AB Applicable to you ? → Yes 'HIJAC' is Applicable to You [194H, 194I, 194J, 194A, 194C]
↓
No
Whether you paid > Rs. 50 Lakh for (w.e.f. 01/09/2019): Deduct TDS
→ Yes
Commission (194H) / Profession Fees only (194J) / Contract Charges (194C) ? u/s 194M @ 5%

• Sec 206A - Due date for filing the returns : •Sec 200 - Payment due date.
Qtr. Q1 Q2 Q3 Q4 Particular Due date
TDS 31 July 31 Oct 31 Jan 31 May Apr to Feb 7th of next month
TCS 15 July 15 Oct 15 Jan 15 May March 30th April

Landing & Parking charges payable by Airlines CIT v/s Japan Airlines Co. Ltd 194I 194C
Service includes -->
a. Air Traffic Services b. Meteorological Services c. Ground Safety Services
d. Installation & Maintenance of Navigation Aids e. Aeronautical Communication Facilities

• Consequent of Non payment of TDS

a. Interest u/s 201 Not Deducted 1% for every month or part on the tax from date on which it was
deductible to the date on which it is deducted
Deducted but not paid 1.5% for every month or part on tax from date on which it was deducted
to CG to the date on which it is actually paid
b. Penalty u/s 271C If any person fails to deduct the whole or any part of the tax, then such person shall be liable to
pay penalty equal to the amount of tax failed to be deducted or paid.
c. Prosecution u/s Failure to pay to credit of CG the tax deducted at source: 3 m. to 7 years & fine
276B Second and subsequent offence: 6 months to 7 years and fine
d. Disallowance of Sec 40(a)(i) 100% of sum payable to Non Resident shall be disallowed.
Expenditure Sec 40(a)(ia) 30% of sum payable to Resident shall be disallowed.

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 39
 TCS TCS - Seller will collect TCS from Buyer
Sec 206C(1) Nature of Goods Rate See Buyer - does not include #
Alcoholic Liquor for human consumption 1%
Waste or Scrap from manufacture 1% Rate cutter applies
Minerals being Coal, lignite / iron ore 1% Rate cutter applies
Timber / Other forest products 2.5% Rate cutter applies
Tendu Leaves 5.0% Rate cutter applies

Sect 206C(1C) TCS on --> Granting a lease / a licence / enters into contract to person other than PSU
Rate 2% a) Parking Lot b) Toll plaza c) Mining & Quarry
Rate cutter applies
Sec 206C(1F) - Note: See Buyer - does not include #
TCS Sale of Motor a. No TCS if sale consideration is up to ₹ 10 Lakhs
Vehicle b. No TCS --> Manufacturer sells motor vehicle --> to dealers / distributors
Rate - 1%
Rate cutter applies
Sec 206C(1G) - w.e.f 01.10.2020
TCS on Remittance Type of Payment Rate Limit
under Liberalised a. Purchase of Overseas tour program (OTP) 5% (If No PAN - 10%) Any Amount
Foreign Remittance
b. Pursuing Foreign Education abroad & money 0.5% of Amt in excess of No TCS - Remittance
Scheme
remitted abroad out of loan obtained from any Rs. 7 Lakh during FY is < 7 Lakh
Financial Institutions. (10% if No PAN)
Note : Auth. Dealer /
Seller will collect TCS c. Pursuing Foreign Education abroad & money 5% of Amt in excess of No TCS - Remittance
from Buyer remitted abroad. (Remittance not out of loan Rs. 7 Lakh during FY is < 7 Lakh
obtained from Financial Institutions.) (10% if No PAN)

d. Any other remittance abroad under LFRS

Note : If company
buys OTP & deducts Buyer Person remitting such amount out of India under the LFRS of RBI
TDS u/s 194C -->
Seller / Auth. Dealer Receives an amount, for remittance out of India from a buyer
then no TCS shall be
collected from Receives amount from buyer - for overseas tour program package
company.
Sec 206C(1H) - When ? If seller sells to buyer goods exceeding Rs. 50 Lakhs in the previous year,
TCS on Sale of Then ? Seller shall collect TCS from buyer 0.1% of Sales exceeding Rs. 50 Lakh.
Goods > Rs. 50 Note- a. TCS shall be at the time of receipt
Lakhs by Certain
b. No TCS if TDS has been made
Sellers
c. If PAN/ Aadhar is not submitted --> Then Rate is 1%
Rate cutter applies
Note : Surcharge & No TCS shall be collected
HEC shall will be If Seller - is exporting goods to a foreign buyer
added --> in case of
- is providing services to the buyer even if total services exceeds Rs. 50 Laks
Non resident buyer /
Foreign Co. If Buyer - is importing goods from abroad
If Goods - covered u/s 206C(1) - Liquor / Scrap / Timber etc. [Except minerals OTHER THAN
are COAL, LIGNITE OR IRON ORE]
- covered u/s 206C(1F) - Motor Vehicles [If TCS collect in 1(F)]
- covered u/s 206C(1G) - Overseas tour program package [If TCS collected in (1G)]

Definition --> Seller - Whose total sales, gross receipts or turnover from the business exceed Rs. 10
crores during the immediately preceding the financial year.

Sec 206CC If Fails to TCS shall be collected a. Twice the rate or

Furnish PAN --> higher of the; b. 5%

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 40
Sec 206C - Assessee • Such collector shall not be deemed to be an assessee in default, If buyer, licensee or lessee
in Default a. furnishes his return of income u/s 139
- If collector fails to b. takes into account the amount for computing income in such ROI, and
collect TCS c. pays the tax due on the income declared by him in such ROI, and
d. such person furnishes a certificate to this effect from CA.

However, Finance Act, 2020 has restricted the relaxation of above Provision to Section
1. Sec 206(1F) - Motor Vehicle
2. Sec 206(1G) - Foreign Remittance / Sale of Overseas Tour Program Package
3. Sec 206(1H) - Sale of goods > Rs. 50 Lakh
--> Matlab Buyer ne 4 condition fulfil kiye tab bhi Seller 'Assessee in Default' Hoga

• Buyer Does not Include

Sec 206C(1) Sec 206C(1F) Sec 206C(1H) -
(Alcoholic Liquor, Forest Product, (Sale of Motor Vehicles) (Sale of Goods > Rs. 50 Lakhs
Mineral, Scrap) by Certain Sellers)
a. Central Govt., State Govt., a. Central Govt., State Govt., a. Central Govt., State Govt.,
[Blank] b. Local Authority b. Local Authority
c. Embassy, High Commission, c. Embassy, High Commission, c. Embassy, High Commission, Consulate of
Consulate of Foreign State. Consulate of Foreign State. Foreign State.
d. Public Sector Company d. PUS engaged in the Business of [Blank]
Carrying passenger
e. Buyer who buyes above goods e. a Person importing goods into India
for his personal Consumption.

Advance Tax Caln on Lowest 100

Advance tax shall be payable during a FY in every case where the amount of such tax payable by the assessee during that
year is ₹10,000/- or more. [Sec 208]

Provisions of advance tax do not apply to :

- an individual resident in India
- who does not have any income chargeable under the head 'Profits and gains of business or profession’
- is of the age of 60 years or more at any time during the PY.

Section 211 Instalment of Advance Tax

Instalments 15th June 15th Sept 15th Dec 15th Mar
% 15% 45% 75% 100%
Note - for Sec 44AD/ 44ADA (Presumptive Income) then due date of Advance tax is 15th March of PY.

Sec 234A Sec 234B Sec 234C

Interest for delay in Return filing. Interest for default in payment of Advance Tax not paid as a 12%,
90% advance tax 36%, 75% and 100% Qtrly
From ? - Due date u/s 139(1) to From ? - 01.04 till payment date 3,3,3 and 1m respectively
Actual Return filing date
Rate @ 1% pm Rate @ 1% pm Rate @ 1% pm

Sec 234D Interest on excess refund granted

Basic & Rate The excess refund will have to be paid back by assessee along with int u/s 234D @ 0.5% p.m. or
part of a month on such excess refund.

Period From date of granting the refund till date of completion of assessment.

Sec 244A Interest on refund

Basic & Rate Simple interest @ 0.5% p.m. or part of the month will be paid by bept. on the amount refunded.

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 41
 13 Taxation of Firm

Basic • Tax Rate 30% • Surcharge - 12% if income exceeds 1 crore

• Sec 44AD (6% or 8%) is not applicable to LLP
• Interest on Partners capital - Max 12% p.a. simple interest
In the hands of 1. Profit from Firm 2. Interest 3. Remuneration
partner; Exempt u/s 10(2A) Taxable as PGBP - to the extent of Taxable as PGBP - to the extent of
allowed u/s Sec 40(b) allowed u/s Sec 40(b)
a. Allowed to Sleeping & Working a. Allowed to Working Partner
Partner b. Should be authorised by only, b. Should be authorised by
deed, C. It should not be deed, c. It should not be
retrospective retrospective

Explanation to see Partner as Receiving Int. as Then

40(b) → Individual capacity Individual capacity Limit of Sec 40(b) i.e. 12% Interest limit is
applicable
Representative Individual capacity Limit of Sec 40(b) i.e. 12% Interest limit is not
capacity applicable
Individual capacity Representative capacity Limit of Sec 40(b) i.e. 12% Interest limit is not
applicable

Remuneration • On First 3 lakh Book profit - Higher of -- Rs. 1.5 Lakh or 90% of Book Profit
allowed on Book • On Balance Book profit - 60% of Book Profit
Profit Basis

Book Profit Means Net Profit under PGBP xxx

(+) Remuneration (if debited to P&L) xxx
(-) Depreciation (CY + B/f Dep) xxx
Book Profit xxx
• Imp--> B/f losses will not be deducted
Salary Paid to • Resident Partner - No TDS req • NR Partner - TDS Required
Sec 78 a. The losses & unabsorbed depreciation of the firm can be carried forward by firm only.
Carry forward & Set- b. If there is retirement of Partner or Death of partner the firm Shall not carry forward shares of
off of losses retired / deceased partner in the losses of firm.

Sec 185 If firm fails to comply Sec 184 [Assessment of firm],

Fails to comply then No deduction allowed (Interest, Salary remuneration) - Means disallowed to the Firm

14 Taxation of AOP / BOI

Shares known
Situation --> Where none of the members has Where any member has Where any member is
taxable income excluding the taxable Income taxable @ higher than the MMR
share income from AOP (< Basic (NTI> Basic Exemption) (Foreign Co)
Exemption)

In the hands of AOP Normal Tax (Slab) MMR - 42.744% Such Income - 43.68%
(30+37+4) Bal. Income - 42.744%
In the hand of Add Income in his total income, Share income not taxable Share income not taxable
Member Calculate Rebate @ avg rate

Shares unknown
Situation --> Where none of the members is taxable at rate Where any member is chargeable to tax at rate
higher than MMR higher than MMR
(If, Foreign Company is not member) (If, Foreign Company is member)

In the hands of AOP MMR - 42.744% Such higher rate

In the hand of Share income not taxable Share income not taxable
Member

Note : Special Rates Income were taxable at Special Rates only. (Eg. Sec 112A, 111A)

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 42
 15 Taxation of Business Trust / Investment Fund / Securitisation Trust

• Business Trust (REIT / InvIT) Business Trust compulsory required to file return u/s 139(4E).
Taxability --> @ MMR - 42.744% (30+37+4)
Type of Income In the hands of REIT In the hands of Unit In the hands of InvIT In the hands of Unit
holder of REIT holder of InvIT
a. Interest from SPV Exempt 10(23FC) Taxable (See #) Exempt 10(23FC) Taxable (See #)
b. Rental Income Exempt 10(23FCA)$ Taxable (See #) Taxable (TDS u/s 194I) Exempt 10(23FD)

c. Dividend Income
from SPV
- SPV opt Sec 115BAA Exempt 10(23FC) Taxable (See #) Exempt 10(23FC) Taxable (See #)

- SPV does not opt Exempt 10(23FC) Exempt 10(23FD) Exempt 10(23FC) Exempt 10(23FD)
Sec 115BAA
d. Dividend from Taxable @ MMR Exempt 10(23FD) Taxable @ MMR Exempt 10(23FD)
Domestic Company 42.744% (30+37+4) 42.744% (30+37+4)
e. LTCG u/s 112A Taxable@ 10% Exempt 10(23FD) Taxable@ 10% Exempt 10(23FD)
f. STCG u/s 111A Taxable@ 15% Exempt 10(23FD) Taxable@ 15% Exempt 10(23FD)
g. LTCG u/s 112 Taxable@ 20% Exempt 10(23FD) Taxable@ 20% Exempt 10(23FD)
h. Other Income Taxable @ MMR Exempt 10(23FD) Taxable @ MMR Exempt 10(23FD)
42.744% (30+37+4) 42.744% (30+37+4)
$ Rental Income from Properties directly held by REIT

# Taxable Rate and TDS Details - Unit Holders

Type of Income Unit holders Taxable @ Rate TDS u/s 194LBA
Interest NR / Foreign Co. 5% 5%
Other (Resident) Normal Tax Rate 10%
Rental Income NR / Foreign Co. Normal Tax Rate Sec 195 (Rate in Force)
(from REIT) Other (Resident) Normal Tax Rate 10%
Dividend from SPV NR / Foreign Co. 10% 10%
(If SPV opt 115BAA) Other (Resident) Normal Tax Rate 10%

Capital Gain
Taxable When When Sponsors Sell unit of business trust then it’s taxable
If Units of Business 1. Period of Holding > 36 Month --> Then LTCG u/s 112A @ 10% in Excess of 1 Lakh
Trust is Listed 2. Period of Holding < 36 Month --> Then STCG u/s 111A @ 15%
If Units of Business 1. Period of Holding > 36 Month --> Then LTCG u/s 112 @ 20%
Trust is Unlisted 2. Period of Holding < 36 Month --> Then STCG Normal @ 30%

• Investment Fund Investment fund compulsorily required to file return u/s 139(4F)
Taxability --> Inv. fund is Company [30% / 25%] If Firm / LLP [30%] If Trust [MMR -42.744]

Type of Income to Investment fund to Unit Holder TDS u/s 194LBB

Business Income Taxable Exempt 10(23FBB) Resident - 10%
Other Income Exempt 10(23FBA) Taxable NR / FC - Rate in Force

Imp --> Losses incurred by Investment Fund (Amended by FA 2019)

1. PGBP Loss Shall be allowed to be c/f and it shall be set-off by investment fund only and
It shall not be passed on to the unit holder.
2. Other Loss Shall also be ignored for the purposes of pass through to its unit holders,
If such loss has arisen in respect of a unit which has not been held by the unit holder for a period of
at least 12 months.

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 43
Rule 12CB: Submission of Statement of Income Paid or Credited by Investment Fund
Document to be submitted Form No. Due date
By Investment Fund to Unit holders Form 64C by 30th June of the FY following the PY during
which the income is paid or credited
By Investment Fund to Principal Commissioner or Form 64D by 15th June of the FY following the PY during
Commissioner which income is paid or credited

• Securitisation Trust TDS u/s 194LBC

to Trust to Investor R. Individual / HUF - 25%
Income received --> Exempt 10(23DA) Taxable Other Resident - 30%
No TDS TDS - 194LBC NR & Foreign Co. - Rate in Force

• Submission of Statement of Income Paid or Credited

(Common Point for Business Trust, Investment Fund & Securitisation Trust )
To Unit Holders - by 30th June of the FY following the PY during which the income is paid or credited
To IT Authority (Auth. by 30th November of the FY following the PY during which income is paid or credited *
= CIT / PCIT) * by 15th June incase of Investment Fund

16 Taxation of Political Parties and Electoral Trust

Political Parties
Sec 13A - Certain income of political party shall be exempted if following conditions are satisfied;
Certain Income of a. Maintain Books of A/c & documents
Political party shall
b. Political Party must get its books of accounts audited
exempt if
c. Keep & maintain record of each voluntary contribution / donation > Rs. 20,000
d. Donation > Rs. 2000 should be recd through only by a/c payee chq /dd / ECS/ electoral bond
e. Submission of report u/s 29C(3) of the Representation of the People Act 1951 for the FY.

If above Conditions Income from HP, Capital Gain, IFOS --> Fully Exempt
are satisfied then; Income from Business and Professions --> Fully Taxable
Note --> Political parties are compulsory required to file return upto the due date of return filing for
availing exemption u/s 13A
Donation to Political Person donating to Political party u/s 80GGB (Indian Company).
Party will get 100% deduction u/s 80GGC (other Assessee).
Note : Deduction u/s 80 GGB/ 80GGC- Not available if donation made in cash.

Electoral Trust
Sec 13B - 1. At least 95% or more aggregate donation of the current year along with surplus B/f from
Donation exempt if 2 the earlier year is distributed to political party referred u/s 29A of Representative of the People Act
conditions are satisfied 1951

2. Function in accordance with the rules made by Central government.

Electoral trust may a. An individual who is a citizen of India
receive voluntary b. A company which is registered in India
contribution from
c. A firm / HUF or an AOP/BOI resident in India
Electoral trust shall a. From Individual who is not citizen of India/ from any foreign entity whether incorporated/ not.
not accept contribution b. From any electoral trust

c. From a government company as defined in sec 2(45) of the companies act

d. From foreign source as defined in sec 2(j) of the Foreign Contribution (Regulation) Act, 2010
Donation Person donating to Electoral Trust u/s 80GGB (Indian Company).
will get 100% deduction u/s 80GGC (other Assessee).
Donation in way of Accept Only Shall not Accept
- by way of an account payee cheque drawn on a bank or - any contribution in cash
- account payee bank draft or
- by electronic transfer to its bank account

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 44
 17 Taxation of Trust

Sec 2(15): 1) Relief 3) Yoga

charitable means of
2) poor
Education 4) Medical Relief
5) Preservation of Environment (including watersheds, forests & wild life).
6) Preservation of monuments or places or objects of Artistic or Historic interest.
7) Advancement of any other object of General public utility. *
* Advancement of any other object of General public utility not be charitable purpose, if it involves
any activity related to trade, commerce or Business.
But it is treated as charitable purpose if aggregate receipt from Business activity is not more than
20% of the total receipts.
Section 11(1)- Following incomes of Trust shall be exempt-
Income of Trust a) Corpus Donations [Corpus donation received shall not be considered as Income]
b) 15% of Gross income
c) Income applied for charitable or Religious purposes in India (out of remaining 85%)
Note : If any Donation is given to other trust registered u/s 12AA / Institution u/s 10(23C) as
corpus donation shall not be treated as application.
Provisions of sec a. 40(a)(ia) - 30% Disallowance of expenditure (TDS) - Payment to Resident
40(a)(ia), 40A(3) & b. 40A(3) - Cash expenditure / Payment in excess of Rs. 10,000
40A(3A) apply
c. 40A(3A) - Asset Purchased in cash in excess of Rs. 10,000
Sec 11(1A) - Where any capital is asset transferred by trust & Net consideration is utilized for acquisition of
Capital gain deemed another capital asset then we need to calculate capital gain of such asset.
to be applied for
• Calculation of Capital Gain
charitable purpose.
Step 1 - Calculate LTCG / STCG
Step 2 - Amount deemed to have invested (Cost of New asset - Cost of Old Asset)
Step 3 - Taxable Capital Gain (1-2)
Sec 11(2) - Where 85% of Income is not applied during the PY but accumulated or set apart then such set-
Exemption if apart income is not included in income if following conditions are satisfied;
Income
1. Assessee should furnish statement to AO stating d purpose & period for income is accumulated
accumulated for
(Max 5 years)
specific purpose.
2. Such money should be deposited in Sec 11(5) modes
3. Such money should not be donated to any other trust.
Sec 11(3) - Any income referred u/s 11(2) -
Exemption a) Is applied to purposes other than the purposes for which it was accumulated, then it shall be
withdrawn if taxable in the P.Y. in which it is so applied, or
conditions not
b) Ceases to remain invested in modes as per sec, 11(5), then it shall be taxable in the P.Y., in
satisfied
which it so ceases, or
c) Is not utilised within specific time (say 5 years) or in the next year after specific period then it
shall be taxable in the year after expiry of specific period (6th year)

d) If donated to any trust then taxable in the year in which it is so donated.

