11 12 (Eng. Med) : Join The Best To Be The Best

SAHAS Institute :- 11th 12th Comm // F.Y – S.Y, - T.Y. B.Com // C.A & C.
S [All Levels] Page 1 of 31
11th 12th (Eng. Med)

F.Y S.Y. T.Y. B.COM
C.A. & C.S (All levels)
E-107, Vrundavan Township, Harni Road, Near Sangam, Vadodara. M : 99989 84152, 82384 48020
Sharnam Complex , Besides Crystal School , Opp; Bahurani Restaurant , W.rd M : 82384 48020
S.Y.B.Com [ Sem 3 ] -: Direct Tax [D.T.] :- Unit 1 (Part – 1)

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RESIDENTIAL STATUS
[Topic 1.] BASIC CONCEPTS. :-
# Assessment Year. :-
:- Assessment year means the period starting from April 1st and ending on march 31st of the next year.
E.g. assessment year 2020-21
which will commence on 1st April 2020 and will end on 31st march 2021.
:- Incomes of the previous year taxed during the next following assessment year
at the rate prescribed by the relevant finance act.
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# Previous Year ; Sec – 3. :-

:- Previous year means income earned in a year is taxable in the next year,
the year in which income is earned is known as previous year and
next year in which assessment year.
 Uniform Previous Year. :-
:- From the AY 1989-90 all the assesse are required to follow financial year April 1st to March 31st
as the previous year.
:- This uniform previous year has to be followed for all sources of income.
 Previous year in case of newly set up business or profession. :-
:- For newly started business or profession
1st previous year is the period commencing from the date of setting up of business or profession
and ending on the immediate following 31st March.
:- Thus, in the case of newly set up business or profession
the first PY is the period of 12 months or less than 12 months.
:- It can never exceed 12 months and the 2nd and subsequent previous year are always of 12 months.
 Income of previous year is not taxable in the immediate following assessment. :-
Following are the exception for the rule :-
[1] Income of non resident from shipping.
[2] Income of person leaving India either permanently or for long period of time.
[3] Income of bodied formed for short duration.
[4] Income of a person trying to transfer his assets with a view to avoiding payment of tax.
[5] Income of discontinued business.
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Join the Best

To be the Best
E-107, Vrundavan township, Besides Tasty Restaurant ,Near sangam char rasta, – 82384 48020 , 99989 84152
SAHAS Institute :- 11th 12th Comm // F.Y – S.Y, - T.Y. B.Com // C.A & C.S [All Levels] Page 2 of 31
# Person : Sec – 2(31). :-

 The term includes :-
[1] An individual
[2] A Hindu Undivided Family (i.e. HUF)
[3] A company
[4] A firm
[5] An association of person or bodied of individual whether incorporate or not
[6] Local authority
[7] Every artificial judicial person, not following within presiding category.
[1] An individual :-
:- It means only a natural person
i.e. human being, individual includes a minor person or a person of unsound mind.
[2] A Hindu Undivided Family (H.U.F) :-
:- It consists of all persons lineally descended from a common family
and includes their wives and unmarried daughter.
:- Profit made by huf is charged to tax as a income of HUF as a separate unit.
[3] A Company :-
# A company is defining to means the following….
⇨ An Indian Company
⇨ Any body corporate incorporated under the law of a foreign country
⇨ Any institution, association or a body which is assessed or was assessable /assessed
as a company for any assessment year commencing on or before April 1, 1970 or
⇨ Any institution association or body,
whether incorporated or not and whether Indian or non- Indian,
which is declared by general or special order of the Central Board of Direct Taxes to be a company.
[4] A firm : (Indian partnership Act, 1932) :-
:- Ss per IPA 1932, relationship between person
who have agreed to share the profit of business carried on
by all or any of them acting for all.
[5] An association of person or body of individual :-
:- The word association means to join in common purpose or to join in action
therefore AOP means an association in which two or more persons join in a common purpose
a common action.
[6] A local authority :-
:- A local authority is a separate unit of assessment as per sec 3(31) of general clause Act.
:- A local authority means a municipal committee, district board, body of port commissioner,
or other authority legally entitled to or entrusted by the govt. with the control and management
or municipal or local fund.
[7] Artificial Judicial Person :-
:- AJP covers all artificial person with a juridical personality
such as Bar Council this is residuary classification and therefore
it does not covered those following with any of above classification.
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 Example on Person :-
[Ex. :1] Classify the following persons into different category.
Sr. No. Particulars Answer
1. X is a partner of a firm Individual
2. Y is a director of A Ltd Individual
3. Delhi Municipal corporation Local Authority
4. Bombay sells tax Bar Council AJP
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LOWEST FEES = HIGHEST VALUE EDUCATION
( From Anywhere @ Anytime )
[Ex.: 2] Determine the status of the following :
1. Mr. Patel a Practice in doctor Individual
2. Miss Payal a partner in a firm Individual
3. Master Ashwin, A minor admitted to the benefit of a partnership firm Individual
4. Mr. Shah teacher in a collage Individual
5. Bank of India A Company
6. Life insurance corporation A Company
7. Laxmi Co-operative bank ltd A Company
8. United india insurance company A Company
9. Trust of Tirupati temple AJP
10. Alkapuri Club AOP/BOI
11. S.P. University AJP
12. Shreeji trust AJP
13. M/s R,M Patel an unregistered firm Firm
14. Association of furniture merchant AOP
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[Ex.3] State the legal status for the following :
1. Unnati Bank Ltd A Company
2. M.S. University AJP
3. Baroda Municipal Corporation Local authority
4. Jaishree education trust AJP
5. Ahutosh Nagar co-operative housing society AOP
6. Apex Ltd A Company
7. Mr. U K Patel a lecturer Individual
8. Chhani Gram Panchayat Local authority
9. Baroda Cricket association AOP
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[Ex.4]
1. M.S. University AJP
2. Apex Ltd A Company
3. Bombay Municipal corporation Local Authority
4. X & Y Company an unregistered company of x & Y A Company
5. Institute of chartered accountant of india AOP
6. Mr. X a manager in XYZ ltd Individual
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# Assesses : Sec – 2(7). :-
:- Assesses means a person by whom any tax or any sum of money is payable under the act.
:- It includes every person in respect of whom any proceeding under the act has been taken
for the assessment of his income or loss, for the amount of refund due to him or fringe benefits.
:- It includes a person who is assessable in respect of income or loss of another person
for whom he is deemed to be an assessee or asessee in default under the provision of act.
# Income Sec – 2(24). :-
:- The definition of the income in sec 2(24) is inclusive and not exhaustive
therefore the term not includes only those things which are included in sec 2(24)
but also includes such thing which the term signifies, according to its general and natural meaning.
Smart Mobile Education – From Any Time – Any Where

[A] Meaning in general :-
:- Income is periodical monetary return with some short of regularity.
:- It may be recurring in nature.
:- It may be broadly define as the true increase in the amount of wealth
which comes to a person during a fixed period of time.
[B] Broad principles which clarified the concept of income :-
(1) Regular and definite source
(2) Different form of income -
Income may be receive in cash or kinds
when income receive in kinds its valuation is to be made
according to the rules prescribed in the act. Or
(3) Receipt V/s Accrual
(4) Illegal income
(5) Disputed title of income tax assessment cannot be held up or postpones merely
because of existence of a dispute regarding the title of income.
(6) Relief or reimbursement of expense not treated as income
(7) Surplus from mutual activity -
A person cannot make taxable profit out of transaction with himself.
:- Income must come from outside.
(8) Diversion of income by over riding titles V/s Application of income.
(9) Temporary and permanent income. M = 82384 48020 , 99989 84152
(10) Lump-sum receipt – it is an income.
Karelibaug Waghodia Road
(11) Personal gift - it is not an income.
:- Gift of a personal nature is not an income.
E.g. Birthday gift, marriage gift are not income and therefore
not liable to tax subject to certain condition.
(12) Tax free income - if person receive tax free income
on which tax is paid by the person who making payment on behalf of recipient,
it has to grossed up for inclusion in his total income.
(13) Receipt on account of Dharmada. (not an income)
(14) Devaluation of currency – taxable
(15) Income include loss - Taxable
(16) Appropriation between capital and interest –
interest is treated as income and capital is not an income.
(17) Income should be real and not fictitious.
(18) Same income cannot be taxed twice.
(19) Charge on person - income of previous year is taxable in the hands of a person.
(20) Source of income need not exist in the assessment year - it is income
(21) Pin money receive - Pin money receives be wife for her dress or personal expenses
or for household expense is not treated as her income.
(22) Awards receive by sport man –
In case of sportsman the awards receive by him in the nature of benefit
in exercises of his profession and therefore it is chargeable to tax.
:- In the case of non professional sportsman,
the awards receive by him in nature of gift or personal testimonial.
(23) Revenue receipt V/s Capital receipt –
Revenue receipt is taxable as income unless it is exempt under the act.
:- On the other hand capital income generally exempt from tax.
(24) Voluntary payment –
Voluntary payment entirely without consideration and is not traceable to any source
but depends entirely on the donor, cannot be treated as income .
(25) Price on winning a motor rally- price on winning motor rally is income.
[C] Receipt which are term as an income Sec 2(24) :-
1. Profit and gain
2. Dividend
3. Voluntary contribution received by trust
4. Perquisite in the hands of employees.
5. Any special allowance or benefits.
6. City compensatory or dearness allowance.
7. Any benefit or perquisites to a director.
8. Any benefit or perquisite to a representative assessee
9. Capital gain.
10. Insurance profit
11. Winning from lottery.
12. Winning from cross word puzzle
13. Winning from race including horse race.
14. Winning from card game and other games of any sort
15. Winning from gambling
16. Winning from betting
17. Employee’s contribution towards provident fund.
18. Amount received under key man insurance policy.
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 Examples :-
[1.] State the following are whether income or not.
a. Profit made in smuggling business
b. Reimbursement of travelling expense received by Mr. Shah,
the salesman’s of M/S new world corporation.
c. Birthday gift received by Mr. Hardik from his uncle.
d. Loss incurred by Ramjibhai in textile business
e. Pin money received by wife for her personal expense.
f. Mr. Jain received a refrigerator in lieu of his salary for the month of February.
[2.] Determine the following items are income or not.
a. Rent free accommodation provided by XYZ ltd to its employee Mr. Manoj
b. Reimbursement of conveyance expenses by XYZ Ltd to its employee
c. Lottery prize of Rs. 50,000 won by Mr. Nasir.
d. Rent received by landlord from let out house.
e. Profit made by student’s association from fun fare.
f. Pin money received by Mrs. Parmar from her husband for house hold expenses.
g. Agricultural income received by Mr. Patel.
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RESIDENTIAL STATUS. :-
:- Tax incidence of an assessee depends on its residential status.
E.g an income accrued to an individual out side india is taxable in India
depends upon residential status of the individual.
:- Similarly whether an income earned by a foreign national in India, is taxable in India
depends upon the residential status of the individual rather than of his citizenship.
 Different Taxable Entities :-
All taxable entities are divided in the following categories
for the purpose of determining residential status. :-
(1) An individual M = 82384 48020 , 99989 84152

