About the charts

Topic:Profits And Gains of Business & Profession[Intermediate/IPC]

No. of charts:06
Index
Chart Particulars
No.
4.1 Basic Concepts (Section 28 & 29)
4.2a Allowable Expenses ( Section 30,31,31)
4.2b Allowable Expenses (Section 32AD- 35DDA)
4.2c Allowable Expenses (Section 36 & 37)
4.3 Disallowable Expenses [Section 40 to 43B & 37(2B)]
4.4 Presumptive Basis,Miscellaneous provisions(Sections 43A- 44AE)
These Charts are applicable for Old and New syllabus & for November 2019
attempt covering all the provisions of AY 19-20
These 6 charts cover the entire chapter of Profits & Gains of Business &
Profession in detail. This will help students for a quick revision

CA Pooja Kamdar Date

 AY19-20
Sections
Sec 28-Basis of charge
Sec 29-Computation of Income from business
Sec 30-Rent,rates,taxes,repairs & Insurance for
building used for business/profession
Sec 31-Repairs & Insurance of machinery, plant &
furniture used for business/profession
Sec 32-Depreciation
Sec 32AD- Assessee engaged in business of
manufacture/production of article/things in 4
specified states
Sec 35- Scientific research
Sec 35AD-14 Specified businesses
Sec 35CCC-Agricultural Extension Project
Sec 35CCD-Skill Development Project
Sec 35D-Preliminary Expenses
Sec 35DDA- VRS expenditure
Sec 36- Other allowable Expenses
Sec 37-General Deductions
Sec 37(2B)-Advertisement in brochure of political party
Sec 40a-Expenses not deductible-Income tax,
payment without TDS ,etc
Sec 40b-Interest & Remuneration to partners
Sec 40A(2)-Unreasonable payment to realtives
Sec 40A(3)-payment in excess of 10000 in cash
Sec 40A(7)provision for Gratuity
Sec 40A(9)- Contribution to non-statutory fund
Sec 43-Payment for acquisition of asset
Sec 43B-Deductions allowed only on payment basis
Sec 41-Deemed income
Sec 43A-Changes in exchange rate of currency
Sec 43CA-Capital asset (land/building/both)
Sec 44AA-Maintenance of Books of accounts
Sec 44AB-Tax Audit
Sec 44AD-Presumptive basis for businesses
Sec 44ADA- Presumptive basis for professional
Sec 44AE-Presumptive basis for assessee engaged
in the business of plying,leasing,etc
Sec 68-69D-Undisclosed sources of income
Chart4.1 PGBP-Basic Concepts(sections 28& 29)
Section 28- Basis of charge
U/s 28, following income is assessable as
income from “Business or Profession”:
1)Profits & gains of any business/Profession.
2)Compensation received for(a) Modification
in, or termination of, managing agency
agreement(b)Contract relating to agency for
business activity in India.
3)Income derived by a trade, professional
& similar association from the specific
services performed for its members.
4)Value of any benefit or perquisite, whether
convertible into money or not, arising from
business or profession (presents from clients)
5)Profit on transfer of Duty Entitlement
Passbook Scheme (DEPB) & Duty free
Replenishment Certificate
6)Any interest, salary, bonus, commission /
remuneration received by partner from firm
7)Any sum received for not carrying out any
activity in relation to business or/profession
not to share patent, copyright, trademark,
(non compete fees),etc
8)Sum received under keyman insurance
policy including bonus;
9)Income from Speculative transactions.
Sec 29-Computation of business Income
The profits and gains of business or profession
shall be computed in accordance with the
provisions contained in Sec 30-43D.It must
however be noted that allowances &
deductions are not exhaustively listed.
Admissibility of deduction will depend upon
the method of accounting followed by the
assessee
CA Pooja Kamdar Date
Meaning of business
Business includes trade, commerce, manufacture,any
adventure/concern in the nature of trade/commerce,etc
It includes the following also:
1)Significance of profit motive.