Sec 11(5) - 1. Investment in Government Savings Certificates;
Investment of fund 2. Investment in units of the Unit Trust of India,
(Some Imp Source)
3. Investment in immovable property.
4. Investment in units issued under any scheme of mutual fund Sec 10(23D);
5. Deposit in any account with the Post Office Savings Bank, scheduled bank or a co-operative
society, deposit with IDBI (Industrial Development Bank of India)
Sec 11(7) - Exemption of sec. 10 is not available
Trust cannot claim any exemption under any provision of Sec 10 [other than 10(1), 10(23C) &
10(46)]
Sec 12A - Exemption u/s 11& 12 available if;
Condition for a. Trust should be registered u/s 12AA. Exemption available from PY in which application made.
applicability of Sec
b. If total income (before claim exemption) is > Basic exemption limit then furnish audit report with
11 & 12
return
Sec 13(1) - Income shall be taxable at MMR (30+37+4) i.e. benefit of 11/12 not available
Exemption u/s 11 a. Income for private b. Income for benefit of c. Funds not invested d. Income for the
shall not apply religious purpose particular religious in Sec 11(5) securities / benefit of specified
community deposits. persons

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 45
Sec 13(3) - 1. Author / Founder of trust
Specified person 2. Person who made donation of > Rs. 50000
3. Where founder / donor is HUF, member of HUF
4. Trustee / manager of trust
5. Relative of any founder, donor, member, trustee, manager
6. Any Concern in which above person's who has substantial interest
Sec 13(9) Exemption u/s 11(2) shall not be available, if
Denial of exemption a) Statement to A.O. not filed up to due date of ROI, or
if return not filed up b) Return of income not filed up to due date of ROI
to due date.

Sec 12AA Procedure of Registration

Review of Commissioner (CIT) on receipt of an application for registration satisfy himself about genuineness
application by CIT of the activity of Trust and the compliance of such requirements of any other law for the time being
in force by the trust or institution as are material for the if purpose of achieving its objects.

Pass order He may pass order in writing for registration or refusing to register.
CIT may cancel where registration is granted u/s 12 AA but after that CIT is satisfied that -
registration if; i) activities of Trust are not genuine, or
ii) activities are not in accordance with the object, or
iii) trust or institution has not complied with requirement of any other law,
he may Cancel such registration.
Registration grant Every order granting / refusing registration shall be passed within 6 months from end of the month
period limit in which application was received otherwise trust is treated as deemed to be registered.

Modification of the Where trust has been granted registration u/s 12AA & subsequently, it has adopted / undertaken
object modification of the objects which do not conform to the conditions of registrations it shall be
required to take fresh registration within 30 days from the date of such adoption / modification.
[Apply for fresh regn]

Sec 115BBC Tax on Anonymous donation received by Trust or Institutions

Basic Anonymous donation means any donation where person receiving such contribution (TRUST) does
not maintain record of donor.

Tax @ 30% on The anonymous donations received in excess of the higher of following:
a. 5 % of Total donation (Incl. Corpus Donation)
Higher
b. Rs. 100,000
Example :
Actual Anonymous Donation Recd. 40 Lakh
(-) Higher of the following (2 Lakh) <-- Taxable @ Normal
a. 5% of Total Donation, 40 Lakh x 5% = 2 Lakh Rate
b. 1,00,000
--> Balance is Taxable @ 30% 38 Lakh

Not taxable a. Anonymous donation received by Wholly Religious & Charitable Purpose
u/s 115 BBC b. Anonymous donation received by Wholly Religious Trust
Note : If Anonymous donation is not taxable u/s 115 BBC, then such donation shall be taxable as
per normal provision of Income Tax & Subject to Sec 11 & 12.

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 46
Sec 10(23C) Income of certain Universities, Hospitals, Educational Institution, Medical Institution
Income of Condition Income shall be
a. Any university / educational institution / any - which exists solely for educational or medical Fully Exempt
hospital / other institution purposes and not for profit. &
- Wholly / substantially financed by the Govt.
(Govt grant is >50% of total receipts)

b. Any university / educational institution / any - which exists solely for educational or medical Fully Exempt
hospital / other institution purposes and not for profit. &
- aggregate annual receipts is up to 1 crore

c. Income of any Trust / Inst. for charitable / - approved by CIT (Exemption) & Fully Exempt
religious purpose, University or Edu. institution - which exists solely for educational or medical
/ hospital / Other Inst. purposes and not for profit.

Sec 115TD - Tax on Accreted Income [Exit Tax] Tax Rate - MMR 34.944% (30+12+4)
Specified Date for Pay Tax within 14 days from
Taxable when Valuation of Note- Interest u/s 115TE @ 1% pm / part of
Assets & Liability. month for non-payment of tax within 14 days.

Iss date ko valuation

3 condition me exit tax lagega Yaha pe tax pay karna hai
Karna hai
a. Conversion of trust / institution into a form
not eligible for registration u/s 12AA
Case 1 - Registration granted u/s12 AA has Date of order cancelling 14 days from
been cancelled registration u/s 12AA a) the period for filling appeal to ITAT against
order rejecting the application expires & no
appeal filed by trust OR

b) Order is any appeal confirming the rejection

the application is recd. by trust.
Case 2 - It has adopted or undertaken Date of adoption or i) Not applied - 14 days from end of P.Y.
modification of its objects which do not modification of any
conform to the conditions of regn. And objects ii) Applied but rejected - 14 days from
a) the period for filling appeal to ITAT against
i) Not applied for fresh regn. order rejecting the application expires & no
appeal filed by trust OR
ii) Applied but application has been rejected b) the order is any appeal confirming the
rejection the application is recd. by trust.
b. Merger into an entity not having similar Date of merger 14 days from the date of merger
objects and registered u/s 12AA
c. Non-distribution of assets on dissolution to Date of Dissolution 14 days from the date on which period of 12
any other trust / institution reg u/s 12AA, months (at the end of the month in which
10(23C) within 12 months from the end of the dissolution took place) expires.
month in which dissolution takes place

Accreted Income Aggregate FMV (see Rule 17CB) of Total Asset xxx
shall be computed on "specified date" Less - Total Liabilities of Trust (xxx)
Accreted Income xxx
Following assets & liabilities in respect of that assets shall not be considered in accreted income.
a. Asset acquired out of agriculture Income. b. Asset acquired before registration

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 47
Method of Valuation for the purpose of Sec 115TD Rule 17CB
The aggregate FMV of Total Asset shall be reduced by : 1) TDS, TCS, Advance Tax and 2) Deferred Expenditure
Part A- Assets
1. Quoted Shares and Securities 3. Unquoted Shares / Security
--> Average of Lowest & Highest price on valuation date on a recognize stock exchange (Other than Equity Shares):
Note: If No trading of such shares and security on valuation date then average of --> FMV/NRV on Valuation Date
Highest & Lowest price of immediately preceding the valuation date when such shares on the basis of valuation report of
and security traded in recognize stock exchange merchant banker / accountant.

2. Unquoted Equity shares --> A+ B - L x (PV/PE) 4. Immovable Property

A : Book Value of All Assets (other than Covered in B) exclude TDS, Advance Tax & --> Higher of the following
deferred expenditure shown in the Asset side a. Open Market Value or
B : FMV of bullion, jewellery, precious stone, artistic work, shares, securities & b. SDV
immovable property as determined in the manner provided in this rule.

L : Book value of liabilities, but not include 5. A Business Undertaking

i) Amt set apart for payment of dividends on pref. shares & equity shares --> A+B-L
ii) R & Surplus even if negative, except set apart Depn.
iii) Tax Provision other than Adv. Tax, TDS, TCS
iv) Contingent & Unascertained liab. v) Any amt of cumulative pref. shares.
6. Any Other Assets:
PV : Total amount of paid up Eq Share capital as shown in the BS. --> FMV/NRV on Valuation Date
PE : Paid up value of such equity shares

Part B - Liabilities a. Capital Fund, Corpus Fund c. Contingent & Unascertained Liab.
does not include : b. Reserve and Surplus d. Income Tax, TDS, TCS liability

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 18 Minimum Alternate Tax (MAT) - 115JB

Rate 15% of Book Profit / 9% (IFSC) --> + Surcharge + 4% Cess

Applies to Domestic / Banking / Insurance company (Other than life insurance business) / Electricity
Not applies to F. Company - doesn’t req to seek registration under any law, No DTAA with country,
Life insurance company and Person exercised option 115BAA, 115BAB
MAT Credit MAT credit shall be c/f & set-off up to 15 A.Y.s
Note - In case of conversion of unlisted company into an LLP, the tax credit u/s 115JAA for MAT
paid by the company u/s 115 JB would not be allowed to the successor LLP.

Book Profit (As per Schedule III) 0

Add in the book profit; (from C. Act P&L) Less from the book profit; (from C. Act P&L)
Deferred Tax Liability Deferred Tax Asset
Income Tax, Int, Surcharge, DDT Lower of ↓ - B.Loss/ Unab Depn
Depreciation Dep excluding rev. on reserve
Dividend Paid / Proposed
Provn. for Losses of Subsidiary Profit of Sick company
Provn. for Unascertained / Contingent Liab.
Provn. for Dimulation of asset
Expenses for Exempt Income u/s 10,11,12 Income u/s 10,11,12
AOP / BOI - Expenses AOP / BOI - Income
Any amt transferred to general reserve Trf from general reserve
Balance in Rev. reserve (if not credited) Withdrawn from Reserve
Royalty Patent Expenses Sec 115 BBF Royalty Patent Income Sec 115 BBF
Notional loss on trf of capital asset - Dr Notional gain on trf of capital asset - Cr
Actual gain sec 47(xvii) Actual loss sec 47(xvii)

IND AS Adjustments IND AS Adjustments

Amt credited to 'OCI', not to be reclassified Amt debited to 'OCI', not to be reclassified
Transition Amt Profit - 1/5 Transition Amt Loss - 1/5
Debited on dist non-cash assets to sh. Credited on dist. of non-cash assets to sh.
- -

19 Alternate Minimum Tax (AMT) -Sec 115JC

AMT Applies to - All assessees (Except Company)

Who has availed - Benefit of deduction under chapter VI-A [80-IA to 80RB (other than 80P)],
- Deduction u/s 10AA (SEZ),
- Deduction u/s 35AD (Specified Business)
Note : If individual & HUF having adjusted total income is < 20 lakh then AMT not applies
Tax Rate - 18.5% of Adj Total Income (9% IFSC)
AMT Credit - AMT credit shall be c/f & set-off up to 15 A.Y.s

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 PART - C

20 Assessment
We divided Assessment chapter in two parts 1. Return's 2. Departmental Procedure

Part 1 - Return's

Sec 139(1) Return filing

For Company, LLP, Firm Return filing is mandatory
For Other Assessee Whose total income or that of any other person in respect of which he is assessable
without giving effect to Chapter VI-A or Sec 54, 54B 54D, 54EC, 54F, 54G,
54GA or 54GB exceeds the basic exemption limit.

• Return filing If;

mandatory to ; 1. He has deposited amt > 1 crore in aggregate in one / more current account maintain with bank
or co-op bank
[Other than Company
and LLP] 2. He has incurred foreign travel expenditure of > 2 lakh for himself or any other person or
3. He had incurred electricity expenditure of > 1 lakh or
4. Fulfils other conditions as may be prescribed.

• Compulsory filing Who is not required to furnish a return and who at any time during the previous year
for Resident and a) holds, as beneficial owner/ otherwise, any asset (including any financial interest in any entity)
ordinarily resident - located outside India/ has signing authority in any account located outside India or
b) is a beneficiary of any asset (including any financial interest in any entity) located outside India.

139(4A) - Charitable Trusts and Institutions If income is more than 250,000 before claiming
139(4B) - Political Party (to be filed by Chief Executive Officer) exemption u/s 10 / 11 / 12 / 13A then filing of
139(4C) - Certain Institutions (see below table) return required.
139(4D) - College, Universities u/s 35(1)(ii)/(iii)
139(4E) - Business Trust Filing of ROI compulsory irrespective of Income
139(4F) - Investment Fund

• Certain Institutions for Sec 139(4C)

News agency [Section 10(22B)]: Press Trust of India Research association [Section 10(21)]
Venture Capital Co. / Venture Cap. Fund [Section 10(23FB))] A fund specified (Section 10(23AAA))
Core Settlement Guarantee Fund (section10(23EE)) Infrastructure Debt Fund [Section 10(47)]
Investor Protector Fund (section 10(23EC) /(23ED)) Securitisation trust [Section 10(23DA)]
Fund or Edu. / Medical Institution / Hospital [Section 10(23C)] Trade union [Section 10(24)(b)]
Mutual Fund [Section 10(23D)] Association or institution [Section10(23A)]
Any Board or Authority (section 10(29A)) Institution [Section 10(23B)]
Body / authority / Board/ Trust/ Commission [Section 10(46)]

Type of Returns

Sec 139(1) Sec 139(3) Sec 139(4) Sec 139(5)

Normal Loss Belated Revised

Return Return Return Return

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139(3) - Loss Return
a. If any person who has sustained a loss in any PY under the head "PGBP" / "Capital gains" and claims that the loss or
any part thereof should be c/f, he may furnish return of loss within the time allowed u/s 139(1).
b. Losses which can be c/f only if Return is filed within due date are Business Loss, Speculative Loss, Specified
Business Loss, Capital Loss and Loss from the activity of owning and maintaining Race Horses

139(4) - Belated Return

a. Any person who has not furnished return within time allowed u/s 139(1) may furnish return at any time before the end
of the relevant assessment year or before the completion of the assessment, whichever is earlier.
b. Belated return can be revised.
c. If return is submitted belated, deduction under the head “Deductions in respect of certain incomes” will not be available.

139(5) - Revised Return (31.03.21)

a. If any person having furnished return u/s 139(1) / 139(4) discovers any omission / any wrong statement therein, he may
furnish a revised return at any time before the end of the relevant AY or before completion of assessment, whichever is
earlier.

b. Revised return substitutes the original return from the date original return was filed. (Dhampur Sugar Mills Ltd). Return
can be revised any number of times within the time limit.

• Due Dates for filing the return u/s 139(1)

Due date of furnishing Due date of
Assessee
return of income furnishing report
Company 31st October 30th September
Any other person who is obliged to furnish tax audit report 31st October 30th September
Working Partner of a firm whose accounts are required to be audited. 31st October 30th September

Any person to whom transfer pricing provisions are applicable 30th November 31st October
In any other case 31st July 30th June

Section 234F Late fees for return filing

Total Income < 5 Lakh - Rs. 1000 Total Income > 5 Lakh, filing b4 < 31.12 Rs. 5,000
Total Income > 5 Lakh, filing > 01.01 Rs. 10,000

Delay in filing loss return; (Genuine hardship) AADHAR Link not required in following cases;
Loss up to 10 lac Condoned by CIT Age >80 years Non citizen
> 10 lac < 50 lac Condoned by CCIT Non resident
Loss > 50 lac Condoned by CBDT J&K, Assam, Meghalaya Residents

Section 140A Self-Assessment

a. Where any tax is payable on the basis of any return 153A after taking into account tax already paid / TDS
/ TCS / Relief u/s 90/90A/91 / MAT / AMT Credit/ any relief of tax claimed under section 89,
- the assessee shall be liable to pay such tax together with interest and fee payable for any delay in furnishing the return
or any default or delay in payment of advance tax, before furnishing the return.

b. Preference in case amount paid falls short 1st. Fees 2nd. Interest 3rd. Tax Payable

Part 2 - Departmental Procedure

• Type of Income Tax Assessments

1. Self-assessment u/s 140A 2. Summary assessment u/s 143(1)
3. Scrutiny assessment u/s 143(3) 4. Best judgement assessment u/s 144
5. Re-assessment u/s 147 6. Assessment in case of search u/s 153A

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 Assessment Procedure

Sec 142(1) Sec 143(1) Sec 143(3) Sec 144

Sec 142(2A) Sec 147
Notice if ROI not Summary Regular / Best
furnished Special Audit assessment Scrutiny Judgement Assessment /
by Dept. (Schemes of Assessment Assessment Reassessment
[RIA wala of Income
Processing)
notice] Escaping
Assessment

Section 142(1) Notice if ROI not furnished [RIA wala Notice - Return, Info. & Accounts]
When ? For making an assessment, AO may serve Notice to furnish ROI on any person
- who has not made a return u/s 139 /
- in case the time allowed u/s 139(1) for furnishing the return has expired

Furnish return ROI shall be furnished even if income is below taxable limit.
Approval of JC With the previous approval of the JC, AO can ask for statement of all assets and liabilities relating
to a period not more than 3 years prior to the previous year.
Return Revise ? Such Return cannot be revised even if filed within due date as per notice.
Penalty for not complying - ₹ 10,000 for each failure (272A)
Prosecution - Up to 1 year and fine (Section 276D)

Sec 142(2A) Special Audit by Department

When ? It's carried out if ordered by AO when assessment is pending. Direction for Special Audit can't be
given if assessment is complete.

