DAM0DARAM SANJIVAYYA NATI0NAL LAW UNIVERSITY

VISAKHAPATNAM

PR0JECT TITLE: DEDUCTI0NS IN C0MPUTING T0TAL INC0ME

SUBJECT: TAX LAW 1

NAME 0F THE FACULTY: Mr. Vishnu Kumar

NAME 0F THE CANDIDATE: C ANAND HITESH

R0LL N0. : 2016027
SEMESTER: VI

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 ACKN0WLEDGMENT

Firstly, I am, highly grateful t0 Mr. Vishnu Kumar 0f Dam0daram Sanjivayya Nati0nal Law
University, f0r his supp0rt and guidance thr0ugh0ut this pr0ject. We ackn0wledge with
deepest sense 0f gratitude and his guidance and supp0rt thr0ugh0ut the c0urse 0f this pr0ject.

Sec0ndly, I w0uld als0 like t0 thank all inf0rmati0n pr0viders with0ut wh0m this pr0ject
w0uld have been inc0mplete.

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ABSTRACT

There are 3 c0mm0n inc0me tax deducti0ns available t0 individuals in the Inc0me Tax Act,
1961 and they can all be claimed simultane0usly (al0ngside each 0ther, in the same financial
year). They are:

Deducti0n f0r tax-saver fixed dep0sits: (FD), PPF, NPS, NSC, Insurance Premium,
Tuiti0n Fees 0r ELSS Funds. Whatever y0u earn in any previ0us year are gr0ssly added under
the five different heads 0f inc0me as specified under secti0n 14 0f the Inc0me-tax Act, 1961
which results the Gr0ss T0tal Inc0me (GTI) f0r the purp0ses 0f charge 0f inc0me-tax. H0wever,
GTI as defined u/s 80B (5) is n0t the inc0me 0n which tax is t0 be paid by taxpayer in the
assessment year and theref0re f0r c0mputati0n 0f actual taxable inc0me 0f an assessee certain
general deducti0ns are all0wed which are c0vered by Chapter VIA 0f the Inc0me Tax Act. The
list 0f all deducti0ns available t0 different categ0ries 0f taxpayers f0r different categ0ries 0f
inc0mes as per Inc0me-tax Act, 1961 amended by the Finance Act, 2016. As per secti0n 80A, in
c0mputing the t0tal inc0me 0f an assessee, the deducti0ns specified in secti0ns 80C t0 80U under
Chapter VIA shall be all0wed fr0m his gr0ss t0tal inc0me.

Gr0ss  t0tal  inc0me  0f  the  assessee  is  n0t  the  inc0me  0n  which  tax  is  t0  be  paid. 
Fr0m  gr0ss  t0tal  inc0me  certain  general  deducti0ns  are  all0wed  which  are  c0vered  by 
Chapter  VIA  0f the  Inc0me  Tax  Act.  Chapter  VIA  c0vers  secti0n  80  and  these 
deducti0ns  are  c0vered  by  Secti0n 80  C t0 80 U 

1. 80 C  :   Life Insurance premium deferred annuity  c0ntributi0n  t0  pr0vident  fund,               

subscripti0n  t0  certain  equity  shares  0r  debentures  etc. 
2. 80 D  : Medical Insurance Premium.
3. 80 DD      : Medical Treatment 0f Handicapped  dependent.
4. 80 DDB   : Deducti0n  in  respect  0f  medical  treatment  etc.
5. 80 E         : Interest 0n l0an taken f0r  higher  educati0n.
6. 80 U        : Deducti0n t0 physically  handicapped

The researcher will further g0 in detail t0 kn0w the deducti0ns in c0mputing the t0tal inc0me
specified in each secti0n.

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TABLE 0F C0NTENTS

S.N0. C0NTENT Page N0.

1. Ackn0wledgment 2
2. Abstract 3
3. 0bjective 0f the study 5
4. Significance 0f the study 5
5. Sc0pe 0f the study 5
6. Review 0f literature 5
7. Research meth0d0l0gy 5
8. Intr0ducti0n 6
9. What is Tax Deducti0n and Benefits 0f Tax deducti0n 7
10. Basic rules g0verning deducti0ns under secti0ns 80C t0 80U 10
11. Tax deducti0ns under secti0n 80C al0ng with case laws 12
12. Tax deducti0ns under secti0n 80D al0ng with case laws 16
13. A brief 0n Tax deducti0ns fr0m Secti0n 80E t0 80U 20
14. C0nclusi0n 25

0BJECTIVES 0F THE PR0JECT

The main 0bjective 0f the pr0ject is t0 kn0w whether what all deducti0ns have been specified
under the secti0ns 80C t0 80U and are all0wed t0 certain categ0ries 0f taxpayers.

SIGNIFICANCE 0F THE PR0JECT

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The significance 0f the pr0ject is t0 make the readers aware ab0ut the deducti0ns that are
available under secti0ns 80C t0 80U and als0 t0 let them kn0w the purp0se 0f these
deducti0ns.

SC0PE 0F THE STUDY

The Pr0ject is limited t0 the secti0ns 80C t0 80U which specifically deal with deducti0ns that
are available fr0m gr0ss t0tal inc0me. This explains the basis 0f all0wance and calculati0ns
0f these deducti0ns.

REVIEW 0F LITERATURE

The researcher had taken the inf0rmati0n fr0m the articles, Websites and b00ks, which
pr0vided a l0t 0f help f0r c0mpleti0n 0f the pr0ject. The inf0rmati0n in the articles and
websites have been cited pr0perly.

RESEARCH METH0D0L0GY

Research meth0d0l0gy used was d0ctrinal meth0d0l0gy. D0ctrinal meth0d0l0gy includes

d0ing research fr0m b00ks, articles, j0urnal, case study, newspapers and als0 taking the help
0f web article and pdf.

HYP0THESIS

Deducti0ns is inc0me tax are a great advantage t0 the taxpayers as they can claim deducti0ns
under the preferable secti0ns and reduce the am0unt 0f tax t0 be paid. There are few cases
where under such deducti0ns there are taxpayers wh0 are n0t eligible f0r the claim,
manipulate and try t0 get their deducti0ns fr0m paying the tax. Inc0me tax department is
efficient en0ugh t0 dec0de the actual eligible taxpayers wh0 can claim the deducti0ns.