(2) A Hindu Undivided Family Karelibaug Waghodia Road
(3) A firm or an association of person
(4) A Joint stock company
(5) Every other person
 Different residential status : An assessee is either
(1) Resident in India or
(2) Non resident in India.
M = 82384 48020 , 99989 84152
However, a resident individual or HUF has to be
(1) Resident and ordinary resident in India or Karelibaug Waghodia Road
(2) Resident but not ordinary resident in India
:- Therefore an individual and HUF can either be resident or ordinary resident in India,
or resident but not ordinary resident or non-resident.
:- All other assessee like firm,
an association of person or joint stock company and every other person can be
(1) Resident in India
(2) Non resident in India.
:- Residential status of an assessee is to be determine and in respect of each previous year
as it may vary from previous year to previous year.
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How To Determine Residential Status of An Individual – Section 6. :-
:- An individual may be
(1) Resident but ordinary resident in India
(2) Resident but not ordinary resident in India.
(3) Non resident in India
(1) Resident and ordinary resident in India : Section 6(1), 6(a). :-
:- To find out whether an individual is resident and ordinary resident in India.
One has to take following two conditions….
a. Find out whether such individual is resident in india (Applying basic condition)
b. If such an individual is resident in india,
than find out whether he is ordinary resident in India
however if such an individual is non resident in India
than no further investigation is necessary. (Apply Additional condition).
# Basic condition to test an individual’s residential status in India : Section 6(1) :-
:- An individual is said to be resident in India in any previous year
if he satisfies at least one of the following conditions. :-
(a) He is in India in the previous year for a period of 182 days or more.
(b) He is an India for a period of 60 days or more during the previous year
and 365 days or more during four years immediately presiding the previous year.
# Additional condition to test an individual is ordinary resident : Section 6(6) :-
:- A resident individual is treated as resident and ordinary resident in India.
:- If he satisfied following two conditions…..
(a) He has been resident in India at least two out of ten previous year
immediately preceding relevant previous year.
(b) He has been in India for a period of 730 days or more during 7 years immediately
preceding relevant previous year.
[I] Resident but not ordinary resident : Section 6(1a) :-
:- An individual whose satisfy one of the basic condition but not satisfied the two additional
conditions is treated as resident or not ordinarily resident in India.
:- In other word, an individual becomes resident but not ordinarily resident in india
in any of the following circumstances :
(a) If he satisfies at least one of the basic conditions but none of the additional condition.
(b) If he satisfies at least one of the basic condition and one of the two additional condition.
[II] Non- resident :-
:- An individual is non resident in India
if he satisfies none of the basic condition for that additional condition is not relevant.
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Examples :
[1] Mr. X left india for the first time on may 20th 2017.
During FY 2019-20 he came to India for a period of 53 days. Determine the residential status.
[2] Mr. X a German tourist comes to India for the first time on May 17th 2018.
He leaves India on Sep 15th 2019. Determine his residential status for AY 2020-21.
[3] Mr. A comes to India for the first time on April 16th 2019. During his stay in India up to 15th Oct 2019,
he stays at Delhi up to 30th April 2019 and thereafter remains in Madras until his departure
from India. Determine his residential status for the assessment year 2020 - 21.
[4] Mr. P an Indian citizen comes to India after 20 years.
On 28th May 2019 and stays up to December 5th 2019.
Determine his residential status for the AY 2020-21.
[5] A foreign citizen comes to India for the first time in the last 30 years on March 20th 2019.
On Sep. 1st 2019 he leaves India for Nepal and a business trip.
He comes back on feb 26th 2020. Determine the residential status for AY 2020-21.
[6] Mr.Y a foreign citizen comes to India for the first time on April 15th 2015.
During the FY 2015-16, 2016-17, 2017-18, 2018-19, 2019-20 he is in India to 130 days,
80days, 13 days, 210 days, 75 days respectively.
Determine residential status for AY 2020-21.
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# Exceptions For Basic Condition – Section 6(1). :-
 There are two exceptions for the basic condition : section 6(1) :-
[1] Where an individual, who is citizen of India,
leaves india in any year for the purpose of employment or as a member of crew of an Indian ship,
he should be treated as resident in India in that previous year only,
if he has been in India in that previous year,
for 182 days or more instead of 60 days or more in condition second.
[2] If an Indian citizen for a person of Indian origin who is in abroad
(whether rendering services out side or not) comes on a visit to India in the previous year,
he should be treated as resident in India if he has been present in India in that previous year
for 182 days or more instead of 60days or more in condition second.
 Note :
(a) A person is deemed to be an Indian
origin if he or either of his parents or any of his grant parents was born in an undivided family.
(b) “Comes a visit to India in the previous year” means that he may come to India for any purpose
what so ever.
:- It may be business purpose or personal purpose of any nature or
he may come to meet his relatives or he may come for a pleasure trip.
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# Residential Status of HUF – Section 6(2). :-
:- A HUF is either resident in India or non-resident in India
at resident HUF is either ordinarily resident or not ordinarily resident.
:- There is one basic condition and two additional conditions for determining residential status of HUF.
[A] Basic Condition of HUF as a resident in India :-
:- A HUF is said to be resident in India
if the control and management of its affairs is situated wholly and partly in India.
[B] When a HUF is said to be a non resident :-
:- A HUF is said to be a non resident in India
if the control and management of its affairs is situated wholly out side India.
[C] When HUF is said to be resident and ordinary resident in India :-
:- If its “Karta” satisfies both of the following two conditions as per section 6(6B).
⇨ First condition :
:- The “Karta” or manager of HUF must be resident in India for at least two out of ten years
immediately preceding the relevant previous year.
⇨ Second condition :
:- The “Karta” or manager of HUF must be present in India for at least 730 days
during the 7 years immediately preceding previous year.
[D] When HUF is said to be resident but not ordinary resident in India :-
:- A HUF will be resident but not ordinarily resident in India
if the Karta or manager satisfies basic condition but does not satisfy both the additional condition.
 Note :
(1) Normally HUF is presume to be resident in India
unless an assessee proves control and management of its affairs are situated
wholly outside india.
(2) The death of manager or karta of a HUF will not disturb the residential status of the family.
:- The period of residential status of successive manager of HUF may be added together
to determine the status.
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# Residential Status of a Firm an Association of a Person – Section 6(4). :-

:- A partnership firm and association of persons are said to be resident in India,
if control and management of their affairs wholly and partly situated within India,
during the relevant previous year.
:- A firm and an association of persons are said to be non-resident in India,
if control and management of their affairs are situated,
wholly outside India during the previous year.
:- A firm and an association of person cannot be “ordinarily” or “not ordinarily resident”
the residential status of the status of partners or members of the firm is not relevant,
in determining the status of the firm and association.
Residential Status of Every Other Person. :-
:- Every other person is resident in India,
if control and management of his affairs is wholly or partly situated
within in India during the relevant previous year.
:- On the other hand, every other person is non resident in India
if control and management of its affairs wholly situated out side India.
Residential Status of Company – Section 6(3). :-
:- A company is said to be resident in India if any previous year
if it is an Indian company or during the previous year, M = 82384 48020 , 99989 84152
its management and affairs are situated wholly in India.
:- A Company will be non resident in any previous year,
if it not an Indian Company and the control and management
of its affairs are situated wholly or partly outside India.
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SCOPE OF TOTAL INCOME (INCIDENCE OF TAX)
[Topic – 1]. Scope of Total Income I.e. Incidence of Tax [Sec.5].

:- Under the Act, incidence of tax on a tax payer depends on his residential status and also on the place and
time of accrual or receipt of income.
[A] Indian Income And Foreign Income
:- In order to understand the relationship between residential status and tax liability, one must understand
the meaning of "Indian income" and foreign income".
# Indian Income
:- Any of the following three is an Indian income
:- If income is received (or deemed to be received) in Indian during the previous year and at the same time
it accrues (or arises or is deemed to accrue or arise) in India during the previous year.
:- If income is received (or deemed to be received) in India during the previous year but it accrues (or
arises) outside India during the previous year.
:- If income is received outside India during the previous year but it accrues (or arises or is deemed to
accrue or arises) in India during the previous year.
#Foreign Income-
:- If the following two conditions are satisfied, then such income is "foreign income"
:- Income is nor received (or not deemed to be received) in India; and
:- Income does not accrue or arise (or does not deemed to accrue or arise) in India
# Provision In Brief- The above provision may be explained in brief as follows
Whether income received (or Whether income accrues (or Status of the income
deemed to be received) in arises or is deemed to accrue or
Indian during the relevant year arise) in India during the
relevant year
Yes Yes Indian Income
Yes No Indian Income
No Yes Indian Income
No No Foreign Income
[B] Incidence of Tax For Different Tax Payers
 Tax Incidence of Different Tax Payer Is As Follow
Individual and Hindu Undivided Family
Residency an ordinarily Residency but not Nonresident in India
resident in India ordinarily resident in
India
Indian income Taxable in India Taxable in India Taxable in India
Foreign income Taxable in India Only two types of Not Taxable in India
foreign incomes (i.e.,
Case 1 and Case 2 given
below) are taxable in
India Any other foreign
income is not taxable in
India
:- The following foreign incomes are taxable in the hands of a resident but not ordinarily resident in India
# Case 1- if it is business income and business is controlled wholly or partly from India.
#Case 2- If it is income from profession which is set up in India.
:- No other foreign income (like salary, rent, interest, etc.) is taxable in India in the hands of a resident but
not ordinarily resident taxpayer.
Any other taxpayer Like.
(company, firm, co-operative society, association of person, body of individual, etc.)
Resident in India Nonresident in India
Indian income Taxable in India Taxable in India
Foreign income Taxable in India Not Taxable in India
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[Topic – 2]. Receipt of Income. :-
:- Income received in India is taxable in all cases irrespective of Residential status of the assesses.
:- Receipt of income refers to the first occasion when the recipient gets the money under his control.
:- Once amount is received as Income, any remittance or transmission of the amount to another place does
not result in Income at other place.
# Cash V/S kind :-
:- It is not necessary that income should be received in cash.
:- Income may be received in cash or in Kind.
# For instance, value of a free resident house provided to an employee is taxable as salary in the
hands of the employee though the income is not received in cash.
# Receipts Accrual :-
:- Receipt is not the sole test of chargeability to tax.
:-If an income is not taxable on receipt basis, it may be taxable accrual basis.
# Actual receipt V/S Deemed Receipts :-
:- It is not necessary that an income should be actually received in India in order to attract tax liability.
:- An income deemed to be received in India, in the previous year is also included in the taxable income of
the assesses.
# The act enumerates the following as income deemed to be received in India :
(a) Interest credited to recognized provident fund account of an employee in excess of 9.5%.
(b) Excess contribution of employer in the case of recognized provident fund (i.e., the amount contributed
in excess of 12% of salary).
(c) Transferred balance.
(d) Tax deducted at source.
(e) Contribution by the Central Government or any other employer to the account of an employee under a
notified pension scheme referred to in section 80CCD.
(f) Tax Deducted at Source.
# Accrual of Income :-
:- Income accruing in India is chargeable to tax in all cases irrespective of Residential status of assesses.
:- The words 'accrue' or 'arises' are used in contradistinction to the word 'receive'.
:- Income is said to be received when it reaches the assesses.
:- When the right to receive the income become vested in the assesses, it is said to accrue or arise.
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[Topic – 3]. Income Deemed To Accrue OR Arise In India [Sec.9].

