2. Charging Section[Sec.28]
Profits and gains of any profession/profession
Any compensation received related business
Income received from members of similar
profession
Any benefit or perquisites from business
/profession
Export incentives from government
Ravikishore
3. Charging -Continue
Any interest, salary, bonus, commission or
remuneration received by a partner from firm.
Sum received(compensation) from other
company not to carry on any business for know
how, patent, copy right, trademark.
Profits and gains of managing agency
Ravikishore
4. Meaning of business
Profit motive
Business and rendering services to others
Business cannot be carried on with oneself
Ravikishore
6. Business income not taxable u/s 28
1. Rental income in case of dealer in property
taxable under the head income from house
property[u/s22].
2. Dividend on shares in case of a dealer in
shares- taxed under income from other sources
[u/s 56].
3. winning from lotteries (lottery business) taxed
u/s 56-income from other sources.
Ravikishore
7. Losses deductible from business
income
Loss due to natural calamity
Loss due to non acceptance of goods
Reduction in value of foreign currency which is
meant for purchase of stock.
Loss of cash/goods due to embezzelment,
burglary, forfeiture of deposits.
Loss of forgoing advance given by sugar
industries to formers due to monsoon failure
Ravikishore
8. Loss not deductible from business
Loss due to destruction of Capital asset.
Loss on sale of investments held as investment.
Loss of advance to set up a business but business could
not be started.
Depreciation in value of foreign currency for capital
purpose
Anticipated future losses.
Loss of discontinued business
Loss from illegal business[T.A.Qureshiv.CIT(2006)SC]
Ravikishore
9. Computation of assessable
profits/loss for tax
Net profit as per P/L Account
Add: Amount debited to P/L A/c in respect of
the following
Loss of earlier years
Capital losses
Personal expenses (such as drawings)
Income tax, surtax, wealth tax, gift tax, estate
duty[Direct taxes], tax penalty, penal interest,
fine.
Ravikishore
10. Continues
Add: Charity and donation
Gifts and presents to others
All reserves/provisions such as tax provision,
Reserve for dividend, provision for bad debts
except provision for depreciation
All expenses related to other heads of income
Ravikishore
11. Continues
Add: Expenses not deductible u/s 40 and 40A
Expenses debited to P/L A/C not admissible
u/s 30 to 40A
Add: Amount not credited to P/L A/c
Deemed income
Deduct :Income credited to P/L A/c but not
chargeable under other heads
Ravikishore
12. Continues
Less:
Salary income( income from salary(u/s 15)
Rental incomeIncome from House property(u/s22)
Capital gain(u/s 45)
Dividend[ Income from other sources(56)]
Direct taxes refund such as Income tax, Wealth tax, estate
duty, surtax refunds
Bad debts, excise duty recovered not allowed as
expenditure preceding previous years
Deduct:
Expenses not debited to P/L A/c but allowed u/s 30 to 40A
Depreciation u/s 32
Income chargeable under income from
business/profession.
Ravikishore
13. Specific deductions expressly
allowed u/s 30 to 37
1.Rent (Sec.30)
Repairs(including painting of a house )
Land revenue, local taxes and municipal taxes
Insurance against risk of damage or destruction
Not allowed: a) arrears of rent b) share of profit
instead of rent c.
Ravikishore
14. Repairs and insurance of machinery,
plant and furniture(sec.31)
Revenue repair-allowed
Capital expenditure – not allowed
Quantum of expenditure is not important
Ravikishore
15. Depreciation Allowances(sec.32)
Conditions:
Asset must be owned by the assessee(Registration is not
important),full control over asset,right to retain the
possession and defend are characteristics of ownership.
Used or ready to use for business purpose
Used in the previous year
Both tangible and intangible assets
Right on occupancy on Lease property is entitled for
depreciation
If hirer purchaser has right over asset and hire seller will
loose all rights- Depreciation is allowed.
Ravikishore
16. Depreciation-Continues
Insurance premium, repairs and other
expenditure incurred on leased business asset are
deductible in the hands of lessor.