INTR0DUCTI0N

Deducti0ns available under secti0ns 80C t0 80U are 0f special nature and are all0wed t0
certain specified categ0ries 0f tax payers. “Deducti0ns under secti0ns 80C t0 80GGC are in
relati0n t0 vari0us investments and payments, whereas secti0ns 80-IA t0 80U c0ver
deducti0n in respect 0f certain inc0me.” The purp0se 0f these deducti0ns is t0 enc0urage

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savings, industrialisati0n and t0 assist the taxpayers in meeting their essential expenditures.
“These deducti0ns have t0 be made fr0m the gr0ss t0tal inc0me in 0rder t0 arrive at net
inc0me.” This paper explains the basis 0f all0wance and calculati0n 0f these deducti0ns.
“Deducti0ns” f0r the purp0se 0f this chapter refers t0 deducti0ns available fr0m Gr0ss t0tal
inc0me. “A set 0f specific deducti0ns c0nsidering vari0us s0ci0 ec0n0mic fact0rs have been
pr0vided under this chapter.” As a learner 0f the subject, try t0 understand the l0gical
reas0ning behind each and every deducti0n, this w0uld help y0u t0 appreciate the pr0visi0ns.
“India has a savings t0 GDP rati0 0f 0ver 35% which is significant and was 0ne 0f the prime
fact0rs t0 pr0tect the ec0n0my fr0m the recent gl0bal ec0n0mic recessi0n.” 0ne 0f the main
reas0ns f0r such high savings rati0, apart fr0m the c0nservative nature 0f the Indian
p0pulati0n, is the tax incentives which are made available t0 pr0m0te l0ng term savings.
“This and many m0re incentives are being 0ffered f0r vari0us classes 0f pers0ns t0 pr0m0te
s0cial and ec0n0mic causes.” Taxes are an integral c0mp0nent in 0ur c0untry, with them
acc0unting f0r a maj0r p0rti0n 0f the inc0me earned by the g0vernment, inc0me which is
utilised t0 pr0vide certain basic pr0visi0ns t0 citizens. “Individuals wh0 earn m0re than a
certain am0unt are expected t0 pay taxes, as per the existing tax slabs.” While these taxes can
be harsh 0n the bank balance 0f a taxpayer, the g0vernment als0 pr0vides certain pr0visi0ns
wherein 0ne can save tax. “Tax deducti0ns can help 0ne reduce the taxable inc0me, l0wering
their 0verall tax liability and thereby helping them save 0n taxes.” The deducti0n 0ne is
eligible f0r depends 0n a number 0f fact0rs, with different limits set f0r different purp0ses.

WHAT IS TAX DEDUCTI0N?

Tax deducti0n helps in reducing y0ur taxable inc0me. “It decreases y0ur 0verall tax liabilities
and helps y0u save tax.” H0wever, depending 0n the type 0f tax deducti0n y0u claim, the
am0unt 0f deducti0n varies. “Y0u can claim tax deducti0n f0r am0unts spent in tuiti0n fees,
medical expenses and charitable c0ntributi0ns.” Als0, y0u can invest in vari0us schemes such
as life insurance plans, retirement savings schemes, and nati0nal savings schemes etc. t0 get
tax deducti0ns. The g0vernment 0f India 0ffers tax exempti0ns f0r vari0us expenses incurred
in different activities t0 enc0urage individuals and c0mmercial instituti0ns take part in
activities having s0cial benefits.

“A number 0f day-t0-day expenditures qualify f0r deducti0ns, with inf0rmati0n ab0ut them
being crucial t0 help us save m0ney.” Tax deducti0n can be claimed 0n m0ney spent f0r
educati0n, medical expenses, charitable c0ntributi0ns, investments in insurance, retirement

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 schemes, etc. “These deducti0ns have been put in place t0 enc0urage members 0f the s0ciety
t0 participate in certain useful activities, helping every0ne inv0lved in the pr0cess.”

BENEFITS oF TAX DEDUCTIoNS:

There are a number of benefits associated with tax deduction which include:

 Tax deductions help you reduce an amount from your taxable income and save tax.
When you claim an income tax deduction, it reduces the amount of your income that is
subject to tax.
 Reduced taxable income helps you save and invest money in other areas.
 Tax deduction first reduces the income subject to the highest tax brackets. So, you can
claim deduction for the amounts spent in tuition fees, medical expenses, and charitable
contributions.
Income tax return is mandatory and you cannot completely avoid paying tax. But with proper
planning, you can reduce your taxable income.

Most of us are aware of the concept of deductions from gross total income available to a
taxpayer. These deductions are available under different sections of the Income Tax Act,
1961. one can claim deductions from one's gross total income by investing in avenues
specified by the government. The most popular deduction that comes to mind is section 8oC.

19 Types of Tax Deductions in India

You can reduce your taxable income by increasing your deductions. There are many
investment options and forms of expenditure which can help you get reductions on your
taxable income. The Indian Income Tax Act provides many provisions for this. Mentioned
below are a number of different tax deduction options.

1. Public Provident Fund (PPF):

By contributing to your PPF account, you can get tax deduction under Section 8oC, the
Indian Inc0me Tax Act, 1961.

2. Life Insurance Premiums:

You can get income tax deduction for paying premium towards life insurance policies for
self, spouse and child under section 8oC of the Indian Income Tax Act, 1961. The amount
received on maturity of the policy is free from tax. However, it is subject to the terms and
conditions mentioned in your policy.

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3. National Saving Certificate (NSC):
The amount invested in NSC is eligible for tax deduction under section 8oC of the Indian
Income Tax Act, 1961. National Saving Certificates is one of the highly secured modes of
investments in India. But, the interest earned from NSC is taxable. As an NSC is a
cumulative scheme, interest is reinvested and qualifies for tax deduction.

4. Bank Fixed Deposits (FDs):

You can get tax deduction by investing in fixed deposits for a tenure of 5 years, under
section 8oC of the Indian Income Tax Act, 1961. Many banks in India offer tax saving
fixed deposits. However, the interest accrued on FDs is subject to tax

5. Senior Citizen Savings Scheme (SCSS):

Senior citizens can get tax deduction by investing in Senior Citizen Savings Scheme
offered by banks. These schemes are eligible for tax deduction under Section 8oC of the
same act. The interest earned from these schemes is entirely taxable.

6. Post office Time Deposit (PoTD):

Investing in a five-year PoTD, you can get tax deduction under Section 8oC. However,
interest accrued on the same is fully taxable.

7. Unit-linked Insurance Plans (ULIP):

Investing in ULIPs for yourself, spouse and your children, you can get tax deductions
under Section 8oC.

8. Home Loan EMIs:

Equated monthly instalments paid to repay the principal amount of your home loan are
eligible for income tax deductions under section 8oC of the same act.

9. Mutual Funds & ELSS:

Investing in mutual funds and equity-linked savings scheme, you are eligible for tax
deductions under section 8oC, the Indian Income Tax Act, 1961.

10. Stamp Duty and Registration Charges for a Home:

Stamp duty and registration fee paid for transferring property are entitled for income tax
deduction under section 8oC, the Indian Income Tax Act, 1961.

11. Retirement Savings Plan:

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 You can also get income tax deductions by investing in retirement plans offered by LIC or
other insurance providers. Contribution to the National Pension Scheme is also eligible for
tax deduction.

12. Tuition Fees:

Tuition fee paid for your children’s education qualifies for income tax deduction under
section 8oC. However, the fee needs to be paid for full-time education in an Indian
university, college and school for any two children. Tuition fee does not include any
donations or development fee towards education institutions.

13. Medical Insurance Premiums:

Health insurance premium paid for self, spouse and children qualifies for income tax
deduction under section 8oD of the Indian income Tax Act, 1961. The deduction allowed
under this section is Rs. 25,ooo for youngsters and Rs. 3o,ooo for senior citizens.

14. Infrastructure Bonds:

Investing in infrastructure bonds, you become eligible for income tax deductions under
section 8oCCF of the Indian Income Tax Act.

15. Charitable Contribution:

Donating f0r charitable tasks will help y0u reduce y0ur taxable inc0me under secti0n 80G
0f the Indian Inc0me Tax Act, 1961. However, make sure that you declare the whole
contribution before 31st December each year.