# Following categories of Income are Income deemed to accrue or arise in India. :-
(i) Income from Business connections in India.
(ii) Income through or from any property, asset or source of income in India.
(iii) Capital gain on transfer of capital asset situated in India.
M = 82384 48020 , 99989 84152
(iv) Income under the head 'Salaries' if service is rendered in India.
(v) Salary payable abroad by the Government to a citizen of India. Karelibaug Waghodia Road
(vi) Dividend paid by Indian Company.
Any dividend paid by an Indian Company outside India is deemed to accrue or arise in India.
 Note
:- However, dividend paid by an Indian Company is exempt from tax u/s 10(34)/ (35).
(vii) Income from interest if it is payable by the Government or by a person who is resident in India or by a
person who is non-resident where such interest is payable in respect of money borrowed or debt
incurred for the purpose of business or profession, carried on by such person in India or for the
purpose of making or earning any income from any source in India.
(vii) Income from royalty, fees or technical services in specified cases.
(Specified Cases are the same as discussed above in point (vii).
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[Topic – 4]. TAX INCIDENCE. :-
# The Following Chart Shows The Incidence of Tax on Income In Different Situation :
Sr. Name of the Income Whether tax incidence arises in the case of
No.
Resident and Resident but Non Resident
Ordinarily Not Ordinarily
Resident Resident
1 Income received in India whether accrued in Yes Yes Yes
India or outside India.
2 Income deemed to be received in India Yes Yes Yes
whether accrued in India or outside India.
3 Income accruing or arising in India whether Yes Yes Yes
received in India or outside India.
4 Income deemed to accrue or arise in India Yes Yes Yes
whether received in India or outside India.
5 Income received and accrued outside India Yes Yes No
from a business controlled in or a profession
set up in India.
6 Income received and accrued outside India Yes No No
from a business controlled from outside
India or a profession set up outside India.
7 Income (not being from a business / Yes No No
profession) received and accrued outside
India.
Income earned and received outside India
8 but later on remitted to India. No No No
 Note
(a) The first four incomes are chargeable to tax in India in respect of all assesses, irrespective of their
residential status.
(b) The tax incidence is the highest in the case of a resident and ordinarily resident assesses, as Income
accruing in any part of the world attracts incidence of tax in India.
(c) Tax incidence is the lowest in the case of the non-resident, as Income which is received or deemed to be
received or accrued or deemed to be accrued in India is only liable to tax.
 Conclusions
# The Following Broad Conclusions Can Be Drawn
(1) Indian Income
Indian income is always taxable in India irrespective of the residential status of the taxpayer.
[2] Foreign Income
Foreign income is taxable in the hands of resident
:- (in case of a firm, an association of persons, a joint stock company and every other person) or resident
and ordinarily resident (in case of an individual and a Hindu undivided family) in India.
:- Foreign income is not taxable in the hands of non-resident in India.
:- In the hands of resident but not ordinarily resident taxpayer, foreign income is taxable only if it is
(a) business income and business is controlled wholly or partly from India,
(b) professional income from a profession which is set up in India.
:- In any other case, foreign income is not taxable in the hands of resident but not ordinarily resident
taxpayers.
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[Topic – 5]. PROVISIONS ILLUSTRATED. :-
Sr. Nature of Income of Reason Conclusion -Is it taxable Indian for the
No. assessment year 2020-21
Resident or Resident but Non
Resident and Not Resident
Ordinarily Ordinarily
Resident Resident
1 Rental Income of Rs. It is Indian Income, Yes Yes Yes
36,000 is received in Indian Income is always
India on May 10, 2019. taxable.
(It may accrue outside
India or in India)
2 Interest Income of Rs. It is Indian Income, Yes Yes Yes
46,000 accurse in India Indian Income is always
on March 31, 2020. taxable.
(It may be received in
India or outside India)
3 Income of Rs. 56,000 is It is Indian Income, Yes Yes Yes
deemed to be received Indian Income is always
in Indian Income is taxable.
India on April 20, 2019.
(It may accrue outside
India or in India)
4 Income of Rs. 66,000 is It is Indian Income, Yes Yes Yes
deemed to accrue or Indian Income is always
arise in India during the taxable.
previous year 2019-20.
(It may be received in
India or outside India)
5 Business Income/ It is foreign income. Yes No No
Professional Income of It is taxable in the
Rs. 76,000 is received case of resident &
and accrued outside ordinarily resident
India during the taxpayer. It is not
previous Year 2019-20. taxable in the case of
(Business is controlled a non-resident. Since
from outside Indian or it is business/
profession is set up profession income
outside India) and Business is
controlled from outside
India or profession is set
up outside India, It is
not taxable in the case
of resident but not
ordinarily resident
taxpayer.
6 In situation 5, suppose It is foreign income. Yes Yes No
business is controlled Since it is business/
from India or professional income
profession is set up in and the Business is
India. controlled from India
or profession is set
up in India, it is
taxable in all case
except non-resident
7 Rental income or salary It is foreign income. Yes No No
income or interest It is taxable in the case
income of Rs. 86,000 is of resident and
received outside India ordinarily resident
in the previous year taxpayer. It is not
2019-20 and at the taxable in the case of
same time it accurse or non-resident, since it
arise outside India. is foreign income
which is neither
business income nor
professional income,
it is not taxable in
the case of resident
but not ordinarily
resident
8 Gift of Rs. 2 Lakh It is foreign income. Yes No No
received outside India It is taxable in the case
by an individual on of resident and
November 6, 2019 ordinarily resident
from a friend. taxpayer. It is not
taxable in the case of
non-resident, since it
is foreign income
which is neither
business income nor
professional income,
it is not taxable in
the case of resident
but not ordinarily
resident
9 Gift of Rs. 1 Lakh It is Indian Income, Yes Yes Yes
received Delhi by an on It is always taxable.
individual November
30, 2019 from
a friend.
10 Income of Rs. 96,000 This income pertains No No No
earned and received to the previous year
but later on remitted outside India in 2015-16
India in 2019-20. 2015-16. It cannot be
to taxed at the time of
remittance in 2019-20.
=======================================================================================
EXAMPLES
[Ex. 1] (Coll.19-20)
:- For the assessment year 2020-21 (Previous year 2019-20), X is employed in Indian and gets Rs. 6,00,000
(after standard deduction) as salary. His income from other sources includes;
:- Dividend received in London on June 3, 2019: Rs. 1,00,000 from a foreign company
(1) Share of profit received in London on December 15, 2019 from a business situated in Shrilanka but
controlled from India: Rs. 2,00,000
(2) Remittance from London on January 15, 2020 out of past untaxed profit of 2018-19 earned and
received there: Rs. 3,00,000 and
(3) Interest earned and received in India on May 11, 2020: Rs. 1,92,000.
 Find out his gross total income, if he is :
(a) Resident and ordinarily resident,
(b) Resident but not ordinarily resident, and
(c) Non-resident for the assessment year 2020-21
=======================================================================================
[Ex. 2] (Coll.19-20)
For the assessment year 2020-21, X (whose previous year is 2019-20) receives the following income
Royalty earned in India but received on May 3, 2019 in Nepal: Rs. 1,46,000:
(1) Dividend from a foreign company received in Nepal on July 16, 2019: Rs, 2,56,000:
(2) Share of profit of a business situated in Nepal received in Burma on June14, 2019 but controlled from
India Rs. 1,42,000
(3) Rent of 2019-20 ofa house property situated in Nepal and received there on December 31, 2019: Rs.
4,65,000 and
(4) Speculation profit earned and received outside India on April 15, 2020: Rs. 5,60,000.
 Determine the gross total income of X for the assessment year 2020-21 if he is...
(a) non-resident
(b) Resident but not ordinarily resident and
(c) Resident and ordinarily resident.
====================================
SCOPE OF TOTAL INCOME (INCIDENCE OF TAX)
[EX. 3] (Coll 18-19) X is resident and ordinarily resident in India for the assessment year 2020-21.
He gives the following information in respect of his income for the previous year 2019-20 :
Particulars Rs.
Capital gain on sale of a house situated in Pune (sale 10,00,000
consideration is received in Nepal)
Salary received in Sri Lanka for rendering service in 1,60,000
Tamilnadu
(Salary after standard deduction being Rs. 1,60,000)
Interest received from Government of India (it is paid to 2,56,000
him in ShriLanka, the money is utilized by the Government
outside India)
Royalty received from A Ltd. (a foreign company which is 92,00,000
non-resident in India) outside Indian
(royalty is paid for a manufacturing business situated
outside India)
# Find out the taxable of x for the assessment year 2020-21.
------------------------------------------------------------
[Ex.4] (Coll 18-19) For the assessment year 2020-21, X is non-resident in Indi.
From the information given below.
# Find the out his income chargeable to tax for the assessment year 2020-21
Particulars Rs.
Royalty received by him outside India from the Government of India 8,17,000
Technical fees received from a Ltd (an Indian company ) in Germany for 1,17,000
advice given by him in respect of a project situated in Iran
income from a business situated in Sri Lanka (goods are sold in 2,17,000
SriLanka, sale consideration is received in Sri Lanka but business is
controlled partly in Sri Lanka and partly in India)
Income from a business connection in India (it is received outside India) 3,17,000
------------------------------------------------------------
[Ex.5] From the following information given by X, determine his net income
for the assessment year 2020-21 .
⇨ Assuming that X is (i) resident but not ordinarily resident or (ii) non-resident in India-
[1]. Remuneration for consultancy service rendered by X is Singapore: Rs.9,50,000.
Out of which Rs. 5,00,000 is directly received in India. Remaining Rs. 4,50,000 is received
in Singapore and later on gifted by X to Mrs. X in Singapore.
Mrs. X has utilized this gifted money for purchasing jewellery in Singapore
[2]. Income from business in Singapore received in Singapore: Rs. 11,35,000.
The business is partly controlled from India and partly from outside India.
[3]. Gift received in India in Singapore form brother of his father-in-law: Rs.2,00,000.
[4]. Interest on fixed deposit in a bank of Singapore: Rs. 37,25,000. It is received in Singapore.
[5]. Pension for services rendered in India: Rs. 7,24,000. He retired from service during 2011-12.
Pension is paid to him in Singapore.
------------------------------------------------------------
[Ex.6] Discuss whether the following incomes are taxable for the assessment year 2020-21 in the
hands of X who was in India during the previous year 2019-20 only for 45 days-
(a) Interest paid to X by the Government of India.
(b) Interest paid to X by Y, a resident in India
(borrowed money is utilized by for the purpose of earning capital profit outside India).
(c) Royalty paid by the government for use of a patent developed by X.
(d) Royalty paid to X by Z, a non-resident Indian (it is paid by Z for using computer software,
developed by X, for the purpose of carrying on business by Z in India).
(e) Salary paid to X by B Inc, an American company, for rendering service in America.
------------------------------------------------------------
[Ex. 7] From the information given below find out the net income of X for the assessment year
2020-21 on the assumption that during the previous year 2019-20 was in India for 46 days -
Salary received outside India a foreign company for rendering 4,50,000
services in Mumbai.
Income for operations confined to the purchase of goods in India 1,00,000
for the purpose of exports to Brazil
Income from operations confirmed to the purchase of goods in 9,33,500
India for the purpose of export to Brazil
Dividend for a foreign company (received in India) (foreign 4,00,000
company l engaged in Agricultural activities in India)
------------------------------------------------------------
[Ex.8] X is a citizen of India. From the information given below, find out the net income of X for the
assessment year 2020-21 on the assumption that X is residents and ordinarily resident in India, or X is
resident but not ordinarily resident in India or X is non-resident in India –
Particulars Rs.
Interest on fixed bank deposit in Punjab National Bank, Amritsar 2,17,500
Incomes from agriculture operations in Afghanistan (the entire amount is 80,55,000
directly received in Afghanistan and later on remitted to Iran for investment
purpose, however, no income in generated during the year out of this
investment) (agriculture operations are controlled from India by a team of
professionals)
Dividend received in UK from a German company (the German company 27,00,000
generates its entire income in India but dividends are declared in Germany)
(out of this income Rs. 9,00,000 is gifted to UNO and remaining amount is
utilized for meeting out education expenditure of Mrs. X in UK)
Salary drawn in France for 1.5 months for working in Indian embassy in Paris 3,00,000
( salary does not include perquisites & allowances )
Salary from UNO 8,00,000
Income From house property situated in Sri Lanka (rent is Received in Sri 9,10,000
Lanka but on the next day it is remitted to India)
Pension received in London 2,25,000
(Service was rendered in India with a foreign Company)
------------------------------------------------------------
[Ex.9] For the assessment year 2020-21, X (whose previous year is 2019-20) receives the following
income; Royalty earned in Nepal but received on May 17, 2019 in India : Rs. 96,000;
[1]. Dividend from a foreign company received India on July 1, 2019: Rs. 1,05,000;
[2]. Profit of a business situated in Sri Lanka, received in Dhaka on June 10, 2019
but controlled from India; Rs.82,000;
[3]. Rent of 2019-20 of a house property situated in Sri Lanka and received there on
December 7, 2019: Rs. 1,85,000; and
[4]. Speculation profit earned and received outside Indian on May 15, 2019: Rs. 93,000.
[5]. December the gross total income of X for the assessment year 2020-21 if he is
(a) resident and ordinarily resident; (b) resident but not ordinarily resident; and
(c) non-resident,
------------------------------------------------------------
[Ex.10] X, a foreign national, furnishes the following particulars of his income relevant
for the previous year 2019-20.
Particulars Rs.
Profit on sale of plant at London (one-third is received in India) 90,000
Profit on sale of plant at Delhi (one-fourth is received in London) 1,00,000
Salary form and Indian company received in London 1,20,000
(one-fifth is paid for rendering service in India)
Interest on UK Development Bonds (entire amount is received in London) 70,000
Income from property in London received there 10,000
Income for agriculture in London received there, half of which is used for 50,000
meeting hostel expense of X's son in England and remaining amounts is
later on remitted to India.
Dividend received in London on May 6, 2019 from a company registered in 15,000
India but mainly operating in UK
Profit for a business in Delhi managed from India 2,30,000
Rental income from a property in Nepal deposited by the tenant in a 18,000
foreign branch of an Indian bank operating there
Gift in foreign currency received on September 20, 2019 from a friend (one- 9,00,000
third of which is received in India and remaining amount is received outside
India and utilized for meeting education expenses of X's son in USA)
# Determine gross total income of X for the assessment year 2020-21, if he is
(a) Resident and ordinarily resident, (b) Resident but not ordinarily resident
(c) Non-resident.
------------------------------------------------------------
[Ex.11] X, a non-resident, has different sources of Income in India and Canada.
He wants to return to India and settle there. As tax incidence varies
according to the residential status, he wants to ascertain his tax liability if he is :
(a) Resident and Ordinarily Resident;
(b) Resident but Not Ordinarily Resident;
(c) Non-Resident in India in respect of the following incomes :
[1]. Income from business property in Canada and received in India.
[2]. Income from a godown in Canada and received there.
[3]. Income from a self occupied property in India.
[4]. Income from the Canadian Government Securities, 70% of which is received in India.
[5]. Pension from an Indian Employer received in Canada.
[6]. Salary Income earned in Canada but brought in India.
[7]. Dividend paid by an Indian Company received in Canada.
[8]. Share of profit (30% of which is received in India) from a business in Canada
but controlled in India
------------------------------------------------------------
[Ex.12] X furnishes the following particulars of his income earned during the previous year relevant to
the assessment year 2020-21 :
1. Interest on German Development ( two fifths is received in India) 60,000
2. Income from agriculture in Bangladesh, received there but 1,81,000
later on Rs.50,000 is remitted to India (agricultural activity is
controlled from Bangladesh)
3. Income from property in Canada received outside India (Rs.76,000 is 86,000
used in Canada for meeting educational expenses of X's daughter in
USA and Rs.10,000 is later on remitted to India.
4. Income earned from business in Kampala (Uganda) which is 65,000
controlled from Delhi (Rs.15,000 is received in India)
5. Dividend paid by a foreign company but received in India on 46,500
April 10, 2019.
6. Past untaxed profit of 2015-16 brought to India in 2019-20 10,43,000
7. Profit From a business in Madras and managed from outside India. 27,000
8. Profits on sale of a building in India but receive in Sri Lanka 14,80,000
9. Pension from a former employer in India, received in Rangoon. 36,000
10. Gift in foreign currency from a relative received in India.20, 2020 80,000
# Find out the gross total income of X, if he is
(i) Resident and Ordinarily Resident in India,
(ii) Resident but Not Ordinarily in India, or
(iii) Non-Resident in India for the AY 2020-21.
------------------------------------------------------------
[Ex.13] X, a Foreign National furnishes the following particulars of his income
relevant for the previous year 2019-2020.
Sr. Particulars Rs.
1. Profit on sale of Plant at London (one-half is received in India) 1,46,000
2. Profit on sale of Plant at Delhi (one-half is received in London) 1,02,000
3. Salary (after standard deduction) from an Indian Co. received in London 60,000
(one-half is paid for rendering services in India).
4. Interest on U.K. Development Bonds (entire amt. is received in London) 40,000
5. Income from property in London received there. 30,000
6. Income from agriculture in London received there half of which is used for 25,000
meeting hostel expenses of X's son in England and remaining amount is later on
remitted to India.
7. Dividend received in London on May 6, 2019 from a company registered in India 17,000
but mainly operating in U.K.
8. Profit from a business in Delhi managed from India 49,000
9. Rental Income from a property in Nepal deposited by the 12,000
tenant in a foreign branch of an Indian Bank operating there.
10. Gift in foreign currency received on September 20, 2019 from a friend (one-third 3,70,000
of which is received in India and remaining amount is received outside India and
utilized for meeting education expenses X's son in USA)
# Determine Gross Total Income of X for the Assessment year 2021-22, if he is :
(a) Non-resident, (b) Resident but not ordinarily resident, and
(c) Resident and ordinarily resident.
------------------------------------------------------------
[Ex.14] Mr. X furnishes the following particulars of his income earned during previous year 2018-2019.
(1) Interest received on investment made in share of American companies, Rs.30,000
(out of this Rs.5,000 received in India).
(2) Profit from a business in Bombay Rs.50,000, which is controlled from Outside India.
(3) Profit on sale of plot of land in Bombay Rs.50,000. Amount received in Tokyo.
(4) Pension from a former employer in India, received n Colombo Rs.15,000.
(5) Dividend paid by PQR Ltd. an Indian company but received outside India Rs.10,000.
(6) Income from Business in Singapore which is controlled from India Rs.25,000.
(7) Past untaxed profit brought to India Rs. 10,000.
# Calculate total taxable income of Mr. X in India, if he is :
(a) Resident (b) Resident but not ordinarily resident. (c) Non Resident.
------------------------------------------------------------
[Ex.15] Following is income of Shri Rao for the previous year 2019-20.
(1) Profits from business in Iraq received in India Rs.5,000.
(2) Income from house property in Pakistan deposited in bank there Rs.1,000.
(3) Profits of business established in Pakistan deposited in a bank there Rs.20,000. Such business is
controlled from India.
(4) Dividend paid by an Indian company, but received in England Rs.2,000.
(5) Profit earned from Business in Kanpur Rs.6,000.
(6) Past untaxed foreign income brought into India during the previous year Rs.10,000
(7) Income from business at Delhi controlled from Iraq Rs.30,000.
# From the above particulars, ascertain the taxable income of Shri Rao
for the previous year 2019-20, assuming that he is :
(a) Resident and ordinarily resident (b) Resident but not ordinarily resident
(c) Non Resident and ordinarily resident.
------------------------------------------------------------
[Ex.16] X and Mrs. X are foreign citizens. They come to India on September 3, 2019
for a visit of 170 days. In the earlier previous years, they are in India as follows :
X Y
2018-19 365 days 240 days
2017-18 20 days 340 days
2016-17 15 days Nil
M = 82384 48020 , 99989 84152
2015-16 120 days 118 days
2014-15 5 days 350 days Karelibaug Waghodia Road
2013-14 8 days 190 days
2012-13 15 days 160 days
2011-12 18 days 332 days
2010-11 140 days 192 days
2009-10 10 days 221 days
During The Previous year 2019-20, X and Mrs. X have the following income :
X (Rs.) Y (Rs.)
[1] Interest on company deposit in India. 48,000 7,10,000
[2] Income deemed to be earned in India. 32,000 55,000
[3] income from business situated in Nepal and
Controlled from India (40% is received in
India and 60% is received outside India). 64,000 38,000
[4] Dividend declared by A Ltd, an Indian company. 30,000 48,000
[5] Salary (after standard deduction) received in India
for service rendered outside India. 92,000 86,000
[6] Interest received from govt. of India
(received outside India). 58,000 16,000
[7] Interest received from a foreign company
Outside India (on capital which can be
utilized outside India). 70,000 5,000
[8] Interest received from a foreign company
Outside India (on loan which is utilized for
Doing business in lndia). 38,000 92,000
[9] Royalty received in India from govt. of India 10,000 5,000
[10] Royalty received in India from a non-resident
In respect of technology used by such person
Outside India 18,000 7,000
The following information is also available :
Place of Birth Year of Birth
X Dubai 1950
Mrs. X Bombay 19511
Father Of X Muscat 1921
Mother Of X Kathmandu 1924
Grandmother Of X Mexico and Dubai 1892 & 1895
Grandfather Of X Taiperi and logos 1890 & 1890
Father Of Mrs. X Dubai 1925
Mother Of Mrs. X Belfast 1926
Grandmother Of Mrs. X Chicago and Muscat 1901 & 1902
Grandfather Of Mrs. X Karachi and Dubai 1901 & 1900
# Find out the residential status and gross total income of X and Mrs. X for the Assessment year 2020-21.
------------------------------------------------------------
INCIDENCE OF TAX ( COLL. PAMPHLET 17-18 ) :-
[Ex.17] Mr. Manish Shah had earned following income during previous year 2019-20.
No. Particulars Rs.
1. Interest on fixed deposit in Bank of Baroda, Vadodara branch 5,50,000
2. Salary for the job in America, received in India 78,000
3. Profits on sale of building in India but received in Sri lanka 5,25,000
4. Amount bought in into India out of past untaxed profit earned in 30,000
Germany
5. Income from house n India, received in USA 20,000
6. Income from business in Bangladesh, which is partly controlled from 65,000
India
7. Dividend received in Belgium from French company, out of which 25,000
Rs. 4000 were to India.
# You are required to compute his gross total income for AY 2020-21, if he is
(a) Resident and ordinary resident in India (b) Resident but not ordinarily resident in India
(c) Non-resident India
------------------------------------------------------------
[Ex.18] Mr. Kapil Rajput provides the following derails on income earned during previous year 2018-19;
compute his income being liable to tax in India for the AY 2019-20. if he is
(a) Resident and ordinarily resident in India
(b) Resident but not ordinarily resident in India (c) Non-resident
No. Particulars Rs.