2)Business and rendering services to others
3)Business cannot be carried on with oneself
4)Commodity purchased determines whether it is trade/
investment
5)Whether a transaction is an isolated one or forms
a part of a series of transactions
6)Need not be related to an existing activity of assessee
Meaning of profession
1)‘Profession’ includes vocation(2) It implies proffesed
attainments in special knowledge as distinguished from
mere skill; ‘special knowledge which is ‘to be acquired
only after patient study and application’.(3) Distinction
between business or profession is not significant
Method of accounting
Income from Profits & gains of business/profession
& Income from other sources will be computed in
accordance with the method of accounting followed
by the assessee.Assessee can follow mercantile/
cash system of accounting
Some basic points
1)Personal expenses are not allowable expenses
2)Business related expenses are allowable expenses
3)Revenue expenses are generally allowable
4)Capital expenses are generally not allowable,capitalize
& claim depreciation
5)Actual expenses are allowable
6)Future/contingent expenses are not allowable
7)Revenue receipts are generally taxable
8)Capital receipts are generally exempt & taxable only
if specified
Sec43(5)Speculative transaction
It means a transaction in which a contract for purchase/
sale of a commodity, including shares & stocks is
periodically or ultimately settled otherwise than by
the actual delivery or transfer of commodity/scraps"
Speculation/Non-speculation business is taxable under
profits & gains of business & profession
Following Income will not be taxable underPGBP
1)Dividend on shares in case of dealer in shares is taxable
under other sources even if they are derived from shares
held as stock in trade(Dividend always taxable under IOS)
2)Winnings from lotteries are taxable under Income
from other sources even if derived as a regular business
activity(always taxable under IOS)
Business Losses
Trading losses are allowed as business loss if they are
incidental to the business. Business losses are allowed
as deduction only if the following conditions are satisfied
1)Losses should be revenue in nature. Losses should be
incurred in the previous year.(2)losses should be incidental
to the business /profession carried on by assessee.(3)Loss
should not be notional or fictitious(4)It should have been
4)It should have been actually incurred & not merely
anticipated to incur in the future.(5)There should not be
any direct or indirect restrictions under the Act against the
deduction of such losses.(6)Such losses can be carried
forward for 8 years
Trading in Agriculture Commodities
It is non-speculative transaction & can be set off for 8 years
from other non-speculative business losses. It has certain
exceptions(1)Contract for raw material/stock & shares to
guard against loss by price fluctuations (2)Jobbing/arbitrage
transaction by a member of forward market(3)Eligible
transaction of trading in derivatives(4)Trading in commodity
derivatives
AY19-20
Sec 30-Rent,Rates,Taxes,Repairs &
Insurance for Building used for business
or profession is an allowable expenditure
Following Expenses shall be allowable
1)Actual Rent
2)Repairs being current repairs and not
being capital expenditure
3)Land revenue,local rate or municipal
taxes
4)Insurance Premium
Sec 31-Repairs & Insurance of Machinery,
Plant and Furniture used for Business
or profession
Following expenses are deductible
(1) Assets should have been used for the
purpose of assessee's own business/
profession
(2)An Insurance & Repair charge of assets
which have been discarded/ not used is
not allowed as deduction
(3)If asset is used for part of the year then
full amount expense can be claimed
(4)Current repairs are allowable
(5)Repairs include renewal/renovation
but does not include replacement or
reconstruction
(6)Insurance in respect of plant &
machinery,furniture used for business
purpose is allowable
NOTE:Repairs & Insurance of Plant &
machinery,furniture is allowable u/s 31.