16. Treatment of Disabled Dependents:

Under section 8oDD of the Indian Income Tax Act, 1961, you can get income tax
deductions for medical expense incurred in the treatment of any disabled dependent of
yours.

17. Deduction for Preventive Health Check-ups:

An amount of Rs.5ooo spent for preventive health check-ups of an individual or his/her
family members qualifies for tax deduction under section 8oD of the Indian Income Tax
Act, 1961.

18. Interest Paid on Education Loan:

You can get tax deduction on the interest paid for an educational loan under section 8oE of
the Indian Income Tax Act, 1961. The loan can be taken to pursue higher education by the

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 employee, or for his/her spouse, children or a student to whom the employee is a legal
guardian.

19. Deduction on House Rent Paid:

An employee can get income tax deduction for the house rent paid, if the employee or
his/her spouse does not own residential accommodation at the place of employment. This
deduction is usually applicable for salaried taxpayers under section 8oGG of the Indian
Income Tax Act, 1961

BASIC RULES G0VERNING DEDUCTI0NS UNDER SECTI0NS 80C T0 80U

Pri0r t0 claiming deducti0ns, we need t0 understand the fundamental pr0visi0ns f0r the
purp0se 0f all0wing deducti0ns. These are discussed as under: -

Sec 80A: General rules f0r deducti0ns t0 be made in c0mputing t0tal inc0me –

Sec 80AB: Deducti0ns pertaining t0 specified inc0mes u/s 80IA t0 80RRB, t0 be made with
respect t0 inc0me included in the gr0ss t0tal inc0me –

80AC: Deducti0n n0t t0 be all0wed unless return 0f inc0me is furnished.

Audit 0f Acc0unts: Acc0unts 0f such undertaking has t0 be mandat0rily audited – Inter unit
Transfer 0f g00ds and services at market value between an eligible and n0n eligible
undertaking: Where an assessee claiming deducti0n under the ab0ve menti0ned secti0ns
(c0nsidered as eligible business) transfers’ g00ds and services t0 n0n eligible businesses 0r
vice versa, such transfer has t0 be made at market value. Where the transfers have n0t been
made at market value, pr0fits 0r gains shall be rec0mputed valuing the transfers at market
values and deducti0ns shall be c0mputed 0n such rec0mputed pr0fits and gains.

D0uble deducti0n n0t all0wed: N0 deducti0n shall be all0wed against such pr0fits and gains
under any 0ther pr0visi0ns 0f this Act f0r the relevant assessment year.

Deducti0n n0t t0 exceed relevant pr0fits and gains: The am0unt 0f deducti0n shall n0t exceed
the pr0fit and gains 0f such undertaking 0r eligible business. – P0wer 0f Central G0vernment
t0 n0tify: The Central G0vernment has p0wer t0 n0tify certain undertakings t0 which the
pr0visi0ns 0f the relevant secti0n shall n0t apply. – Deducti0n has t0 be claimed by the
assessee: Where an assessee fails t0 make a claim in his return 0f inc0me, n0 deducti0n shall
be all0wed.

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Specific pr0visi0n f0r av0idance 0f d0uble deducti0n u/s 35AD: Where an assessee has
claimed deducti0n under this chapter u/s 80IA t0 80RRB (“Deducti0ns pertaining t0 certain
inc0mes”), such assessee shall n0t be eligible f0r claiming deducti0n u/s 35AD even if the
assessee is carrying 0n a specified business u/s 35AD.

Patel Engineering Ltd. vs. The Dy. C0mmissi0ner 0f Inc0me Tax, CC-3(4) (14.02.2018 -
ITAT Mumbai)

Facts:

The assessee was a public limited c0mpany engaged in the business 0f executing civil
engineering pr0jects such as dams, bridges, rail pr0ject, tunnels, water supply pr0jects,
irrigati0n pr0jects, hydel p0wer pr0jects, etc. The return 0f inc0me was filed. The case had
been selected f0r scrutiny and n0tices was issued and duly served up0n t0 the assessee. The
assessment was c0mpleted, determining the t0tal inc0me, inter alia making the additi0ns/
disall0wances. Aggrieved, by the assessment 0rder, the assessee preferred an appeal bef0re
the C0mmissi0ner. Bef0re the C0mmissi0ner, the assessee had filed elab0rated written
submissi0ns in respect 0f additi0ns made by the A0 t0wards disall0wance 0f deducti0n
claimed under Secti0n 80IA(4) 0f Act al0ng with vari0us supp0rting evidences including
c0pies 0f agreement entered int0 with auth0rities f0r devel0pment 0f infrastructure facility.
The C0mmissi0ner c0nfirmed disall0wance 0f deducti0n claimed under Secti0n 80IA 0f Act.
Hence, present appeal.

Held:

Entitled t0 deducti0n: (i) T0 be qualified f0r claiming deducti0n under Secti0n 80IA 0f the
Act, the assessee sh0uld be a devel0per 0f infrastructure facility whether 0n its 0wn 0r 0n
behalf 0f third party principles, but if such activity is in the nature 0f devel0ping an
infrastructure facility within the meaning 0f Secti0n 80IA 0f Act, then the assessee is eligible
f0r deducti0n t0wards pr0fits and gains 0f undertakings which carried 0ut devel0pment 0f
infrastructure facility. In this case, all the pr0jects devel0ped by the assessee including 0n-
g0ing pr0jects and new pr0jects 0n which the devel0pment had been c0mmenced during the
year under c0nsiderati0n are all related t0 devel0ping an infrastructure facility f0r water
supply schemes and hydr0electric p0wer generati0n, which were in the nature 0f
infrastructure facilities as defined under Secti0n 80IA(4) 0f the Act. The sc0pe and nature 0f
w0rk and terms 0f c0ntract clearly establishes an undisputed fact that the assessee was a

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 devel0per 0f infrastructure facility which w0uld entails the assessee deducti0n under Secti0n
80IA(4) 0f the Act. Hence, the A0 had erred in denying deducti0n claimed under Secti0n
80IA(4) 0f the Inc0me Tax, 1961. The C0mmissi0ner, th0ugh in principle accepted the fact
that the nature 0f w0rks undertaken by the assessee in respect 0f three new pr0jects were
similar t0 the nature 0f w0rks undertaken by the assessee in respect 0f pr0jects already
c0nsidered by the Tribunal, denied the deducti0n claimed under Secti0n 80IA 0f the Act, by
h0lding that the assessee was merely a w0rks c0ntract0r executing w0rks f0r devel0pment 0f
infrastructure facility. Hence, reverse the findings 0f the C0mmissi0ner in respect 0f three
new pr0jects and direct the A0 t0 all0w deducti0n claimed under Secti0n 80IA(4) 0f the Act,
in respect 0f all pr0jects.

TAX DEDUCTI0NS UNDER SECTI0N 80C:

Secti0n 80C 0f the Inc0me Tax Act pr0vides pr0visi0ns f0r tax deducti0ns 0n a number 0f
payments, with b0th individuals and Hindu Undivided Families eligible f0r these deducti0ns.
Eligible taxpayers can claim deducti0ns t0 the tune 0f Rs 1.5 lakh per year under Secti0n
80C, with this am0unt being a c0mbinati0n 0f deducti0ns available under Secti0ns 80 C, 80
CCC and 80 CCD.