1. Dividend from an India company outside India 30,000
2. Dividend received in India from a foreign company 80,000
3. Income from sale of house property situated in Hong 20,60,000
Kong (50% consideration received in India)
4. Royalty from government of India, received in Canada 8,20,000
5. Income earned from Business in Uganda which is 1,20,000
controlled from Delhi (Rs. 30000 is received in India).
6. Income from sale of house property situated in Pune 30,00,000
(50% consideration received outside India)
7. Rent being directly Deposit in bank situated in Canada by 50,000
a tenant for house property in Canada, however assesses
withdraws from India branch of such bank
[Ex.19] Mr. Mayank Patel provides the following details previous year 2019-20,
Compute his income being liable to tax in India for the A.Y. 2020-21, if he is
(a) Resident and ordinarily resident in India (b) Non-resident in India
No. Particulars Rs.
1. Interest on UK Development Bonds received in America. 85,000
2. Interest from Government of India (60% received outside 60,000
India).
3. Salary form an India company received in London, for the 2,50,000
service rendered there.
4. Salary received in Sri lanka for rendering service in Delhi. 1,00,000
5. Dividend received in Germany form British company. 40,000
6. Incomes from agriculture in Nepal received there. 50,000
====================================
INCOME EXEMPT FROM TAX u/s 10
Following Income Are Exempt From Tax Under Section 10 Of Income Tax Act,1961 &
They Do Not From Part Of Total Income :-
[1]. Agricultural incomes [Section 10 (1)]