Previous approval of PCCIT / CCIT / PCIT / CIT

SCN and OOBH Assessee has Opportunity of being heard by issuing SCN milega
Circumstances 1. Special nature of business 2. Volume of accounts
3. Multiplicity of transaction 4. Doubts about correctness of transactions
5. Nature and complexity of accounts
Who can conduct ? - CA shall be nominated by CCIT / CIT (Expenses shall be paid by the Central Government)
Total Period - Total period including extension shall not exceed 180 days
If order not followed : - BJA u/s 144 hoga,
- Penalty u/s 272 - Rs. 10k,
- Prosecution - up to 1year and fine u/s 276D

Sec 143(1) Summary assessment (Schemes of Processing) Remedy - Revision u/s 154
When ? 1. When ROI filed u/s 139 or in response to notice u/s 142(1), total income or Loss shall be
computed after making following adjustments;

a. Any arithmetical error in the return.

b. An incorrect claim, if such incorrect claim is apparent from any information in return.
c. Disallowance of loss claimed, if return is filed beyond due date u/s 139(1).
d. Disallowance of expenditure indicated in the audit report but not taken into account
in computing the total income in the return.
e. Disallowance of deduction u/s 10AA, 80-IA to 80-IE, if return is filed beyond due date.
Documentation No such adjustments shall be made unless an intimation is given to the assessee of such
adjustments either in writing or in electronic mode:

Response recd. The response received from the assessee, if any, --> shall be considered before making any
adjustment.

Response not recd. In case where no response is recd. within 30 days of issue of such intimation --> such adjustments
shall be made;

Time Limit Intimation shall be sent within 1 year from the end of the FY in which the return is made.

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Sec 143(3) Regular / Scrutiny Assessment
Circumstances Where a return has been furnished under section 139, or 142(1), the AO or the prescribed
income-tax authority considers it necessary / expedient to ensure that;
a. the assessee has not understated the income or
b. has not computed excessive loss or
c. has not under-paid the tax in any manner,
Serve Notice AO shall serve on the assessee a notice requiring him to attend the office or to produce any
evidence on which the assessee may rely in support of the return
Section143(2): Notice Time limit to serve Notice to make scrutiny assessment u/s 143(3)
of Scrutiny • within 6 months from the end of the FY in which return is filed.
Sect 153(1) : Time limit for completion of assessments:
Time limit - 12 months from the end of the assessment year in which the income was first
assessable.
Note - In case if reference is made u/s 92CA to Transfer Pricing Officer, the time limit shall be
increased by 12 months.

Sec 144 Best Judgement Assessment

When ? • If any person;
a. Fails to furnish ROI u/s 139(1) / 139(4) / 139(5)
b. Fails to comply with terms of notice u/s 142(1) [RIA wala], u/s 143(2) [Scrutiny],
u/s 142(2A) [Special Audit]
c. Having made return, fails to produce evidence / docs. required u/s 142(2A)
d. AO is not satisfied with correctness and completeness of accounts or no method of
accounting has been regularly been employed.
e. PGBP / IFOS income not computed as per 'ICDS'.
Show cause notice SCN shall be served (No time limit prescribed). Such notice shall not be necessary where a
notice u/s 142(1) has been issued prior to the making of such assessment.
Dept ke favour me AO cannot assess income below returned income & loss higher than returned loss. This
hoga Assessment assessment is for the benefit of Department and not assessee.
Sect 153(1) : Time limit for completion of assessments:
Time limit - 12 months from the end of the assessment year in which the income was first
assessable.
Note - In case if reference is made u/s 92CA to Transfer Pricing Officer, the time limit shall be
increased by 12 months.

Sec 144A Power of Joint Commissioner to issue directions

• A Joint Commissioner may call for and examine record of any proceeding in which assessment is pending
on own motion on reference being made to him by AO on application by assessee
• He may issue such directions as he thinks fit for the guidance of the Assessing Officer to enable him to complete the
assessment and such directions shall be binding on the AO.

Sec 144C Reference to DRP

Eligible assesse ?
1. Any person in whose case variation arises due to Transfer prising officer
2. any Foreign Company / non-resident

AO → Draft Assessment order → forward to DRP → Assessee → Shall file cross objection → Within 30 days
No Objection filed Objection filed
--> Draft order forwarded to assesse
AO pass order within 1 month
--> DRP issue direction for guidance to AO within 9 month from the end of the month
from end of the month in which
in which draft order forwarded
acceptance recd from DRP or cross
--> AO shall complete assessment within 1 month from the end of the month in which
objection filing period expired
direction issued
Assesse can file appeal to CIT(A) against the final order

Protective Assessment
When ownership of the income is in dispute or is a matter of doubt then A.O. can assess income in the hands of all persons
(who are claiming ownership). This is called protective Assessment.
- The objective of the protective assessment is to protect the interest of revenue, in this case, income tax authority cannot
recover tax from both the persons.

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Sec 147 Assessment / Reassessment of Income Escaping Assessment
When ? If AO has reason to believe that any taxable income has escaped assessment,
- he may assess or reassess such income and also any other income which has escaped
assessment and which comes to his notice subsequently in the course of the proceedings for the
assessment year concerned (even if not mentioned in the Notice)

Reason to believe Following constitutes “reasons to believe".

a. A later Supreme Court judgment,
b. Retrospective amendments in law.
c. Evidence in possession of A.O. that assessee under stated income.
d. Mistake apparent from records.
Note - Rumours, gossips & suspicion does not amount to "reason to believe".
Deemed - escaped The following shall also be deemed to be the case where income has escaped assessment.
assessment a. Income more than basic exemption but return not filed.
b. Income has been under assessed or excessive loss, depreciation allowed to assessee.
c. Taxes paid at lower rate.
d. Where person is found having any asset located outside India.
e. Where assessee fails to furnish report of transfer pricing u/s 92E.
f. On the basis of Info & document record, from IT. Authority u/s 133C(2), it is notice by A.O. that
assessee under stated the income or has claimed excessive loss ,dedn, allowance or relief in return.

g. On the basis of info & doc. recd from I.T. Authority u/s 133C(2) it is notice by A.O. that the
income is more than basic exemption & assessee not files return
Doctrine of Partial a. AO may assess or reassess such income, other than the income involving matters which are the
Merger: subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped
assessment.
b. AO cannot invoke section 147 if the matter is pending or is complete in Appeal or Revision.
Remedy against it would be further appeal if possible.
Sec 148 : Issue of Notice [AO serve notice before making assessment]
Sec 149 : Time limit for serving notice
Generally notice u/s 148 can be issued within 4 Years from the end of R.A.Y.
Income escaped amounts to or likely to amount up to 6 Years from the end of R.A.Y.
to 1 Lakh or more
Income escaped relate to foreign assets then up to 16 Years from the end of R.A.Y.
Notice to the Agent of NR within 6 Years from the end of R.A.Y.

Sec 151 : If Notice Issued Within 4 yrs from end of R.A.Y. Beyond 4 yrs from end of R.A.Y.
Approval of Higher If A.O. is: Any AO
Authority a) J.C. No. Approval of CIT / CCIT / PCIT /
b) AC / DC / ITO approval
Approval of JC PCCIT is required.

Sect 153(2) : Time limit for completion of assessments:

Time limit - 12 months from the end of the PY in which notice was served u/s 148.
Note - In case if reference is made u/s 92CA to Transfer Pricing Officer, the time limit shall be
increased by 12 months.

Sec 156 Demand Notice

AO shall serve When any tax, interest, penalty or any other sum payable due to any order passed under IT. Act,
then A.O. shall serve demand notice specifying the payment.

Time limit to pay Assesses should pay the amount within 30 days from date of receipt of notice of demand.
If assesse fail to pay then recovery proceedings shall be initiated & assesses shall be treated as assesses in default, in
such case, he will be liable to pay interest u/s 220 & penalty u/s 221.

Deemed notice in case of intimation u/s 143(1), 200A(l) & 2O6CB(1) intimation shall be deemed to be notice of
demand.

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 Compilation of Time limit for Issue of Notice and Time limit to Complete Assessment

Time limit for Issue Notice

Sec 143(1) - Scheme of Processing of Within 1 Year from the end of the FY in which return is filed
Returns (Bangalore) --> for FY 19-20 the due date is 31.03.22 (31.3.21 + 1 Yr.)
Sec 143(2) - Scrutiny Assessment u/s 143(3) Within 6 months from the end of the FY in which return is filed
--> for FY 19-20 the due date is 30.09.21 (31.3.21 + 6 m)
Sec 149 - Assessment / Reassessment u/s 147 - Income escaped is 1 lakh or more Within 6 years from the end of the
relevant AY (Approval req)
- If Income related to any asset Within 16 years from the end of
located o/s India (including financial the relevant AY (Approval req)
interest)

- Any other Case Within 4 years from the end of the

relevant AY (Approval JC)

Time limit to Complete Assessment

Sec 153(1) - before AY 19-20 on or after AY 19-20
Scrutiny Assessment u/s 143(3), 18 months from the end of the AY in 12 months from the end of the AY
Best Judgement u/s 144 which income first assessable in which income first assessable.

for AY 21-22 - Ans --> 31.03.23

Sec 153 (2) - Notice served before 01.04.19 Notice served on after 01.04.19
Assessment u/s 147 9 month from the end of the FY in 12 month from the end of the FY
(AO has reason to believe) which notice was served in which notice was served

Sec 153B Raid > 1.4.19 12 month from the end of the FY in which last auth. was executed
Note - Where reference made to TPO - time limit shall be increased by 12 months

Direction of Appellate Authorities / Court to give effect to any finding or direction contained in an order u/s 250, 254, 260A,
262, 263, 264 ---> - 12 months from the end of the month in which such order was passed
Sirf 2 cases me hoga 1. Income transfer from one assesse to another assesse
2. Income exclude from particular year to other year

• Some Newly introduced sections

w.e.f. Section Particular
01/11/2020 130 Faceless Jurisdiction of Income-tax Authorities
01/11/2020 135A Faceless Collection of Information
01/11/2020 142B Faceless Inquiry of Valuation
01/11/2020 144C(14B) Faceless Scheme for Reference to Dispute Resolution Panel
01/11/2020 151A Faceless Assessment of Income Escaping Assessment
01/11/2020 157A Faceless Rectification, Amendments & Issuance of Notice or Intimation
01/11/2020 231 Faceless Collection and Recovery of Tax
01/11/2020 253(8)/(9)/(10) Faceless Appeal to Appellate Tribunal
01/11/2020 264A Faceless Revision of Orders
01/11/2020 264B Faceless Effect of Orders
01/11/2020 274(2A)/(2B)/(2C) Faceless Penalty (E-Penalty)
01/11/2020 279(4)/(5)/(6) Faceless sanction of Prosecution / Compounding
01/11/2020 293D Faceless Approval or Registration

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Sec 143 (3A) - E- Assessment
National E-Assessment Centre
(NEC)

Regional e-assessment centre Regional e-assessment centre Regional e-assessment centre

(REC) - State 1 (REC) - Maharashtra (REC) - State 2,3..

Assessment
Verification unit Technical unit Review unit
unit

Space for Your Notes

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 21 Power of IT Authorities (Seizure)
We divided this chapter in two parts 1. During the Search 2. After the Search

Part 1 - During the Search

Sec 131 Power of Income Tax Authority [Common Powers]

IT Authority shall have all the powers vested in a civil court under the Code of Civil Procedure, 1908:
a. Discovery and Inspection
b. Enforcing the attendance of any person and examining him on oath,
d. Compelling production of books of account under the code of civil procedure, 1908
c. Issuing commissions (Summons).
e. IT Authority can impound Books of Accounts for max 15 working days.

Sec. 133 Power to call for Information Sec 133B : Powers to collect Sec. 133C Power to call for
information Info. by Prescribed IT
Authority
Dept. can call information from any person. Place - I.T. Authority may enter at any Exercised by Investigating wing
eg:- Info. from bank relating to any account place at which Business / profession is The I.T. authority may for the
holder etc. carried on. purpose of verification of
[Enter at only Business Place] information in its possession
U/s 133(6) AO, CIT(A), CCIT or CIT may relating to any person, issue a
require any person to furnish any information. Time - Only during the hours at which notice to such person requiring
such place is open for business or him to furnish information &
If proceeding is not pending - profession. documents, which may be useful
Approval of CIT required if exercise by any [Business Hrs.] in any inquiry or proceeding under
authority below the rank of CIT. Approval not this Act.
required for the rank of JD, DD, AD. This power can be exercised even
if no proceedings are pending.

• Survey
Section Sec 133A - Power to Survey Sec 133A(2A) - TDS Survey
Previous Approval No action under this section can be taken by A.O. or inspector They can enter the premises for
without approval of Joint Commissioner. which they have jurisdiction.

Entering Place? any building / place at which Business or profession is carried IT Authority can conduct survey
on or activity of charitable purpose is carried on. for the purpose of verifying
And place where books of a/c and assets kept TDS/TCS has been
deducted/collected and paid as
per the provision of income Tax
Entry Restrictions Place of Business or profession - can be only during which such The IT Authority can enter the
place kept open for conducting busi. or profession. premises to conduct survey >
Any other place can be only > sunrise but < sunset. sunrise but < sunset.
Note: Restriction is only for entry, Not for Exit.

Upon entering they a. Inspect any Books of A/c’s or docs. a. Can inspect books & documents
can do : during survey however
b. Impound Books of A/c's [Max 15 working days] b. Can't impound the books of a/c
& document.
c. Make an inventory of any cash, stock / other valuable c. Can't make inventory of cash,
articles. valuables, stock etc.
d. Check/ verify the cash, stock or other valuable articles. d. Ask for various documents and
c. Place marks of identification on Books of A/c‘s & docs. information.
f. Record the statement of any person.
Survey at Function / a. The I.T. Authority has power to do survey at any function,
Ceremony / Event ceremony or event.
b. They can survey such place but only after conclusion of such
function, ceremony or event and
c. require any person to furniture information as he may
require statement given by such person can be record.

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Sec 132 Search & Seizure [RAID]
Column 1 Column 2
Who can Authorize ? Assessment Wing Investigation Wing
- PCCIT / CCIT / PCIT / CIT - PDGIT / DGIT / PDIT / DIT
[issue search warrants]
- Addn. CIT * / JC * - DIT * / JD *
* If empowered by CBDT
Reason to believe a. any person to whom Notice u/s 142(1) or summon u/s 131 issued / might be issued
- to produce Books of A/c's or docs and
[ When search can be
- Assessee failed to produce / will not produce such Books of A/c's or docs.
authorised. ? ]
b. Any person is in possession of any money, jewellery / any other valuable articles and
- such asset, which has not been disclosed / would not be disclosed.
However, the reason to believe shall not be disclosed to any person or any authority or the
Appellate Tribunal.
Power of Authorised a. Enter & Search any Building, place, vessel, vehicle or aircraft where he has suspect that Books of
officer in course of A/c's, money etc. are kept.
search.
b. Power to break lock of any door, box, locker etc. if keys are not available.
c. Search any person who has got out of, or is about to get into, or is in, the Building, vessel, place,
vehicle etc.
d. Require any person who is in control of any Books of A/c's maintained in the electronic form, to
provide password.
e. Seized any Books of A/c's, docs., money, bullion, jewellery etc. found under search however,
stock cannot be seized.
Deemed / Constructive where it is not possible / practical to take physical possession of any asset due to volume, weight,
Seizure nature etc.
- then authorised officer may serve an order on the owner of the person who is in immediate
(Note 1) possession there of, that he shall not remove / deal with / part with such asset without the
approval of Authorised officer.

Prohibitory order / Where it is not practical to take physical possession of any Books of A/c's or other asset for reason
order of restraint other than mentioned in Note-1 above, then authorised officer may serve an order on the owner of
(Note 2) the person who is in immediate possession that he shall not remove / deal with / part with such
asset without approval of Authorised officer, This order is valid for maximum 60 days,

Presumption Where any Books of A/c's. other documents, money, bullion , jewellery etc. found in possession of
(Assumption] under any person, it may be presumed;
Search:
1. That such Books of A/c's, docs , money, bullion, other valuable article belongs to such person.
2. That the content of such Books of A/c's & docs are true.
3. That the signature & every other part of such Books of A/c's & other docs which purport (seems)
to be in the handwriting of any particular person are in that person's handwriting.
4. That the document which purports to be attested or stamped by particular person are presumed
to be attested or stamped by such person.
Section 132(9A) - Where the authorised officer has no jurisdiction over the person searched by him,
- the books of accounts or any money, bullion, jewellery etc. shall be handed over by authorised
officer to the A.O. having jurisdiction over such other person
- within period of 60 days from the date on which search was completed.

Section 132(9B) • During the course of search / within 60 days from the date of conclusion of search,
• the search party, may, provisionally attach any property belonging to assessee. However, before
doing so;
- Reasons shall be recorded in writing - Interest of revenue shall be involved.

Section 132(9C) • Provisional attachment so made shall be operational for 6 months, after which it shall be
automatically vacated.

Part 2 - After the Search

Sec 132A Power of Requisition

Where a search has already been conducted by any Authority under any other law.
Eg:- FEMA, CBI, Election commission, etc. then the authorised officer shall require such other authority [FEMA / CBI] to
deliver Books of A/c's, assets seized, as early as possible.

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Sec 132B Application of Books of A/c's & Seized Assets.
Books of accounts and It shall be released within 30 days from the date of completion of assessment u/s 153A. For
documents - retaining Books of A/c's & docs beyond this period permission of CCIT / CIT is required.
Money, Bullion, a. Explained Assets
Jewellery, other - assessee makes an application within 30 days from the end of the month in which the asset was
valuable Assets. seized and
- explains the nature and source of acquiring such asset to the satisfaction of the AO,
- then, such asset can be released to the assessee with the prior approval of CCIT/CIT,
- after adjusting any existing tax liability of the assessee. Such release shall be made within 120
days from the date of search was completed.
b. Other Assets (other than above)
Asset seized & requisitioned can be utilised to recover
i) Existing liability under Income Tax Act. (Note. Advance Tax is not existing liability)
ii) New liability determined on completion of assessment u/s 153A Notes
Notes a) Money seized shall first be used for discharging the above liability.
b) If money falls short, then assets may be sold for discharging liability
c) If assets remain then they shall be handed over to assessee.
d) Any liab. arising on an appln made to ITSC shall also be recovered out of seized assets.
Interest on excess The central govt. shall pay simple interest at the rate of 0.5% per month or part of the month on
amount the followings amounts:

Amt. of money seized under sec. 132 or requisitioned under sec. 132 A xxx
Add: Proceeds of any assets sold towards the discharge of the liabilities xxx
Less: Money released under the first proviso( explain money xxx
Less: Aggregate amt. required to meet the liabilities xxx
Interest from ? - from the expiry of the period of 120 days from the date on which the search was completed to
- to the date of completion of assessment under sec. 153A

Section 153A Assessment in case of Search or Requisition

Basic AO shall issue notice to furnish within such period specified in the notice, Return of Income
for each assessment year falling within 6 assessment years and for the relevant
assessment year / years

Conditions • If following conditions are satisfied, years prior to 6 years (called relevant years) can be assessed
(for 6+4 year) u/s. 153 A (but not beyond 10 years) :-
a) AO has in his possession books of account or other documents or evidence which reveal that the
income, represented in the form of asset, which has escaped assessment amounts to or is likely
to amount to Rs. 50 Lakhs or more in the relevant assessment year or in aggregate in
relevant assessment years
[Asset shall include immovable property being land or building or both, shares and securities, loans
and advances, deposits in bank account.]
b) the Income above has escaped assessment; and
c) Search is initiated /requisition is made on or after 01.04.2017.
Pending Assessment ? If Assessment / Reassessment of any last 6 years or relevant years pending u/s 143(3) /144 /147
If any - then it shall abate i.e. come to an end & assessment shall be made u/s 153A only
- Appeal, Revision or Rectification shall not abate but shall continue.