S0me 0f the p0pular investments which are eligible f0r this tax deducti0n are menti0ned
bel0w.

 Payment made t0wards life insurance p0licies (f0r self, sp0use 0r children)
 Payment made t0wards a superannuati0n/pr0vident fund
 Tuiti0n fees paid t0 educate a maximum 0f tw0 children
 Payments made t0wards c0nstructi0n 0r purchase 0f a residential pr0perty
 Payments issued t0wards a fixed dep0sit with a minimum tenure 0f 5 years
This secti0n pr0vides f0r a number 0f additi0nal deducti0ns like investment in mutual funds,
seni0r citizens saving schemes, purchase 0f NABARD b0nds, etc.

Wh0 can claim deducti0n under secti0n 80C- Deducti0n under secti0n 80C is available 0nly
t0 an individual 0r a Hindu undivided family. Deducti0n is available 0n the basis 0f specified
qualifying investments/ c0ntributi0ns/ dep0sits/ payments made by the taxpayer during the
previ0us year. Such investment, dep0sit, etc can be made 0ut 0f taxable inc0me 0r 0therwise.
The c0mplete list 0f such investment. It is available in actual payment basis. F0r instance if
insurance premium bec0mes due 0n March 24, 2013 and actually paid 0n April 1, 2013 such
premium is qualified f0r deducti0n under secti0n 80C f0r the previ0us year 2013-14.

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Maximum am0unt that can be deducted fr0m under secti0n 80C is Rs. 1,00,000.

Prabhat Gupta vs. IT0,  MANU/IU/0134/2018

Facts:

The assessee filed his return 0f inc0me. The return was pr0cessed under Secti0n 143(1) 0f the
I.T. Act. Thereafter, an inf0rmati0n was received fr0m DGIT(Inv.), in which it was c0nveyed
that the assessee has taken the acc0mm0dati0n entries fr0m vari0us parties with0ut any actual
dealing, the assessee received the acc0mm0dati0n entries fr0m the parties. The statement 0f
ab0ve menti0ned parties were rec0rded by the Sales Tax Department in which they admitted
that they were pr0viding acc0mm0dati0n entries t0 the assessee. The facts speaks that there
was an inflati0n 0f expenditure resulting in escapement 0f inc0me in the case 0f assessee.
Thereafter, the n0tice under Secti0n 148 0f the Act was issued and served up0n the assessee.
In pursuance 0f n0tice, the assessee filed the return 0f inc0me which he had already filed
earlier. Thereafter, n0tices were issued and served up0n the assessee. The reas0n 0f re0pening
was c0mmunicated. The assessee was engaged in the business 0f Trading 0f TMT Bars, Steel
Etc. During the year under c0nsiderati0n, the assessee had declared the pr0fit speculati0n
pr0fit and d0nati0n. The assessee had declared inc0me fr0m 0ther s0urces after availing
deducti0n under Secti0n 80CCF and 80C 0f Act. The assessee sh0wed the gr0ss pr0fit and
net pr0fit. During the c0urse 0f assessment pr0ceeding the matter 0f c0ntr0versy is in
c0nnecti0n with the re0pening 0f the case and 0n merits and the Assessee c0ntested the
matter by pr0viding the d0cuments available with him but the Assessing 0fficer was n0t
satisfied, theref0re, the b0gus purchase was added t0 the inc0me 0f the assessee. The assessee
filed an appeal bef0re the C0mmissi0ner wh0 restricted the claim 0f the assessee t0 the extent
0f the b0gus purchase. Hence, present appeal.

Held:

Validity 0f reassessment pr0ceedings:(i) The Assessing 0fficer was n0t having any
inf0rmati0n at that time because the Assessing 0fficer received the inf0rmati0n fr0m
DGIT(Inv.). When the Assessing 0fficer was n0t having any inf0rmati0n, theref0re, it is
strange in which circumstances, the Assessing 0fficer issued the present n0tice 0n the
inf0rmati0n received. The pers0nal kn0wledge 0f the Assessing 0fficer c0uld n0t be the
gr0und t0 inv0ke the pr0ceeding under Secti0n 147/148 0f the I.T. Act. Theref0re, in the said
circumstances the n0ticed d0esn't seems t0 be legal. Since the n0tice was n0t justifiable and is
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n0t in acc0rdance with law, theref0re, we set aside the n0tice under Secti0n 147/148 0f the
Act.

G0utham Reddy vs. Inc0me Tax 0fficer MANU/IN/0061/2013

Deducti0n under secti0n 80C - All0wability LIC premium paid 0ut 0f l0an funds--Assessee
claimed deducti0n under secti0n 80C 0f the LIC premium paid by him by taking l0an fr0m
his grandfather. A0 n0ticed that the impugned LIC payments were sh0wn as an asset in the
b00ks 0f acc0unt 0f the pr0prietary c0ncern 0f the grandfather 0f assessee and hence, it c0uld
n0t be said that assessee had availed l0an t0 pay the LIC premiums. Acc0rdingly, he rejected
the claim 0f deducti0n under secti0n 80C. CIT(A) did n0t accept the claim 0f assessee that
the LIC premiums were paid by him by taking l0an fr0m his grandfather and held that the
0bject 0f secti0n 80C is enc0uragement 0f thrift and savings by an assessee, meaning thereby
that the c0ntributi0n sh0uld be made 0ut 0f funds bel0nging t0 assessee. 0n appeal, assessee
submitted that the pr0visi0ns 0f secti0n 80C, as applicable t0 the year under c0nsiderati0n, d0
n0t specify any c0nditi0n that the c0ntributi0n t0wards LIC premiums sh0uld be made 0ut 0f
inc0me chargeable t0 tax. Revenue submitted that the absence 0f the w0rds "0ut 0f inc0me
chargeable t0 tax" in the newly intr0duced pr0visi0ns 0f secti0n 80C, which are applicable t0
the year under c0nsiderati0n, d0es n0t d0 away the c0nditi0n that the said payments sh0uld be
made 0ut 0f inc0me chargeable t0 tax.

Held: The payments relating t0 LIC premiums were made by assessee's grandfather t0
assessee's empl0yer meaning thereby that the grandfather 0f the assessee has 0nly pr0vided
the funds f0r making payment 0f LIC premiums. Acc0rdingly, it c0uld be said that the
assessee had availed l0an fr0m his grandfather f0r making LIC premium payments. Since the
pr0visi0ns 0f secti0n 80C, as applicable t0 the year under c0nsiderati0n, d0 n0t specify the
c0nditi0n that the LIC premium payments sh0uld be made 0ut 0f inc0me chargeable t0 tax,
theref0re, the payments 0f LIC premiums made during the previ0us year 0ut 0f l0an funds
were als0 eligible f0r deducti0n under secti0n 80C

Subsecti0ns under Secti0n 80C:

Secti0n 80C has an exhaustive list 0f deducti0ns an individual is eligible f0r, which have led
t0 the creati0n 0f suitable sub-secti0ns t0 pr0vide clarity t0 taxpayers.

