tax project for comparison check for relevant section.

1. COMPARISON OF DTC WITH INCOME TAX ACT
FOR BUSINESS INCOME

2. Section 30:
DTC-2013 AMMENDMENT :income
from business
• (1) The income from any business
carried on by the assesse at any time
during a financial year shall be
computed under the head “Income
from business
IT ACT-1961:—Profits and gains of
business or profession
• As per section 29 the income referred to
in section 28 shall be computed in
accordance with the provisions contained
in sections 30 to [43D]. The
following income shall be chargeable to
income-tax under the head “Profits and
gains of business or profession”,—
• (i) the profits and gains of any business or
profession which was carried on by the
assesse at any time during the previous
year
• (ii) any compensation or other payment
due to

3. Section 30:
DTC-2013 AMMENDMENT : income
from business
• (2) The income of distinct and separate
business referred to in section 31 shall be
computed separately for the purposes of
subsection (1)
IT ACT-1961:—Profits and gains of
business or profession
• (iii) income derived by a trade,
professional or
similar45 association from specific
services45 performed for its members.
• (iv) the value of any benefit or perquisite,
whether convertible into money or not,
arising from business or the exercise of a
profession.
• (v)any interest, salary, bonus,
commission or remuneration,
by whatever name called, due to, or
received by, a partner of a firm.

4. Section 30:
DTC-2013 AMMENDMENT : income
from business
• (3) Any income from a business after
its discontinuance shall be deemed to
be the income of the recipient in the
year of receipt and shall, accordingly,
be computed under the head “Income
from business”
IT ACT-1961:—Profits and gains of
business or profession
• (vi) any sum received under a
Keyman insurance policy including
the sum allocated by way of bonus
on such policy
• (vii) any sum, whether received or
receivable, in cash or kind, on account of
any capital asset (other than land or
goodwill or financial instrument) being
demolished, destroyed, discarded or
transferred, if the whole of the
expenditure on such capital asset has
been allowed as a deduction
under section 35AD.]

5. Section 31:
DTC-2013 AMMENDMENT
:31:business when treated distinct
and separate
• (1) A business shall be distinct and
separate from another business if
there is no interlacing or
interdependence or unity embracing
the two businesses.
• (2) For the purposes of subsection (1),
a business shall be distinct and
separate from another business, if
• (a) it is a business in respect of which
profits are determined under
subsection (2) of section 32; or
IT ACT: business when treated
distinct and separate
Section 28
Explanation 2.—Where speculative
transactions carried on by an assessee
are of such a nature as to constitute a
business, the business (hereinafter
referred to as “speculation business” )
shall be deemed to
be distinct and separate from any other
business.

6. Section 31:
31:business when treated distinct and
separate
• (b) it is a business eligible for
deduction in accordance with the
provisions of clauses (l),(m), (n), (o) or
(p) of subsection (2) of section 324
• (3) A speculative business shall be
deemed to be distinct and separate
from any other business including any
other speculative business.
IT ACT: business when treated distinct
and separate

7. Section 32:
DTC-2013 AMMENDMENT :
computation of income from business
• The income computed under the
head “Income from business” shall
be the profits from the business.
• The profits from the business of
the nature specified in column of
the Table given below shall be
computed in accordance with the
provisions contained in the
Schedule specified in the
corresponding entry in column of
the said Table.
IT ACT-1961: Computation of income
from business
• Different incomes are computed under different
sections in it act 1961.
• Computation of profits and
gains from the business of operating qualifying
ships.
• 115VA. Notwithstanding anything to the contrary
contained in sections 28 to 43C, in the case of a
company,
the income from the business of operating
qualifying ships, may, at its option, be computed in
accordance with the provisions of this Chapter and
such income shall be deemed to be the profits and
gains of such business chargeable to tax under the
head "Profits and gains of business or profession" .

8. Si no Nature of business schedule
1 Business of Insurance Sixth schedule
2 Business of operating a qualifying ship Seventh schedule
3 Business of mineral oil or natural gas Eighth schedule
4 Business specified in Paragraph 1 of the Ninth
Schedule
Ninth schedule
5 Business specified in Paragraph 1 of the Tenth
Schedule
Tenth schedule
6 Business listed in column (2) of the Table in
theEleventh
Eleventh schedule