If any asset is fully controlled such as lease the
capital expenditure incurred by lessee can
provide depreciation[32(1)(ii).
Ravikishore
17. Lease property
Registered ownership is not necessary Sec. 53A
of the transfer of property Act.
If the assessee can be the co-owner to claim
depreciation
Any capital expenditure incurred by the person
who takes building can provide depreciation on
capital expenditure.
Rules of Accounting Standard (AS19) not
applicable for depreciation as per IT Act.
Ravikishore
18. Hire purchase
Conditions:
Hire purchaser can provide depreciation if hire
purchaser has uninterrupted right over the asset.
The seller looses his right
Who can provide depreciation?
Hire purchaser.
Ravikishore
20. 50% of rate of depreciation
If an asset acquired during the previous year.
Put into use or ready to use for less than 180 days.
Exceptions:1. Put into use for less than 180 days but ready
to use for more than 180 days –full rate of depreciation
If asset purchased in the preceding year to current previous
year but put into use for less than 180 days during the
current previous year what is the rate of depreciation rate?
If an asset is not used at all-No depreciation not only for
first year but also for subsequent period
Ravikishore
21. Full rate of depreciation.
Can depreciation be provided on intangible
assets such as know- how, patent rights, copy
right, trade mark, licences, franchises etc.
depreciation?
Ravikishore
22. Meaning of Building and Plant
Building means: Super structure only. It does
not include site.
Plant : Includes ships, vehicle, books, technical
know-how report, scientific apparatus and
surgical equipment.
It does not include tea bushes or livestock or
building or furniture and fittings.
If assessee does not claim depreciation whether
is depreciation available?
Ravikishore
23. Method of depreciation
Yes.
Block asset method.
What is block asset method?
Similar nature of asset having the
same rate of depreciation are
clubbed together.
Ravikishore
24. 100% depreciation?
1. Building acquired on or after September 1,
2002 forming part of water supply project
2. Pollution control equipments
3. waste control equipment
4.wooden parts used in artificial silk
manufacturing machine
5.cinimatograph films
6. Books
Ravikishore
26. calculation of depreciation
Block value in the beginning
Add:- Purchase of asset of the same block
Less:- Net sale value of the consideration
received/receivable in cash /cheque/draft if any
of the block of assets sold during the year
Ravikishore
27. Continuation
Calculate depreciation of the balance amount.
If it reaches to Zero value no more depreciation
is allowed.
If net sale consideration exceeds the block it
amounts to short term capital gain.
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28. continues
Once asset is depreciated the gain on
sale of block never be a long term gain
Index can not be used for the
calculation of capital gain.
If all assets of the assets sold out but
block continues it amounts to short
term capital loss.
Ravikishore
29. ###Intangible assets
Depreciation is allowed at the
rate of 25%
Include: know- how, patent
rights, copy rights, trade mark,
licenses, franchises etc.
Ravikishore
30. Imported Cars
Purchased between March 1, 1975 and
March 31, 2001 for hire for tourist- no
depreciation is allowed if used in India for
business purposes other than for hire for
tourist
Used outside india for business-alowed
For hire for tourist-allowed
After 31st March 2001- all purposes
depreciation is allowed
Ravikishore
31. Change in the ownership in any part of the
year due to amalgamation , absorption or
demerger
Calculate depreciation for the
previous year as if no
amalgamation/re-organization
taken place
Apportion between the
companies on time basis.
Ravikishore
32. ###Computation of additional
depreciation
Manufacture or production of any article
Purchased entirely new machinery Not used any part
of the world
Acquired and installed after March 31, 2005
Rate-20%
If used less than 180 days-Half of the rate
Excludes ships and aircrafts, used in the guest house,
or office road transport vehicles
Ravikishore
34. Actual cost-continues
Modification before first put into
use
Training of staff to operate the
machine
Other related expenses required
such as cold storage.