Rent of plant & machinery ,furniture will
be allowable expenditure u/s 37
Chart4.2a PGBP - Allowable expenses Sec 30,31,32
Sec 32-Depreciation
Normal depreciation Additional Depreciation Rates of depreciation
Available to all assessees Available in addition to normal depreciation Plant & Machinery
Car,Machinery, AC,Scooter,etc 15%
1)For claiming depreciation asset must be used 1)Available to assessee engaged in Air pollution Equipment,books,
40%
for business or profession purpose manufacturing or in generation/distribution/ Computer, Laptop, Software,etc
2)Assessee must be the owner of the asset transmission of power/electricity Furniture 10%
3)It is calculated on the block of assets 2)It is available on purchase of eligible Building
4)It is calculated at rates specified in IncomeTax plant and machinery Residential purpose 5%
5)Calculated using WDV method for all assessees 3)Additional depreciation is available only Other than Residential Purpose 10%
6)Only Electricity generating companies have an in 1st year when eligible P/M is put to use Intangible Assets- Goodwill,etc 25%
option between WDV & SLM method 4)Additional depreciation= 20% cost of
7)Depreciation is limited to 50% of the normal eligible plant and machinery Note for section 43-Cost of Fixed Assets
depreciation if asset is purchased & in the year 5)In case of notified backward areas in for depreciation in some special Cases
of purchase it is put to use for ≤180 days Bihar,Telangana,West Bengal,Andhra 1)If any payment in Such amount will not
8)Assessee must own the asset partly/wholly, Pradesh additional depreciation will be 35% excess of 10000 is be considered in cost
In case the asset is used partly for business 6)If the assets are put to use for ≤180 days done in cash/bearer/ of plant & machinery
purpose or partly owned then proportionate then 10%/17.5% depreciation is allowable cross cheque for claiming depreciation
depreciation is available. & balance depreciation can be claimed 2)If inventory FMV should be treated
9)Depreciation on succession of firm/sole next year converted into as cost & then
proprietary concern by company,amalgamation/ 7)Following are not eligible for additional capital Asset depreciation can be
demerger of companies/conversion of companies depreciation Ship & aircraft,Second hand claimed
into LLP shall be apportioned between 2 entities machinery,plant and machinery installed 3)Building used for It should be accounted
in the ratio of number of days used by them in office/guest house,transport vehicle, personal purposes & in books at WDV after
10)Assessee can claim depreciation in case the plant & machinery for which 100% then introduced in notional depreciation
asset has been purchased under Hire Purchase deduction has already been claimed business
11)Depreciation is allowed when asset is put to Depreciation for Power Generating 4)Assets other than Account in books at
use. Undertaking 1)Have an option to follow- building are introduced original cost ie. No
12)Mandatory to claim depreciation for all SLM (2)In SLM depreciation is calculated notional depreciation
assessees on Individual asset(3)Also when such 5)Assets used for Account in books
assets are sold there will be balancing scientific research at zero value
charge/terminal depreciation.(4)If sale introduced in business
value is less than WDV then difference 6)Subsidy received Reduce Subsidy from
can be debited to P/L as terminal for capital asset Cost & then claim
depreciation(5)If Sale Value is more than depreciation
WDV the surplus shall be taxed as 7)Assessee sells Recorded at WDV of
balancing charge as Business income capital asset at WDV previous owner/ value
& reacquires it by paid for asset
paying some whichever is lower
CA Pooja Kamdar Date consideration
AY19-20 Chart4.2b PGBP - Allowable expenses 32AD-35DDA

Sec32AD-Manufacture/production of any article Section 35-Expenditure incurred on Scientific Research

or thing in notified backward areas in 4 states
Bihar, AndhraPradesh,Telangana,West Bengal
(1)Acquire New P/M from 1/4/15-31/3/20
(2)Deduction will be 15% of actual cost of new plant Expenditure incurred by the assessee Contribution made to the outsiders Expenditure on Inhouse Research & Development
& machinery.