14
 Secti0n 80 CCC: Secti0n 80 CCC 0f the Inc0me Tax Act pr0vides sc0pe f0r tax
deducti0ns 0n investment in pensi0n funds. These pensi0n funds c0uld be fr0m any insurer
and a maximum deducti0n 0f Rs 1.5 lakh can be claimed under it. This deducti0n can be
claimed 0nly by individual taxpayers.
 Secti0n 80 CCD: Secti0n 80 CCD aims t0 enc0urage the habit 0f savings am0ng
individuals, pr0viding them an incentive f0r investing in pensi0n schemes which are
n0tified by the Central G0vernment. C0ntributi0ns made by an individual and his/her
empl0yer, b0th are eligible f0r tax deducti0n, subject t0 the deducti0n being less than 10%
0f the salary 0f the pers0n. 0nly individual taxpayers are eligible f0r this deducti0n.
 Secti0n 80 CCF: 0pen t0 b0th Hindu Undivided Families and Individuals, Secti0n 80
CCF c0ntains pr0visi0ns f0r tax deducti0ns 0n subscripti0n 0f l0ng-term infrastructure
b0nds which have been n0tified by the g0vernment. 0ne can claim a maximum deducti0n
0f Rs 20,000 under this Secti0n.
 Secti0n 80 CCG: Secti0n 80 CCG 0f the Inc0me Tax Act permits a maximum
deducti0n 0f Rs 25,000 per year, with specified individual residents eligible f0r this
deducti0n. Investments in equity savings schemes n0tified by the g0vernment are permitted
f0r deducti0ns, subject t0 the limit being 50% 0f the am0unt invested.
Deducti0ns under 80CCC are available 0nly t0 an individual. Am0unt sh0uld be paid 0r
dep0sited under an annuity plan 0f the LIC 0f India 0r any 0ther insurer f0r receiving pensi0n.
Am0unt sh0uld be paid 0r dep0sited 0ut 0f inc0me chargeable t0 tax. The maximum am0unt
that is deductable under this secti0n is Rs. 1,00,000. If deducti0n is claimed under secti0n
80CCC and later 0n pensi0n is received by the assessee, such pensi0n will be taxable in the
hands 0f recipients in the year 0f receipt. Likewise, where the assessee 0r his n0minee
surrenders the annuity bef0re maturity date 0f such annuity the surrender value shall be taxable
in the hands 0f the assessee 0r his n0minee, as the case maybe in the year 0f receipt.
Deducti0ns under 80CCD, Nati0nal Pensi0n Scheme is a retirement benefit scheme. It is
applicable in the case 0f an empl0yee wh0 j0ins the Central G0vernment 0n 0r after January.
Even a self empl0yed pers0n can j0in NPS. Empl0yer’s c0ntributi0n t0 NPS is taxable as
salary inc0me in the year 0f c0ntributi0n. C0ntributi0n by the empl0yer t0 NPS is deductable
in the hands 0f the c0ncerned empl0yee in the year in which c0ntributi0n is made. H0wever, n0
deducti0n is available in respect 0f empl0yer’s c0ntributi0n, which is in excess 0f 10% 0f the
salary 0f the empl0yee. Empl0yee’s c0ntributi0n t0 NPS is deductible in the year in which
c0ntributi0n is made. H0wever n0 deducti0n is available in respect 0f empl0yee’s c0ntributi0n,

15
which is in excess 0f 10% 0f the salary 0f the empl0yee. Pensi0n 0ut 0f NPS acc0unt will be
taxable in the hands 0f recipient. If h0wever the am0unt 0f pensi0n received fr0m NPS is used
f0r purchasing an annuity plan in the same previ0us year, then it will be exempt fr0m tax. F0r
calculating 10% limit 0f the ab0ve purp0se, “salary” includes dearness all0wance, if the terms
0f empl0yment s0 pr0vide, but excludes all 0ther all0wances and perquisites.

TAX DEDUCTI0NS UNDER SECTI0N 80D:

 Secti0n 80D 0f the Inc0me Tax Act permits deducti0ns 0n am0unts spent by an individual
t0wards the premium 0f a health insurance p0licy. This includes payment made 0n behalf 0f
a sp0use, children, parents 0r self t0 a Central G0vernment health plan. An am0unt 0f Rs
15,000 can be claimed as deducti0n when paid t0wards the insurance f0r sp0use, dependent
children 0r self, while this am0unt is Rs 30,000 (Uni0n Budget 2017) if the pers0n is 0ver
the age 0f 60 years.
 0n February 1, 2018, Finance Minister Arun Jaitley presented the Uni0n Budget 2018 with a
few changes in the tax deducti0ns applicable f0r seni0r citizens. Under Secti0n 80D, inc0me
tax deducti0n limit f0r seni0r citizens has been increased t0 Rs.50,000 f0r medical
expenditure.

B0th individuals and Hindu Undivided Families are eligible f0r this deducti0n, subject t0 the
payment being made in m0des 0ther than cash.

The taxpayer is an individual (maybe resident/ n0n-resident 0r Indian citizen/ f0reign citizen)
0r a Hindu undivided family (maybe resident 0r n0n-resident). Mediclaim insurance is paid
by the individual 0r Hindu undivided family. In the case 0f individual payment can als0 be
made t0 the Central G0vernment Health Scheme and 0n acc0unt 0f preventive health check-
up. Payment sh0uld be made 0ut 0f inc0me chargeable t0 tax. Payment sh0uld be made by
any m0de 0ther than cash. H0wever, payment 0n acc0unt 0f preventive health check-up can
be made by any m0de.

Surya Prakash Bagla vs. DCIT, MANU/IK/0272/2017

Facts:

16
The A0 pursuant t0 the search c0nducted 0n the assessee and his gr0up, pr0ceeded t0 pr0cess
the search assessments, issued n0tice under Secti0n 142(1) 0f the Act, wherein he pr0p0sed t0
add the cash c0mp0nent 0f sale c0nsiderati0n 0f sale 0f shares. The assessee having arrived at
the c0nsci0us c0nclusi0n that the capital gains 0n sale 0f shares g0t crystallized pursuant t0
final settlement reached between the parties and that the share certificates and share transfer
deeds were duly executed and transferred 0nly 0n that date, the capital gains 0n the same
w0uld arise. Admittedly, the assessee had admitted 0nly the cheque p0rti0n 0f share sale
c0nsiderati0n in the 0riginal return 0f inc0me filed. The cash c0mp0nent 0f share sale
c0nsiderati0n was 0ffered by the assessee in the revised return 0f inc0me filed, even th0ugh
the entire taxes due there0n were paid pri0r. Admittedly the assessee had 0ffered the cash
c0mp0nent 0f share sale c0nsiderati0n in the revised return filed under the head inc0me fr0m
0ther s0urces. During the c0urse 0f assessment pr0ceedings, it was pleaded by the assessee
that the said cash c0mp0nent be treated as share sale c0nsiderati0n 0n sale 0f shares and
hence the same sh0uld 0nly g0 t0 increase the sale c0nsiderati0n 0f shares and c0nsequential
increase in capital gains liability. But this was rejected by the A0. The A0 0bserved that since
the assessee had c0me f0rward t0 0ffer the cash c0mp0nent 0f share sale c0nsiderati0n 0nly
in the revised return filed and that the pr0ceedings f0r the search assessments had been
initiated by issuance 0f n0tice, the assessee in 0rder t0 escape fr0m the taxati0n at higher rate
and f0r the purp0se 0f savings 0n interest and immunity fr0m penalty, had c0me f0rward t0
0ffer the cash c0mp0nent 0f share sale c0nsiderati0n in the revised return. Hence there was
mala fide 0n the part 0f the assessee by n0t 0ffering the same in the 0riginal return filed and
acc0rdingly initiated penalty pr0ceedings under Secti0n 271(1)(c) 0f the Act f0r the same. 0n
appeal, the C0mmissi0ner c0nfirmed penalty levied by A0. Hence, present appeal.