Sec 153B - Time limit Time limit to complete assessment in Search cases
- Should be Completed (order passed) within 12 months from the end of the year in which search
is completed.

Note - If case transferred to T.P.O. (Transfer Pricing Officer) then assessment completion time limit
shall be increased by 1 year.

Section 153C Assessment of other person

Handover If during the search, if books of A/c's, Docs. or assets belonging to any other person are seized, the
AO will handover them to AO having jurisdiction over such other person.

Issue of Notice If A.O. having jurisdiction over such other person is satisfied that the books of A/c's & asset seized
have a bearing on the determination of total income of such other person then such A.O. shall issue
notice to file return of last 6/10 years.

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Procedure All other points same as sec 153 A.
Sec 153B - Time limit Time limit to complete assessment in Search cases
Whichever is later.
- Should be Completed (order passed) within 12 months from the end of the year in which search
is completed. or
- 12 months from the year end in which books of A/c's / Assets handed over to A.O. having
jurisdiction over other person.

Note - If case transferred to T.P.O. (Transfer Pricing Officer) then assessment completion time
limit shall be increased by 1 year.

Sec 116 Income Tax Authorities

CBDT
Rank Assessment Wing Investigation Wing
Rank 1 Prin. chief Commissioner of IT (PCCIT) Principal Director General of IT (PDGIT)
Chief Commissioner of IT (CCIT) Director General of IT (DGIT)
Rank 2 Prin. Commissioner of IT [PCIT) / Principal Director of IT (PDIT)
Commissioner of IT [CIT] Director of IT (DIT)
Rank 3 Add. CIT / Joint Commissioner (JC) Add. DIT / Joint Director (JD)
Rank 4 Asst. Comm. / Deputy Comm. (AC/DC) Asst. Director / Deputy Director
Rank 5 Income Tax Officer (ITO)
Rank 6 Tax Recovery Officer (TRO)
Rank 7 Inspector of IT

Sec 2(7A) - Who is Assessing officer (AO) ? --> Additional CIT /JC/AC/DC/ITO

Validity of Provisional attachment ;

Time Period Such provisional attachment shall cease to have effect after the expiry of a period of 6 months
from the date of order made u/s 281 B(1).

Extended by ? 2 Year - Order of Assessment / 60 days - Order of Re-Assessment

• Example Search conducted on --> 02/01/18
Time period for As per section 132B, where the person concerned makes an application to the Assessing Officer,
application within 30 days from the end of the month in which the asset was seized, for release of the asset *

Time period for release Such asset or portion thereof has to be released within 120 days from the date on which the last of
the authorizations for search under section 132 was executed.
*Assessing Officer may, with the prior approval of the Principal Chief Commissioner or Chief Commissioner or Principal
Commissioner or Commissioner, release the asset after recovering the existing liability.

Circumstances under which the AO can resort to provisional attachment of the property of the assessee;
As per the provisions of section 281B, there can be provisional attachment of property to protect the interest of Revenue in
certain cases i.e.-
(i) The proceeding for the assessment of any income or for the assessment or reassessment of any income which has
escaped assessment should be pending.
(ii) Such attachment should be necessary for the purpose of protecting the interest of Revenue in the opinion of the
Assessing Officer.

(iii) The previous approval of the Principal Chief Commissioner or Chief Commissioner, Principal Commissioner or
Commissioner, Principal Director General or Director General or Principal Director or Director has been obtained by the
Assessing Officer.

(iv) The Assessing Officer, may, by an order in writing attach provisionally any property belonging to the assessee in the
manner provided in the Second Schedule.

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 22 Appeals and Revision

Dept. Limit Stay on

Sec Authority Time limit (within)
Sec 268A Demand
246A CIT (A) 30 days - Yes
253 ITAT 60 days 50 Lakh 180+185 --> See *
260A High Court 120 days 1 Crore No
261 Supreme Court - 2 Crore No
Dept. can file cross objection to Tribunal within 30 days
* ITAT may grant stay for up to 180 days if the assessee deposits not less than 20% of tax, interest, fee, penalty,
or any other sum or furnishes security of equal amount.

Single Member bench - If total income of assessee is up to 50 lakhs then appeal can be heard by single member.

Time Limit to Issue Judgment and Rectification

Particular CIT(A) ITAT
Time limit to Dispose 1 years from the end of the FY in such appeal 4 years from the end of the FY in such appeal
/ Issue judgement; is filed -- > agar possible hai toh is filed -- > agar possible hai toh

Advisory time limit hai not a mandatory

Time limit to Sec 154 - 4 years from the end of the year in Sec 254 - 6 months from the end of the
Rectification; which order passed. month in which order passed. (Cant review)

Appeal Fees
Assessed Income Commissioner (A) Appellate Tribunal Doctrine of Merger;
< 1 Lakh 250 500 147 - Reassessment
Partial
> 1 Lakh < 2 Lakh 500 1500 154 - Rectification
Merger
> 2 Lakh 1000 1% but max 10,000 263 - Revision
Other Case 250 500 Total
264 - Revision
Stay Application Fees 500 Merger

Sec 154 Sec 263 Sec 264

If there is mistake in the order passed by Revision by CIT / PCIT of Order Revision by CIT / PCIT of
AO / Authority, then it can be rectified by prejudicial to interest of revenue Order prejudicial to interest of
the said authority u/s 154 assesse

Which order? - Suo moto - Suo moto

- Assessee ko OOBH milega - Application by assessee
Intimation u/s 143(1), 200A(1), 206CB(1) TCS

When ? Earlier of Time limit to pass order ? Time limit to pass order ?
4 years from the end of the FY in which order 2 years from the end of the year in Within 1 year from the passing of
sought to be amended was passed which order sought to be revised was order of sought to be revised
or passed
6 months from the end of the month in which
the application is received
Assesse can file appeal to CIT(A) / Revision Assesse can file appeal to 'ITAT' Order u/s 264 is final order & no
appln to CIT against such order against such order appeal is possible against it.
Revision u/s 263 is possible after Revision u/s 264 is not possible
revision u/s 264 after revision u/s 263

143(3) Ass 30.01.15 Application cannot be made if ;

147 Re-ass 10.02.17 a. Time limit to file appeal to
263 Revision 31.03.19 CIT(A) / ITAT has not expired
b. Assessee has not waived his
Order is invalid, > 2 years
right of appeal
c. Appeal is filed to CIT (appeal)
or to ITAT

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W.e.f 1.11.2020, Power of [Now] Chief Commissioner or Chief Commissioner [Before] Earlier it could be
Revision u/s 263 and 264 can be or Principal Commissioner or Commissioner. exercised only by Principal
exercised by Commissioner / Commissioner.

• In following 5 Cases we have no right of appeal against following order :

1. Order levying interest u/s 234 A/B/C 2. Revision order u/s 264 3. Order of Settlement commission
4. Order of Authority of Advance Ruling 5. Order of ITAT on a que. of FACT

• Cases where adverse judgement should be contested on merits even it tax effect is less than the specified
monetary limit
a) Where the constitutional validity of the provisional of an Act or Rule is under challenge
b) Where boards order, Notification, Instruction or Circular has been held to be illegal or ultra vires
c) Where revenue audit objection in the case has been accepted by the department
d) Where addition relates to undisclosed F.Income / undisclosed Foreign Asset / undisclosed Foreign Bank A/c
e) Case when prosecution has been filed by the dept. and is pending in the court

• Order passed by A.O. shall be deemed to erroneous in so far as it prejudicial to the interest of the revenue, if
in the opinion of the CIT/PCIT.
(i) Order passed without making inquiries or verification which should have been made.
(ii) The order is passed allowing any relief without inquiring into the claim.
(iii) The order has not been made in accordance with any order direction or instruction issued by the CBDT u/s 119.
(iv) The Order has not been passed in accordance with any decision which is Prejudicial to the assessee, rendered by the
jurisdictional HC / SC in the case of the assessee or any other person.

23 Penalties

Penalty can be imposed by - Assessing Officer CIT(A) CIT ITAT

a. Assessing Officer AO shall levy penalty for under reporting or misreporting of income to the additions made by him in
an assessment or reassessment u/s 143(3)/144/147/153A
b. CIT(A) CIT(A) shall levy penalty for under reporting or misreporting of income to the additions made by
him in an order passed u/s 250
c. CIT CIT shall levy penalty for under reporting or misreporting of income to the additions made by him
in an order passed u/s 263

Penalties

a. b. c. d. e.
Penalty with Search Cash Penalty Penalty with Penalty with TDS General / Common
Transfer Pricing Penalty

a. Penalty with Assessment and Search

Penalty Section Circumstances Penalty
Section 270A Under Reporting of Income (Not due to misreporting) 50% Tax Payable on Such Income
Section 270A Under Reporting of Income (Due to Misreporting) 200% Tax Payable on Such Income
Section 271AAB(1A) In case of Search - If undisclosed income admitted before due 30% of undisclosed income
date of return filing. 60% (In other cases)
Section 271AAC In case income determined u/s 68, 69, 69A to 69D 10% of Tax (u/s 115BBE)

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b. Cash Penalty
Penalty Section Circumstances Penalty
Section 271D Sec 269SS - Taking / Accepting Loans > 20k Such Amt (100%)
Section 271DA Sec 269ST - Accepting Cash > 2 lac [Seller] Such Amt (100%)
Section 271E Sec 269T - Repayment of Loan in Cash > 20k Such Amt (100%)
Section 271DB Sec 269SU - Mode of acceptance of busi. payments Rs. 5000 p/day

c. Penalty with Transfer Pricing

Penalty Section Circumstances Penalty
Section 271AA a. Failure to maintain documents (u/s 92D) 2% of Int. Transaction Value
b. Failure to report such Int. Transaction 2% of Int. Transaction Value
c. Maintaining or furnishing any incorrect info or doc. 2% of Int. Transaction Value
Section 270A Failure to report Int. Transactions (Misreporting) 200% of under-reported Income.
Section 270A(9) Failure to furnish report of Int. Group (Master File) Rs. 5 Lakh
Section 271BA Failure to furnish report of CA u/s 92E Rs. 1 Lakh
Section 271G Failure to furnish info or doc as required by AO or CIT(A) (u/s 2% of Int. Transaction Value
92D)

d. Penalty with TDS

Penalty Section Circumstances Penalty
Section 234E Late Fees - Return not filed Rs. 200 per day subject to TDS
Penalty u/s 271H Penalty - Return not filed Rs. 10K to 1 Lakh, No penalty if
Return filed < 1 year

Penalty u/s 272A(2) Certificate not issued. Rs. 100 per day
Penalty u/s 272BB Fails to get TAN / quotes false TAN up to Rs. 10,000

e. General / Common Penalty

Penalty Section Circumstances Penalty
Section 271A Failure to maintain books of account as per sec. 44A Rs. 25,000
Section 271AAD Penalty for False Entry, etc., in Books of Account Such amount
Section 271B Failure to get account audited u/s 44AB 0.5% of Total Sales / 1.5 Lakh ↓
Section 272B(2A) Failure to quote PAN / Aadhar number in the doc Rs. 10,000
Section 271FA Penalty for failure to furnish statement of financial transaction.
(Due Date 31st May)
- from 1st June till due date of filing statement as per notice Rs. 500 per day
- from the day immediately following the day on which the
time specified in such notice Rs. 1000 per day

Section 271FAA Penalty for failure to furnish Accurate statement of financial Rs. 50,000
transaction
Section 271J Penalty for furnish Incorrect Information - Accountant, Rs. 10,000 for each certificate
Merchant Banker

Section 275 Time Limit for Imposition of Penalty

Where revision Where No appeal has been filed against

Where an appeal has been filed against
application has been order of AO & No application made for
assessment order to CIT(A) or ITAT
made u/s 264 revision u/s 264

Order is passed by Where order is passed End of the FY in which assessment proceeding
CIT(A) & No appeal is by ITAT are completed
made to ITAT 6 month from the end of or
the month in which
1 year from the end of 6 month from the end revision order u/s 264 is 6 months from the end of the month in which
the FY in which order of the month in which passed penalty proceedings are initiated.
of CIT(A) is recd. order of ITAT is recd.
Whichever is later

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Sec. 285BA Statement of Financial Transaction (SFT) or Reportable Account
Basic This statement is obtained to cross-verify the information in return of income / TDS etc. Like details
are collected from, bank as to who deposited amount exceeding Rs. 10 lakhs in cash in saving Bank
Account

Who is required to file Certain specified persons are required to file SFT
Statement

Due Date SFT or Reportable Accounts shall be filed upto 31st May of the year immediately following the F.Y.
in which the transaction is registered or recorded.
Non-filing SFT or Penalty u/s 271FA :
Reportable Accounts: Rs. 500 Per day - on failure to furnish SFT or Reportable Accounts.
Rs. 1000 Per day - on failure to file the same after expiry of notice.

Filing incorrect Penalty u/s 271FAA :

information in SFT or Rs. 50,000 for furnishing inaccurate information by
Reportable Accounts

• Misreporting of Income means

a. Misrepresentation or suppression of facts (STCG as LTCG, 43B override kiya etc.)
b. Failure to record investment in the books of accounts (I. Property, FD, Jewellery)
c. Claim of expenditure not substantiated by any evidence (Bogus expenditure)
d. Recording of any false entry in the books of account (Income recd shown as advances)
e. Failure to record any receipt in books of account (Sales not recorded)
f. Failure to report any international transaction

• Sec 270AA Immunity from Imposition of Penalty

The AO shall grant immunity from imposition of penalty u/s 270A and initiation of proceedings u/s 276C/276CC
Application shall be made within 1 month from the end of the month in which order passed u/s 143(3) / 147
- Assessee has paid tax and interest and Note -
- Has not filed an appeal and Under reporting due to Mis -
reporting म Immunity नहीं िमले गी
- The time period of filling the appeal has expired.

Sec 276CC - Prosecution u/s 276CC

Prosecution u/s 276CC

When ? Exceptions;

1. Failure to 2. Failure to 1. If ROI filed 2. If ROI filed after the expiry of

file ROI file ROI before the Relevant AY / No ROI filed at all
within the within the expiry of
time allowed time allowed Relevant AY
in a notice in a notice
u/s 142(1) / u/s 139(1) In case of person Company
148 / 153A other than company
No
Prosecution
whatever be Tax on Income assessed - xxx
the Income Prosecution
tax payable (-) TDS/TCS - xxx will be there
(-) Adv Tax - xxx in any case
(-) S.A. Tax - xxx
-------------------------------
Balance - xxx
If Balance is < 10,000 --> No
Prosecution

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 24 Offences

Tax Fraud >25 L /

Section Offences Tax Fraud < 25 Lakh
Other
276B Sec 115-O, 194B Fails to pay 3 m to 7y + Fine
276BB Sec 206C Fails to deposit TCS MTP M19 3 m to 7y + Fine
276C(1) Wilful attempt to evade tax (Under reporting of 3m to 2y + Fine 6m to 7y + Fine
income)

276C(2) Wilful attempt to evade tax 3 m to 2y

276CC Failure to furnish return 3m to 2y + Fine 6m to 7y + Fine
277 False stmt in verification 3m to 2y + Fine 6m to 7y + Fine
278 Abatement of false return 3m to 2y + Fine 6m to 7y + Fine
280(1) Public servant ne disclose kiya up to 6m
276D Failure to produce Documents / Ac Book (Failed up to 1 year and with
to comply sec 142(1) / 142(2A) fine

277A Falsification of books or document 3 m to 2y

25 Settlement Commission
The main objective of any tax law is to raise revenue & while raising revenue there has to be a room for compromise &
settlement, For that purpose C.G. constituted a Authority called ITSC.

Details regarding applicant:

Who can apply ? Assessee can make application to ITSC only if following conditions are satisfied:
1. Assessment of Assessee should be pending (Note 4) u/s 143(3)/144/147 /153A
2. Additional amount of income tax on the income disclosed in application should be more than
i) 50,00,000 in Raid cases [section 153 A)
ii) 10,00,000 in other cases [Section 143(3) /144/147]
Note / Eg. : If Raid on Company / Firm then limit is 50 lakh but Director / Partner wants to apply
additionally, then limit for such related person is 10 Lakh.
Payment of tax while Additional tax along with interest should be paid before making an application to ITSC.
application Note: 1. Application once filed cannot be withdrawn by assessee.
2. After filling application, assessee shall intimate to A.0.
Additional Tax > Return was not filed Return was filed
10 lakhs / 50 lakhs Tax on Income disclosed in Tax on Disclosed Income xxx
Means ? application called Additional Tax. + Retuned income xxx
(-) Tax on Returned income. xxx
Additional Tax xxx

Procedure
Applied to ITSC --> ITSC within 7 days from the date of application, issues a notice to explain as to why his application
(7 Days for SCN) be admitted (SCN).
Accept / Reject ? Within 14 days from the date of receipt of application, the ITSC shall allow or reject the application.
(14 Days) If no order passed within 14 days then the application is deemed to be admitted.
Accepted ? within 30 days from the date of receipt of application, shall call for a report of CIT& CIT should
(30 Days + 30 Days) submit such report within 30 days of receipt of communication from ITSC.
Invalid Declaration Within 15 days from the date of receipt of report of CIT, the ITSC may declare the application as
(15 Days) invalid.
If Valid If the application is valid, ITSC shall call for records from CIT CIT shall furnish the report within 90
(90 Days) days of receipt of communication from ITSC.

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Pass order After examining the record & report of CIT, after giving all opportunity of being heard, ITSC shall
(18 months) pass order of settlement within 18 months from the end of the month in which application was
made by the assessee.

Order of ITSC includes a. Income settled & tax thereon

[Order me yeh b. Interest u/s 234A/B/C, as per SC judgement in M.H Ghaswala, ITSC cannot waive / reduce
information hogi] interest u/s 234A/B/C but it can waive / reduce to the extent CCIT/DGIT can
c. Immunity from penalty & prosecution
d. Manner in which tax shall be paid.
Payment of Tax Within 35 days from the date of receipt of order assessee should pay tax, If tax paid after 35 days
there interest @ 1.25 % per month or part shall be applicable from 36th
day.
Rectification of If there is any mistake apparent on record in order of ITSC, then the ITSC can rectify it within 6
Mistakes - months from the end of the month in which,
a) The order was passed,
b) An application has been made by Assessee or CIT / PCIT
Note : Application for rectification cannot be made by Assessee or CIT / PCIT after 6 months from
the end of the month in which order was passed by ITSC.
Abatement of In the following cases, the proceeding with ITSC shall abate & A.O. shall complete assessment as
proceeding - per normal provisions of Income Tax.