Traveling expenses to acquire the
asset Ravikishore
35. Un-absorbed depreciation
Deduct the depreciation of the
previous year from income from
business or profession
Deduct it from other heads of income
except salary
If not able to absorb-carry over to
subsequent assessment year (s) – No
time limit. Ravikishore
36. Subsequent assessment years
Order of priority to set off:
1. current depreciation
2.Brought forward business losses
3. Un-absorbed depreciation
Note: Continuity of business is not relevant.
The same assessee only can carry forward
Ravikishore
37. Depreciation on Straight Line
basis/WDV
Applicable to Power
units(generating and distribution
of power)
Assets acquired after 31st march
1997.
Ravikishore
38. Terminal depreciation
If straight line depreciation method followed on
power generating units
sold after the use of such asset more than one
previous year
Terminal depreciation=WDV> Net
Sale consideration
Capital gain=Net sale>WDV
Ravikishore
39. Tea, coffee and rubber development
account[Sec.33AB]
Deposit with NABARD or Deposit account of
tea, coffee or rubber Board
With in 6 months from the end of the previous
year or before the last date of filing of returns
whichever earlier
Exemption:
Amount deposited or 40% of profit whichever is less
Can amount be withdrawn?
Ravikishore
40. withdrawal
Only for the purpose stated
If unutilised within the previous year it is treated as
income
If business closed or dissolved-treated as taxable profit
If death of the taxpayer/partition of HUF/liquidation
of company will not be treated as income
Purpose: installed in plant and machinery in low priority
sector or entitled to get 100% depreciation.
Maximum 8 years
Ravikishore
41. Site restoration fund[sec.33ABA]
Production of Petroleum /Natural gas in India
Deposit with SBI/account opened as per
petrolem and Natural Gas Commission In a
scheme specified
Before the end of the previous year
Amount withdrawn should be used for low
priority sector/100% depreciated and utiled
within 8 years at the end of previous year.
Ravikishore
42. ###Scientific research[Sec.35]
In house research
All Revenue expenditure and Capital expenditure related
to one’s business during the current previous year or even
3***preceding previous years allowed
[Except Land]
Even asset is not put into use –it is allowed.
No depreciation is allowed on such capital asset
If such asset is sold what could be the consequences?
Ravikishore
43. If scientific asset sold?
If not used for any other purpose:
***Sale or deduction already
allowed whichever is less taxed as
business profit.
Capital gain=Sale-Cost (index if
required) Ravikishore
44. Contribution to National laboratory
Including University, IIT
Weighted deduction= 1.25 times of
contribution can be treated as Expenditure.
***Even approval is withdrawn after the
payment to such institution the assesssee
who contributed can enjoy the benefit
Ravikishore
45. Expenditure on Patent rights and
copy rights[35A]
Capital Expenditure incurred before 1st
April 1998
14instalments
After 1st April 1998-Depreciation can be
claimed-25%
Revenue expenditure-Fully allowed
expenditure in the year such expenditure incurred.
Ravikishore
47. Amortisation of telecom license
fees[35ABB]
Conditions
Capital Expenditure
Acquiring any right to operate telecommunication
services
Incurred before or after commencement of Business
Mainly incurred to obtain license.
If conditions fulfilled claim can be done u/s 35ABB
otherwise u/s 37(1) as business expenditure.
Ravikishore
48. Payment to associations and institution
for rural development program
Institutions approved before
1st March 1983
Deduction up to the amount
paid
Ravikishore
49. Amortisation of preliminary expenses
Indian Company or resident non corporate
assessee
Foreign company excluded
Legal charges on MOA, AOA,printing
of MOA, AOA,Registration fees,expenses
connected to issue of shares or debentures
Is there any limit?
Ravikishore
50. Limit of preliminary expenses
Corporate assessee Non-Corporate assessee
5% of cost of project or
5% of capital employed
Whichever is More(dil
monge more)
5% of the cost of the
project
Actual cost= costs incurred initially and additional
costs after commencement
Of business
Ravikishore
51. Preliminary Exp. Continue
The value on the last day of the previous year in
which the business of the assessee commences.