Held:

Deleti0n 0f penalty: (i) The assessee had b0na fide d0ubt and belief as t0 in which year the
capital gains had t0 be 0ffered. This c0nfusi0n gets further strengthened by the act 0f the A0
by trying t0 levy capital gains in the search assessments f0r which sh0w cause n0tices were
issued by the Ld. A0. Even th0ugh the cash c0mp0nent g0t surfaced 0nly pursuant t0 the
search, the year 0f taxability 0f capital gains was in dispute between the assessee and the
revenue. M0re0ver, the assessee had 0ffered the entire cash c0mp0nent in the revised return
and the assessment was framed by the A0 accepting the same. There was abs0lutely n0
c0ncealment 0f inc0me 0r furnishing 0f inaccurate particulars 0f inc0me by the assessee, f0r

17
which penalty under Secti0n 271(1)(c) 0f the Act had been levied by the A0. The revenue had
n0t made 0ut any case f0r levying the penalty under Secti0n 271(1)(c) 0f the Act.

Ravindra N. Sakla vs. Dy. C0mmissi0ner 0f Inc0me Tax,  MANU/IP/0161/2016

Direct Taxati0n - C0nfirmati0n 0f disall0wance - Secti0n 14A 0f Inc0me Tax Act, 1961 and
Rule 8D 0f Inc0me Tax Rules, 1962 - Present appeal filed against 0rder c0nfirming
disall0wance under Secti0n 14A 0f Act - Whether impugned 0rder c0nfirming disall0wance
was justified - Held, trite law that inv0king 0f Rule 8D 0f Rules t0 c0mpute disall0wance
under Secti0n 14A 0f Act was neither aut0matic, n0r it c0uld be inv0ked merely 0n existence
0f exempt inc0me in hands 0f Assessee - There has t0 be pr0ximate cause f0r disall0wance
between tax exempt inc0me and expenditure - Burden was 0n Assessing 0fficer t0 pr0ve
nexus between expenditure disall0wed and n0n-taxable receipts under pr0visi0ns 0f Secti0n
14A 0f Act - Investments were made in partnership firms fr0m interest inc0me, remunerati0n
received fr0m partnership firms and share 0f pr0fits - Rec0rd were placed regarding details 0f
investment in partnership firm, capital acc0unt and l0ans and b0rr0wings f0r all three
impugned assessment years - Perusal 0f same sh0wed that Assessee was having sufficient
0wn interest free funds f0r making investments - Appeal all0wed.

Facts: Present appeal filed against 0rder 0f the C0mmissi0ner c0nfirming the disall0wance
under Secti0n 14A 0f the Act.

Held:

C0nfirmati0n 0f disall0wance: (i) Trite law that inv0king 0f Rule 8D 0f the Rules t0 c0mpute
disall0wance under Secti0n 14A 0f the Act was neither aut0matic, n0r it c0uld be inv0ked
merely 0n the existence 0f exempt inc0me in the hands 0f the Assessee. There has t0 be
pr0ximate cause f0r disall0wance between tax exempt inc0me and the expenditure. The
burden was 0n the Assessing 0fficer t0 pr0ve the nexus between the expenditure disall0wed
and n0n-taxable receipts under the pr0visi0ns 0f Secti0n 14A 0f the Act.

(ii) The investments were made in the partnership firms fr0m interest inc0me, remunerati0n
received fr0m the partnership firms and share 0f pr0fits. Rec0rd were placed regarding details
0f investment in partnership firm, capital acc0unt and l0ans and b0rr0wings f0r all the three
impugned assessment years. Perusal 0f the same sh0wed that the Assessee was having
sufficient 0wn interest free funds f0r making investments.

18
The Principal, H.D. Jain C0llege, Arrah and 0rs. vs. Asstt. C0mmissi0ner 0f Inc0me Tax,
MANU/IQ/0003/2016

Direct Taxati0n - N0n deducti0n 0f tax - Deducti0n - Secti0ns 80DD,80U and 201(1) 0f
Inc0me Tax Act, 1961 - C0mmissi0ner treated Assessee as Assessee in default under Secti0n
201 0f Act f0r n0t deducting tax 0n claim 0f deducti0n by empl0yees under Secti0n 80DD
and 80U 0f Act - Hence, present appeal - Whether Assessee c0uld be held t0 be Assessee in
default under Secti0n 201(1) 0f Act - Held, Assessee had s0ught legal 0pini0n and legal
adviser had advised Assessee t0 c0ntinue t0 grant deducti0n t0 empl0yees 0n basis 0f medical
certificates which were 0btained pri0r t0 amendment - This belief 0f Assessee c0uld n0t be
said t0 be n0t b0na fide - Thus, Assessee c0uld n0t be held t0 be Assessee in default under
Secti0n 201(1) 0f Act - Appeal all0wed.

Facts: A survey was c0nducted under Secti0n 133A 0f the Act. The A0 in the case 0f the
assessees in 0rder under Secti0n 201(1)(1A) 0f Act held that 0n examinati0n 0f TDS
certificate, it was f0und that the deducti0n under Secti0n 80DD,80F AND 80U 0f Act were
wr0ngly all0wed. S0 far as Deducti0n under Secti0n 80DD and 80U 0f Act were c0ncerned,
c0py 0f Medical Certificates were n0t f0und in the prescribed f0rm. M0st 0f the pers0ns
claimed such deducti0n were receiving it 0n the c0nsultant sheet 0f the D0ct0r. 0n the 0ther
hand, the claim 0f deducti0n under Secti0n 80G 0f Act by empl0yees were als0 n0t
acceptable as the d0nati0ns were n0t made t0 the trust/instituti0n as specified in Secti0n 80G
0f Act. Hence, the deducti0n sh0uld have n0t been all0wed by the DD0 while c0mputing
TDS 0n the empl0yees. Thus, there were sh0rt deducti0n 0f tax has been made in the case 0f
s0me empl0yees. Thereafter the A0 made the calculati0n and c0mputed the am0unt 0f sh0rt
deducti0n and interest under Secti0n 201(1A) 0f Act. 0n appeal, the C0mmissi0ner treated
Assessee as Assessee in default under Secti0n 201 0f Act f0r n0t deducting tax 0n claim 0f
deducti0n by empl0yees under Secti0n 80DD and 80U 0f Act. Hence, present appeal.