[2]. Receipts by a member form a Hindu Undivided Family [Section 10 (2)]
[3]. Share of profit received by partner from a partnership firm [Section 10(2A)]
[4]. Interest received by a Non-resident [ Section 10 (4)]
[5]. Leave Travel Concession [Section 10 (5)]
[6]. Fess for technical service [Section 10 (6)]
[7]. Gratuity [Section 10 (10)]
[8]. Pension [Section 10 (10A)]
[9]. Leave salary [Section 10 (10AA)]
[10]. Retrenchment compensation [Section 10 (10B)]
[11]. Compensation received at the time of voluntary retirement [Section 10(10C)]
[12]. Amount paid on life insurance policies [Section 10 (10D)]
[13]. Payment form provided fund [Section 10 (11)]
[14]. Payment from approved superannuation fund [Section 10 (13)]
[15]. House Rent Allowance [Section 10 (13A)]
[16]. Special Allowances [Section 10 (14)]
[17]. Interest on Securities [Section 10 (15)]
[18]. Educational scholarship [Section 10 (16)]
[19]. Daily allowance of Members of Parliament [Section 10 (17)]
[20]. Awards [Section 10 (17A)]
[21]. Family pension received by family members of armed forces [Section 10(19)]
[22]. Notional property income of any one palace occupied by former ruler [Section 10 (19A)]
[23]. Income of local authority [Section 10 (20)]
[24]. Income of an approved research association [Section 10 (21)]
[25]. Income of professional institutions [Section 10 (23A)]
[26]. Incomes of educational institutions [Section 10 (23C)]
[27]. Income of hospitals [Section 10 (23C)] M = 82384 48020 , 99989 84152
[28]. Income of trade unions [Section 10 (24)] Karelibaug Waghodia Road
[29]. Income of provident funds [Section 10 (25)]
[30]. Income of minor [Section 10 (32)]
[31]. Dividend and interest on units [Section 10 (34)/(35)]
[32]. Long term capital gain on equity shares/units covered by STI [Section 10 (38)]
----------------------------------------------------------------------------------
Smart Mobile Education – From Any Time – Any Where

(1) Agricultural Income [Sec. 10(1)]

# By the virtue of sec 2 (1A), the expression " Agricultural Income" means :
(i) Any rent or revenue derived from land which is situated in India and is used for agricultural purposes.
(ii) Any income derived from such land by agricultural operation including processing
of the agricultural produce, raised or received as rent-in-kind so as to render it fit for the market
of sale of such produce.
(iii) Income attributable to a farm house subject to certain conditions.
Explanation :-
(i) Following determine the scope of the term "agriculture" and "agricultural purposes" :
 Basic Operations :
:- Prior to germination, some basic operations are essential to constitute agriculture.
:- The basic operations would involve expenditure of human skill and labour
upon the land itself and not merely on the growth from the land.
:- Some illustrative instances of basic operations are tilling of land, sowing of the seeds,
planting, and similar kind of operations on the land.
 Subsequent operations :
:- Besides the basic operations, there are certain subsequent operations
which are performed after the produce sprouts from the land.
:- Illustrative instances of subsequent operations are weeding, digging the soil around the growth,
removal of undesirable under growths and all operations
which foster the growth and preserve the same, not only from insects and pests
but also from degradation from outside, tending, pruning, cutting,
harvesting and rendering the produce fit for the market.
(ii) Income derived from marketing process :
:- In order to make the produce a commodity which is saleable,
it becomes necessary to perform some kind of process on the produce.
:- The income, arising by way of enhancement of value of such produce,
by performing such process to make the raw produce fit for market,
is also agricultural income. M = 82384 48020 , 99989 84152
# However, the following conditions must be satisfied. Karelibaug Waghodia Road

