ASSIGNMENT

INCOME TAX LAW AND

ACCOUNTING
NAME : AMAN RATHOUR

ROLL NUMBER : 0504425

CLASS : BBA-V-A

COURSE CODE : BBA 503

N

DEPARTMENT : BUSINESS MANAGEMENT

SCHOOL : SCHOOL OF BUSINESS MANAGEMENT

UNIVERSITY : CHHATRAPATI SHAHU JI

MAHARAJ UNIVERSITY KANPUR
QUESTION 1: EXPLAIN ALL THE PARTIAL TAXABLE ALLOWANCE?
Partially Taxable Allowances
These allowances are exempt from tax to a certain limit as instructed in the income tax act. Here are few
commonly known partially taxable allowances:

House Rent Allowance – HRA is a special allowance specifically granted to an employee by his
employer towards payment of rent for residence of the As per the Sec 10 (13A), the least of the following
is exempted, and rest amount is taxable.

Actual HRA received

Rent Paid – 10% (Basic salary + DA)

40% of salary ( basic + DA) and 50% in metro cities like Mumbai, Kolkata, Delhi, or Chennai)

Exemption is not available to an assessee who lives in his own house, or in a house for which he has not
incurred the expenditure of rent.

Children Education Allowance – This allowance is granted towards the expenses incurred on a
child’s education. This is exempted up to Rs. 100 per month per child up to a maximum of 2 children.

Hostel Expenditure Allowance – This allowance is granted to employees for the expenses
incurred on the hostel fees of their child. This is exempted up to Rs. 300 per month per child up to a
maximum of 2 children.

Transport allowance – Any transport allowance granted to an employee who is blind or deaf and
dumb or orthopedically handicapped with disability of the lower extremities of the body, to meet his
expenditure for commuting between his residence and place of duty is exempt upto rs 3200 per month.

Allowance given to an employee in the transportation industry – Allowance given to

an employee in the transportation industry to cover personal expenses while performing duties related
to the operation of such transportation from one location to another, if the employee is not receiving the
daily allowance.

Amount of exemption shall be lower of following:

70% of such allowance; or

Rs 10,000 per month.

Special Allowance – Special Allowance is a allowance granted to the Employees to meet certain
expenses. The expenses must be incurred against which such allowance is given to the employee.

Underground Allowance- This allowance is granted to an employee who is working in uncongenial,

unnatural climate in underground mines is exempt upto 800 per month.

Conveyance Allowance Exemption Limit – Conveyance allowance refers to the compensation

provided by the employer to the employee for travelling to and from the workplace. Taxes are not due on
the allowance up to a monthly cap of INR 1600. According to the Income Tax Act, taxes will be due on
any sums received in excess of INR 1600.However, with the amendment coming in Budget 2018, tax
exemption on conveyance/transport allowance has been replaced and included in the Standard
Deduction allowed. Therefore, no separate exemption will be allowed for conveyance/transport
allowance from FY 2018-19 onwards.

Leave Travel Allowance- You are eligible to claim exemption for LTA if you are going on a vacation
subject to exemption limit as specified under the Income Tax Act, 1961. This exemption applies to the
employee’s when the journey is performed by rail, aircraft, or bus. The exemption is as below

If travel by Air: Maximum exemption shall be economy fare calculated by the airlines considering shortest
route to the Destination.

Where place of origin and destination is connected by Railways and the Journey is performed between
such places : Maximum exemption shall be not more than air-conditioned first class rail fare by the
shortest route.

Where place of origin and destination is not connected by Railways : In case recognized public transport
exist, maximum exemption will be of amount not exceeding first class fare of such transport by shortest
route. In case recognized public transport does not exist, amount equal to air conditioned first class rail
fare.

This exemption does not apply to any additional local transportation, sightseeing, hotel accommodations,
meals, or other expenses. The lower of the two exemptions will be allowed:

The employer provides LTA.

Exemption based on expenses incurred or the applicable amounts subject to the conditions covered
above for each method of transportation.

Medical Allowance – Medical allowance is a part of the salary, exactly like dearness allowance. It is
totally taxed.