(3)New plant & machinery purchased should not be 1)Research should be related to the business 1)Research may or may not be related to the business 1)Taxpayer should be a company
sold for a period of 5 years except in case of 2)Revenue/Capital expenditure is allowable Donation to Amt of 2)He should be engaged in the business of
amalgamation or demerger. 3)Cost of land not allowable as a deduction Deduction manufacture or production of any article/thing,
(4)Following are not eligible for Section 32AD 4)Depreciation will not be allowable on capital National laboratory,IIT 150% bio-technology research & development.
i)Any machinery used within/outside India by any expenditure Approved university,college/institution 150% 3)Research should be approved by prescribed authority
person 5)Expenditure incurred prior to commencement Companies having object of scientific Research 100% 4)Amount of deduction will be
ii)machinery installed in office premises/residential of business University/college for research in social Revenue Expenditure 150%
accomodation in the nature of guest house i)Expenses incurred 3 years prior to business Science/Statistical research 100% Cost of Land Not Allowed
iii)Office Appliance including Computer& softwares ii)Revenue expenses should be approved by National laboratory includes Cost of building 100%
iv)Any vehicle precribed authority 1)Scientific Laboratory functioning at national level under Other capital expenditure 150%
v)Any plant & machinery, actual cost of which iii)Perquisites to staff is not allowed as deduction the agenda of Indian council of Agricultural research
is allowed as a deduction under PGBP iv)Capital expenditure is allowable.However cost 2)Indian Counil of Medical Research Section 35D-Amortization of preliminary expenses
land is not allowed 3)Council of Scientific & Industrial Research 1)Indian company & Resident non-corporate assessee
4)Defence Research & Development of Bio-technology can claim deduction
5)Department of Atomic Energy 2)Expenses if incurred before commencement of the
business for setting up any undertaking/business
Sec 35AD-Deduction in respect of specified businesses Section 35CCC-Weighted deduction for Agricultural Extension shall be allowable
1)There are 14 specified businesses Project 3)Expenses if incurred after commencement of the
2)100% capital expenditure incurred for these specified business shall be allowable as deduction 1)If assessee incurs expenditure in agriculture extension project business in connection with extension/in connection
3)Any capital expenditure before commencement of business shall be allowed as a deduction if it has then allowable expenditure is 150% of such expenditure with setting up new unit shall be allowable
been capitalized in the books of accounts 2)Project should be notified by CBDT 4)Expenses should qualify as preliminary expenses
4)For claiming this deduction assessee should start a new business ie.Merger,Amalgamation, 5)For corporate assessees maximum ceiling is 5%
Re-organization, etc shall not be allowed Section 35CCD-Weighted deduction for expenditure on Skill of cost of project/5% of capital employed whichever is
5)35AD deduction is available only for new plant & machinery. Development Project is more. In case of non-corporate maximum
6)However, Old Plant & machinery is allowed to the extent of 20%. Also if second hand asset is 1) It is applicable to a Company ceiling will be 5% of cost of project
purchased from outside India it shall be treated as new P/M for the purpose of Section 35AD 2)Allowable expenditure will be 150% of the cost of project 6)Here cost of project = Actual cost of extension or
7)If an asset is purchased u/s 35AD it must be used for business atleast for 8 years 3)Project should be notified by CBDT cost of fixed assets shown in the books as on last day
8)Capital expenditure such as cost of goodwill,land & financial instruments will not be allowable 4)Cost of land & building is not allowable of previous year in which business commences
9)Capital expenditure in excess of 10000 in cash will not be allowable expenditure 7)Here Capital employed =Issued share capital+
10) Once the expenditure is allowed u/s 35AD then no depreciation can be claimed debentures+long term borrowings as on last day of
11)Following are 14 specified businesses:i)cold chain facility(ii)warehousing facility for storage Section 35DDA- Amortization of expenditure incurred under previous year in which business commences
(iii)laying & operating a cross country natural gas/crude/petroleum oil pipeline (iv)New hotel of voluntary retirement scheme 8)Following expenses qualify as preliminary expenses
2 star or above (v)New hospital with atleast 100 beds for patients (vi)Developing a housing project 1)Expenditure by way of compensation paid to employee under Expenditure approved Expenditure not
under affordable housing scheme (vii)Investment in new plant for production of fertilizer VRS Scheme shall be allowable as a deduction over a period of by the board approved by Board