(a) The process must be one
which is ordinarily employed by a cultivator or receiver of rent-kind;
(b) The process must be applied to render the produce fit to be taken to market.
e.g are thrashing, winnowing, cleaning, drying, rushing, boiling and decanting, etc.
(iii) Income from farm building :
# Income from a house property which satisfies the following cumulative conditions
would be treated as agricultural income and exempt from tax :-
(a) The building should be occupied by the cultivator or receiver of rent-in-kind
(b) It should be on or in the immediate vicinity of land,
situated in India and used for agricultural purposes;
(c) The cultivator or receiver of rent-in-kind should by reason of his connection
with the agricultural land require the building
as a dwelling house or as a store house or other out-building, and
(d) The land is assed to land revenue or local rate or, alternatively,
the land is situated outside urban areas".
 Meaning of urban area :
:- Any area which is comprised within the jurisdiction of any municipality / cantonment board
having a population of not less than 10,000 persons or within notified distance
(up to a maximum of 8 kms) from the limits of any such municipality or cantonment board.
 Use of building or land for any purpose other than agriculture :
:- With effect from the assessment year 2001-02, any income from such building,
or land arising from the use of the building or land for any purpose
other than agriculture, shall not be included in the definition of "agricultural income".
 For e g, if a person has income from using such building or land
for purposes such as letting it out for residential purposes of any business or profession,
then, such income shall not be treated as agricultural income
(2) Receipts by a member from a Hindu Undivided Family [Sec. 10(2)]
:-
:- Any sum received by an individual as a member of a Hindu Undivided Family either out of income
of the family or out of income of estate belonging to the family is exempt from tax.
:- Such receipts are not chargeable to tax in the hands of an individual member
even if tax is not paid or payable by the family on its total income
The exemption is based upon the principle of avoidance of double taxation.
:- Only those members of a Hindu Undivided Family can claim exemption under this clause
who are entitled to demand share on partition or are entitled to maintenance under the Hindu Law.
:- Some of the receipts from a Hindu undivided family are, however, taxable vide section 64(2).
(3) Share of profit from partnership firm [(Sec. 10(2A)] :-
:- Share of profit received by partners from a firm (which is assessed as firm) is not taxable
in the hands of partners.
(4) Gratuity [Sec. 10(10)] :-
:- Refer to the chapter of Salaries.
(5) Pension [Sec. 10(10A)] :-
M = 82384 48020 , 99989 84152
:- Refer to the chapter of Salaries. Karelibaug Waghodia Road
(6) Leave Salary [Sec. 10(10AA)] :-

(7) Tax On Perquisites Paid By The Employer [Sec.10(10CC)] :-
:- The amount of tax actually paid by an employer, at his option, on non-monetary perquisites
on behalf of an employee, Is not taxable in the hand On perquisites paid by the employee.
:- Such tax paid by the employer shall not be treated as allowable expenditure
in the hands of the employer under section 40.
(8) Payments from Provident Fund [Sec. 10(11) (12)] :-
(9) Payments from an Approved Superannuation Fund [Sec. 10(13)] :-
:- It means a superannuation fund which has been and continues to be approved by the Commissioner
in accordance with rules contained in Part B of the Fourth Schedule.
:- The tax treatment of contribution to any payment from the fund is as under:
 Employer's contribution is exempt from tax.
 Employee's contribution qualifies for tax deduction under Sec. 80C.
 Interest on accumulated balance is exempt from tax.
 Section 10(13) grants exemption in respect of payment from the fund
(a) To the legal heirs on the death of beneficiary (e.g., payment to widow of the beneficiary);
(b) To an employee in lieu of or in commutation of an annuity on his retirement
at or after the specified age or on his becoming incapacitated prior to such retirement; or
(c) by way of refund of contribution on the death of the beneficiary; or
(d) by way of refund of contribution to an employee on his leaving the service
otherwise than in the circumstances in (b) to the extent which such payment does not exceed
the contribution made prior to April 1, 1962.
(10) House Rent Allowance [Sec. 10(13A)] :-

(11) Compensation received at the time of voluntary retirement [Sec. 10(10C)] :-
:- Compensation received at the time of voluntary retirement is exempt from tax
if the following conditions are satisfied :
(1) Compensation is received at the time of voluntary retirement separation.
(2) Compensation is received by employees of Central, State or Provincial Government;
local authority; university; an Indian Institute of Technology Public sector company;
any Company or co-operative society Compensation is received in accordance
with scheme of voluntary retirement which is framed in accordance with prescribed guidelines
(3) Maximum amount of exemption is Rs.5,00,000
(4) The amount receivable on account of voluntary retirement or voluntary Separation
of the employees does not exceed the amount equivalent to three months' salary
for each completed year of service or salary at the time of retirement
multiplied by the balance months of service left before the date of his retirement
on super annuation.
(12) Special Allowance [Sec. 10(14)] :-
M = 82384 48020 , 99989 84152
:- Refer to the Chapter of Salaries Karelibaug Waghodia Road
(13) Educational scholarships [Sec. 10(16)] :-

:- Scholarship granted to meet the cost of education is exempt from tax.
:- In order to avail the exemption it is not necessary that scholarship should be financed
by the Government.
 The term "cost of education" takes within its ambit not only tuition fee but all other incidental
expenses incurred for acquiring education.
 Once it is proved that the amount received is "scholarship" it will be fully exempt from tax
irrespective of its terms of award.
:- The position remains so even if the scholarship is received for pursuing a course of education not
leading to a degree.
 The exemption in the hands of recipient depends on what it is meant for the person paying or
disbursing the scholarship.
:- If it is paid only for meeting the cost of education it is exempt from tax
even if the recipient does not spend the whole amount towards education or that
he is able to save something out of it.
:- To put it differently, if the whole object of the payment is to meet cost of education
then no further inguiry is called for in order to excluded the amount
from taxable income under section 10(16)
(14) Daily allowances of members of parliament [Sec. 10(17)] :-
Clause (17) of section 10 provides exemption to Member of Parliament and state legislature in respect of
the following allowance :-
Case Nature Of Allowance How Much Is Exempt
1. Daily allowance Entire Amount Is Exempt
2. Any other allowance received by a member of Entire Amount Is Exempt
parliament under the member of parliament
(Constituency allowance) Rules 1986
3. Constituency allowance received by any person Entire Entire Constituency Allowance Is
by reason of his membership of any state Legislature Exempt
(15) income of local authority [Sec. 10(20)] :-

[1]. Income under the head "Income from house property", "Capital Gain" ,"Income from other sources"
[2]. Income from a business carried on by it, which accrues or arises
from the Supply of a commodity or services (not being water or electricity)
within its own jurisdictional area or
[3]. Income from the business of supply of water or electricity within or outside its own jurisdiction area.
 In short, entire income of a local authority is exempt from tax except income From one source, i.e.
the income derived from the supply of a commodity or service (other than water or electricity)
outside its own jurisdiction area.
(16) Income of minor [Sec. 10(32)] :-
:- In case the income of an individual includes the income of his minor child in terms of section 64(1A),
such individual shall be entitled to exemption of Rs.1,500 in respect of each minor child
if the income of such minor as includible under section 64(1A) exceeds that amount.
:- Where, however, the income of any minor so includible is less than Rs.1,500,
the aforesaid exemption shall be restricted to the income
so included in the total income of the individual.
(17) Dividend income and interest from UTI/ Mutual Fund [Sec. 10(34/35)] :-
# The following income is not chargeable to Tax -
1. Dividend for 4m domestic company [exemption is given by [section 10(34)].
2. Income in respect of units of a mutual fund/UTI [exemption is given by [section 10(35)].
The following points should be noted -
1. Dividend distribution tax The person paying dividends on shares or interest
on units will have to pay distribution tax on dividend/income distributed
under section 115-0 and 115R.
2. Dividend income taxable in the hands of resident shareholder under section 115BBDA
Dividend income is taxable in the hands of shareholders under section 115BBDA,
if a few conditions are satisfied.
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = == = == = = = == = == = = = = = = = = = == = =
UNIVERSITY PAPER
[Ex.20] (A) (Mid Oct 12) Define the term 'Person'. (03)
(B) What is "Previous Year ? When income earned in the Previous Year is not taxable in the
immediately following financial Year? (07)
======================================================================================
[Ex.21] (A) (Mid Oct 12)
During the Previous Year 2019-20, Mr. Mani, a foreign citizen (being a person of Indian Origin)
comes to India for the first time on 11th November, 2018 for 200 days.
Determine his residential status for the A.Y. 2020-2021. (03)
(B) Mr. Kappor, provides following details of his income earned during the previous year 2019-20.
Compute his income liable to tax in India for the Assessment Year 2020-21
If, he is (a) Resident and Ordinary Resident in India; or
(b) Resident but not Ordinarily Resident in India, or
(c) Non-Resident in India. (07)
[1]. Profit on sale of plant in Delhi Rs. 3,00,000 (1/3rd received in India). M = 82384 48020 , 99989 84152
[2]. Dividend received in Canada from a company registered in India Karelibaug Waghodia Road
but manly operating from UK Rs. 10,000.
[3]. Interest received form a foreign company, on loan
which is utilized for doing business in India Rs. 80,000. (1/2 received in India)
[4]. Amount brought to India out of past years untaxed profits earned in Canada Rs. 20,00,000.
[5]. Rental Income from a property in Canada deposited by the tenant in a foreign branch
of an Indian bank operating there Rs. 4,00,000.
[Ex.22](A) (End Jan 13) Why the residential status of a person is to be determined ? (03)
(B) List any ten exempt income u/s. 10 of the Income Tax Act, 1961. (05)
(C) During the previous year 2019-20, Me. Deny, a foreign national
(not being a person of Indian origin), visits India for 70 days.
Determine his residential status for the A.Y. 2020-21 on the basis of the assumption
that during last 10 years, He was present in India as follows :
⇨ During previous year 2015-16, for 365 days.
⇨ During previous year 2013-14, for 365 days.
(D) Define the term "Income". (04)
======================================================================================
[Ex.23] (End Jan 13) How the residential status of a company, Firm and HUF
determined during the previous year 2019-20
1]. Gift Rs. 51,000 received in Baroda from an NRI friend.
2]. Technical fees, received outside India from a foreign company for Rs. 40,000
(he foreign company has utilized this technical advice for its Indian business)
3]. Agriculture income from land situated in UK & received there for Rs 5,00,000.
4]. Business income received in JAPAN for Rs. 1,00,000 (business Is situated in JAPAN& controlled
from Baroda).
5]. Salary of Rs. 3,00,000 received in USA (full services rendered in Baroda).
6]. Rental income of Rs, 10,000 from property situated in SRI LANKA & received there
# Compute his total income for A.Y. 2020-21 if he is.....
(a) Resident & Ordinary resident in India,
(b) Resident but nor ordinarily, resident in India, and
(c) Non-resident in India.
======================================================================================
[Ex.24] (A) (End June 13) Discuss how residential status of an individual and HUF is determined ? (07)
(B) During the previous year 2019-20, Mr. Reddy, a foreign national
(being a person of Indian origin), visits India for 135 days.
# Determine his residential status for the assessment year 2020-21 on the basis of the assumption
that during last 10 years, he was present in India for 200 days each. (03)
(C) Define the time "Assessee" and "Assessment Year. (07)
======================================================================================
[Ex.25] (A) (End June 13) Discuss briefly any two incomes which are exempt from tax. (05)
(B) Mr. Paritosh furnishes the following particulars of his income
earned during the previous year 2019-20. (12)
1]. Gift of Rs. 51,000 received in Baroda from Great Grandfather in cash.
2]. Rent received outside India for a foreign company for Rs. 1,40,000
(Property is located outside India).
3]. Agriculture Income from land situated in Nepal & received in India Rs. 1,00, 000.
4]. Business income received in Qatar for Rs. 5,00,000
(business is situated in Qatar & controlled from India).
5]. Salary of Rs. 5,00,000 received in India (full serves rendered in USA).
6]. Interest income Rs.20,000 received from Foreign Company in Canada for using
the funds in India for its business.
7]. Commission received in India Rs. 90,000 (Net). Tax is deducted at source @ 10%
8]. income earned in US in 2018-19 Rs. 1,00,000. Now remitted in India during
the previous year 2019-20. This income was not taxed in the previous year 2018-19.
 Compute his total income for A.Y. 2020-21 if he is
(a) Resident & Ordinarily Resident in India.
======================================================================================
[Ex.26] (A) (Mid Oct 13) Define the term "Assessee." (03)
(B) Discuss the provisions of Income Tax Act, 1961 for determining,
the residential status of a comply. (04)
(C) Mention any six instances of Income exempt from tax
under section 10 of Income Tax Act, 1961 (03) OR
======================================================================================
[Ex.27] (A) (Mid Oct 13) Mr. Anthony is a Citizen of U.S.A.
(Not being a person of Indian Origin) is in India as follows : (05)
Previous Year Presence In India
2019-20 90
2018-19 285
2017-18 170 M = 82384 48020 , 99989 84152
2016-17 148
2015-16 32
2014-15 165
Before 2013-14 Nil
Determine the residential status of Mr. Anthony for the assessment Year 2020-21. (B)
Ms. Durga furnishes following particulars of her income earned during the Previous Year 2019-20.
No. Particulars Rs.
1. Income from Business in Thailand, Received there. 7,00,000
(The business is partly controlled from India).
2. Capital Gain on sale of property in Vadodara (50% received in 9,00,000
Thailand).
3. Income from agriculture in India received in Thailand. 2,00,000
4. Salary from and Indian Company received in Thailand for the 5,00,000
service rendered there
5. Dividend received in India from a foreign company. 10,000
Compute her total income liable to tax in India for the Assessment Year 2020-21, if she is :
1. Residential and Ordinarily Resident in India
2. Residential but not ordinarily Resident in India
3. Non-Resident in India
======================================================================================
[Ex.28] (End Jan 14) Income of the previous year is chargeable to tax in the Immediately
following assessment year is there any exception to this rule? Discuss. (07)
(B) Discuss any eight broad principles which clarify the concept of the term Income'. (08)
======================================================================================
[Ex.29] (A) (End Jan 14) Mr. Shah has earned the following income during the Previous Year 2019- 20.
Compute his total income being liable to tax in India for the Assessment Year 2020-21 if he is; (15)
(a) Resident and Ordinarily Resident in India
(b) Resident but not Ordinarily Resident in India
(c) Non Resident in India
1]. Interest received from Government of India (Received in France) is Rs. 70,000.
2]. Royalty received from Zen Ltd. (a foreign company which is non-resident in India) outside India
(royalty is paid for a manufacturing business situated outside India) is Rs. 50,000.
3]. Technical fees received form YEAR Ltd. (an Indian company) in U.K. for advice given by him
in respect of project situated in Iran is Rs. 1,15, 000.
4]. Rental Income from the house situated in Vadodara is Rs. 60,000. (Received in U.K.)
5]. Capital Gain on transfer of house property situated in Surat is Rs. 20,00,000,
(sale consideration is received in U.K.)
6]. Salary received in U.K. for rendering service in Gujarat is Rs. 15,00,000.
7]. Income from Business situated in U.K., partly controlled from India is Rs. 4,50,000.
8]. Rent being directly deposited in bank situated in U.K. by a tenant for house property in U.K.,
however assesses withdraws from Indian branch of such bank Rs. 5,00,000.
Best Team With One Common GOAL Students Growth