9. Section 32:
DTC-2013 AMMENDMENT :
• (3)The profits from any business not referred
to in subsection (2) shall be the gross
earnings from the business as reduced by the
amount of business expenditure incurred by
the assesse.
• (4) The Central Government may, if it
considers necessary or expedient so to do, by
notification direct that the provisions of the
Eighth Schedule, Ninth Schedule, or Tenth
Schedule, as the case may be, shall not apply
from such date as may be specified therein,
to the following, namely:
• (i) any class of undertakings or enterprises; or
• (ii) the business of the nature specified at Sl.
Nos. 3, 4 or 5 of TABLE given in subsection (2)
respectively.
IT ACT-1961: Computation of income
from business
• Profits of life insurance business to be
computed separately.
• 1. In the case of a person who carries on or at
any time in the previous year carried on life
insurance business, the profits and
gains of such person from that business shall
be computed separately from his profits and
gains from any other business
• Profits and gains from the business of trading
in alcoholic liquor, forest produce, scrap, etc.
• 206C. 29[30(1) Every person, being a seller
shall, at the time of debiting of the amount
payable by the buyer to the account of the
buyer or at the time of receipt of such
amount31 from the said buyer in cash or by
the issue of a cheque or draft or by any other
mode, whichever is earlier.

10. Determination of Income from Business or
Profession
Income Tax Act 1961
IT Act Section 28
• The profits and gains of any
business or profession which
was carried on by the assesse at
any time during the previous
year
• Cash assistance received or
receivable by any person against
exports under any scheme of
the Government of India
Direct Tax Code 2013
Direct Tax Code Section 33-34
• The profits and gains of any
business or profession which
was carried on by the assesse at
any time during the previous
year
• Cash assistance received or
receivable by any person against
exports under any scheme of the
Government of India

11. • The amount of cash assistance,
subsidy or grant (by whatever
name called), received from any
person or the Government for,
or in connection with, the
business other than to meet any
portion of the cost of any
business capital asset;
• The value of any benefit or
perquisite, whether convertible
into money or not, accrued or
received from, or in connection
with, the business
• Cash assistance received or
receivable by any person against
exports under any scheme of the
Government of India
• The value of any benefit or
perquisite, whether convertible
into money or not, arising from
business or the exercise of a
profession

12. • Any consideration on sale of a
licence, not being a business
capital asset, obtained in
connection with the business;
• The amount of remuneration
(including salary, bonus and
commission) or any interest
accrued to, or received by, a
participant of an unincorporated
body from such body;
• Any sum, whether received or
receivable, in cash or kind, under an
agreement for—
(a) not carrying out any activity in
relation to any business; or
(b) not sharing any know-how, patent,
copyright, trade-mark, licence, franchise
or any other business or commercial
right of similar nature or information or
technique likely to assist in the
manufacture or processing of goods or
provision for services
• Any interest, salary, bonus,
commission or remuneration,
by whatever name called, due to, or
received by, a partner of a firm from
such firm

13. SECTION 35- DETERMINATION OF OPERATING
EXPENDITURE
DTC-2013 AMMENDMENT
Clause 35 of the code lists operating expenditures
allowed as business deductions. Further clause
35(2)(xliv) allows deduction of any other operating
expenditure not covered in the list.
1) DTC categorizes business expenditure under
three heads
• (i) operating expenditure
• (ii) finance charges
• (iii) capital allowance.
INCOME TAX ACT-1961
Clause 35 in DTC is spread over section 30, 31, 36, 37,
40, 43 etc. in the Income-tax Act. General deduction
of any business expenditure is provided under section
37.
The provision in the Income Tax Act, 1961 are as
follows:
GENERAL:
1) Any expenditure (not being in the nature of capital
expenditure or personal expenses of the assessee),
laid out or expended wholly and exclusively for the
purposes of the business or profession shall be
allowed in computing the income chargeable under
the head "Profits and gains of business or
profession".

14. DTC-2013 AMMENDMENT
2) Clause 35(2) of the Code provide that the
operating expenditure will include :
• rent paid for any premises if it is occupied and
used by the person;
• current repairs to any building if it is occupied and
used by the person;
• land revenue, local rates or municipal taxes in
respect of premises occupied and used by the
person;
• current repairs of machinery, plant or furniture
used by the person;
IT ACT-1961
2) The clause in the existing Act is as under:
In respect of rent, rates, taxes, repairs and insurance for
premises, used for the purposes of the business or
profession, the following deductions shall be allowed—
(a) where the premises are occupied by the assessee—
• as a tenant, the rent paid for such premises ; and
further if he has undertaken to bear the cost of
repairs to the premises, the amount paid on account
of such repairs ;
• otherwise than as a tenant, the amount paid by him
on account of current repairs to the premises ;
(b) any sums paid on account of land revenue, local
rates or municipal taxes ;
(c) the amount of any premium paid in respect of
insurance against risk of damage or destruction of the
premises.