Deduction: 1/5 of the qualifying
expenditure
Ravikishore
52. Expenses on issue of
shares/Debentures
New company even Old industrial
company issue shares - u/s 35 D
Old company-- u/s 37(1) except issue of shares)
Old industrial company issue shares-35D
Non industrial company – All expenses related to bonus
issue, issue of debentures or raising of long term or short
term loans
Note: old non industrial company-
Expenditure related to issue of shares
can not be claimed
Ravikishore
53. Amortisation of expenditure incurred
for amalgamation[35DD]
Indian company
Deductions in five
successive installments
Ravikishore
54. Amortisation of expenditure under voluntary
retirement scheme[35DDA]
Any assessee
Deduction 1/5every year
Voluntary retirement scheme need not be
accordance with guidelines prescribed under
section 10(10C)
Ravikishore
55. Amartisation of expenditure on development of
certain minerals[35E]
Indian companies and
Resident assessee
I/10 every year allowed
Ravikishore
56. Insurance premium to protect the
asset or employees[36(1)(i)]
Allowed
Bonus to
employees[36(1)(ii)]
Ravikishore
57. Interest on borrowed capital[36 (1)(iii)
Interest on own capital is not allowed.
Interest paid by a firm to partner is deductible- 12%
per annum Simple interest
Interest paid to wife and daughter- allowed
Interest before the asset is put into use to be
capitalised
Ravikishore
59. Discount on Zeeero coupon
Discount Bonds[36(1)(iiia)]
Issued after June 1, 2005
Minimum 10 years and Maximum 20 years
Deduction on pro rata basis.
Ravikishore
60. ***Unpaid liabilities
Includes:
1. Local taxes, duty cess or fee under any law
2. Sum payable to employees such PF, Gratuity,
superannuation fund to employees, BONUS, OR
COMMISSION
3. Interest on loan borrowed from public financial
institution such as ICICI,IFCI, IDBI,LIC AND
UTI ONLY
DEDUCTION ALLOWED ON PAYMENT BASIS
OR ACCRUAL BASIS?
Ravikishore
61. Payment/ Accrual?????
No payment- Not allowed
If depositedEVEN before the last
date of filing of returns with
Proof for payment-fully
allowed(page 336)
Ravikishore
62. ****Employees’ contribution towards staff welfare
scheme such as PF[36(1)(va)]
Amount received by employer-
Included with the
assessee’s Income
If Paid to the
employees’s account???
Ravikishore
63. If paid !!!!!
Due date ####as per the PF rules or
Gratuity rules Usually with in a month of
deduction from employees.
*****not as per IT rules
Ravikishore
64. Written off of allowance for animals
[36(1)(vi)]
If died /useless
Used as capital asset
Allowed loss = Original cost- Carcasses
or ( sale of animals)
No depreciation is allowed
any time on animals
Ravikishore
65. Bad debts [36(1)(vii)] !!!
If actual- allowed
Provision –Never allowed
If recovered[41(4)]-----If earlier
allowed it is taxable
If earlier denied - not taxable
Ravikishore
66. Provision for Bad and doubtful debts to rural branches of
scheduled and non scheduled commercial
banks[36(1)(vii)]
bank and Institution bank
Non scheduled
Scheduled Financial Foreign
7.5% of income 5% 5%
10% of advances --- ---
made by rural
branchs
Ravikishore
67. Transfer to SPECIAL RESERVE
[36(1)(viii)]
Long term (5 years or more) financial corporation/public
company/government company
Finance for industry/agriculture/infrastructure facilities in
India.