Medical reimbursement is a refund of the employee’s or his family’s medical expenses. The exemption
amount will be the lesser of the two;
However, with the amendment coming in Budget 2018, tax exemption on medical reimbursement has
been replaced and included in the Standard Deduction allowed. Therefore, no separate exemption will be
allowed for Medical Reimbursement from FY 2018-19 onwards.

Car maintenance allowance – If an employee uses a company’s car and the company repays the
driver’s wage, insurance, maintenance, and fuel expenses, the taxable value is Rs 2,700 per month (cars
with cubic capacity within 1.6 Litre) or Rs 3,300 per month (cars with engines over 1,600 cc) (car with
cubic capacity exceeding 1.6 Litre).

An exemption of Rs 2,700 per month or Rs 3,300 per month in respect of the driver salary, maintenance,
and fuel expenditures paid and refunded by the employer if the employee owns the car.

QUESTION 2: EXPLAIN THE RESIDENTIAL STATUS OF

INDIVIDUAL, HUF AND COMPANY?

Residential status of an individual

1. Firstly, determine whether he is resident or nonresident
2. If he is a resident, then determine whether he is a resident and ordinarily resident, or resident
and not ordinarily resident

An individual is said to be a resident of India, if he satisfies any one of the following two basic conditions

 He is in India in the previous year for a period of 182 days or more *

(OR)
 He has been in India for a period of at least 60 days or more * during the relevant previous year
and 365 days * or more during 4 years immediately preceding the relevant previous year.

An individual is said to nonresident of India if he doesn’t satisfy both the basic conditions mentioned
above.

While calculating the period of stay in India, stay need not be for a continuous period, aggregate period
of stay even in breaks have to be considered, and stay can be at any place such as place of residence,
business, etc.
There are certain exceptions to basic condition 2 where instead of 60 days 182 days will be considered
while determining the residential status of following persons.

 An Indian citizen who is going outside India for a job and his contract for such employment
outside India has been approved by central government.
(OR)
 He is a member of crew of an Indian ship.

To determine whether an individual is resident and ordinarily resident (ROR) or resident and not
ordinarily resident (RNOR) two additional conditions mentioned below must be checked.

 He has been resident of India in at least 2 out of 10 previous years immediately preceding the
relevant previous year.
(AND)

 He has been in India for a period of 730 days or more during 7 years immediately preceding the
relevant previous year.

An Individual is said to resident and ordinarily resident (ROR) if he satisfies any one of the basic condition
and both the additional conditions mentioned above.

An Individual is said to resident and not ordinarily resident (RNOR) if he satisfies any one of the basic
condition and doesn’t satisfy both the additional conditions mentioned above.

Determining residential status in any other case

1. As said earlier above, the residential status of any other person other than individual depends
upon the place of incorporation (in case of company) and place of control & management.

2. Control and management does not mean carrying out day to day business functions by servants,
employees, or agents. It means the business may be done outside India and yet its control and
management may be wholly with in India.
 3. Control and management of a business is said to be situated at a place where the controlling and
decision making power of the business is exercised.

Residential Status Of HUF (Hindu Undivided Family) – under the ‘Income Tax Act.’
[Section 6(2)]
Residential Status Of HUF
When is HUF said to be a Resident in India?
A HUF is said to be resident in India in any previous year in every case except where during that year the
control and management of its affairs is situated wholly outside India.

When is HUF said to be a Non-Resident?

A HUF is said to be non-resident in India if during the previous year, the control and management of its
affairs is situated wholly outside India.

In other words it will be non-resident in India if no part of the control and management of its affairs is
situated in India.

Residential Status Of HUF

Control and management refers to the decisions taken regarding affairs of the HUF. The control and
management lies at the place where decisions regarding the affairs of the HUF are taken.

Once the HUF is a resident in India, it is to be further determined whether it is:

(a) Resident and ordinarily resident in India; or

(b) Resident but not ordinarily resident in India.

When is HUF said to be a Resident and Ordinarily Resident in India?

The HUF shall be said to be resident and ordinarily resident in India if the karta of the HUF satisfies both
the following conditions:

(a) He (Karta) must be resident in at least 2 out of 10 previous years immediately preceding the
relevant previous year; and

(b) He must be in India for at least 730 days during 7 previous years immediately preceding the
relevant previous year.