15. DTC- 2013 AMMENDMENT
3) AMOUNT OF CONTRIBUTION:
As per Clause 35(2)(xxix) of the Code, deduction for an
amount of contribution by the person, being an
employer, to an approved fund subject to such limits and
conditions, as may be prescribed.
Further as per Clause 35(2)(xxx) of the Code,
contribution to any fund, to the extent the amount has
been received from his employees as their contribution
to the fund
IT ACT-1961
In respect of repairs and insurance of machinery, plant or
furniture used for the purposes of the business or profession,
the following deductions shall be allowed—
• the amount paid on account of current repairs thereto
3) AMOUNT OF CONTRIBUTION:
The provision as per the existing Income Tax Act, 1961 is as
follows:
• any sum paid by the assesse as an employer by way of
contribution towards a recognised provident fund or an
approved superannuation fund, subject to such limits as may
be prescribed.
• any sum paid by the assesse as an employer by way of
contribution towards an approved gratuity fund created by
him for the exclusive benefit of his employees under an
irrevocable trust;

16. DTC-2013 AMMENDMENT
4) DEDUCTION FOR HEAD OFFICE EXPENSE
Clause 35(2) (xxxi) of the Code provides for deduction of any
head office expenditure by a non-resident, as is attributable
to his business in India, not exceeding an amount equal to
one-half per cent (1.5%) of the total sales, turnover or gross
receipts of business in India.
5) TAX
Clause 35(xxxv) of the Code allows as operating expenditure-
any tax (not being a tax under this Code), duty, cess, royalty
or fee, by whatever name called, under any law for the time
being in force, if the amount is actually paid.
IT ACT-1961
4) DEDUCTION FOR HEAD OFFICE EXPENSE
No allowance shall be made, in computing the income
chargeable under the head "Profits and gains of business or
profession", in respect of so much of the expenditure in the
nature of head office expenditure as is in excess of the amount
computed as hereunder, namely:—
(a) an amount equal to 5% of the adjusted total income; or
(c) the amount of so much of the expenditure in the nature of
head office expenditure incurred by the assessee as is
attributable to the business or profession of the assessee in
India, whichever is the least .
5) TAX
Certain deductions to be only on actual payment.

17. DTC-2013 AMMENDMENT
6) LOSS OF INVENTORY OR MONEY
Clause 35(3)(b) allows deduction of loss of inventory or money
on account of theft, robbery, fraud or embezzlement, occurring
in the course of the business, if the inventory or the money is
written off in the books of account.
7) AMOUNT CREDITED FOR PROVISION FOR BAD AND
DOUBTFUL DEBTS
Clause 35(3) (c) of the Code allows a deduction of any amount
credited to the provision for bad and doubtful debts account,
not exceeding 1% of the aggregate average advances computed
in the prescribed manner if,—
• the person is a financial institution, or a non-banking finance
company as may be notified;
• the amount is charged to the profit and loss account for the
financial year in accordance with the prudential norms of the
Reserve Bank of India in this regard; and
• the amount of trade debt or part thereof written off as
irrecoverable in the books of the person is debited to the
provision for bad and doubtful debts account.
IT ACT-1961
6) LOSS OF INVENTORY OR MONEY
This provision does not exist in the Income Tax Act, 1961.
7) AMOUNT CREDITED FOR PROVISION FOR BAD AND
DOUBTFUL DEBTS
Allows deduction in respect of any provision for bad and
doubtful debts made by—
• a scheduled bank or a non-scheduled bank or a co-operative
bank other than a primary agricultural credit society or a
primary co-operative agricultural and rural development
bank], an amount not exceeding seven and one-half per cent]
of the total income (computed before making any deduction
under this clause and Chapter VIA) and an amount not
exceeding ten per cent of the aggregate average advances
made by the rural branches of such bank computed in the
prescribed manner.

18. DTC-2013 AMMENDMENT
8) FINANCE CHARGES
Clause 35(4)(c) of the Code provide that the clause provides
that operating expenditure shall not include finance charges.
9) VALUE OF INVENTORY
Clause 35(3)(a) provides for deduction of the value of
inventory of the business, as at the beginning of the financial
year.
IT ACT-1961
8) FINANCE CHARGES
This is not provided in the existing Act.
9) VALUE OF INVENTORY
The provision does not exist in the Income Tax Act, 1961

19. SECTION 36- DETERMINATION OF FINANCE CHARGES
DTC
The amount of finance charges referred to in
clause (b) of sub-section (1) of section 36 shall
be—
(a) the amount of interest paid on any capital
borrowed or debt incurred
(b) the amount of interest paid to trade creditors
(c) the amount of interest paid to any participant
(d) the amount of any incidental financial charges
ITA
NO CHANGES