Deduction: Whichever is less
1. amount transferred to such account or
2. 40% of profit from business activities before such
deductions
3. 200% of paid up capital and reserve on the last day of
PY(- )amount in special reserve account in the beginning of
the PY
Ravikishore
68. Family planning expenditure [36(1)(ix)]
For Company assessee
Revenue expenditure- Fully allowed
Capital Expenditure - 1/5th every year
Non-corporate assessee can claim u/s
32(Depreciation on capital expenditure) and
37(1)(Revenue expenditure)
Ravikishore
70. Expenses incurred by commission agent
from insurance UTI agents etc. If
commission less than 60,000
commission Adhoc deduction Max. deduction
1 2 3
LIC –first year
Renewal commission
First & renewal Commission
Bonus commission
UTI/agents of specified
securities, mutual funds
authorised agent
50% of commission
15% OF THE COMMISSION
33 1/3%
No deduction
50%
20,000
Ravikishore
71. Contribution towards Exchange risk
Administration fund [36(1)(x)]
By Public financial
institution
Deductible upto the
assessment year 2007-08
Ravikishore
73. General deductions[37(1)]
It should not be a capital expenditure or
Not personal
Not prohibited by law such as fine, penalty
Not be an illegal expenditure
Can we see some of the expenditures allowed as
per various case laws?
Ravikishore
74. Expenses allowed
*Litigation expenses to protect the trade or business
/asset/or to retain title of asset
*Legal expenses to receive loan
*Litigation expenses in restoring trade mark
***Legal expenses to alter the AOA in conformity with
the changes brought about
in the companies ACT
****Damages paid to workers/fulfil the contract
***Damages for breach of contract
Ravikishore
75. Expenses allowed
**Contribution to the union formed to oppose the
nationalisation of assessee’s business
**Expenses incurred during festival
***Premium paid for loss of profit
*Professional tax paid
All maintenance expenditure
**Expenses incurred to register trade marks
*****Entertainment expenses
**Periodical payment for the use of goodwill
Ravikishore
76. Expenses allowed-case laws
###Estimated probable liability for free maintenance
CIT vs Modi Olovetti ltd.(2004)
***Expenditure to car even it is huge[CIT vs
Mangalchand premchand& co.[2004]
**Repairs to maintain building taken on lease
[Sumitomo Corpn. India (p) ltd.
Expenditure on civil work on leased asset [Hero Honda
motors vs CIT
***Interest on delayed payment of Provident fund[CIT
vs Ishwari Khetan Sugar Mills (P0 ltd.(2004)
Ravikishore
77. Important notes & controversial
issues
Expenditure to issue of shares fees paid to Registrar to
increase the authorised capital disallowed[Brook
Bond India ltd Vs CIT(SC)
Retrenchment compensation payable at the time of
partial closure of business Is deductible. But at
the time of closure of industry is not
deductible[CIT vs MGF India(2004)
Ravikishore
79. Controversial Continues
***Foreign study expenses
incurred by the company even
though the employee is a
director’s son-allowed [J.B
Advani& co Vs CIT](2005)
Ravikishore
80. Controversial Continues
Medical expenses of wife employee
of cine actor-Allowed [Ajay Singh
Deol Vs CIT]
Payment on account of
membership fees for health club
and also paid membership fees for
an another club-Allowed [Sterlite
Industries (India) Vs CIT(2006)
Ravikishore
81. Controversial- Continues
###Provision made for
contribution towards Provident
Fund maintained by Government
of Tamilnadu sent on deputation to
the assessee corporation-allowed[
CIT Vs Kattabomman Transport
Corporation Ltd.(2004)
Ravikishore
82. Controversial Continues
***Interest on arrears of tax , sales tax
compensatory in nature and not penal
– allowed(Lachmandas Vs CIT(SC)
(2002)
***Interest paid for late payment of
tax is disallowed. Even Income-tax
itself disallowed.
Ravikishore
83. Disallowed Expenditure
*****Interest paid on borrowed funds
to pay Income tax is disallowed
Interest paid on installment of the
price of property
*****Expenditure to raise capital
***Expenditure on shifting of
registered office
Ravikishore
85. Important question to be asked!!!
****Protecting Business
or protecting the title to
capital asset.