When is HUF said to be Resident but Not Ordinarily Resident in India? [Section 6(6)(b)]:

A HUF, which is resident in India, is said to be resident but not ordinarily resident in India during the
relevant previous year, if the manager (Karta) of the HUF does not satisfy any one, or both, of the
conditions mentioned in clauses.

Residential status of a Company

A Company is Said to be resident in India if

It is an Indian company as defined under section 2(26).

(OR)

It’s control and management is situated wholly in India

during the accounting year.

Place of Control Indian Company Company other than Indian Company

Wholly In India. Resident Resident

Wholly outside India. Resident Non Resident

Partly in India and Partly outside India Resident Non Resident

QUESTION 3 : LAY DOWN THE FORMAT OF COMPUTATION OF
INCOME FROM SALARY?
These processes are laced with complicated calculations and adjustments, so we take you through them
to make the math simple.

Step 1: Calculate your gross income

First, write down your annual gross salary you get. This will include all the components of your salary
including House Rent Allowance (HRA), Leave Travel Allowance (LTA) and special allowances, like food
coupons and mobile reimbursements etc..

Next, take out the exemptions provided on the salary components. The major exemptions you get are
HRA i.e. House Rent Allowance and LTA i.e. Leave Travel Allowance.

For HRA, remember you can claim HRA ONLY if you live in a rented house and can submit valid rent
receipts as proof. You can easily fill out and download rent receipt from the ETMONEY website and
submit it after affixing revenue stamp and getting it signed by your landlord or landlady to claim HRA
benefit. If you have your own accommodation or live with parents, then HRA is fully taxable. Also, your
tax exemption under HRA is taken as the lowest of the following amounts:

 HRA received from an employer

 Actual rent paid less 10 percent of basic monthly salary
 50 percent of basic salary if the taxpayer is living in a metro city
 40 percent of basic salary if the taxpayer is living in a non-metro city

The good news is that you no longer need to use pen and paper to calculate your HRA exemption
amount. All you need to do is use the online HRA calculator to know your exempt and taxable HRA
Details. After this, remove the standard deduction of Rs 50,000 (every salaried individual is entitled to
this deduction) to arrive at the net salary amount.

Next, you need to add income that you might have received from other sources. This could be rental
income, interest earned from deposits, capital gains you might have received etc.

The amount you arrive at is your gross total income.

Step 2 – Arrive at your net taxable income by removing deductions

Tax deductions allow you to reduce your taxable income further by investing, saving or spending on
certain items.

First is the Standard Deduction of Rs 50,000 (mentioned in the previous section), which can be availed by
all, without making investment or expenditure on any defined products.

Next, deduct investment and expenses eligible under Section 80.

Under Section 80C, which is the biggest pool for deduction, you can claim up to Rs 1.5 lakh deduction for
various investment and expenditure. Investments in PPF, ELSS Mutual Funds, EPF, Sukanya Smriddhi
Yojana, premium paid for term insurance are some of the most popular ways to claim this deduction.
Also, if you have a home loan, the principal amount paid back in the year can be claimed as deduction
under this section. Further your EPF, which is a part of your salary, falls in the category.

If you are investing in NPS, you can claim another Rs 50,000 deduction under Section 80CCD(1B), which is
over and above the Rs 1.5 lakh limit under Section 80C. Apart from this, if you have paid premiums
towards the health insurance policy of your family and your parents, you can claim that amount as
deduction under Section 80D.

In case of a home loan, the interest portion of the EMI paid for the financial year can be claimed as a
deduction, up to a maximum of Rs 2 lakh, under Section 24. Again, this is over and above the deduction
on the principal amount under Section 80C.