20. DTC
ITEMS ALLOWED FOR DEDUCTION
The amount of interest on any
capital borrowed or debt incurred,
which is payable to any financial
institution, shall be allowed as a
deduction
ITA
Provisions granting deduction at 10% of
the aggregate average advances made by
rural branches of specified banks

21. DETERMINATION OF CAPITAL ALLOWANCES
DTC – sec 37
Amount would be the aggregate amount of :
a) Depreciation of business capital asset
b) Terminal allowance
c) Scientific research allowance
d) Initial depreciation allowance
ITA
No separate section

22. DEPRECIATION AND INITIAL DEPRECIATION
DTC
Depreciation – section 38
Initial depreciation – section 39
• Amount of depreciation in case of a
business capital asset would be:
a)Percentage of the adjusted book value
b)NIL in case of any other business where
capital asset does not form a part of block
asset
ITA
Section 32
• Amount of depreciation in case of a
business capital asset would be:
a) Percentage of actual cost in case of
power generating assets
b) WDV in case of assets forming a block

23. DTC ITA
• Amount deducted shall be restricted to
50%
• Whole actual cost of asset is not allowed as
deduction
• No deduction shall be allowed when
• Initial depreciation should be 20% on new
plant and machinery
• Amount deducted shall be 75% of the
amount calculated as on WDV
• Aggregate reduction should not be
exceeded
• No deduction shall be allowed when
• Governed by the exception of 180 days

24. SECTION 40- Deduction for Terminal Allowance
DIRECT TAX CODE-2013
1. A person shall be allowed a terminal
allowance in respect of a block of
assets, if
(a) the block of assets has ceased to exist
by reason of being demolished,
destroyed, discarded or transferred
during the financial year;
(b) The percentage specified in the
thirteenth schedule for computing
depreciation in respect of the block of
assets is zero.
INCOME TAX ACT-1961
1. Section 32(1)(iii) of the Income-tax Act,
1961, provides for deduction in the case of
a
(i) building, machinery, plant or furniture
which is sold, discarded, demolished or
destroyed in the previous year (other than
the previous year in which it is first
brought into use )the amount by which
the money is payable in respect of such
building, machinery, plant or furniture,
together with the amount of scrap value,
if any, falls short of the written-down
value thereof.
(ii) This deduction is to be allowed only if
such deficiency is actually written-off in
the books of the assesse.

25. SECTION 40
DIRECT TAX CODE-2013
2. The terminal allowance referred to in
subsection(1) shall be computed in
accordance with the formula
A+B-C
Where
A= the written down value of the block of assets
at the beginning of the financial year
B= the actual cost of any asset falling within that
block, acquired during the financial year; and
C= the amount accrued or received in respect of
the assets which are demolished, destroyed,
discarded or transferred during the financial year
together with the value of the carcass or the
scrap, if any.
INCOME TAX ACT 1961
No such formula is specified in the income tax
act.

26. SECTION 41- Deduction for Scientific Research and
Development ALLOWANCE
DIRECT CODE TAX-2013
1. A company shall be allowed a deduction
equal to one 150% of the expenditure (not
being expenditure in the nature of cost of
any land or building) incurred on—
(a) creating and maintaining an in- house
facility for scientific research and
development; and
(b) carrying out scientific research and
development in the in-house facility.
PROVIDED THAT:
(a) the company is engaged in the business of
biotechnology or in business of
manufacture
(b) the company creates and maintains an in-
house facility for carrying out scientific
research and development
INCOME TAX ACT-1961
1. Deductions shall be allowed of an amount
equal to one and one-fourth times of any
sum paid to a scientific research association
which has as its object the undertaking of
scientific research or to a university, college
or other institution to be used for scientific
research.
PROVIDED THAT:
(a) is registered in India, has as its object the
scientific research and development.
(b) University, college or other institution for
the purpose of this clause (a) is for the time
being approved, in accordance with the
guidelines, in manner and subject to such
conditions may be presented.

27. SECTION 41
DIRECT TAX CODE-2013
(c) the research facility is approved by the
Central Government on the basis of the
recommendation of such authority as may
be notified;
(d) the company enters into an agreement with
such authority,-
(i) for cooperation in the research and
development facility; and
(ii) for audit of the accounts maintained for
such facility.
2. The approval granted to a predecessor
shall be deemed to have been granted to
the successor if the research facility is
transferred to the successor as a result of a
business re-organization.
INCOME TAX ACT-1961
(c) such university, college or other
institution is specified as such, by
notification28 in the Official Gazette, by
the Central Government.
(d) In respect of expenditure on scientific
research, the following deductions shall
be allowed—
(i) any expenditure laid out or expended on
scientific research related to the business.
(ii) On payment of any salary to an employee
engaged in such scientific research or on
the purchase of materials used in such
scientific research.
2. The aggregate of the expenditure so laid
out or expended within three years
immediately preceding the
commencement of the business.