1. If application to ITSC is rejected -

[Means yeh 4 case me
hum settlement ka 2. If application to ITSC is declared invalid.
benefit nahi le sakte] 3. If the ITSC fails to pass order within time limit (i.e. 18m)
4. If the ITSC passed order without providing terms of settlement
Restriction on making Individual Company Firm / AOP HUF
second time application a) Co. in which individual holds > 50% shares / Any individual holds > Any Karta of
voting power 50 % share capital / individual HUF
b) Firm / AOP / BOI in which individual holds > voting power holds
50% of PSR. >50% PSR
c) Any HUF in which individual is karta.

Power of ITSC 1. It can attach property. Attachment initially is for 6 months but can be extended.
2. It has all the power of the Income Tax authority.
3. It shall have exclusive Jurisdiction over case i.e. IT Authority will not touch the case
4. Power to grant immunity from -Penalty or prosecution under income Tax Act, it is given if-
a) Assessee co-operated with ITSC.
b) Assessee made full & true disclosure of income &
c) Manner of deriving such income.
Immunity Withdrawn Immunity granted shall be withdrawn if;
a) Assessee fails to pay taxes
b) Assessee has concealed any material or has given false evidence.

Space for Your Notes

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 26 General Anti Avoidance Rule (GAAR)

a. Tax Planning Tax planning may be defined as an arrangement of one‘s financial affairs in such a way that,
without violating in any way the legal provisions, full advantage is taken of all tax exemptions &
deductions, permitted under the Act so to minimize the burden of taxation.

Example : 1. Choosing the suitable form of assessable entity (individual, firm, company)
2. Choosing suitable forms of investment (share capital, loan capital, lease) considering deductions
available in respect of interest, exemption available in respect of dividend etc.
3. Diversification of the business activities

b. Tax Evasion Tax evasion refers to any attempt to avoid payment of taxes by using illegal means.
Example : 1. Misrepresentation or suppression of facts;
2. Failure to record investments in books of account;
3. Claim of expenditure not substantiated by any evidence;
4. Recording of any false entry in books of accounts

c. Tax Avoidance Minimization of one’s tax liability by taking advantage of legally available tax planning
opportunities. Tax avoidance may be contrasted with evasion, which entails the reduction of tax
liability by using illegal means. [Black’s Law Dictionary] The arrangement is entered into solely or
primarily for the purpose of obtaining a tax advantage & does not have any commercial substance.

Example : 1. If a person shift his existing business to a SEZ just to claim the tax benefits u/s 10AA & there is
no other commercial consideration involved.

d. Tax Management It means planning affairs in such a manner, so that the tax obligation is managed properly.
Example : 1. Advance tax is paid properly to avoids interest,
2. Return filed on time so refund can be processed earlier.

GAAR do not deals GAAR Provisions do not deal with cases of Tax Evasion, Tax Planning, with cases where there are
with specific provision under the Act for anti-avoidance.

GAAR Applicability - GAAR provisions are applicable from AY 2018-19 and onwards
- GAAR would apply in respect of tax benefit in aggregate by all enterprises out of an arrange in an
AY exceeds 3 crores.
Exemption from 1. To Foreign Institutional Investor who:
GAAR Provision a. is an assessee under the act
b. has not taken benefit of DTAA
c. has invested in listed or unlisted securities with prior permission
2. NR, in relation to investment made by wase of offshore derivative instruments ('P-Notes') or
otherwise, directly or indirectly, in FII.

GAAR - Basic a. Generally, tax avoidance is legally permissible, if it is within the four corners of the Act, and is
not a colorable device.
b. However, many tax-planning/ avoidances are prima-facie in conflict of the objectives of the Act
or may be primarily designed to reduce the tax liability.
c. Provisions of GAAR override the provisions of Double Taxation Avoidance Agreement (DTAA).
Section 96: IAA means an arrangement which satisfies 2 conditions: -
Impermissible Primary Conditions Tainted element presence Test
Avoidance
Main purpose is to i) Creates rights which are not ordinarily created between persons
Agreement [IAA]
obtain a tax benefit dealing at arm's length (Test 1) or
ii) Results (directly or indirectly) in misuse or abuse of provisions of this
Arrange would IAA, if Act (Test 2) or
it satisfies Primary iii) Entered/ carried in a manner, which are not ordinarily employed for
condition & any 1 of bonafide purposes (Test 3) or
tainted element
presence test. iv) Lacks commercial substance or Deemed to lack commercial
substance. (Test 4)

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Tax Benefit includes a) Reduction or avoidance or deferral of tax or other amount payable under this Act
b) an increase in a refund of tax or other amount under this Act
c) a reduction or avoidance or deferral of tax or other amount that would be payable under this Act,
as a result of a tax treaty (DTAA under section 90 / 90A)
d) an increase in a refund of tax or other amount under this Act as a result of a tax treaty
e) a reduction in total income
f) an increase in loss
in the relevant previous year or any other previous year
Sec 97- An arrangement shall be deemed to lack commercial substance, if
Arrangement to lack a) Substance or effect of the arrangement as a whole, is inconsistent with, or differs significantly
commercial from, the form of its individual steps or a part
substance
b) It involves or includes
i. Round trip financing ii. an Accommodating party
iii. Elements that have effect of offsetting or cancelling each other
iv. Transaction which is conducted through one or more persons and disguises the value,
location, source, ownership or control of funds which is the subject matter of such transaction

c) Involves the location of an asset or of a transaction or of the place of residence of any party
which is without any substantial commercial purpose other than obtaining a tax benefit for a party
- Asset includes property, or right, of any kind.
- Benefit includes a payment of any kind whether in tangible or intangible form.

d) It does not have significant effect upon the business risks or net cash flows of any party to the
arrangement apart from any effect attributable to the tax benefit that would be obtained.
- Party includes a person or a permanent establishment which participates or takes part in an
arrangement.

Sec 98 - If an arrangement is declared to be an impermissible avoidance arrangement, then, the

Consequences of consequences, in relation to tax, of the arrangement, including denial of tax benefit or a benefit
Impermissible under a tax treaty, shall be determined by:
Avoidance
Arrangement [IAA] 1. Disregarding, combining or re-characterising any step in, or part or whole of, the IAA
2. Treating the IAA as if it had not been entered into or carried out
3. Disregarding any accommodating party or treating any accommodating party and any other
party as one and the same person
4. Deeming persons who are connected persons in relation to each other to be one and the same
person for the purposes of determining tax treatment of any amount

5. Reallocating amongst the parties to the arrangement -

(i) any accrual, or receipt, of a capital or revenue nature; or
(ii) any expenditure, deduction, relief or rebate;
6. Treating
i. the place of residence of any party to the arrangement
ii. the situs of an asset or of a transaction
at a place other than the place of residence, location of the asset or location of the transaction as
provided under the arrangement; or

7. Considering or looking through any arrangement by disregarding any corporate structure.

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 68
 27 Miscellaneous

Sec 115BBE - 60 + 25 +4 = 78%;

Sec 68 Unexplained cash credit Sec 271AAC -
Sec 69 Unexplained Investment Levy of penalty @10% -->
Sec 69A Unexplained Money 68,69,69A to 69D
Sec 69B Investment not fully disclosed in the books
Sec 69C Unexplained expenditure
Sec 69D Amt borrowed and paid other than ac payee cheq

Sec 115VC Tonnage Taxation

Basic If Indian co, (has POEM in India) engaged in business of operating ships can compute its income on
the basis of Tonnage tax scheme if company owning at least one qualifying ship. This scheme is
optional.
Qualifying company - Indian Company (POEM in India) Own Ship Object same
Sec 115UG - Net tonnage Daily Tonnage Income
Computation of 1000 ton Rs. 70 for each 100 ton
Tonnage Income 1000-10000 ton Rs. 700 + Rs. 53 for each 100 ton
10000-25000 ton Rs. 5470 + Rs. 42 for each 100 ton
Exceeding 25K Rs. 11770 + Rs. 29 for each 100 ton

Tax Rate @ 30 + 7% (Surcharge) + 4% (Cess)

Misc. • Tonnage shall be rounded off to the nearest multiple of 100 tons.
• No Chpt VI-A, • No Exp Deductions • MAT not applicable
Qualifying Ships - Seagoing ship or vessel of 15 net tonnage or more
but exclude ;
(i) a seagoing ship or vessel if the main purpose for which it is used is for the provision of goods or
services of a kind normally provided on land
(ii) factory ships (iii) fishing vessels
(iv) harbour and river ferries (v) pleasure craft
(vi) offshore installations
(vii) qualifying ship which is used as a fishing vessel for a period of > 30 days during a P.Y.

Sec 10AA Deduction for SEZ Units

Basic Deduction is allowed to an assessee who is engaged in manufacture or produces articles or things
or provides any services.

Deduction should be for First 5 AY for Next 5 AY for Next 5 AY

- 100% of Export - 50% of Export Profit - Amount debited to P & L & credited SEZ Re-
Profit investment allowance Reserve A/c or
- 50% of Export Profit
(Whichever is lower)
Export Profit Export Turnover
PGBP of unit located in SEZ x
Total Turnover

Export Turnover means Consideration in respect of export brought into India in convertible foreign currency within 6
months from end of P.Y. or as time permitted by RBI.
Note - Sales proceeds deemed to have been received in India if such amount is credited to a
separate A /c maintained by assessee outside India with approval of RBI.
Export Turnover does a. Freight, Telecommunication charges, Insurance or Expn. for providing service outside India.
not include b. Shall not include Cash Compensatory Support, Duty drawback and profit on sale of import
entitlement licenses.
Total Turnover does a. Freight, Telecommunication charges, Insurance or Expn. for providing service outside India.
not include b. Shall not include Cash Compensatory Support, Duty drawback and profit on sale of import
entitlement licenses.
Utilization of SEZ 1. should be utilized for acquiring new Plant & Machinery put to use within 3 years from the end of
Investment Reserve P.Y. in which reserve was created.
A/c
2. If amount mis-utilised / un-utilised then deduction claimed earlier shall be taxable as PGBP.
Deemed Income If Reserve has not been utilized till the expiry of time limit: of the year immediately following the
period of 3 years

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 69
Sec 269SS - Mode of Taking or Accepting - Sec 269ST - Mode of Undertaking Sec 269T - Repayment of Loan
Loans / Deposit / Advance. Transactions. / Deposit / Advance
Any person should accept : Any person should not receive amt > Any person should repay :
a. Loan / Deposit 2,00,000 in cash a. Loan or Deposit (together with
b. Advance in relation to Immovable Property, (a) Aggregate from person in a day; or interest)

by Other than Cash (If Amt > 20K) b. Advance in relation to

(b) In respect of a single transaction; or immovable property,
by Other than Cash (If Amt > 20K)
Notes Compiled by Sanjay Zanwar (c) In respect of transactions relating
Telegram Channel @ DT_LDR to one event or occasion from a person.

• Penalty u/s 271D • Penalty u/s 271DA • Penalty u/s 271E

Penalty shall be levied @ 100% of such Penalty shall be levied @ 100% of such Penalty shall be levied @ 100% of
amount. It shall be imposed by J.C amount. It shall be imposed by J.C such amount. It shall be imposed
by J.C

• Exception (Non applicability) • Exception (Non applicability) • Exception (Non applicability)

Above section is not applicable if L / D or 1) Any receipt by Govt, Banking If L/ D / A taken / accepted from :
Advance is taken from or by company, Post office or co- operative (i) Government or Govt Company
(i) Govt (ii) Govt. Company bank
(ii) Bank, co-op. bank, post office
(iii) Banks, co-op Bank, Post Office, (2) Transactions of the nature referred
(iv) Person having only Agri. Income to in section 269SS. (iii) Corp, established by Central,
(v) Corp, established by Central, State, (3) such other persons or class of State, Provincial Act
Provincial Act. persons or receipts, notified by the CG.
(vi) Any other as notified by CBDT. (See #)

• Note • Note • Note

On date of taking/ accepting such L / D / A, a. No penalty shall be levied if that On the date of repayment of
--> any L / D / A taken or accepted earlier by person proves that there were good & L/D/A
such person & unpaid on such date shall also sufficient reasons for the contravention. -- > any L / D / A outstanding
be consider for Rs. 20,000 limits. on such date shall also be
consider for 20,000 limits.
Example :
a. 01.06 - 12000 by NEFT, 15.06 - 13000 by
Cash --> Violation of Sec 269SS L / D / A Means :
Penalty = 13000
L = Loans
b. 01.06 - 12000 by Cash, 15.06 - 12000 by
NEFT --> No Violation of Sec 269SS D = Deposits
A = Adv. in relation to Immovable
Property
Telegram Channel @ DT_LDR (Compiled by Sanjay)

# CG has specified that the provision of section 269ST shall not apply to the following, namely.
(a) Receipt (cash withdrawals) by any person from a bank, co-operative bank or a post office savings bank
(b) Receipt by a business correspondent on behalf of a banking company or co-operative bank, in accordance with the
guidelines issued by the RBI;
(c) Receipt by a white label ATM operator from retail outlet sources on behalf of banking co. or co-op. bank;
(d) Receipt from an agent by an issuer of pre-paid payment instruments
(e) Receipt by company/ institution issuing credit cards against bills raised in respect of one /more credit cards;
(f) receipt which is not includible in the total income under section 10(17A)

Sec 269SU Mode of acceptance of business payments. Applicable to every person

- The Section is applicable to business not profession
- Where the turnover > 50 crore
- All payments to be collected through electronic modes prescribed
- Penalty of 5000 per day u/s 271DB
- No transaction charges on this by the banks

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 70
Cash sale by cultivators / agriculturist to traders, If amount > 2 lac Case Law - Ans writing format
40A(3) Disallowance expenditure > 10 k - Issue Involved
269ST Receipt in cash > 2 lac - Provision applicable
Rule 114B Quote his PAN / Furnish form 60 - Analysis
- Conclusion

Action on legal representative

1. LR would liable to file return of income as legal representative and pay sum which died person would have been liable to
pay.
2. Any sum includes tax, penalties, interest / any other sum that would have been payable by died person, the liability of LR
would be limited to extent to which, the estate of the deceased is capable of meeting the liability.
3. No prosecution can be initiated on LR

Successful tax planning must confirm two test … Conformity with the current law and flexibility

Sec 10(26AAA) Any income which accrues or arises to a Sikkimese Individual

a) From any source in the state of Sikkim
b) by way of dividend or interest on securities (Whether generated in Sikkim or any other place/)
This exemption is not applicable in case a Sikkimese woman marries a non-Sikkimese on or after the 1-4-2008.

Rule 6DD of Income Tax Rules enlists certain cases and circumstances which enjoy relaxation from provisions
of Section 40A(3) and 40A(3A). i.e., payment exceeding Rs. 10,000 otherwise than by an account
payee cheque.

“Where the payment was required to be made on a day on which the banks were closed either on
account of holiday or strike”.

This circumstance has been deleted by way of an amended in the Rule.

Rule 6ABBA (w.e.f. 1.9.2019)

Sections : Sec 13A, Sec 35AD, Sec 40A(3)/(3A)/(4), Sec 43(1),
Sec 43CA/50C, Sec 44AD, Sec 56(2)(x), Sec 80JJAA,
Sec 269SS, 269T, 269ST
Other electronic Credit / Debit Card Net Banking
modes : IMPS (Immediate Payment Service) NEFT (National Electronic Funds Transfer)
RTGS (Real Time Gross Settlement) BHIM (Bharat Interface for Money) Aadhar Pay
UPI (Unified Payment Interface)

• Certain cases when income of previous year will be assessed in the previous year itself;
General Rule Income of a previous year is assessed in assessment year following the previous year
Exceptions to this rule Cases where income of a previous year is assessed in the previous year itself
a. Shipping business of non-resident b. Persons leaving India
c. Discontinued business d. Persons likely to trf. property to avoid tax
e. AOP/BOI/ Artificial Juridical Person formed for a particular event or purpose

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 71
 Part D - International Taxation

1 Residential Status and Accrual of Income

Chapter MAP
Part A Part B Part C
Residential Status of Accrual of Income in case; a. POEM Guidelines
a. Individual a. Individual b. Section 9 [ Interest / Royalty / FTS]
b. HUF b. Firm / Company / AOP / BOP c. Income from Business Connection
c. Company - Other than Int / Royalty / FTS
d. Firm / AOP d. Significant Economic Presence
e. Other Person - Explanation 2A to Sec 9(1)
e. Gift Provision

• Residential Status of Individual

Sec 6(1) Rule 1 - Basic Condition: To determine whether an assessee is a Resident or not
Particular Conditions
1) An Indian citizen who leaves India during the previous Condition 1 He/she is in India for a period of 182 days or
year more (Current PY) OR
- for the purpose of employment outside India He will be RESIDENT if above option satisfied
- as member of crew of an Indian ship
2) Indian citizen / a Person of Indian origin (PIO) who Condition 1 He/she is in India for a period of 182 days or
comes on a visit to India during the previous year AND more (Current PY) OR

having total income, other than the income from

foreign sources is Rs. 15 Lakh or Less. He will be RESIDENT if above option satisfied

3) Indian citizen / a Person of Indian origin (PIO) who Condition 1 He/she is in India for a period of 182 days or
comes on a visit to India during the previous year AND more (Current PY) OR

Condition 2 He/she is in India for period of

having total income, other than the income from
foreign sources is Exceeding Rs. 15 Lakh. - 120 days or more in the previous year AND
- 365 days or more during 4 years immediately
preceding the previous year
RESIDENT - If any one of the above condition is satisfied
Note :
If his stay in India > 120 Days but < 182 days --> He will be
RNOR (As per sec 6(6) amendment)
4) Cases not covered by 1, 2 or 3 above Condition 1 He/she is in India for a period of 182 days or
more (Current PY) OR

Condition 2 He/she is in India for period of

- 60 days or more in the previous year AND
- 365 days or more during 4 years immediately
preceding the previous year
RESIDENT - If any one of the above condition is satisfied

• Definition
Indian Origin If he or either of his parent or any of grand person, was born in Undivided India.
Income from Foreign Means income which accrue or arise outside India (Except income derived from business controlled
Source from or profession set up in India) and
which is not deemed to accrue / arise in India
So, Income from Foreign Source --> Income which accrue / arise outside India but shall not include:
1. Income which are deemed to accrue or arise in India by virtue of Sec 9
2. Income derived abroad from business controlled from India or Profession set up in India

Sec 6(6) Rule 2 -Additional Condition - To determine if he/she is ordinarily resident

a) He/she has been resident in India for at least 2 out of 10 PY immediately preceding the PY AND
b) He/she has been in India for period of 730 days or more during 7 years immediately preceding the relevant PY.
If Both conditions of Rule 2 are satisfied --> ROR If Both conditions of Rule 2 are not satisfied --> RNOR

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 72
Sec 6(1A) Deemed Resident
Shall be deemed to - An Individual being citizen of India.
resident in India - having total income, other than the income from foreign sources,
- exceeding Rs. 15 lakhs during the PY
If --> - he is not liable to tax in any other country / territory by reason of his domicile or residence or
any other criteria of similar nature.
This clause shall not - In case of Individual who is said to be resident in India as per Sec 6(1)
apply

• Residential Status of HUF - Sec 6(2)

Control and Management of affairs Status
- Wholly in India Resident
- Partly in India and Partly outside India
- Wholly in Outside India Non Resident
Note:
Both the additional Conditions (Rule 2) as per sec 6(6)
If Karta of HUF is satisfying --> HUF is treated as ROR
If Karta of HUF is not satisfying --> HUF is treated as RNOR

• Residential Status of Firm / AOP / BOI / Local Authority / Other Person

Control and Management of affairs Status
- Wholly in India Resident
- Partly in India and Partly outside India
- Wholly in Outside India Non Resident

• Residential Status of Companies - Sec 6(3)

a) Indian Companies : are always Resident in India
b) Other Companies : If its "POEM" is in India in that year then Resident otherwise Non resident.