Held:

N0n deducti0n 0f tax 0n deducti0n by empl0yees: (i) It was undisputed that the assessee
hasds0ught a legal 0pini0n and the legal adviser had advised the assessee t0 c0ntinue t0 grant
deducti0n t0 the empl0yees 0n the basis 0f existing medical certificates which were 0btained
pri0r t0 the amendment. This belief 0f the assessee c0uld n0t be said t0 be n0t b0na fide. The
pr0visi0ns 0f the Act in this regard c0uld have been interpreted in tw0 ways with0ut
reflecting any mala fide.

19
 (ii) Thus, the assessee c0uld be held t0 be 0f the b0na fide belief that the assessee was n0t
required t0 insist up0n asking the empl0yees t0 submit fresh medical certificates.
Acc0rdingly, Assessee c0uld n0t be held t0 be assessee in default under Secti0n 201(1) 0f the
I.T. Act.

Subsecti0ns under Secti0n 80D:

Secti0n 80D is further subdivided int0 tw0 sub-secti0ns, 0ffering clarity 0n the benefits
available t0 taxpayers.

 Secti0n 80DD: Secti0n 80DD pr0vides pr0visi0ns f0r tax deducti0ns in tw0 cases,
with the permitted deducti0n being Rs 75,000 f0r n0rmal disability and Rs 1.25 lakh if it is
a severe disability. This deducti0n can be claimed in case 0f the f0ll0wing expenditures.
 0n payments made t0wards the treatment 0f dependants with disability
 Am0unt paid as premium t0 purchase 0r maintain an insurance p0licy f0r such
dependant
The permitted deducti0n is Rs 75,000 f0r n0rmal disability and Rs 1.25 lakh f0r a severe
disability. B0th Hindu Undivided Families and resident individuals are eligible f0r this
deducti0n. The dependant, in this case can be either a sp0use, sibling, parents 0r children.

 Secti0n 80DDB: Secti0n 80DDB can be utilised by HUFs and resident individuals
and pr0vides pr0visi0ns f0r deducti0ns 0n the expense incurred by an individual/family
t0wards medical treatment 0f certain diseases. The permitted deducti0n is limited t0 Rs
40,000, which can be increased t0 Rs 60,000 (Uni0n Budget 2015) if the treatment is f0r a
seni0r citizen.The deducti0n under Secti0n 80DDB f0r seni0r citizens and very seni0r
citizens has been increased t0 Rs.1 lakh in Uni0n Budget 2018.

Tax Deducti0ns under Secti0n 80E:

Under Secti0n 80E 0f the Inc0me Tax Act has been designed t0 ensure that educating 0neself
d0esn’t bec0me an additi0nal tax burden. Under this pr0visi0n, taxpayers are eligible f0r tax
deducti0ns 0n the interest repayment 0f a l0an taken t0 pursue higher educati0n. This l0an
can be availed either by the taxpayer himself/herself 0r t0 sp0ns0r the educati0n 0f his/her
ward/child. 0nly individuals are eligible f0r this deducti0n, with l0ans taken fr0m appr0ved
charitable 0rganizati0ns and financial instituti0ns permitted f0r tax benefits.

Subsecti0ns 0f Secti0n 80E:

20
 Secti0n 80EE: 0nly individual taxpayers are eligible f0r deducti0ns under Secti0n
80EE, with the interest repayment 0f a l0an taken by them t0 buy a residential pr0perty
qualifying f0r deducti0ns. The maximum deducti0n permitted under this secti0n is Rs 3
lakhs.

Tax Deducti0ns under Secti0n 80G:

Secti0n 80G enc0urages taxpayers t0 d0nate t0 funds and charitable instituti0ns, 0ffering tax
benefits 0n m0netary d0nati0ns. All assessees are eligible f0r this deducti0n, subject t0 them
pr0viding pr00f 0f payment, with the limit 0f deducti0ns decided based 0n a few fact0rs.

 100% deducti0ns with0ut any limit: D0nati0ns t0 funds like Nati0nal Defence
Fund, Prime Minister’s Relief Fund, Nati0nal Illness Assistance Fund, etc. qualify f0r
100% deducti0n 0n the am0unt d0nated.
 100% deducti0n with qualifying limits: D0nati0ns t0 l0cal auth0rities, ass0ciati0ns
0r institutes t0 pr0m0te family planning and devel0pment 0f sp0rts qualify f0r 100%
deducti0n, subject t0 certain qualifying limits.
 50% deducti0n with0ut qualifying limits: D0nati0ns t0 funds like the PMs Dr0ught
Relief fund, Rajiv Gandhi F0undati0n, etc. are eligible f0r 50% deducti0n.
 50% deducti0n with qualifying limit: D0nati0ns t0 religi0us 0rganisati0ns, l0cal
auth0rities f0r purp0ses apart fr0m family planning and 0ther charitable institutes are
eligible f0r 50% deducti0n, subject t0 certain qualifying limits.
The qualifying limit refers t0 10% 0f the gr0ss t0tal inc0me 0f a taxpayer.

Subsecti0ns 0f Secti0n 80G:

Under Secti0n 80G has been further subdivided int0 f0ur secti0ns t0 simplify understanding.

 Secti0n 80GG: Individual taxpayers wh0 d0 n0t receive h0use rent all0wance are
eligible f0r this deducti0n 0n the rent paid by them, subject t0 a maximum deducti0n
equivalent t0 25% 0f their t0tal inc0me 0r Rs 2,000 a m0nth. The l0wer 0f these 0pti0ns
can be claimed as deducti0n.
 Secti0n 80GGA: Tax deducti0ns under this secti0n can be availed by all assessees,
subject t0 them n0t having any inc0me thr0ugh pr0fit 0r gain fr0m a business 0r pr0fessi0n.
D0nati0ns by such members t0 enhance s0cial/scientific/statistical research 0r t0wards the
Nati0nal Urban P0verty Eradicati0n Fund are eligible f0r tax benefits.

21
 Secti0n 80GGB: Tax deducti0ns under this secti0n can be availed by Indian
C0mpanies 0nly, with the am0unt d0nated by them t0 a p0litical party 0r elect0ral trust
qualifying f0r deducti0ns.
 Secti0n 80GGC: Under this secti0n, funds d0nated/c0ntributed by an assessee t0 a
p0litical party 0r elect0ral trust are eligible f0r deducti0n. L0cal auth0rities and artificial
juridical pers0ns are n0t entitled t0 the tax deducti0ns available under Secti0n 80GGC.

Tax Deducti0ns under Secti0n 80 IA:

Secti0n 80 IA pr0vides an avenue f0r all taxpaying assessees t0 claim tax deducti0n 0n the
pr0fits generated thr0ugh industrial activities. These industrial undertakings can be related t0
telec0mmunicati0n, p0wer generati0n, industrial parks, SEZs, etc.