(B) Mr. Sachin, a foreign citizen (not being a person of Indian origin),
comes to India on 25th December, 2017 and he leaves India on 30th April, 2018.
He is in Indian as follows : (10)
Previous Year Presence In India Previous Year Presence In India
2019-20 91 days 2016-17 200 days
2018-19 55 days 2015-16 54 days
2017-18 110 days Before 2014-15 Nil
Determine the residential status of Mr. Sachin for the Assessment Year 2020- 21. (10)
======================================================================================
[Ex.30] (A) (End May 14) How to determine the residential status if a HUF and company? (08)
(B) Write short note on "Income deemed to accrue or arise in India. (07)
[Ex.31] (A) (End May 14)
Mr. Panchal has earned the following income during the Previous Year 2019-20.
# Compute his total income being liable to tax in India for the Assessment Year 2020-21 if he is; (08)
1]. Salary from a Malaysian Company received in Malaysia. (For rendering service in Malaysia) is
Rs. 15,00,000
2]. Business income (Business is situated in Malaysia partly controlled from India and entire income
is received in Malaysia.) Rs. 10,00,000.
3]. Rental income form a property situated in Delhi (Income is receive in Malaysia) is Rs. 2,40,000.
4]. Royalty from Government of India (received outside India) is Rs. 60,000.
S]. Dividend for an Indian company (received in India is Rs. 40,000.)
6]. Dividend from a foreign company (received outside) is Rs. 15,000.
7]. Agriculture income from Punjab is Rs. 50,000.
(B)
Mr. Stephen is a foreign citizen (not being person of Indian origin). He is in India as follows: (07)
2019-20 151 days
2018-19 120 days
2017-18 280 days
2016-17 90 days
2015-16 35 days
Before 2014-15 Nil
Find out the residential status of Mr. Stephen for the Assessment Year 2020-21.
======================================================================================
[Ex.32] (A) (Mid Oct 14) Define the term Person. (05)
(B) Discuss the provision of lncome Tax Act, 1961 for determining the residential status of a firm.
(C) Discuss any five broad principles which clarify the concept of Income. (02)
======================================================================================
[Ex.33] (A) (Mid Oct 14)
Ms. Edna Citizen of U.K (Not being a person of Indian origin) comes to India for the first time on
May 17, 2014. From May 17, 2014 to March 31 2020, she is present in India for :62 days (2014-15:
200 days: 2015-16: 300 days: 2016-17: 90 days: 2017-18 10 days: 2018-19: 190 days: 2019-20 : 72
days) Determine the residential status of Ms. Edna for the Assessment Year 2020-21. ( 05)
(B)
Mr. lyer furnishes following particulars of this Income earned during the Previous Year 2019-20 :
1]. Profit on sale of plant at London. (One third received in India) 9,00,000
2]. Salary from an Indian company received in London.
(One-fifth is paid for rendering services in India). 10,00,000
3]. Dividend from a foreign company received in India. 75,000
4]. Profit on sale of plant at Mumbai (one-fourth is received in India). 2,00,000
5]. Technical fees received in London from Government of India. 10,00,000
# Compute his total income liable to tax in India for the Assessment Year 2019- 20, if he is :
(c )Non-Resident in India
======================================================================================
[Ex.34] (A) Define the term "Assessee". (04)
(B) Explain the term "Income deemed to accrue or arise in India".
Discuss any THREE such incomes. (07)
(C) List out any eight Exempted Income under section 10 of the Income Tax. Act, 1961. (04)
======================================================================================
[Ex.35] (A) (End Jan 15) Mr. Palash has earned the following income during the Previous Year 2019-20.
Compute his total income being liable to tax in India for the Assessment Year 2020-21 if he is;
a) Resident and Ordinary Resident in India.
b) Resident but not Ordinarily Resident in India
c) Non Resident in India (08)
1]. Salary from and Indian Company for rendering service in India. 6,00,000
2]. Income from Business situated in Sri Lanka which is controlled from Chennai.
(50% receive in India). 15,00,000
3]. Income from sale of house property situated in Surat. 2,40,000
4]. Interest from Government of India ( received outside India). 85,000
5]. Dividend from and Indian company (received in India). 65,000
6]. Dividend from a French company (received in U.K.). 75,000
7]. Agriculture Income from Sri Lanka (received in Shri Lanka). 4,75,000
(B)
Mr. Ashish is a foreign citizen (not being person of Indian origin). He is in India as follows : (07)
2019-20 70 days
2018-19 100 days
2017-18 190 days
2016-17 155 days
2015-16 135 days
2014-15 65 days
Before 2013-14 Nil
Ascertain the residential status of Mr. Ashish - for the Assessment Year 2020-21
======================================================================================
[Ex.36] (A) Explain in detail "Income demanded to accrue or arise in India" with appropriate examples.
(B) Define and discuss the term "Person".
======================================================================================
[Ex.37] (A) (End May 15) Mr. Chirayu has earned the following income during the previous Year 2019-20.
# Compute his total income being liable to tax in India for the Assessment Year 2020-21
if he is;
a) Resident and Ordinarily Resident in India
b) Resident but not Ordinarily Resident in India
c) Non Resident in India
1. Income received from Government of India (Received in U.SA.) is Rs 5,00,000.
2. income from a business in Pune controlled from U.SA Rs. 15,00,000.
3. Rent from Commercial Property n U.S.A. received in UK but latter on remitted to India Rs. 4,00,000.
4. Rental income from the house situated in Pune is Rs. 50,000. (Received in U. S. A)
5. Capital Gain on sale of property situated in Mumbai is Rs. 7,00,000 (Sale consideration is received in
U.S.A)
6. Royalty from Government of India, received in U.SA is Rs. 2,00,000
7. Salary from the job in U.S.A. received in india is Rs. 8,00,000.
8. Rent being directly deposited in bank situated in U.SA. by a tenant for house property in U.S.A., however
assessee withdraws from Indian branch of such bank is Rs. 3,00,000.
(B)
Mr. Andrew, a foreign citizen (not being person of Indian origin), visits India for 110 days during the
previous year 19-20. Determine his residential status tor the Assessment Year 20-21 on the basis of
following information: (06)
(a) During the previous year 2015-16, Mr. Andrew was present in India for 350 days.
(b) During the previous year 2014-15 and 2013-14, Mr. Andrew was in India
for 30 days and 360 days respectively.
======================================================================================
[Ex.38] (A) (Mid Sep 15)
State the provisions of Income Tax Act, 1961 for determining the residential status of a firm. (02)
(B) List any four incomes that are exempt from tax under section 10 of the Income Tax Act, 1961.
(02)
(C) Income of previous year is chargeable to tax in the immediately following assessment year. Is
there any exception to this rule? Explain. (06)
======================================================================================
[EX.39] (A) (Mid Sep 15)
Mr. Kohli is a citizen of U.S.A. (not being person of Indian Origin) He is export manager and for
export promotion he regularly comes to India. His stay in Indian is as follows-
2019-20 70 days
2018-19 55 days
2017-18 95 days
2016-17 215 days
Before 2014-15 Nil
Determine his residential status for the assessment year 2020-21.
(B)
From the following income earned by Mr. Kadri during the previous year 2019-20. Company his
income liable to tax in India for the assessment year 2020-21 if he is
(a) Resident and Ordinarily Resident in India;
(b) Resident but not Ordinarily Resident in India;
(c)Non-Resident in India.
1. Capital gain on sale of plant situated in UK (1/4th consideration received in India) 10,00,000
2. Income from profession in China which is set up in India, received in China. 5,50,000
3. Dividend received in China from British company. 20,000
4. Salary for services rendered in India but received in China. 7,20,000
5. Royalty from Government of India (50% received outside India) 90,000
======================================================================================
[Ex.40] (A) (End Dec 15)
How to determine the residential status of Huf. (05)
(B) Mr. Steron is a foreign citizen (not being person of Indian Origin). During the Previous Year
2019- 20, he came to India for 80 days.
⇨ Determined Residential status for the Assessment Year 2020-21 on the basis following
information of his presence in India.
Previous Year Presence In India Previous Year Presence In India
2019-20 101 Days 2012-13 180 Days
2018-19 90 Days 2011-12 100 Days
2017-18 65 Days 2012-13 70 Days
2016-17 125 Days 2011-12 10 Days
2015-16 85 Days 2010-11 15 Days
2014-15 74 Days 2009-10 55 Days
2013-14 25 Days 2008-09 197 Days
[Ex. 41] (A) (End Dec 15) Mr. Agrawal has earned the following income during the Previous Year 2019-20.
⇨ Compute his total Income being liable to tax in India for the Assessment Year 2020-21if he is;
a) Resident and Ordinarily Resident in India
b) Resident but not Ordinary Resident in India
c) Non Resident in India
1]. Business Income (Business is situated in Korea partly controlled from India
and entire income is received in Korea.) Rs. 15,00,000.
2]. Salary form a Chinese Company received in China. (for rendering senvice is Chinais Rs. 35,00,000.
3]. Rental income from a property situated in Mumbai (Income is received in China) is Rs. 24,00,000.
4]. Interest received from Government of India (received Outside India) is Rs. 1,40,000
5]. Dividend from an Indian company (received outside India) is Rs. 30,000.
6]. Dividend from a foreign company (received in India) is Rs. 50,000.
7]. Income from Agriculture in Bangladesh is Rs. 1,50,000.
(Agriculture activity is controlled from Bangladesh and income received in Bangladesh.)
8]. Interest on U.K. Development Bonds is Rs. 90,000 (one-third is received in India)
9]. Income from property in U.K., received in U.K. is Rs. 95,000. (Rs. 70,000 is used in U.K. for meeting
educational expenses his son in U.K. and Rs. 25,000 is later on remitted to India)
(B) Explain the meaning of "lndian Income" and "Foreign Income". (05)
======================================================================================
[Ex.42.] (A) (End Dec 2016)
Discuss the provisions of Income Tax Act, 1961 for determining the residential status of HUF.
(B)
Define the term Assessment Year and Previous Year. Explain the Exemption when income of
previous year is not taxabie in the immediately, following assessment year.
======================================================================================
[Ex.43] (A) Mr. Prakash has earned the following income during the Previous Year 2019-20.
Compute his total Income being liable to tax in India for the Assessment Year 2020-21 if he is;
(a) Resident and ordinarily resident in India
[1].Capital gain on sale of a house situated in Vadodara.
(sale consideration is received in U.S.A). Rs.12,00,000
[2].Salary received in U.S.A for rendering service in India. Rs.10,00,000
[3]. Royalty received in U.S.A from Government of India. Rs.15,00,000
[4]. Technical fees received form an Indian company in U.S.A for advice given by him
in respect of project situated in U.S.A. Rs. 1,90,000
[5]. Interest is received from X Ltd. (resident in India) and X Ltd. has utilized the capital borrowed
from Mr. Prakash for carrying on business in India. Rs. 1,50,000
[6]. Dividend from a Chinese company (received in U.S.A). Rs.1,75,000
[7]. Profit form a business in India (received in U.S.A). Rs.2,25,000
(B) Mr. Devang, a foreign national (not being person of Indian origin), comes to Indian
for the first time on May 17,2014. During the previous years 2015- 16, 2016-17, 2017-18, 2018-19 and
2019-20 he was in India for 150 day5, 90 days, 30 days, 200 days and 70 days respectively.
# Determine the residential status of Mr. Devang for the A.Y. 2020-21. (07)
======================================================================================
[Ex.44] (End Jan 2018) Mrs. Kamini Joshi is a foreign citizen (not being a person of Indian Origin). During
the financial year 2019-20, She comes to India for 120 days on 7 January, 2020 during the previous year.
Determine her residential status for the assessment year 2020-21 on the assumption that during
the financial year 2007-08 to 2018-19, She was present in India as follows : (15)
P.Y 18-19 17-18 16-17 15-16 14-15 13-14 12-13 11-12 10-11 09-10 08-09 07-08
Days 98 80 60 125 80 70 92 181 80 65 14 08
Moreover, she furnishes the following particulars regarding here income earned………………
Particulars Rs.
Profit on sale of land in Surat but received in USA. 12,00,000
Past untaxed profit of 2014-15 brought to Indian in 2019-20. 2,45,000
Dividend paid by a foreign company but received in India on l3 January, 2020. 70,500
income earned from business in UK which is controlled form 1,30,000
Ahmadabad (Rs.20,000 is received in India.)
Profit from a business in Mumbai and managed form outside India 2,40,000
Find out gross total income of Kamini Joshi for the assessment year 2020-21.
======================================================================================
[Ex.45] (A) (End Jan 2018) Define the term "Person" as per section2 (31) of the Income Tax Act, 1961.
(B) Discuss the Provision of Income tax Act, 1961