Company having turnover or gross receipts > Company having turnover or gross receipts
Rs. 50 cr in a FY < Rs. 50 cr in a FY
If both test satisfied then POEM is not in India Determination of POEM would be 2 Stage Process
1. Identification / ascertaining persons who
How to Identify POEM ? actually make key management & commercial
Test 1 - Active Business Outside India
decision for conduct of the companies business
Test 2 - Majority Board meetings held outside as a whole.
India. 2. Determine of place where decision are infect
being made

• Place of Effective Management [POEM] Determination of POEM (Applicable only if Turnover > 50 crore)
Meaning a place where key management and commercial decisions that are necessary for the conduct of the
business of an entity as a whole are, in substance made.

Applicability POEM guidelines shall apply to a company having turnover or gross receipts of Rs. 50 crores or
(Circular No. 8/2017) more in a financial year.
Company having If Both the conditions satisfied then POEM is not India
Active Business i) Active Business outside India(ABOI).
outside India (ABOI)
ii) Majority meetings of Board held outside India.
Test - Active Business A Company shall be said to be engaged in "Active Business Outside India" if
Outside India a. Passive Income is not more than 50% of its total income. and
b. Less than 50% of its total assets are situated in India. and
Note : All conditions
should be satisfied c. Less than 50% of Total no. of employee are situated in India / are resident in India. And
d. The payroll expenses incurred on such employee is < 50% of its total payroll expenditure

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 73
• Meaning of Certain Terms
Passive Income ? a) Income from the trans. where both the purchase & sale of goods is from / to its AE and
b) Income by way of Royalty, Dividend, Capital gains, Rental Income or Interest (Interest
except for Banking Company or PFI). (ये 5 Income अ े से याद रखना )
Income ? Income as per Tax Law of country of incorporation. If Tax Law does not required computation of
Income then Income as per Books of Accounts.

Value of Assets ? a. Depreciable asset: Average of opening and closing WDV of such asset or block of asset as per
Tax Law of that country.

b. Other Asset: Value as per Books of Account.

Payroll ? Cost of salaries, wages, bonus and all other employee compensation including related pension and
social costs borne by the employer.

• Accrual of Income - Individual / HUF

Type of Income ROR RNOR NR
1. Indian Income Taxable Taxable Taxable
2. Foreign Income
a. Business / Profession Income : Taxable Taxable Not Taxable
- wholly / partly controlled from India and
- Received out of India

b. Other Foreign Income Taxable Not Taxable Not Taxable

• Accrual of Income - Firm / AOP / Companies / Other Person

Type of Income Resident Non Resident
Indian Income Taxable Taxable
Foreign Income Taxable Not Taxable

Section 9 Income deemed to accrue or arise in India

All income accruing or through or from any business connection in India,
arising, whether through or from any property in India
directly or indirectly
through or from any asset or source of income in India
through the trf. of a capital asset situate in India shall be deemed to accrue/ arise in India.
Salary [9(1)(ii)] a. For service rendered in India, whether such Income before or after service rendered like
Gratuity, Pension, Profit in lieu of Salary.
Salary [9(1)(iii)] b. Salary received by Indian Citizen from Govt, for service rendered outside India.
Note - as per section 10(7) perquisite & allowances are Exempt.
Dividend [9(1)(iv)] Dividend paid by Indian Company Outside India
Interest Interest paid by Use of Funds
[Sec 9(1)(v)] Government For any purpose (in India or outside India)
Resident For any purpose except loan is used for a business or profession carried on
outside India or for making or earning any income from any source outside
India
Non Resident Loan or money is used for business or profession carried on in India
Royalty Paid by Use of Funds
[Sec 9(1)(vi)] Government For any purpose (in India or outside India)
Resident For any purpose except for any right, property or information used or
services utilised for a business or profession outside India or for earning
any income from any source outside India
Non Resident For any right, property or information used or services utilised for business
or profession in India or for the purposes of making or earning any income
from any source in India
Fees for Technical Paid by Use of Funds
Service (FTS) Government For any purpose (in India or outside India)
[Sec 9(1)(vii)] Resident For any purpose except if services utilised in a business / profession
outside India or for the purposes of making or earning any income from
any source outside India
Non Resident For services utilised in business/profession in India or for the purposes of
making or earning any income from any source in India

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 74
Gift to person outside - Any sum of money paid, or any property situate in India transferred,
India - Accrue in India - by a person resident in India to a person outside India shall accrue in India.
[9(1)(viii)]

Income from Business Connection -(Business Profits other than Interest/ Royalty / FTS)
Operations carried out The income of the business deemed to accrue or arise in India shall be only such part of income as
in India is reasonably attributable to the operations carried out in India.
Activity on behalf of Business connection shall include any business activity carried out through a person who, acting on
the non-resident behalf of the non-resident [Agent]
a) has and habitually exercises in India,
- an authority to conclude contracts on behalf of the non-resident or
- habitually concludes contracts or
- habitually plays the principal role leading to conclusion of contracts
by that non-resident and the contracts are
i. in the name of the non-resident; or
ii. for the transfer of the ownership of, or for the granting of the right to use, property
owned by that non-resident or that non-resident has the right to use or
iii. for provision of services by the non-resident
b) has no such authority, but habitually maintains in India a stock of goods or merchandise from
which he regularly delivers goods; or
c) habitually secures orders in India, mainly or wholly for the non-resident or for that non-
resident and other non-residents
Not Includes Such business connection shall not include any business activity carried out through a broker,
general commission agent or any other agent having an independent status
Not treated as a. Purchase of goods in India for export.
Business Connection in b. Collection of news and views in India for transmission out of India.
India
c. Shooting of cinematograph films in India if such NR is Individual,
- who is not a citizen of India or
- a firm which does not have any partner who is a citizen / resident of India or
- a company which does not have any shareholder who is a citizen / resident of India

d. In case of a foreign company engaged in the business of mining of diamonds, from the activities
which are confined to display of uncut and unassorted diamonds in any special zone notified by the
CG.

Significant Economic Presence (SEP) - Explanation 2A to Section 9(1)

The significant economic presence of a non-resident in India shall constitute “business connection” in India.
Nature of Nature of Transaction Condition
Transactions and 1. Transaction for goods, services or property Aggregate payments from transaction/s exceeds
Condition carried out by a non-resident in India including prescribed amount
provision of download of data or software in India

2. Systematic & continuous soliciting of business Users should be of prescribed number

activities/ engaging in interaction with users in
India through digital means
SEP in India, Further the above Transactions shall constitute 'SEP' in India, whether or not,
whether or not. a. the agreement for such transactions or activities is entered in India;
b. the non-resident has a residence or place of business in India; or
c. the non-resident renders services in India.
Deemed to accrue Only so much of income as is attributable to the transactions or activities referred to in clause (a)
or clause (b) above shall be deemed to accrue or arise in India.

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 75
 2 Non Resident Taxation
Chapter MAP
Part A Part B Part C Part D
Sec 115E - Special Rates of Tax for NR - Sec 115AC Taxation of Presumptive Taxation
Taxation of NRI Sec 115A, 115AB, 115AD, 115BBA Income on Bonds & GDR - Ship, Aircraft etc.

Note:
NR / Foreign Companies are NOT REQUIRED to file the return of Income even if income exceeds the taxable limit in the
following 4 cases.
1. Sec 115A 2. Sec 115AC 3. Sec 115G 4. Sec 115BBA

Part A - One Section

1. Sec 115E Taxation of NRI (This provision is optional to NRI)

NRI Means NR + Indian citizen / Person of Indian origin.
Person of Indian Origin means if he, or either of his parents or any of his grand-parents, was born
in undivided India

• Type of Income
1. Interest Income @ 20% 2. LTCG @ 10% 3. Other incomes
Interest from foreign exchange assets# LTCG from foreign ex. assets#
• Tax Rates - @ 20% • Tax Rates - @ 10% • Tax Rates - Normal Tax Rate
Method : Method : (Brokerage less करना ) Method :
- Dedn u/s 28 to 44C, S. 57 not available - Chapter VI-A Dedn. Not Available - as per normal provisions
- Chapter VI-A Dedn. not available. - Indexation Benefit Not Available

# Foreign Exchange Any of the following assets acquired / purchased in foreign exchange (FOREX).
Assets i. Shares of Indian company (Public/ Private) ii. Debenture of Indian Public Co.
iii. Deposits with an Indian Public company iv. Securities of Central Govt.
v. Any other asset as may be notified by CG
Section 115F - LTCG on FOREX asset shall be exempt if net consideration is utilized for acquiring other FOREX
Exemption on LTCG assets with 6 Months from the date of transfer.
[Net consideration = Consideration (-) Expenditure in connection with transfer.]
नोट --> Exam म Exempt Amount = LTCG x Cost of New Asset / Net Consideration
expenditure less Lock in period - New asset should be retained for 3 years from the date of its acquisition.
करना मत भूलना

Section 115G - ROI not required to be filed if :

Exemption from a) Total Income include only Interest Income & LTCG.
Filing of ROI b) TDS already deducted.
Section 115-I The above provisions are optional means Assessee can pay Normal tax on LTCG & Interest income
instead of 10% & 20%.

Key Notes Interest received by NRI on debentures / bonds issued by a unit located in IFSC on or after
1.09.2019 is exempt under section 10(15).

Space for Your Notes

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 76
 Part B - Four Section

1. Sec 115A Interest, Royalty, Fees for Technical Service recd by NR/Foreign Company

• Interest
Type of Income Payable to From Rate TDS
A. Interest NR / F. Company Infrastructure Debt Fund [Sec 10(47)] @5% 194LB 5%
(Asked in Nov 19 - New Syllabus)
B. Interest on Loan NR / F. Company Indian Co. / Business Trust - Loan in Foreign @5% 194LC 5%
Currency, RDB, Long Term Bond (IFSC 4%)

C. Interest on FII / QFI* Investment made in RDB of Indian Company or @5% 194LD 5%
Investment Government Securities
D. Interest on Unit NR Unit holder Business Trust (REIT / InVIT) @5% 194LBA
E. Interest on NR / F. Company Government or Indian Concern (Nov 18 Q7) @20% Sec 195
F. Currency Loan (Other than A,B,C,D)
*FII - Foreign Institutional Investor, QFI - Qualified Foreign Investor, RDB- Rupee Denominated Bond

# Interest on RDB's or Any other Long term Bond --> earned by NR / Foreign Company
Bond issued on or after 01/04/2020 and are listed only on the Stock Exchange Located in IFSC
Taxable at 4%

• Dividend Income and Income received on Units.

Obligation to
Nature of Income Payee Tax Rate TDS Return Furnish
1. Dividend on Shares purchased in Indian Currency / NR / FC 20% - 115A 20% - u/s No
Foreign Currency 195
2. Distributed Income from Business Trust (Dividend NR / FC 20% - 115A 10% -u/s Yes
received from SPV who opted 115BAA) 194LBA
3. Income on Unit of Mutual Fund / Units of Unit Trust of NR / FC 20% - 115A 20% -u/s No
India purchased in Foreign Currency. 196A
3. Income on Unit of Mutual Fund / Units of Unit Trust of NR / FC Normal Tax 20% -u/s Yes
India purchased in Indian Currency. Rate 196A

Return Filing if income The assessee is not required to furnish Return u/s 139(1) if -
u/s 115A a. The Total income consists of only Interest / Dividend Income referred above and
b. the TDS has been deducted from such income.
Benefit not available - Deduction under chapter VI-A - Indexation Benefit (in case CG)
for Sec 115A - Basic Exemption (Slab) - Deduction u/s 28 to 44C / Sec 57
Note - Deduction u/c VI-A available against Royalty & FTS referred in Sec 115A

• Royalty / Fee for technical service (FTS)

Particular If there is PE in India If there is No PE in India
1. Section Applicable 44DA Sec 115A
2. Taxable at the Rate Normal Tax Rate 10% (Gross Royalty is Taxable)
3. Surcharge & Edu. Cess Applicable Applicable
4. Computation of Income Computed under PGBP after allowing No expenses allowed in computing
all expenses such Income.
5. Compulsory maintenance of Yes, Applicable No such requirements
Books of A/c and AUDIT
6. Deduction under Chapter VI-A Allowed Allowed
7. Set-off losses from other Allowed Allowed
business in India

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 77
• Comparison
Dividend & Income
Particular Royalty & FTS Interest
received on Units
a. Slab Benefit Not available Not available Not available
b. Deduction u/s 28 to 44C & Sec 57 No No No
c. Deduction under Chapter VI-A Available Not available (except 80LA)
d. Provision of set off, c/f losses Applicable Applicable Applicable
e. Unabsorbed depreciation Can't be set off Can't be set off Can't be set off
f. Filing of Return of Income not necessary if; 1. It includes only above income AND
2. TDS is fully deducted

2. Sec 115AB LTCG to "Overseas Financial Organization" on units of UTI/Mutual Fund

Tax Rate --> @10% TDS Dedn u/s --> Sec 196B
If STT Paid --> Benefit of Sec 111A (STCG @ 15%) and Sec 112A (LTCG @ 10% in excess of 1 Lakh)
Benefit not available - Deduction under chapter VI-A - Indexation Benefit (in case CG)
- Basic Exemption (Slab) - Deduction u/s 28 to 44C / Sec 57

3. Sec 115AD Capital Gain & Interest on Security of FII (Max Surcharge is 15% on CG)
Income --> Income recd by Foreign Institutional Investors (FII) on securities (other than units of UTI/MF).
Taxable at the rate STCG u/s Interest / Dividend Interest / Dividend
LTCG STCG Other
111A from FII Specified Fund
Tax --> @ 10% @ 15% @ 30% @ 20% @ 10%
TDS --> Sec 195 Sec 195 Sec 195 196D - 20% 196D - 10%
Note -
a. If Sec 112A apply then income tax @10% on income exceeding 1 lakh
b. Surcharge on Capital Gain and Dividend Income u/s 115AD shall be charged in the same manner
as in the case of Capital gains u/s 111A and/or 112A. (Max Surcharge 15%)

Benefit not available - Deduction under chapter VI-A - Indexation Benefit (in case CG)
- Basic Exemption (Slab) - Deduction u/s 28 to 44C / Sec 57

4. Sec 115BBA Income of NR Sports Person, NR Sports Association & NR Entertainer

Basic • Tax rate @20% • TDS u/s - 194E (20% + Cess)
Benefit not available - Indexation Benefit (in case CG) - Deduction under chapter VI-A (Except 80LA)
- Basic Exemption (Slab) - Deduction u/s 28 to 44C / Sec 57
Note : Deduction u/c VI-A available against Royalty and FTS referred in section 115A
Sportsman means (including an athlete), who is not a citizen of India and is a non-resident Any income received or
receivable by way of
Note - Umpire, NR 1. Participation in India in any game or sport
Commentator and Note - Game does not include which are taxable u/s 115BB --> being winning from crossword
Referee are not a puzzles, races including horse races, card games & gambling or betting
Sport Person
2. Advertisement;
3. Contribution of articles relating to any sport in India in newspapers, magazines / journals;
Entertainer means An entertainer who is not a citizen of India and is a non-resident
Return Filing The assessee is not required to furnish Return u/s 139(1) if -
a. His total income in respect of which he is assessable under this Act during the PY consisted only
of income referred u/s 115BBA AND
b. TDS under the provisions of Chapter XVII-B has been deducted from such income.
Note अगर question म Horse race income या income from लॉटरी है तो 30% tax लगेगा (Sec 115BB)

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 Part C - Bonds & GDR

Sec 115AC LTCG and Interest from --> Bonds and GDR
Income Income received by NR / Foreign Company on 'Bonds of Indian Company'
Income received by NR / Foreign Company on 'GDR acquired in Foreign Currency'
Tax Rate Interest @10% TDS Dedn u/s 196C
LTCG @10% TDS Dedn u/s 196C
Dividend* @10% TDS Dedn u/s 196C (Note - *it means Dividend on GDR)
Benefit not available - Deduction under chapter VI-A - Indexation Benefit (in case CG)
- Basic Exemption (Slab) - Deduction u/s 28 to 44C / Sec 57
Return Filing The assessee is not required to furnish Return u/s 139(1) if -
a. Total income consists of only Interest / Dividend Income referred above and
b. TDS has been deducted from such income.
Transfer of Bonds / Not considered as transfer for calculation of capital gain [Sec 47 (viiia)]
GDR If transfer made outside India by one NR to another NR shall not be treated as transfer

Part D - Presumptive Scheme

Particular Sec 44B Sec 44BBA Sec 44BB Sec 44BBB

Nature of Business Shipping Business Operation of Aircraft Mineral Oil, N. Gas * Turnkey Power Project #
Eligible assessee Non-resident Non-resident Non-resident Foreign Co. only
Presumptive Income 7.5% of Freight 5% of Total Freight 10% Service charge rcd. 10% of sum recd
Income means 1. Amount paid / payable 1. Amount paid or Amount paid or
Specified sum which is - on account of carriage of passengers, payable, Such service payable, against Such
--> livestock, mail or goods provided in India service.
- shipped at / from any port / place in India;
and 2. Amount recd or
Note in Sec 44B - 2. Amt recd. / deemed to be recd in India deemed to be recd in
Demurrage (+) - on account of carriage of passengers, livestock India, Such service
Handling charges also mail or goods provided outside India
to be included - shipped at / from any port / place outside
India

Sec 28 to 43A Not Available Not Available Not Available Not Available
deductions
Chapter VI-A Available Available Available Available
deductions
Set-off Losses Possible Possible Possible Possible
Dep. / B/f Dep set off Not Possible Not Possible Not Possible Not Possible
Option to declare Not Available Not Available Lower profits may be claimed u/s 44BB & u/s
lower profit 44BBB but assessee
- maintains Books of account u/s 44AA &
- gets them audited u/s 44 AB.