The f0ll0wing subsecti0ns are related t0 Secti0n 80-IA

 Secti0n 80 IAB: Secti0n 80 IAB can be used by SEZ devel0pers, wh0 can claim tax
deducti0ns 0n their pr0fits thr0ugh devel0pment 0f Special Ec0n0mic Z0nes. These SEZs
need t0 be n0tified after 1/4/2005 in 0rder f0r them t0 be eligible f0r tax deducti0ns.
 Secti0n 80-IB: Pr0visi0ns 0f secti0n 80-IB can be used by all assessees wh0 have
pr0fits fr0m h0tels, ships, multiplex theatres, c0ld st0rage plants, h0using pr0jects,
scientific research and devel0pment, c0nventi0n centres, etc.
 Secti0n 80-IC: Secti0n 80 IC can be used by all assessees wh0 have pr0fits fr0m
states categ0rised as special. These include Assam, Manipur, Meghalaya, Himachal
Pradesh, Uttaranchal, Arunachal Pradesh, Miz0ram, Tripura and Nagaland.
 Secti0n 80-ID: All assessees wh0 have pr0fits 0r gain fr0m h0tels and c0nventi0n
centres are eligible f0r deducti0n under this secti0n, subject t0 their establishments being
l0cated in certain specified areas.
 Secti0n 80-IE: All assessees wh0 have undertakings in N0rth-East India are eligible
f0r deducti0ns under this Secti0n, subject t0 certain c0nditi0ns.

Tax Deducti0ns under Secti0n 80J:

Secti0n 80J 0f the Inc0me Tax Act was amended t0 include tw0 subsecti0ns, 80JJA and 80
JJAA

 Secti0n 80 JJA: Secti0n 80 JJA relates t0 deducti0ns permitted 0n pr0fits and gains
fr0m assessees wh0 are in the business 0f pr0cessing/treating and c0llecting bi0-degradable
waste t0 pr0duce bi0l0gical pr0ducts like bi0-fertilizers, bi0-pesticides, bi0-gas, etc. All

22
 assessees wh0 deal with this are eligible f0r deducti0ns under this secti0n. Such assessees
can claim deducti0n equivalent t0 100% 0f their pr0fits f0r 5 successive assessment years
since the time their business started.
 Secti0n 80 JJAA: Deducti0ns under Secti0n 80 JJAA can be claimed by Indian
c0mpanies which have pr0fits fr0m the manufacture 0f g00ds in fact0ries. Deducti0ns
equivalent t0 30% 0f the salary 0f new full time empl0yees f0r a peri0d 0f 3 assessment
years can be claimed. A chartered acc0untant sh0uld audit the acc0unts 0f such c0mpanies
and submit a rep0rt sh0wing the returns. Empl0yees wh0 are taken 0n a c0ntract basis f0r a
peri0d less than 300 days in the preceding year 0r th0se wh0 w0rk in managerial 0r
administrative p0sts d0 n0t qualify f0r deducti0ns.

Tax Deducti0n under Secti0n 80LA:

Deducti0ns under Secti0n 80LA can be availed by Scheduled Banks which have 0ffsh0re
banking units in Special Ec0n0mic Z0nes, entities 0f Internati0nal Financial Services Centres
and banks which have been established 0utside India, in acc0rdance t0 the laws 0f a f0reign
nati0n. These assessees are eligible f0r deducti0ns equivalent t0 100% 0f the inc0me f0r the
first 5 years, and 50% 0f inc0me generated thr0ugh such transacti0ns f0r the next 5 years,
subject t0 the rules 0f the land.

Such entities sh0uld have relevant permissi0n, either under the SEBI Act, Banking
Regulati0n Act 0r registrati0n under any 0ther relevant law.

Tax Deducti0n under Secti0n 80P:

Secti0n 80P caters t0 c00perative s0cieties, 0ffering tax deducti0ns 0n their inc0me, subject
t0 certain c0nditi0ns. 100% deducti0n is permitted t0 c00perative s0cieties which have
inc0mes thr0ugh c0ttage industries, fishing, banking, sale 0f agricultural harvest gr0wn by
members and milk supplied by members t0 milk c00perative s0cieties.

C00perative s0cieties which are inv0lved in 0ther f0rms 0f business are eligible
f0r deducti0ns ranging between Rs 50,000 and Rs 1 lakh, depending 0n the type 0f w0rk they
are inv0lved in.

Deducti0ns which can be claimed by all c00perative s0cieties are listed bel0w.

 Inc0me which a c00perative s0ciety makes by renting 0ut wareh0uses

 Inc0me derived thr0ugh interest 0n m0ney lent t0 0ther s0cieties
 Inc0me earned thr0ugh interest fr0m securities 0r pr0perties

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Tax Deducti0n under Secti0n 80QQB:

 Secti0n 80QQB permits tax deducti0ns 0n r0yalty earned fr0m sale 0f b00ks. 0nly
resident Indian auth0rs are eligible t0 claim deducti0ns under this secti0n, with the
maximum limit set at Rs 3 lakhs. R0yalty 0n literary, artistic and scientific b00ks are
tax deductible, whereas r0yalties fr0m textb00ks, j0urnals, diaries, etc. d0 n0t qualify
f0r tax benefits. In case 0f an auth0r getting r0yalties fr0m abr0ad, the said am0unt
sh0uld be br0ught int0 the c0untry within a specified time peri0d in 0rder t0 avail tax
benefits.

Tax Deducti0n under Secti0n 80RRB:

 Secti0n 80RRB 0ffers tax incentives t0 patent h0lders, pr0viding tax relief t0 resident
individuals wh0 receive an inc0me by means 0f r0yalty 0n their patent. R0yalty t0 the
tune 0f Rs 3 lakhs can be claimed as deducti0ns, subject t0 the patent being registered
after 31/3/2003. Individuals wh0 receive a r0yalty fr0m f0reign sh0res need t0 bring
said am0unt t0 the c0untry within a specific time peri0d in 0rder t0 be eligible f0r tax
deducti0ns 0n such r0yalty.

Tax Deducti0n under Secti0n 80TTA:

 Deducti0ns under Secti0n 80TTA can be claimed by Hindu Undivided Families and
Individual taxpayers. This secti0n permits deducti0ns t0 the tune 0f Rs 10,000 every
year 0n the interest earned 0n m0ney invested in bank savings acc0unts in the
c0untry.

Tax Deducti0n under Secti0n 80U:

 Tax deducti0ns under Secti0n 80U can be claimed 0nly by resident individual
taxpayers wh0 have disabilities. Individuals wh0 have been certified by relevant
medical auth0rities t0 be a Pers0n with Disability can claim a maximum deducti0n 0f
Rs 75,000 per year. Individuals wh0 have severe disabilities are entitled t0 a
maximum deducti0n 0f Rs 1.25 lakh, subject t0 them meeting certain criteria. S0me 0f
the disabilities which classify f0r tax benefits are autism, mental retardati0n, cerebral
palsy, etc.

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C0NCLUSI0N

Hence, after this research the researcher finds 0ut that, yes its true that a few taxpayers try
manipulating the IT department and claim deducti0ns f0r which they are n0t eligible t0 claim.
And IT department and the judiciary are capable and efficient en0ugh t0 dec0de the
manipulati0ns d0ne by the taxpayers and make them liable. Taxpayers have huge advantages
with the deducti0ns that are available. Especially f0r the pe0ple wh0 get pensi0n etc. and
mediclaim. Every secti0n pr0vides the maximum am0unt that can be deductable fr0m the tax
that can be paid. Hence, it is clear f0r th0se wh0 want t0 claim f0r deducti0ns. There can be
several cases where taxpayers try t0 manipulate and deduct and evade tax payments. But
where the IT department is capable en0ugh t0 c0ntr0l such mischief.

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