(viii)Housing for slum redevelopment/rehabilitation (ix)setting up & operating inland container 5 years 1)Feasibility report 1)Legal charges
depot/freight station(x)Beekeeping & production of honey & beewax (xi)Laying slurry pipeline 2)Rule is applicable even if VRS has not been framed in 2)Project report 2)Registration fees
for ironore transportation (xii)Warehousing of sugar (xiii)Setting up semiconductor wafer accordance with guidelines of Section 10(10C) 3)Market survey 3)Expenses in connection
fabrication manufacturing unit (xiv) developing new infrastructure facility 3)In case of firm/proprietory concern taken over by a company 4)Engineering Services with public issue of shares
deduction will be available to successor company for the 4)Any other expenditure
remaining period which is prescribed
9)Expenditure u/s 35D will be allowable over a
CA Pooja Kamdar Date period of 5 years
AY19-20
Insurance Premium
Amount paid for Insurance against
risk of damage/destruction of
stock/stores
Employers Contribution towards
approved Gratuity Fund/Approved
Staff Welfare Fund
Allowable if expenditure is exclusively
for benefit of employee & Fund
should be approved
Bonus or commission to employee
If bonus/commission is paid by
way of distribution of profit then
it is not deductible. So it is
deductible if paid genuinely as
bonus/commission
Employers contribution to RPF/
Super Annuation Fund
It is an Allowable expenditure
if the fund is recognised/approved
Employers Contribution to Pension
scheme u/s 80CCD
Allowable only to the extent of 10%
of salary. Salary = Basic + DA (if
provided in terms of employment
Chart 4.2c PGBP - Allowable expenses 36 &37
Section 36-Other Allowable expenses
Insurance premium paid by federal
milk co-operative Society
Insurance Policy on the life of cattle
owned is an allowable expenditure
Employees contribution to Staff
Welfare Scheme
Employee contribution collected is
Income u/s 2(24).Deduction is
allowed if amt is credited to employees
account in relevant fund within
due date of that fund
Commodities/Securities Transaction
Tax
CTT is paid when dealer deals in
commodities.When person is trading
in securities then stock exchange
charges STT.Both are allowable
Family planning expenditure
Such exp. is allowable only for
Corporate Assessee.In case of Capital
exp., it will be allowable over 5 yrs
Bad debts
It will be allowable exp if there is
a debt & it has become bad.It has
been treated as income in previous
years.Such income should have been
written off as irrecoverable in
books of accounts
Insurance premium paid on health of
employees
Premium paid by any mode other than
cash for employees under scheme framed
by GIC & Central Govt
Write off allowance for animals
Where animals are used for business/
profession & have died/become permanently
useless then deduction = Cost(-) Amt Realized
Discount on Zero coupon bond
Can be issued by infrastructure,public sector
& scheduled banks only.Discount will be
Amt received(-) amt payable on redemption
Discount is spread over life of bonds
Interest on borrowed Money
Money must be borrowed for business.
Loan can be taken from financial institution/
bank/relatives.Interest should be actually
payable in case taken for fixed assets then
interest till the date asset is put to use shall
be capitalized.Once the asset is put to use
interest thereafter shall be allowable u/s36
Interest on loan shall not be allowable for
payment of Income Tax but for Sales Tax/
GST shall be allowable. Interest on proprietors
capital is not deductible expenditure.Interest
on partners capital shall be allowable u/s 40b
CA Pooja Kamdar Date
Section 37-General Deductions
It is a residuary section.In order to claim
deduction under this section following conditions
need to be satisfied
1)Expenditure should not be covered u/s 30-36
2)It should not be in the nature of capital exp
3)It should not be personal expenditure
4)It should have been incurred in relevant PY
5)It should be in respect of business carried
on by assessee
6)It should be wholly expended for business
purpose
7)No allowance shall be made in respect of
expenditure by assessee for any purpose which
is an offence/prohibited by law(illegal exp)
8) Contigent liability is not allowable expenditure
Note: (1) Any expenditure spent on Corporate
Social Responsibility shall not be allowable
expenditure but assessee can claim deduction
under any other section if appropriate
Some examples of expenses that are allowable
are as follows:
1)Salary to staff
2)Office expenses
3)Printing & stationary
4)Expenses on maintenance of guest-house
5)Travelling expenses for business purpose
6)Rent of plant & machinery,Furniture
7)Embezzlement of cash,theft,Destruction of
asset,Misappropriation by employees,etc
8)Distribution of gifts to employees & clients
9)Postage and telegram
 AY19-20 Chart4.3 PGBP-Disallowable Expenses - Sec 40 to 43B & 37(2B)
Section 37(2B) Sec 40b Interest & remuneration Section 40A(2) Section 40A(3)