* Sec 44BB Business of providing services & facilities for or supplying P&M on hire, used or to be used in the
exploration & exploitation of Mineral oils, Petroleum and Natural gas

# Sec 44BBB - Business of civil construction or

- Business of erection of P&M or testing or commissioning thereof,
- in connection with Turnkey Power Projects approved by CG

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DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 79
 Added by FA 2020
Sec 10(23FE) Exemption of Certain Income of 'Specified Persons' from Investment in India
Income exempt Dividend, Interest or Long Term Capital Gain arising from an Investment in India.
Investment during on or after 01/4/2020 but before 31/03/2024
To be held For at least 3 years (Lock in Period)
Investment in 1. Business trust being an Infrastructure Investment Fund (InVIT)
2. Company or Entity carrying on the business,
- or operating and maintaining,
- or developing, operating and maintaining
any infrastructure facility as defined in Sec 80-IA

3. Category I / II Alternative Investment Fund regulated by SEBI having 100% investment in one
or more of the companies or entity referred to in Item (2)
Fails to Satisfy Any of the above conditions, Such income shall be chargeable to Income Tax as the Income of the
Specified Person of that Previous Year.

Other Condition File return of income on or before the due date u/s u/s 139(1) and furnish along with such return a
certificate in Form No. 1OBBC in respect of compliance to the provisions u/s 1O(23FE), during the
FY, from an accountant.

Specified Persons:
1. a wholly owned (i) is a resident of the U.A.E. (United Arab Emirates); and
subsidiary of Abu (ii) makes investment, directly or indirectly, out of fund owned by the Government of the Abu
Dhabi Investment Dhabi;
Authority which—

2. Sovereign wealth (i) it is wholly owned & controlled, directly / indirectly, by the Government of foreign country;
fund (SWS) which (ii) it is set up and regulated under the law of such foreign country;
satisfies conditions,
(iii) the earnings of the said fund are credited either to the account of the Government of
namely:-
that foreign country or to any other account designated by that Government so that no portion of
the earnings inures any benefit to any private person;

(iv) Asset of the said fund vests in the Govt. of such foreign country upon dissolution;
(v) it does not undertake any commercial activity whether within or outside India; and
(vi) it is specified by the Central Government, by notification in the Official Gazette.
3. Pension Fund (i) is created/ established under the law of foreign country including laws made by any of its
political constituents being province, State/ local body, by whatever name called;
(ii) is not liable to tax in such foreign country;
(iii) is specified by the Central Government, by notification in the Official Gazette

Sec 115JG Conversion of Indian Branch of Foreign Bank into a Subsidiary Company
Basic Where a foreign company is engaged in the business of banking in India
- through its branch situate in India and
- such branch is converted into a subsidiary company thereof, being an Indian company (Indian
subsidiary company)
- in accordance with the scheme framed by the Reserve Bank of India,

Then then, notwithstanding anything contained in the Act and subject to the conditions as may be
notified by the Central Government in this behalf,

Capital Gain arising from such conversion shall not be chargeable to tax in the assessment year relevant to
the previous year in which such conversion takes place;
Unabsorbed Dep., Set the provisions of this Act relating to treatment of
off or carry forward - Unabsorbed depreciation,
and set off of losses, - Set off or carry forward and set off of losses,
MAT Credit - Tax credit in respect of tax paid on deemed income relating to certain companies and the
computation of income in the case
of the foreign company and Indian subsidiary company shall apply with such exceptions,
modifications and adaptations as may be specified in that notification.

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Above tax benefit available if following conditions are satisfied
Asset and Liability All the assets and liabilities of the Indian branch immediately before conversion become the assets
and liabilities of the Indian subsidiary company.
Transfer before its The asset and liabilities of the Indian branch are transferred to the Indian subsidiary company at
conversion values appearing in the books of account of the Indian branch immediately before its conversion.

Lock in Period The foreign bank or its nominee shall hold the whole of the share capital of the Indian subsidiary
company during
- the period beginning from the date of conversion and ending on the last day of the previous year
in which the conversion took place, and
- continue to hold the share of the Indian subsidiary company carrying not < 51% of the voting
power for period of 5 years immediately succeeding the said PY; and
Consideration Does not receive any consideration or benefit, directly or indirectly, in any form or manner, other
than by way of allotment of shares in the Indian subsidiary company.

Application of the provisions of the Income-tax Act, 961 with modifications/exceptions

Depreciation Dep. in the year of transfer to be apportioned between foreign branch & Indian sub. Company
Actual cost of capital Actual cost of Asset in the hands of Indian subsidiary company shall be the actual cost in the
asset hands of foreign Branch

WDV WDV in the hands of Indian subsidiary company shall be equal to WDV in the hand of the foreign
Branch

MAT Credit MAT Credit of foreign branch shall be allowed to Indian Subsidiary company for the Balance no. of
years.
Accumulated losses & Accumulated losses & unabsorbed dep. of the Indian branch shall be deemed to be the loss or
unabsorbed dep. allowance or depreciation of the Indian subsidiary company

Sec 56(2)(x) The provisions of sec 56(2)(x) of the Act shall not apply to the transaction of receipt of
shares in the Indian subsidiary company by the foreign company
Sec 35DDA - VRS The provisions of sec 35DDA of the Act shall apply to the Indian subsidiary company, as they would
Expenditure have applied to the Indian branch, if the conversion had not taken place
Credit balance of The credit balance in the provision for bad and doubtful debts account, shall be deemed to be the
provision for bad and credit balance of the Indian subsidiary company.
doubtful debts

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 3 DTAA - Double Taxation Relief

Purpose To prevent double taxation of income

Type of relief Two type of Double taxation relief -
Sec 90 & 90A - Bilateral Relief Sec 91 - Unilateral Relief
Agreement with Foreign country (DTAA) No agreement with Foreign country (No DTAA)

• Bilateral Relief
Sec 90 - Tax Income is taxed in one country and exempt in another country
Exemption Method
Sec 90A - Tax Credit Income is taxable in both the countries & the country of resident allowed tax credit of tax paid in
method source country.
Agreement with 90(2) --> C.G. may enter DTAA with another country to avoid double taxation, However provision
Foreign countries of SAAR shall apply even if such provisions are not beneficial to assessee
a) For granting relief for Doubly taxed income, or
[DTAA]
b) Exchange of information with each other for prevention of tax evasion transaction,
investigation of such cases & co-operation with each other for recovery of taxes.
90(4) --> In order to claim relief, such person need to obtain TRC [Tax Residency Certificate] from
that country

Also he has provide following information in Form 10F :

1. Status (Individual, Company) 2. PAN No. if allotted
3. Incorporation Certificate (company) 4. Nationality (in case Individual)
5. Tax Identification no allotted by country (individual) 6. Address proof
7. Dedn of tax in such country
• Unilateral Relief
Sec 91 - Double Where India doesn't have DTTA with foreign country, Then assessee shall be allowed relief;
taxation relief if there u/s 91 provided all the following conditions are satisfied ;
is No DTAA.
1. The assesse is a resident in India during the relevant PY
[No DTAA] 2. The income accrues or arises to him outside India during that PY
3. Such Income should not be deemed to accrue or arise in India during the PY
4. The income is sub. to Tax in such foreign country & assesse has paid tax on such income.
5. There is no agreement u/s 90 with such country
Method : Assessee (resident in India) in respect of Income arising outside India,
- Pays income tax in foreign country and also in India
- Then he shall be entitled to deduct the lower of Following amount in respect of doubly taxed
income.

a. Tax Rate in Foreign Country b. Tax Rate in India

CIT vs P.V.A.L Kulandagan Chettiar - Conflict between DTAA & Act, DTAA will prevail

• Concept of Permanent Establishment

It Includes : (i) A place of management (ii) A branch (iii) An office
(iv) A factory (v) A workshop (vi) A sales outlet
(vii) A mine, an oil or gas well, a quarry, or any other place of extraction of natural resources (not
exploration)
DTAA provides that Income of NR / Foreign company received from India shall be taxable in India only if,
- NR / FC has PE in India.
Applies to all kind of except: a. Royalty b. Fees for Technical Service c. Interest
Business Income
Permanent a. Means a fixed place of business through which the business of an enterprises is wholly or partly
Establishment carried on.
b. Every DTAA has a specific clause, which will deal with an explanation of permanent
establishment for the purpose of such DTAA.
c. Business Income of a non-resident will not be taxed in India, unless such Non-resident has a
permanent establishment in India.

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• Income arising to Non resident or Foreign Company from India

Income to NR / FC from India

Income taxable in India
Is there PE in India ?
as per DTAA
If there is DTAA
Income not taxable in India
Is there NO PE in India ?
as per DTAA

There is Business
Income Taxable in India
Connection ?
If there is NO
DTAA
If there is No Business Income Not taxable in
Connection India

• Summarised

Taxability of Foreign Income

Resident Non-Resident

DTAA ? - Yes DTAA ? - No Not taxable

(Sec - 90/90A) (Sec 91)

Whether Income Compute NTI & Gross Tax

Taxable in India ? (Indian + Foreign Income)

No Yes From total tax payable

reduce lower of -
a. Avg tax in India on
Foreign Income
a.DTAA rate
Not taxable b. Tax in Foreign Country
b. IT act rate
whichever is less

Find Tax
Payable
Find Tax
Payable

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 4 Equalisation Levy

Particular 6% Eq. Levy introduced 2% Eq. Levy introduced

by FA 2016 (Sec 165) by FA 2020 (Sec 165A)
Who will pay levy ? Service Receiver Non-resident E-Commerce Operator
Services provided by Non resident not having PE in India Non-resident E-Commerce Operator.

Services provided to 1. a Resident who carries out 1. Person resident in India

business or profession 2. A person who buys such goods or services using Internet
2. Non resident having PE in India. Protocol (‘IP’) address located in India; or
3. A NR from sale of advertisement which targets customer
(Covers only B2B transactions) - Who is resident in India or
- Who accesses the advertisement through internet protocol
address located in India

4. A NR from sale of data collected from a person

- Who is resident in India or
- Who uses internet protocol address located in India.

(Covers both B2B and B2C transactions)

Specified Services 1. Online advertisement, 'E-commerce supply of goods or services’ means
2. Digital advertising space, 1. Online sale of goods by ECO
3. Any other notified services by 2. Online provision of services by ECO (e.g. e-gaming, online
CG. hotel or travel package or ticket booking, etc.)
3. ECO facilitating online sale of goods or online provision of
services
Non Applicability 1. NR having PE in India & service 1. Non-resident ECO having a PE in India through which sale of
is effectively connected with said goods / provision of services is made.
PE;
2. Sales of ECO less than 2 crores during the PY
2. Consideration does not exceed 3. If covered by 6% Equalisation Levy (Sec 165)
Rs. 1 lakh;
3. Payer is using specified service
for personal purposes.

Time limit for deposit Monthly – By 7th of next month Quarterly – by 7th of Next Month (Except Q4)
(Eg. April Month --> 7th May) Q1 --> 7th July Q2 --> 7th Oct
Q3 --> 7th Jan Q4 --> 31st March
Fails to deduct levy 1. 100% disallowance of
expenditure u/s 40(a)(ib)
2. Pay Interest 1% pm or part of
the month
3. Pay a penalty equivalent to the
amount of Equalisation Levy
Fails to pay to govt. 1. 100% disallowance of Non resident will pay :
(Within due date) expenditure u/s 40(a)(ib) 1. Interest 1% pm or part of the month
2. Pay Interest 1% pm or part of 2. Pay penalty equivalent to the amount of Equalisation Levy
the month
3. Penalty 1000 p/day, however
such penalty shall not exceeds the
amount of eq. levy

Sec 10(50) Such Income is exempt in the Such Income is exempt in the hands of Non-resident.
hands of Non-resident.

Furnishing of Every assessee has to file return in FORM NO. 1 on / before 30th June of immediately following
Statement financial year.
(Return Filing)
• Penalty for late filing of Return :
If assessee fails to file return up to 30th June or within 30 days from the date of service ' of Notice
by AO then penalty of Rs. 100 per day during which failure continue.

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Sec 174 of FA 2016 An assessee aggrieved by an order imposing penalty under this Chapter, may appeal to the
Appeals to CIT(A) CIT(Appeals)

Appeal within : a period of 30 days from the date of receipt of the order of the AO.
Form No. - 3 Fees - Rs. 1000
Sec 175 of FA 2016 An assessee aggrieved by an order made by CIT(Appeals) u/s 174 may appeal to ITAT
Appeals to ITAT Appeal within : a period of 60 days from the date of receipt of the order of the CIT(A).
Form No. - 4 Fees - Rs. 1000

5 Advance Ruling (Sec 245N)

Meaning - Advance ruling means a decision taken in advance,

- If application is made to "Authority for Advance Ruling"
- then AAR will give its ruling (Judgment) in relation to
- a transaction which has been already undertaken or is proposed to be undertaken by Assessee A
such judgment may be related to any question of law / fact.
Applicant [245N(b)] [245N (a)]
Applicant Determination by the AAR in relation to
Non Resident Transaction undertaken / proposed to be undertaken by NR Applicant
Resident Tax liability of NR, arising out of Trans. undertaken by Resident with NR
Resident If his tax liability arising out of one / more transaction valuing Rs. 100 cr or
more
PSU (notified by CG) - Determination / decision in respect of an issue relating to;
- Computation of Total Income (issue pending before any IT Authority /
ITAT)

R / NR - Due to GAAR - Determination / decision by Authority whether an arrangement,

- Which is proposed to be undertaken by a Resident / Non-Resident,
- Is an Impermissible avoidance arrangement or Not (GAAR).

Sec 245Q - a. Make an application is prescribed form & manner stating question on which ruling is sought.
Application to AAR b. Application can be withdrawn within 30 days from date of application.
& Advance Ruling Beyond 30 days can be withdrawn if the circumstances of the case so justify. (Case - M.K. Jain AAR
No. 644 of 2004)
c. Application shall be Quadruplicate.
d. Fees Transaction Amt Other Assesse PSU
<100Cr Rs. 200,000
>100Cr <300Cr Rs. 500,000 Rs.10,000
>300Cr Rs. 10,00,000

Sec 245R - 1. AAR shall forward a copy of application to CIT/PCIT to ascertain whether the case is pending or
Procedure not & if necessary call for the records.

2. AAR may Reject application if;

a. Issue Pending with Income Tax Authorities, ITAT, Court (R/NR). [in PSU (Court only)]
Particular Resident / Non-Resi. PSU
If Case Pending with IT Authority Can't Apply Apply to AAR
If Case Pending with ITAT Can't Apply Apply to AAR
If Case Pending with HC / SC Can't Apply Can't Apply
b. Question involves Determination of FMV
c. Transaction designed for avoidance of Income Tax

3. If the application is allowed then AAR shall pronounce its ruling within 6 months from the date
of receipt of application of assessee.
4. Copy of ruling shall be forwarded to assessee, & CIT/PCIT

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Sec 245-S - - On applicant who had sought
Applicability of - In respect of the transaction in relation to which the ruling had been sought
Advance Ruling - On the PC / Commissioner & the IT authority subordinate to him in respect of application said
transaction
Appeal against order The order of Advance Ruling Authority giving its opinion is a final order and no appeal is possible
against such an order.
Sec 245-O - Category Vice - Revenue
Chairman Law Member
Composition of AAR --> Chairman Member
Max Age 70 65 62 62
Tenure 3 Year 3 Year 3 Year 3 Year
Extension 3 Year 3 Year 3 Year 3 Year <--Restricted to Maximum Age

Authority of Advance Ruling Rules, 2O16 Qualification (Appointed on or after 26.05.2017)

a. Chairman - a person who is or has been or is qualified to be a judge of the Supreme Court or
- is or has been a Chief Justice of a High Court or
- has, for at least 7 years, been a Judge of a High Court or
- has, for at least 3 years, been Vice-Chairman, Revenue / Law Member of the Authority for
Advance Ruling or
- is a person of ability, integrity & standing, and having special knowledge of, and professional
experience of not < 25 years in economics, business, commerce, law, finance, accountancy,
management, industry, public affairs, administration, taxation.
b. Vice Chairman - a person who is, or has been, or is qualified to be, a Judge of a High Court
c. Revenue Member - from the Indian Revenue Service is qualified to be a Member of the CBDT and
from CBDT - an officer of the Indian Customs and Central Excise Service, who is qualified to be a Member of
the CBEC.
d. Law Member - from the Indian legal service - a person who is an Additional Secretary to the Government of
India.

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 6 Transfer Pricing
Chapter MAP
Part A Part B Part C
Sec 92 - Charging Section 92C - Computation of ALP 92CC-Advance Pricing Agreements
Sec 92A - Associated Enterprises Range Concept 92CE - Secondary Adjustments
Sec 92BA - Specified Domestic Transaction Master File 94A - Trans with person in NJA
Country by country report 94B - Limitation on Interest Dedn.

Sec 92 Charging Section

Any Income, Expenditure, Interest & Allocation of cost in relation of International transaction / Specified Domestic
Transaction shall be computed having regard to Arm's length price.
Condition 1 - - Any Income
Transaction related to - Allowance of any expenditure, interest
[Sec 92] - Purchase, sale, transfer, lease or use of tangible or intangible property
- Provision of Service and
- Capital Financing
Condition 2 - [92B] At least 1 party to the transaction should be Non Resident
Condition 3 - [92B] The transaction should be between 2 Associated Enterprises (AEs)

Sec 92A Associated Enterprises 13 conditions

Two enterprises shall be treated as AE's if at any time during P.Y. :
26% Shares 1. One enterprises holds at least 26% shares (voting power) of other Enterprises
2. Any person holds at least 26% shares of each of such Enterprises
Appoints BOD / ED 3. One enterprises appoints more than half BOD / one or more Executive director of other
Enterprises
4. Any person appoints more than half BOD / one or more Executive Director of each of such
enterprise.
Loan 5. A Loan given by one ent. to other enterprises, at least 51% of the Total asset of other
enterprises.
Guarantee 6. One enterprises Guarantee at least 10% of the Total borrowing of the other enterprises
Knowhow, Patent 7. Business of one ent. is wholly dependent on knowhow, patent etc. of other enterprises
Raw Material 8. 90% or more raw material req by one enterprises is supplied by other enterprises
Price Influenced 9. Goods manufactured by one enterprise are sold to other enterprise & price & other condition are
influenced by other enterprise.
Controlled by 10. One enterprise is controlled by individual & other enterprise is controlled by such individual or
Relatives / Members of his relative or jointly by individual & relative.
Ind / HUF
11. One enterprise is controlled by HUF & other enterprise is controlled by member, relative of
member or jointly by member & relative.