Step 3: Arriving at your net taxable income

By subtracting all the eligible deductions from the gross taxable income, you will arrive at your total
income on which you need to pay tax basis your tax slab

Tax slab for Individual taxpayers who are of the age of less than 60 years
Net income range Income-Tax rate Your tax outgo before Rebate under Section87A

Up to ₹ 2,50,000 Nil Nil

₹ 2,50,000 – ₹ 5,00,000. 5% ₹ 12,500

₹ 5,00,000 – ₹ 10,00,000 20% . ₹ 1 lakh

Above ₹ 10,00,000 30% ₹ 2,62,500 assuming net income of ₹ 15 lakh

This slab rate is different for senior citizens. Those who are over 60-years-old with up to Rs 3 lakh net
income, the tax rate is nil. And for very senior citizens, who are over 80-years-old, up to Rs 5 lakh net
income, the tax rate is nil. Basically, the applicable tax rates depend on your age and net income.

We will now get into the crucial step of calculating your tax.

STEP 4 – Calculate Your Taxes

Now, one pays tax on his/her net taxable income.

 For the first Rs. 2.5 lakh of your taxable income you pay zero tax
 For the next Rs. 2.5 lakhs you pay 5% i.e. Rs 12,500
 For the next 5 lakhs you pay 20% i.e. Rs 1,00,000
 For your taxable income part which exceeds Rs. 10 lakhs you pay 30% on entire amount

Step 5: Consolidate your net tax

Rebate under Sec 87A: Tax rebate is a form of tax incentive provided by the government to individuals
earning an income below a specified limit. In case your total taxable income after deductions doesn’t
exceed Rs 5 lakh, you can claim rebate under Sec 87A of Rs 12,500.

Now if your taxable income is more than Rs 5 lakh, you can add the health and education cess of 4
percent to your tax amount to see the final amount you will pay.

For people in the very high-income bracket, i.e. between Rs 50 lakh and Rs 1 crore, they need to pay a
surcharge of 10 percent. And, for income between Rs 1 and Rs 2 crore, surcharge is 20 percent.
Let’s now understand this with an example –

Akash works at a Mumbai-based MNC and his annual gross salary is Rs 15 lakh. After removing all
exemptions from his salary, including HRA and standard deductions, his net salary is Rs 12.5 lakh.

Last year, he earned Rs 10,000 as interest income from his bank account. And his total investment in ELSS
Mutual Funds and contribution to EPF combined come to Rs 1.5 lakh. He has even invested in NPS (Rs
20,000) and has a health insurance policy for himself and his wife for which he pays 15,000 premium
every year

Income Tax Calculation AY 2020-21

Gross Salary ₹ 15 lakh

HRA and LTA – ₹ 2.5 lakh

Standard deduction – ₹ 50,000

Net salary ₹ 12 lakh

Income from other sources ₹ 10,000

Gross taxable income ₹ 12,10,000

Deduction under Section 80C (ELSS + EPF) – ₹ 1,50,000

Deduction under Section 80CCD(1B) for NPS – ₹ 50,000

Deduction under Section 80D for health insurance – ₹ 15,000

premium

Deduction under Section 80TTA for interest on bank – ₹ 10,000

account

TOTAL INCOME ₹ 9,85,000

QUESTION 4 : Mr. A rented his house to Mr. B ,Rs 20,000 per
month. Be occupied one – third portion for his self-residence,
one- third for business and remaining is let out he paid Rs.
21,000 as municipal tax compute his income from house
property after considering the following information.
FR = 7,25,000
MV = 7,19,000
SR = 7,21,000
He borrowed 1,000,000 for his construction for of house at
rate of 10% on 1/10/2018. Construction of his house
completed on 1/04/2022.

Sol. The remaining part will also become one-third which Mr A

let out to Mr. B.

So, the

MV =
7,19,000 ×
1÷3
=2,39,666
.66

FR =
7,25,000 ×
1÷3=
2,41,666.
66
PARTICULAR LET OUT SELF OCCUPIED
SR =
Gross annual value×(GAV)
7,21,000 2,40,333.33 ---------
Less municipal
1 ÷ 3 =tax (paid) 7,000 ---------
Net annual2,40,333.
value (NAV) 2,33,333.33 ---------
33
Less@std.deduction u/s 24(a) 69,999.9 ---------
Int. On loan
Actual rent is
20,000 per month

AR =
20,000 ×
12 =
 (1) Current year 1,00,000
(2) Pre-construction 70,000
1,70,000 56,666.66 56,666.66
1,06,666.5 56,666.66

Income from house property = 1,06,666,5 – 56,666.66

=. Rs. 49,999.84

Solution:

The remaining part will also become one-third which Mr. A let out to Mr.B

So,

MV = 7,19,000 × 1 ÷ 3 = 2,39,666.66 Rs.