Exp. on advertisement in souvenir,brochure, to partners Sec 40A(2)Any payment in relation to expenditure 1)Any payment in respect of expenditure to a person in a single day in
pamphlet etc published by a political party is not 1)On the profits of the firm, firm pays tax made to relative, associate concern/person excess of 10000 should be done only by account payee cheque/account
allowable expenditure.However this expenditure 2) Firm pays interest & salary to partners. having substantial interest shall be disallowed payee DD/ECS.(2)If such payment is made in any other mode , same shall
can be treated as a contribution to a political party 3)This is firms allowable expenditure(subject to the extent it is unreasonable/excessive be disallowed (3)For this section to be attracted Invoice& payment both
& deduction u/s 80GGB/80GGC can be claimed to certain conditions) While considering whether such payment is should exceed 10,000. (4) Payment to a transporter limit is 35000
4)Interest & salary received from firm is partners excessive or not Assessing officer shall have 5)Rule 6DD[exceptions to Sec 40A(3) (i)Payments to banks/banking
Section 40a business income.Share of profit from firm is due regard to FMV of Goods/Services channels-debit/credit card ,ECS,etc(ii)Purchase of agriculture or forest
Expenditure Disallowance exempt in hands of partners Assessee Related Person produce, the producer of animal husbandry (including livestock,meats,
1)Interest ,royalty, fees 100% disallowance if 5)Interest on partners capital is allowable subject Individual Any relative of the individual hides & skins/dair/poultry farming/fish/fish-products from cultivator,
for technical services etc TDS is not paid/deducted to a maximum limit of 12%. Firm Any partner of firm/relative of grower or producer of such articles,produce/products(iii)Payments
payable outside India within due date of 139(1) 6)Remuneration paid to working partners has a such partner & member of is made for purchase of products manufactured/processed without aid of
or In India to NR It shall be allowed in year maximum limit which is calculated as follows family/association of power in cottage industry,to producer of products(iv)where payment
in which it is paid Book Profit Limit HUF/AOP Any member of AOP/HUF/any was required to be made on a day on which banks were closed on account
2)In case of Interest, 30% disallowance if TDS On 1st 3,00,000 of 1,50,000 or 90% of book relative of such member of holiday/strike(v)Where payment is made in village/town where on such
royalty fees for technical is not deducted/paid book profit profit whichever is more Company Director of the company/any date payemnt is not served by any bank,to any person who ordinarily
services,etc payable to within due date of 139(1) On balance book 60% of book profit relative of director resides/carries on business/profession/vocation in such village(vi)Where
contractor/sub-contractor It shall be alloweed in profit Any Any individual who has substantial payment is made by authorized dealer or a money changer against
which is payable to the year of payment Net Profit as per P&L A/c XXX assessee interest(20% or more voting power/ purchase of foreign currency/travellers chq in normal course. (vii)Payment
resident (+/-)Adjustments u/s 28 to 44 XXX beneficial entitlement/20% of profits to terminal benefits such as gratuity, retrenchment compensation etc
3)Salary paid/payable TDS has not been paid/ (+)Remuneration to partners XXX in business/profession of assessee not exceeding Rs.50,000.(viii)Payment made by an assessee by way of
to NR or paid outside deducted then there is is debited to P&L A/c or relative of individual salary to his employee after deducting income tax from salary in accordance
India permanent disallowance. Book Profit XXX For Individual relative is defined u/s 2(41). It with provisions of Sec 192 & when such employee:(a)temporarily
No deduction in later Remuneration is allowable expenditure covers husband,wife,brother/sister/lineal posted for continuous period of 15 days or more in a place other than
years also u/s 40b if it is paid only to working partner ascendant/descendant of that Individual his normal place of duty/on a ship.(b) Does not maintain any account in
4)Tax on Non-Monetary Not deductible in hands of any bank at such place(ix) Payments made to government are covered
Perquisite employer Section 43B- Deduction allowed on payment basis only under exception
5)Income tax paid/ Not allowable expenditure U/s 43B certain expenses are allowable on payment basis irrespective of the method of accounting
payable/advance tax followed by the assessee.43B allows the assessee to make payment either during the PY/on or before Sec 40A(7)- Provision for gratuity
6)Wealth Tax Not allowable exp. As it the due date of filing IT return u/s 139(1).If the payment for above expenses is made during the No deduction is allowed in respect of a mere provision of gratuity .