10% Interest 12. One enterprise has at least 10% interest in another ent. being Firm, AOP,BOI.
Misc. 13. Any relationship of mutual interest, as may be prescribed.

Sec 92BA - Specified Domestic Transactions

Specified domestic transaction means the following transaction, provided the aggregate of such transactions entered
into by the assess in the Previous year exceeds a sum of Rs. 20 Cr. :
1. any transaction referred to in section 80A
2. any transfer of goods or services referred to in section 80-IA(8)
3. any business transacted between the assessee and other person as referred to in section 80-IA(10)
4. any transaction, referred to in any other section under Chapter VI-A or section 10AA, to which provisions of section 80-
IA(8) or (10) are applicable i.e. Section 80-IAB, 80-IB, 80-IC, 80-ID, 80-IE and 10AA.
5. any business transacted between the persons referred to in section 115BAB(6) (w.e.f. AY 2020-21)

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 87
Sec 92C - Computation of Arm's Length Price [5 Methods]
1. Comparable 2. Resale Price 3. Cost Plus Method 4. Profit Split Method 5. Transactional Net
Uncontrolled Price Method (Distribution (Software Industry) (Joint venture me) Margin Method
Method Case)

Applied where there Applied where item Applied where semi Applied where there is
are similar trans obtained from AE is furnished goods are sold transfer of unique
between unconnected resold to unrelated to AE's. intangible or in multiple
parties. parties. intangibles.

Sec 92C(2) - More than 1 ALP Rule 10CA - Range Concept

[But less than 6] [More than 6 ALP]
If the difference between Actual Transaction Step 1 - Arrange the values in the data set in Ascending order.
Price &. ALP is up to 3% (1% in case of Step 2 - Calculate 35% and 65% percentile of No. of data set
wholesale trading) of actual transaction price
Step 3 - In case actual transaction price falls within the range (i.e. 35-65
then such difference shall be ignored & actual
percentiles) then actual transaction price shall be deemed to be the ALP.
transaction price shall be treated as ALP.
Step 4 - In case the actual transaction price does not fall within the
If such diff. is > 3% of actual transaction price computed range, the Median of data set (i.e. 50%) shall be deemed to be
then entire difference shall be added to the the ALP.
income of assessee.
• If 35%, 65%, 50% percentiles computed are not whole numbers
Example : Actual transaction price - 200 - then consider higher number for range.
• If 35%, 65%, 50% percentiles computed are whole numbers
ALP as per most appropriate method - - then we have to consider mean of value assign at that number and next
number. (If 20x35% = 7, Avg of value given at 7&8)
Infosys 190
TCS 215
Wipro 210 • Example Actual Price - 200
Microsoft 195 Normal Data given --> Set in Ascending order
Total 810 Infosys 194 1 190
Avg of APL is 202.5 Reliance 215 2 194
Wipro 207 3 203
Allowed diff. (Tolerance Band) is 3% of Actual TCS 190 4 207
Trans. Price i.e. 200*3% = 6 Microsoft 203 5 215
SAP 238 6 225
Actual Trans Price 200 Linux 225 7 238
Allowed Tolerance 206
Avg ALP Price 202.5 Now calculate 35 & 65 percentile
Final Price 200 So, 7 x 35% = 2.45 and 7 x 65% = 4.55
Since 2.45 and 4.55 not whole no. so take 3 & 5, ALP range will be
Since Avg ALP is within the limit of Tolerance
beginning at 203 (3rd no.) & ending at 215 (5th no.)
band then Actual Price should be ALP
In our case it doesn’t fill in that range (Actual Price 200)
Now calculate 50% percentile
Total no. of values in data set = 7x50% = 3.5,
Since 3.5 is not whole no. Next no. is 4
So, ALP is 207 (4th No.)

Notes:
1. In Range concept, if 'multiple years' data is given, then we have to take weighted average of multiple year data (current
year +Last two years) in case of RPM,CPM, TNMM
2. Range concept is applicable in case of CUP, RPM, CPM & TNMM
3. Sec 92C (2) is applicable only if number of values in the data set is less than 6. If number of values in the data-set is 6
or more than RANGE CONCEPT shall apply i.e. Rule 10 CA.

Sec 92C(3) - In the following cases ALP shall be computed by A.O.

Determination of a. Assesse fails to compute ALP as per most appropriate method
ALP by AO
b. Data used for computing ALP is not reliable or not correct
c. Document are not maintained by Assesse as per Sec 92D
c. Assessee fails to furnish Info & Docs required u/s 92D
OOBH shall be given to Assessee

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Sec 92CA - 1. If AO considers it necessary, he may refer the computation of ALP to TPO, with previous
Reference to approval of CIT/PCIT
Transfer Pricing
2. TPO shall gather material for computation of ALP &
officer.
3. TPO shall require assessee to produce evidence
4. During the course of proceedings before T.P.O. if any other international transaction (which was
not referred by A.O) comes to his knowledge, then T.P.O. shall consider such other transaction also.
5. On the basis of material & evidence., TPO shall compute the ALP & pass an order.
6. AO is bound to follow the price determined by TPO
7. If any case referred to T.P.O. then time limit allowed u/s 153 & 153B shall be increased by 1
year.
8. TPO shall pass order before 60 days prior to the last date for completion of Assessment allowed
u/s 153 & 153B.
Penalty with Refer 'Penalty Chapter' in LDR
Transfer Pricing

Sec 92BA: Specified Domestic

Points Section 92: International Transfer Pricing
Transfer Pricing
When will it apply? If all 3 conditions are satisfied, then provisions will apply Provisions will not apply if value of
irrespective of the value of transactions. such transactions in a year does
not exceed ₹ 20 crores.
Maintenance of Not required if the aggregate value, as recorded in the books of
specified account does not exceed ₹ 1 crore.
The limit is for all 6 transactions
documentation
for an assessee in a year. If value
Audit Report to be If provisions of International Transfer pricing is ₹ 20 crores, it won’t apply as it
furnished in 3CEB apply, then filing of Audit Report is compulsory. is not exceeding ₹ 20 crores.

Furnishing of report in respect of international group in line with BEPS Action Plan
Every person who entered in aggregate value of Int. Transaction / Specified Domestic Transaction in P.Y. exceeding 1 Cr,
Shall keep and maintain such information and document as may be prescribed.

Sec 92D / Rule 10DA : Master File

Standardised information relevant for all multinational enterprises (MNE) group members
Who is required to Every person, being a constituent entity of an international group shall keep and maintain the
keep and maintain following information and documents of the international group
i. if the consolidated group revenue of the international group for the accounting year,
exceeds Rs. 500 crores and
ii. the aggregate value of international transactions
A. during the accounting year, as per the books of account, exceeds Rs. 50 crores, or
B. in respect of purchase, sale, transfer, lease or use of intangible property during the
accounting year, as per the books of accounts, exceeds Rs. 10 crores

Report of Master file In form 3CEAA

Kept & Maintained up to 8 years from the end of relevant AY

Local File : Specific reference to material transactions of the local taxpayer

Sec 286/Rule 10DB : Country- by- Country Report

Information relating to the global allocation of the MNE's income and taxes paid and indicators of the location of economic
activity within the MNE group.
Who is required to The provisions shall apply if the total consolidated group revenue as reflected in the
keep and maintain consolidated financial statement (CFS) for the accounting year preceding such accounting year
is above a threshold i.e. Rs. 5,500 crore.

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Intimation Every constituent entity resident in India, of an international group having parent entity that is
not resident in India, shall notify to the Director General of Income-tax (Risk Assessment) in Form
No. 3CEAC at least 2 months prior to the due date for furnishing of report as specified
under section 286.
Report filing The parent entity of an international group / the alternate reporting entity, if it is resident in
India shall be required to furnish the report for every reporting accounting year, within a period
of 12 months from the end of the said reporting accounting year in Form No. 3CEAD.

Penalty for non- Delay up to 1 month - 5000 per day, Penalty for submission of Rs. 5,00,000
furnishing the report Beyond 1 month - 15000 per day, inaccurate information
u/s 271GB (Sec 271GB4)
Thereafter - 50000 per day

Sec 92CC Advance Pricing Agreements

Meaning An Advance Pricing Agreement (APA) is an agreement between a taxpayer and a taxing
authority on an appropriate Transfer Pricing methodology for a set of transactions over a
fixed period of time in future for not exceeding 5 consecutive PYs.

Validity of APA For the period specified in the agreement which shall not exceed 5 consecutive PYs.
In case of rollback, the total period shall not exceed 9 PYs [4 PY + maximum 5 consecutive PY]

APA will be binding 1. The person who entered in to APA and

on: 2. The IT Authority till level of PCIT / CIT.
Non-applicability of If APA apply then provisions of section 92C & 92CA does not apply
sec 92C & sec 92CA
Declare void ab initio Where APA obtained by way of fraud or misrepresentation of facts, the Board with the approval of
CG can declare APA void ab initio.
Consequences of (a) All the provisions of the Act shall apply to such person as if such APA had never been entered
declaration of an into.
APA as void ab initio
(b) The period beginning with the date of such APA and ending on the date of order declaring the
APA as void ab initio, shall be excluded for the purpose of computation of any period of limitation
under this Act (for example period of limitation specified in the section 153, 153B etc.). This is
irrespective of anything contained in any other provision of the Act.

(c) In case the period of limitation after exclusion of the above-mentioned period is less than 60
days, such remaining period of limitation shall be extended to 60 days.
Conditions for The agreement shall contain rollback provision in respect of an international transaction subject to
applying for the following, namely: -
rollback provisions:
(i) The international transaction is same as the international transaction to which the agreement
(other than the rollback provision) applies;
(ii) The return of income for the relevant rollback year has been or is furnished by the applicant
before the due date as specified in section 139(1)
(iii) The report in respect of the international transaction had been furnished in accordance with
section 92E;
(iv) The applicability of rollback provision, in respect of an international transaction, has been
requested by the applicant for all the rollback years in which the said international transaction has
been undertaken by the applicant.

(v) The applicant has made an application seeking rollback in Form 3CEDA
Note 1. Roll back is not possible for a year for which order has been passed by ITAT
2. Roll back is possible only for those PY whose return was filed by due date u/s 139(1)
3. APA can not be entered for Specified Domestic Transactions. It can be entered only for
International Transactions

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Sec 92CD Effect of APA
Return of Income Where prior to the date of entering APA, any then such person shall furnish modified return as
has already filed return of income has already been furnished for per APA within 3 months from the end of the
any PY to which APA applies month in which APA into.

Assessment is Where assessment for any P.Y. to which APA the AO shall complete assessment as per APA,
Pending applies are pending on the date of Modified AO will get extra 1 year for completion of
return Assessment.

Assessment was Where assessment for P.Y. to which APA applies then A.O. shall pass an order modifying the total
completed already completed before filing of modified return income of that P.Y. within 1 year from the end of
financial year in which time modified return was
furnished

APA Application Time Limit

Whether the International Transaction are of a continuing nature ?
Yes --> Before 1st day of the relevant PY for which APA application is made
No --> Before undertaking the transactions

Sec 92CE Secondary Adjustment

Why ? Where, as a result of primary adj. to the transfer price --> there is an increase in the total income
/ reduction in the loss of the assesse, if Such excess money not repatriated to India shall be
deemed to be an advance made by the assesse to AE
Secondary adjustment 1. The same relates to an assessment year after AY 2016-17 on or after 1.4.17
is applicable only 2. The quantum of primary adjustment (PA) made in each year is above Rs 1 Cr
when;
3. The same is accepted by the assessee
The time limit for Particular Within
repatriation of excess a. If Primary adjustment made by AO or Within 90 days from date of Order
money / Interest to Appellate Authority
be Chargeable from
b. If Primary adjustment due to APA
- if APA is entered before due date of ROI u/s - Within 90 days from date of return filing
139(1) of that PY
- if APA is entered after due date of ROI u/s - Within 90 days from end of the month in
139(1) of that PY which APA was entered into after due date of
ROI for relevant AY.

Example;
We entered in Advance Pricing Agreements APA • Due Date for 18-19, 19-20
for FY 18-19 to FY 22-23 on dated 16/02/2021 - 90 days from End of the month i.e. 28.02
(FY20-21)
• Due Date for 20-21, 21-22, 22-23
- 90 days from date of return filing u/s 139(1)
c. If Primary adjustment due mutual agreement Within 90 days from the date of giving effect by
procedure AO of MAP
d. If Primary adjustment due any other reason Within 90 days from Due date of return filing
or Suo-moto [u/s 139(1)] i.e. 30.11

Rule 10CB - If excess money not repatriated within above time limit then interest income shall be computed as
Computation of follows.
interest income
Type International Transactions Int. Transactions Denominated
Denominated in Indian Rs in Foreign Currency
Interest Rate SBI as on 1st April of relevant PY LIBOR as on 30th September of
+ 3.25% relevant PY + 3%

Sec 93CE(2A) - Additional Income Tax instead of Secondary Adjustment Added by FA2019
Pay Tax instead of
Assessee will have the option to pay additional income-tax @ 18% (effective tax rate is
Secondary Adjustment
18+12+4 --> 20.9664%) on such excess money
(अगर हम repatriated money इं िडया म नहीं ला सकते तो we can pay tax on such income)

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Sec 94A Special provision in respect of transaction with person located in NJA.
Pre-conditions for The section is applicable only if the following pre-conditions are fulfilled.
applicability a. There is country or territory outside India with whom India does not have effective exchange of
information on taxation matters.
b. Such country or area is specified by notification in official gazette as a 'Notified Jurisdiction Area
(NJA)', having regard to the lack of effective exchange of information with such country or territory.

c. An assessee enters in to a transaction where one of the parties to the transaction is a person
located in NJA.
Consequences - • Deemed AE : All the parties shall be deemed to be associated enterprises (as per 92A).
If the above pre- • Deemed Sec 92B : Transaction shall be deemed to be an international transaction.
conditions are fulfilled • TP Apply : The provision of Transfer pricing shall apply to Assessee (except tolerance
band of 3%).
• Submit Doc : Assessee have to submit documents & information required by IT
Authority.
• Deduction of : No deduction in respect of any other expenditure or allowance from
expenses and (Including Depreciation) arising from the transaction with person located in
Depreciation NJA.

• TDS @ 30% : If any payment made to person located in NJA then min. TDS rate will be
30%.
Explain source of fund If Assessee recd any sum from person located in NJA then assessee have to offer explanation about
the source of the fund in the hands of that person or in hands of beneficial owner (If that person is
not beneficial owner). If assessee doesn't offer explanation or explanation is not satisfactory, then
such sum shall be treated as income of Assessee.

Sec 94B Limitation on Interest Deduction in certain cases

Applies when Indian company incurs any expenditure by ways of interest in respect of any debt issued by NR
associated enterprises
and such interest exceeds 1 cr
Then the interest paid or payable by such Indian company in excess of 30% EBITDA, shall not be
allowed as deduction as per section 94B
Computation of Excess a) Calculate interest paid or payable to associated enterprise for that previous year.
Interest b) Compute EBITDA
c) Calculate 30% of EBITDA [30% of (a)].
d) Ascertain lower of (a) and (c).
e) Excess interest = [(a) – (d)].
C/f Expenditure Disallowed expenditure maximum c/f limit = 8 years
Sec 94B not applies to a. an Indian company / permanent establishment of a foreign company which is engaged in the
business of Banking or Insurance.
b. Interest paid in respect of a debt issued by lender which is a permanent establishment in India
of a non-resident engaged in the business of banking (w.e.f. AY 2021-22)

Space for Your Notes

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Benefits under Income Tax Act, 1961 for units located in IFSC
Sections Other than IFSC Unit Located in IFSC
112A LTCG on transfer of LTCG from "Specified Asset u/s 112A" is apply
- Equity Share in a Company or even if STT is not paid.
- Units of an equity oriented fund or
- Units of a business trust
on which STT is paid is taxable @ 10% where
the capital gain exceeds Rs. 1,00,000.

111A STCG on transfer of STCG from "Specified Asset u/s 112A" is taxable
- Equity Share in a Company or @ 15% even if STT is not paid.
- Units of an equity oriented fund or
- Units of a business trust
on which STT is paid is taxable @ 15%.

115JB - MAT Rate Applicable - 15% Rate Applicable - 9%

115JC - AMT Rate Applicable - 18.5% Rate Applicable - 9%
80-LA - Not Applicable Deductions in respect of certain incomes of
Tax Holiday Offshore Banking Units and IFSC.

- 100% for any 10 consecutive assessment years

out of 15 years.
Sec 115A Tax on Interest in case of NR / Foreign Company Tax on Interest in case of NR / Foreign Company
- Taxable @ 5% - Taxable @ 4%

Sec 47(viiab) Not Applicable Any transfer of Capital Asset By NR:

Transfer is not on Unit located in IFSC and such consideration is
regarded as payable in Foreign Currency
transfer, hence NO
There is no Capital Gain on transfer of;
capital gain.
a. Bond, GDR referred u/s 115AC
b. Rupee Denominated Bond of Indian Co.
c. Derivative
d. Unit of Mutual Fund, Business Trust
e. Foreign Currency denominated bond.
f. Unit of Alternative Investment Fund
d. Other Securities (notified by CG)

Yorker [Compilation of Various Topics]

Yorker - 1 Situation 1 - If Loan Taken from Bank, Public Fin. Institutions, Employer (PSU / Public Co.)
Interest & Repayment a. Eligible for deduction u/s 24b House Property (Interest)
of Loan against House b. Eligible for deduction u/s 80C (Repayment of Principal)
Property.

Situation 2 : If Loan Taken from Friend, Relatives, Employer (Pvt Ltd)

a. Eligible for deduction u/s 24b House Property (Interest)
b. Not Eligible for deduction u/s 80c(Repayment of Principal)

Yorker - 2 a. Partners remuneration, Salary, Interest {As per sec 40(b)} While computing Income u/s 44AD
Provisions in case of a shall NOT be deductible --> / 44ADA
partnership firm b. Partners remuneration, Salary, Interest {As per sec 40(b)} While computing Income u/s 44AE
shall be deductible -->

Yorker - 3 We need to calculate

Calculation of FMV in ● FMV of Listed Shares / Securities u/s 112A and
case Listed Shares / ● FMV of Listed Shares / Securities in Tax on Accreted Income (Exit Tax).
Securities
Which pricing is to be considered for FMV? Avg of Highest and Lowest or Only Highest.
Examiner will try yorker, He will give you both value ie highest & lowest.
- If question on Sec 112A - Calculation is based on Highest Price
- If que on Accreted Income (Exit Tax) - Caln is based on Avg of Highest & Lowest Price.

DT(Final) Last Day Revision Notes - By CA Sanjay Zanwar, 9765974365, Telegram Channel @DT_LDR 93