FR = 7,25,000 × 1 ÷ 3 = 2,41,666.66 Rs.

SR = 7,21,000 × 1 ÷ 3 = 2,40,333,33 Rs.

AR = 20,000 × 1 ÷ 3 = 2,40,000 Rs.

Municipal tax (paid) = 21,000Rs = 7000

NAV= GAV – Municipal tax

= 2,40,333.33- 7000

= Rs. 2,33,333.33

Now, 30% of NAV = 2,33,333.33 × 30 ÷

100

= RS. 69,999.99

Interest on loan

For current year, ROI = 10%

Borrowed loan =10,00,000Rs.

= 10,00,000 ×
10 ÷ 100

= Rs.
1,00,000
DOB = 1/10/2018 DOC =
For pre-construction year, 1/04/2022
Accounting D/y before completing = 1/03/2022

Total years and month taken = 3 year& 6 months

For 3 year

= 10,00,000 × 3 × 10 ÷100

= 3,00,000

For 6 months

= 10,00,000 × 6/12 × 10/100

= 50,000 Rs

Total Int. On loan = Int. On C.Y + Int. On P.C.Y

= 1,00,000+ 70,000

= 1,70,000

Since, its one-third part,

= 1,70,000 × 1/3

= 56,666.66
QUESTION 5 : List Out the income which do not form the part
of total income?
Incomes Which Do Not Form Part Of Total Income
Incomes Which Do Not Form Part Of Total Income Are Exempt Income. • Thus Income, To The Extent
They Are Exempt, Are Not Included In The Total Income For Computation Of His Total Income. As Per
Section 10 To 13a, Certain Incomes Are Totally Exempt From Tax Or Exempt Upto A Certain Amount.
Section 10 (Income Not To Be Included In The Total Income Of Any Assessee.) Section 10aa (Established
Units In Special Economic Zones) Section 11-13 ( Income Of Trust/ Institution ) Section 13a (Income Of
Political Parties) Section 13b (Income Of A Electoral Trust) Incomes Not To Be Included In Total Income Of
Any Person Section 10(1) Agriculture Income Section 10(2) Sum Received By A Member From Huf
Section 10(2a) Profit Of A Partner From A Firm Section 10(4) Interest On Non-Resident Account Section
10(5) Travel Concession From A Employer (A) Incomes Not To Be Included In Total Income Of Any Person
Section 10(6) Remuneration To A Non Citizen Section 10(7) Allowances/ Perquisites Outside India Section
10(10) Gratuity (Death Cum Retirement) Section 10(10a) Pension Section 10(10aa) Leave Encashment
Section 10(6) Remuneration To A Non Citizen Means Individual Who Is Not A Citizen Of India.
Remuneration Received By:

1. Diplomats, Foreign National As An Official. Whatever Names Called As An Embassy, High

Commission, Legation, Trade Representative Of A Foreign State Or As A Staff Of These Members.
2. Foreign National As Employee Of A Foreign Enterprise. Services Rendered During His Stay In
India.
3. Non-Resident Employed On Foreign Ship. Provided His Stay In India Should Not Exceed 90 Days In
The Previous Year.
4. Employee Of Foreign Government During His Training In India. (A) Incomes Not To Be Included In
Total Income Of Any Person Section 10(10b) Retrenchment Compensation Section 10(10c)
Amount Voluntary Retirement Section 10(10cc) Non Monetary Poerquisites Section 10(10d)
Amount On Maturity Of Lic Section 10(11) Provident Fund Section 10(10d) Amount On Maturity
Of Lic Lic Amount On Maturity + Bonus On Such Policy Exludes: Not An Exempt• Policy U/S
80dd(3) Or 80dda(3)• Keyman Insurance Policy • An Insurance Policy Issued On Or After
01.04.2003 But Before 31.03.2012, If Premium Exceeds 20% Of The Actual Capital Sum Assured.
But If Received After Death Of A Person Is Fully Exempt. • An Insurance Policy Issued On Or
After01.04.2012 If Premium Exceeds 10% Of Sum Assured. • An Insurance Policy On Or After
01.04.2013 On The Life Of Any Person Who Is I) Disable As Per Section 80u Ii) Suffering From
Disease As Per Section 80ddb If Premium Payable Exceeds 15% Of The Actual Capital Sum
Assured.