28. SECTION 41
DIRECT TAX CODE-2013
The deduction under this section shall not be
allowed to a company in respect of the
expenditure referred to in sub-section (1), if
the expenditure is incurred in the course of its
business in the nature of scientific research
and development.
.
INCOME TAX 1961
be deemed to have been laid out or expended
in the previous year in which the business is
commenced

29. SEC (42)-Computation of Profit on transfer of a
business capital Asset
DTC- 2013 AMMENDMENT
1. The amount of profit, where a business capital asset,
which forms part of a block of assets specified in the
Thirteenth Schedule, is transferred, discarded, destroyed
or demolished shall be computed in accordance with the
formula-
 A-(B+C)
where-
• A = the amount accrued or received in respect of such
asset, which is transferred, discarded, destroyed or
demolished during the financial year together with the
amount of scrap value, if any; the amount accrued
• B= the amount of written down value of such block of
assets at the beginning of the financial year;
• C= the actual cost of any asset falling within that block of
assets, acquired during the financial year;
INCOME TAX ACT-1961
1. Profits or Gains arising from the transfer of a
capital asset is chargeable to tax in the year in
which transfer take place under the head "Capital
Gains".
 The Capital Gains have been divided in two parts
under Income Tax Act 1961.
 Short term capital gain and
 Long term capital gain

30. SECTION 42
DTC- 2013 AMMENDMENT
2. The profit referred to in sub-section (1) shall be
treated as ‘nil’, if the net result of the computation
there under is negative.
3. The amount of profit, where a business capital
asset other than that referred to in sub-section (1)
is transferred, discarded, destroyed or demolished,
shall be computed in accordance with the formula-
 A-B
where-
• A = amount accrued or received in respect of the
asset which is transferred, discarded, destroyed or
demolished during the financial year together with
the amount of scrap value, if any;
• B =the actual cost of the asset.
INCOME TAX ACT-1961
(i) Short term capital gains
Find out full value of consideration
 Deduct the following
a. Expenditure incurred wholly and exclusively
in connection with such transfer
b. Cost of acquisition
c. Cost of improvement
Balance amount is short term capital gains.
(ii) Long term capital gains
Find out full value of consideration
Deduct the following
a. Expenditure incurred wholly and exclusively in
connection with such transfer
b. Indexed cost of acquisition
c. Indexed cost of improvement
Balance amount is long term capital gain

31. Actual cost
DTC 2013 amended
• No such provision in DTC act
2013
• No such provision in DTC act
2013
Income tax act 1961
• The actual cost of an asset being a motor
vehicle is used otherwise than in a business
the excess cost over twenty five thousand
rupees shall be ignored
• Where an asset is used in business after it
ceases to be used in scientific research, the
actual cost of the asset will be the cost to the
assessee reduced by the amount that is
allowed

32. Written down value and adjusted value of
asset
DTC Act 2013
• The written down value of the block of assets at
the close of the immediately preceding financial
year shall be the adjusted value of the block of
assets in the immediately preceding financial year
as reduced by—
• (a) the amount of capital allowance, if any, allowed
under section 37 during that year; and
• (b)any expenditure incurred for acquiring the
asset to the extent allowed as a deductionin the
financial year under any provision of this Code
Income Tax Act 1961
• No such provision in Income tax Act 1961

33. Special provision relating to business
reorganization
DTC Act 2013
• Provision under DTC is in general related to
business
• A x B
C
• Where A =the amount of deduction allowable as if
the business reorganisation had not taken place;
• B = the number of days comprised in the period
beginning with the first day of the financial year
and ending on the day immediately preceding the
date of business reorganisation;
• C = the total number of days in the financial year in
which the business reorganisation has taken place
Income tax Act 1961
• Provision for business reorganization under
Income tax relates to cooperative banks
• A x B /C
• where A = the amount of deduction allowable
to the predecessor co-operative bank if the
business reorganisation had not taken place;
• B = the number of days comprised in the
period beginning with the 1st day of the
financial year and ending on the day
immediately preceding the date of business
reorganisation; and
• C = the total number of days in the financial
year in which the business reorganisation has
taken place.

34. THANK YOU!!