is now abolished PY or on or before filing IT return then Exp. Shall be allowed on accrual basis.If the payment is Provision for contribution to approved gratuity fund is allowed.
7)Any royalty,license To avoid DDT & pass on made after the due date of filing return then it shall be allowable on payment basis ie in the year Provision for gratuity which has become due is also allowable if
fees, privilege fees, income to State Govt. ., of payment. Following are 7 expenses allowability is on payment basis even if the assessee follows it is paid
service charges or any several State Govt., mercantile method of accounting 1)Any sum payable by assessee as employer by way of contribution
other name by whatever Undertaking are passing to any provident fund/fund for welfare of employees (2)Bonus/Commission for services rendered Sec 40A(9)Contribution by Employer to Non Statutory Fund
called is exclusively levied on the income to State Govt. payable to employees (2)Bonus/Commission for services rendered payable to employees Employers contribution to unrecognized/unapproved provident fund,
on State Government in form of royalties,service (3)Sum paid by assessees as employer in lieu of earned leave of his employee.(4)Sum payable Gratuity fund/superannuation fund/any other fund where employer
Undertaking by State fees. This clause intends interest on loan/borrowing from public financial institution/State Financial Corporation/Industrial is required to contribute under any law will not be allowable
Govt. is not allowable to stop the same Investment Corporation(5)Interest on loan/advance from scheduled bank/co-operative/primary expenditure
exp co-op bank/Agricultural & Rural development Bank (6) Sum payable as Tax,duty,fees,etc
7) Payments to railways for use of railway assets CA Pooja Kamdar Date
 AY19-20 Chart4.4 PGBP -Tax Audit,Presumptive basis,Miscellaneous Provisisons 43A to 44AE
Section 41:Deemed Income Section 44AA- Maintenance of books of accounts Presumptive Basis
1)Any expenditure which was earlier allowed as deduction Who is a specified person? Legal, Medical, Engineering Common points: Assesse has an option to declare profits u/s 44AD, 44ADA, 44AE. Assessee can also declare higher
& is recovered later on then it will be treated as business Accountancy, Technical Consultancy, Interior Decoration profits.If the assessee opts for Presumptive basis he does not have to maintain books of accounts. WDV of
income.Eg:Customs duty recovered,Bad debts recovered, or any other notified profession asset shall be calculated as if assessee had claimed & had been actually allowed in respect of depreciation
(earlier allowed as deduction). Persons Books to be maintained Particulars 44AD 44ADA 44AE
2)Any capital asset bought for scientific research, deduction Specified persons Such Books of Accounts and Eligible business Businesses(not covered Professions notified u/s 44AA Taxpayers engaged in business
u/s 35 is claimed & later on the same is sold then, Business whose gross receipts other documents to enable under 44AE) & Gross and receipts exceeds 50 lakhs of plying, leasing, hiring trucks
income u/s 41 = sale consideration or expenditure allowed in any 1 of the previous A.O. to compute Taxable income. receipts exceeds 2Cr. who owns not more than 10 goods
u/s 35 whichever is lower. 3 yrs does not exceed carriage
3)Amount withdrawn from special reserve shall be deemed 150000 Presumptive 8%/6% of gross receipts. 50% of gross receipts or 7500 per Goods carriage vehicle
to be the profit & gain from business or profession(applicableSpecified persons Cashbook,journal ledger,CC ≥25 6%-in case of payments higher as declared by assessee owned per month or 1000 per ton
only to banks & financial institution ) whose gross receipts Original bills for exp ≥50,Person received through banking per month in case of heavy vehicle
4)It is taxable in the year of receipt. It is taxable as business
in all the 3 previous carrying on medical profession channels Ownership is important & not usage