Incomes Not To Be Included In Total Income Of Any Person Section 10(12) Payment From Rpf Section
10(13) Any Payment From An Approved Saf Section 10(13a) Hra Section 10(14) Special Allowances
Section 10(15) Interest, Premium & Bonus On Specified IInvestments

Section 10(15) Interest, Premium & Bonus On Specified Investments • Interest 1.Interest Of Any Assesee
On Deposits, Securities, Certificates And Bonds Issued By Cg. Subject To Limits & Conditions. 2. On Gold
Deposits 3. Bonds Issued By A Local Authority 4. Deposits With Offshore Banking Unit. Premium Or Bonus
Or Other Payment On • Securities • Bonds • Annuity Certificates • Saving Certificates Or • Other
Certificates Issued By Cg • Subject To Conditions And Limits.

Incomes Not To Be Included In Total Income Of Any Person Section 10(16) Scholarship For Education
Section 10(17) Daily Allownaces To Mps & Mlas Section 10(17a) Award & Reward Section 10(18) Pension
To Awardess Or Their Members Section 10(20) Income Of Local Authority

Incomes Not To Be Included In Total Income Of Any Person Section 10(21) Income From Approved
Research Association Section 10(22b) Income Of Specified News Agency Section 10(23a) Income Of
Professionals/ Institution Section 10(23bbh) Income Of Prasar Bharti Section 10(23c) Income Of Certain
Funds Of National Importance

Section 10(23c) Income Of Certain Funds Of National Importance 1.The Prime Minister’s National Relief
Fund 2.The Prime Minister’s Fund For Promotion Of Folk Art 3.The Prime Minister’s Aid To Students Fund
4.The National Foundation For Communal Harmony 5.University Or Educational Institution Solely For
Educational Purpose.

Section 10(23c) Income Of Certain Funds Of National Importance 6. Any Hospital Or Other Institution For
Reception And Treatment Of Persons • Suffering From Illness • Mental Defectiveness • During
Convalescence • Requiring Medical Attention Or Rehabilitation Existing Solely For Philanthropic

For Above Two Points Only Exemption Shall Be Given To Following Type Of Universities Or Institution Or
Hospitals A) Financed By The Government (Wholly Or Substantially) B)Aggregate Annual Receipts Do Not
Exceed Rs.1 Crore C) Other Than Institution Mention (A) & (B) , Institution Approved By Prescribed
Authority. I.E. Principal Chief Commissioner Or Chief Commissioner Or Principal Director General Or
Director General . Application On Or Before 30the September Of The Relevant Assessment Year. Section
10(23c) Income Of Certain Funds Of National Importance

Incomes Not To Be Included In Total Income Of Any Person Section 10(23d) Income Of Mutual Funds
Section 10(23fc) Income Of Business Trust Section 10(23fd) Income By Unit Holder From The Business
Trust Section 10(32) Income Of Minor Clubbed In The Hands Of A Parent Section 10(34) Dividend

Incomes Not To Be Included In Total Income Of Any Person Section 10(34a) Income To Shareholder On
Account Of Buy Back Section 10(35) Income From Units Of Uti Section 10(35a) Income From
Securitization Trust Section 10(37) Capital Gain On Compulsory Acquisition Of Agriculture Land Section
10(38) Capital Gains From Sale Of Shares And Units

1. 20. (A) Incomes Not To Be Included In Total Income Of Any Person Section 10(39) Income From
International Sporting Event Held In India Section 10(43) Amount Of Loan Under Reverse
Mortgage Scheme Section 10(44) Income Of New Pension Scheme Trust Section 10(45)
Allowances/Perquisite To Chairman & Member Or Retired Chairman / Member Of U.P.S.C.
Section 10(46) Income To Notified Body/Authority/ Board/Trust/ Commission
Incomes Not To Be Included In Total Income Of Any Person Section 10(47) Income Of Infrastructure Debt
Fund Section 10(48) Income Received By Certain Foreign Companies