for determining residential status of Hindu Undivided Family. (07)
(C) List of any five exempted income under section-10 of the income tax Act, 1961. (03)
======================================================================================
[Ex.46] (A) (End Dec 2019)
Elsa is a foreign citizen (not being a person of Indian origin) Leaves India for the first time in last 10
years on 31/12/2017.During the calendar year 2017 she comes to India for 60 days on 1/12/2018. During
the calendar year 19 she does not come to India at all. She finally comes back on 31/1/19.
Determine her residential status for the A.Y.20-21. (10)
(B) Explain the provisions of income tax Act, 1961 relating to Determination of residential status
of the company. (05)
======================================================================================
(A) Mr. Hemant Nandaia provides the following details for income
earned during previous year 2019 -20;
compute his income being liable to tax in India for the A.Y. 2020-21, If he is :
a) Resident and ordinarily resident in India
b) Resident but not ordinarily resident in India
c) Non- resident. (10)
No. Particulars Rs.
1. Interest on UK Development Bonds, 20,000
(50% of interest received in India).
2. Interest for debentures in an India Company 20,000
(Received in London).
3. Income from a business in Chennai managed 40,000
form London. (50% is received in India)
4. Profits on sale of shares of Indian company 40,000
(received in London)
5. Dividend form British company 10,000
(received in London)
6. Profits on sale of plant at Germany 80,000
(50% of profits are received in India).
7. Business income in Germany which is 1,40,000
controlled from Delhi
(80,000 is received in India).
8. Profit from a business in Delhi but managed 30,000
entirely from London.
9. Income from house in London deposited in 1,00,000
Indian Bank at London, brought to India
(computed)
10. Royalty/Fees for technical services rendered 16,000
in India (received in London)
11. Salary drawn for 2 months for working in 1,60,000
Indian Embassy's Office in Australia &&
received there
(B)
List out any ten Exempted Incomes under section 10 of the income tax Act, 1961. (05)

11 12 (Eng. Med) : Join The Best To Be The Best

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11 12 (Eng. Med) : Join The Best To Be The Best

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SAHAS Institute :- 11th 12th Comm // F.Y – S.Y, - T.Y. B.Com // C.A & C.

S [All Levels] Page 1 of 31

11th 12th (Eng. Med)

S.Y.B.Com [ Sem 3 ] -: Direct Tax [D.T.] :- Unit 1 (Part – 1)

# Previous Year ; Sec – 3. :-

Join the Best

# Person : Sec – 2(31). :-

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(1) An individual M = 82384 48020 , 99989 84152

# Residential Status of a Firm an Association of a Person – Section 6(4). :-

[Topic – 1]. Scope of Total Income I.e. Incidence of Tax [Sec.5].

[Topic – 3]. Income Deemed To Accrue OR Arise In India [Sec.9].

No. Particulars Rs.

[1]. Agricultural incomes [Section 10 (1)]

Smart Mobile Education – From Any Time – Any Where

(1) Agricultural Income [Sec. 10(1)]

# However, the following conditions must be satisfied. Karelibaug Waghodia Road

:- Refer to the chapter of Salaries. Karelibaug Waghodia Road

(6) Leave Salary [Sec. 10(10AA)] :-

(10) House Rent Allowance [Sec. 10(13A)] :-

:- Refer to the chapter of Salaries.

(13) Educational scholarships [Sec. 10(16)] :-

(15) income of local authority [Sec. 10(20)] :-

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(B) Discuss the Provision of Income tax Act, 1961

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