income even if it is not in existence. Amount is chargeable years exceeds is further required to maintain What expenses are No expenses allowed u/s 30 No expenses are allowed. Partners Salary & Interest is allowed
to tax even if in the hands of successor of the business. 150000 daily register , inventory register allowed to 38. Partners salary & Partners salary and interest Other all expenses are not allowed
5)Balancing charge in case of Electricity generating companiesIn non-specified profession No requirement interest are not allowed also not allowed
where depreciation is calculated using SLM if their income ≤120000 NOTE: Only for Individuals/HUF Advance Tax 1 instalment on or before 1 instalment on or before 15th All instalments are applicable
or total sales/turnover or the limit of Rs. 120000 has been 15th March. March
Section 43A Special provisions consequential to changes gross receipts thereof increased to Rs250000 and/or Eligible Assessee Individual,HUF & Partnership Individual,HUF & Partnership Individual,HUF & Partnership
in exchange rate of currency are ≤1000000 in any one Gross receipts of Rs.10 lakhs Firm(except LLP & Firm(except LLP & Firm(except LLP &
Where a capital asset has been acquired from a country of 3 previous years increased to Rs.25 lakhs Company) Company) Company)
outside India, addition/deduction from actual cost of asset In non-specified profession Such Books of Accounts and Persons not Professionals specified under LLP, company LLP, company
on account of change in rate of exchange in previous year if their income ≥120000 other documents to enable eligible 44AA, business of commission
shall be allowed to be made only on payment by the assessee or total sales/turnover or A.O. to compute Taxable income. or brokerage, Agency business
towards the cost of the asset/repayment of loan/interest gross receipts thereof
irrespective of the method of accounting adopted by assessee are ≥1000000 in any one Section 44AB:Tax audit-Who has to get books audited? Undisclosed Income u/s 115BBE @ 78%
of 3 previous years Business If his total sales, turnover or gross receipts Sec68-Cash Credit/Sec69-unexplained investment/money
Section 43CA Assessee wants to claim Such Books of Accounts and in business for the previous year exceeds 1Cr In case cash credits,unexplained money,etc are
If assessee transfers an asset other than capital asset being income lower than other documents to enable Profession If gross receipts in profession exceeds 50lacs. found in accounts & assessee offers no explanation
land/building/both,it istransferred for less than stamp duty presumed by Sec44AD, A.O. to compute Taxable income. 44AE Income is claimed to be lower than deemed to source or if it is not satisfactory the AO can
valuation.In such case if the stamp valuation exceeds 105% 44ADA,44AE,44BB,44BBB profits treat it as income in such financial year.
of actual sale price then Stamp Valuation will be considered Aforesaid books of accounts and documents are required to 44ADA Income is claimed to be lower than deemed Sec 69D-Hundi Borrowings
for calculating Business Income. be maintained for period of 6 years profits & such income exceeds basic Where any amount is borrowed on hundi/any
However if the date of agreement when consideration was exemption limit amount due on hundi is repaid other than through
fixed & date of registration are not same then stamp 44AD Income is claimed to be lower than deemed an account payee drawn on a bank.The amount
valuation as on date of agreement will be considered. profits & such income exceeds basic so borrowed or repaid will be considered as the
(applicable only if consideration is received in any mode exemption limit income of the assessee in the year in which
other than cash before the date of agreement Tax Audit Report needs to be submitted in Form 3CA & 3CD or such amount is borrowed or repaid
3CB & 3CD. Due date for filing Income Tax Return for such
CA Pooja Kamdar Date assessee is 30th September.