Special Provisions In Respect Of Newly Established Units In Special Economic Zones Section 10aa

Section 10aa Eligible Assessee: Every Assessee Beign Entrepreneurs • Entrepreneurs May Be A Person. •
Who Derived Profits Or Gains • From An Undertaking • Beign A Unit • Engaged In The Export • Export Of
Articles Or Things Or Services

Essential Conditions To Claim Deduction 1. Begins During The Previous Year 2005-06 Or Thereafter In Any
Sez. 2. New Establishment. I.E. No Splitting Up Or Reconstruction Of Already Business In Existence. 3.
New Plant & Machinery. I.E. P&M Should Not Be Used Before In Any Business. Two Exceptions Are
There: 1) A) It May Be Used Outside India By Any Person Other Than Assessee And P&M Is Imported
From Foreign Country By Assesee For New Business . B) No Deduction On Depreciation In Respect Of
Previously Allowed Depreciation To Any Person. 2) Total Value Of Second Hand P&M Should Not Exceed
20% Of The Value Of P&M Used In Such Export Business.

Assessee Should Get His Account Audited And Signed By Ca. And Such Report & Prescribed Form Should
Furnish To Relevant Department Alongwith The Return Of Income. 5. Assessee Can Claim Deduction In
One Section Only. I.E. If He Is Claiming Deduction U/S 10aa Then He Shall Not Be Eligible For Deduction
U/S 35ad For Any Capital Expenditure.

Period For Which Deduction Is Available For A Total Period Of 15 Relevant Assessment Years • For First 5
Consecutive A.Y 100% Of P&G • For Next 5 Consecutive A.Y 50% Of P&G • For Next 5 Consecutive A.Y Not
More Than 50% Pf P&B Dr. To P&L A/C In P.Y. In Respect Of Which Deduction Is Allowed And Cr. To Sez
Reinvestment Reserve Account To Be Created And Utilizes For The Puroose Of The Business Of The
Assessee In The Manner Laid Down

Consequences Of Mis-Utilisation Or Non-Utilisation Of Reserve (For Last 5 Year) Where Any Amount
Credited To Sez Re-Investment Reserve Account • Has Not Been Used For The Purchase Of New Plant &
Machinery, Then Such Utilized Amount Shall Be Trated As Income In The Year Of Utilization & Shall Be
Charge To Tax. • Shoiulb Be Used Before The Expiry Of 3 Years . If Not Used Then Shall Be Treated As
Income & Shall Be Charge To Tax.

Computation Of Deduction For Such Undertakings Profits From The Business Of The Undertaking Being
The Unit Et Of The Undertaking Of Such Article/Things Or Services Total Turnover Of Business Carried On
By The Undertaking Et Is Export Turnover : In Respect Of Export By Such Undertaking, Being The Unit If
Articles Or Things Or Services Received In Or Brought Into.

Income From Property Held Under Charitable Or Religious Purposes Section 11 To 13

Income Of Political Parties Section 13a Income Of Political Parties Following Incomes Are Exempt:
1.Income From House Property 2.Income From Other Sources 3.Voluntary Contribution From Any Person
4.Capital Gains Subject To Conditions: 1. Proper Maintenance Of Books Of Account And Other Documents
As Will Enable The Ao To Properly Deduce Its Income Therefrom. 2. Voluntary Contribution If Exceeds
Rs.20,000, It Maintains & Keeps Records Of Same With Name & Address Of Person. 3. Accounts Audited
By Ca. 4. Submit Report U/S 29c(3) Of The Representation Of The People Act, 1951 For The Relevant
Financial Year. Income Of Electoral Trust Section 13b

Refer To Case Laws

1. Godrej & Boyce Mfg.Co.Ltd. Mumbai Vs Dy. Commissioner Of Income Tax On 12 August, 2010

2. Harish Krishnakant Bhatt Vs The Ito On 4 August, 2004

3. Cit Vs Tei Technologies Pvt. Ltd On 27 August, 2012

4. Sesa Goa Ltd., Panaji Vs Department Of Income Tax On 19 February, 2013