Capital Expenditure or
revenue expenditure
Ravikishore
86. Expressly disallowed expenditures
Interest, Royalty, fees for technical
services payable outside India
***TAX TO BE DEDUCTED
AND PAID WITHIN 7 DAYS
FROM THE LAST DAY OF THE
MONTH IN WHICH TAX WAS
DEDUCTED OR
Ravikishore
87. Expressly disallowed expenditures
AMOUNT PAID TO GOVERNMENT
IN THE FINANCIAL YEAR IF NOT
PAID WITHIN 7 DAYS FROM THE
LAST DAY OF THE MONTH.
Anything paid after the financial year and
after the expiry of 7 days FROM THE
LAST DAY OF THE MONTH -
deductible only in the year of payment.
Ravikishore
88. Fringe benefit tax
Fringe benefit tax, Income tax,
wealth tax, securities transaction
tax- Not Taxable
Ravikishore
89. Salary payable outside India without
TDS
Outside India both resident and non-resident
In India to NON-REDIDENT
NOT ALLOWED
Ravikishore
91. Tax on perquisites paid by the
employer
Tax paid by employer- Not taxable to
employees
Perquisites paid- Not deductible to
employer
(Non monetary)
See illustration- para 82.1.8- page 328
Ravikishore
92. Payment to relatives[ Sec. 40A(2)]
Excess or
unreasonable -
disallowed
Relative: husband, wife, brother or sister or lineal
ascendant or descendant of that individual.
Substantial interest:- at least 20% of equity or 20%
profits of a concern at any time during the year
Ravikishore
93. Expenditure exceeding Rs. 20,000
Should be paid account payee crossed
cheque or account payee demand draft.
If not - 20% of such payment is
disallowed.
Note: on the same day any number of
cheques less than 20,000 each can be given
Partly cash, partly cheque without account
payee crossed cheque without exceeding
20,000 each. Ravikishore
95. Recovery of earlier deductions
If recovered in the subsequent
assessment years it is taxable
even there is no business and
taxed in the hands of
recepient.
Ravikishore
96. Undisclosed income
Cash credit[sec.68]
Undisclosed investment[sec.69]
Unexplained money [sec. 69A]
Amount of investments not fully disclosed
[sec.69B]
Unexplained expenditure [sec.69C]
Amount borrowed or repaid on hundi[sec.69D]
They are deemed income of the current previous
year. Ravikishore
97. Maintenance of books
compulsory[Sec.44AA]
Legal medical, engineering, architectural, accountancy,
Film artist technical consultancy, or interior decoration
and other notified profession [Specified professional]
If gross receipts exceed 1,50,000 in any of the three
years preceding the previous year.
Non-specified professional- Income exceed Rs.
1,20,000 and total gross receipts exceed 10,00,000
What are those books maintained?
Ravikishore
98. Specified Books to be maintained
Cash book
A Journal on mercantile basis
Ledger
Carbon copies of machine numbered bills
exceeding Rs. 25 issued by the person
Original bills if exceed Rs. 50. If bills are not
issued payment vouchers signed by the person
Ravikishore
99. Medical practitioner
Additional books required:
Daily cash register showing date,
patient’s name, nature of
professional services rendered, fees
received and date of receipt
Stock register for medicines and
other consumable accessories .
Ravikishore
100. Audit of Accounts[sec.44AB] if
crossed limit
Business-Gross receipts
/sales exceed 40 lakhs
Profession- gross receipts
exceed 10 lakhs
Ravikishore
101. Audit compulsory with out any limit
of income/receipt
Person engaged in:
1. civil construction[44AD]- 8% of gross receipts
2.Business of plying, leasing or hiring trucks[44AE]-
Heavy vehicles Rs. 3500 pm (owned months), other
vehicles- 3150 pm (not owned more than 10 vehicles
any time during the previous year.-No expenditure is
deductible .
Retail traders[44AF]- 5% of turnover is considered as
income
Ravikishore
102. Important points to solve problems
Bonus-before last date of filing
Depreciation- permitted as per income tax
Direct taxes-disallowed
Indirect taxes-allowed if paid before due date of filing
Capital expenditure-disallowed
Bad debts recovered-if allowed earlier taxable
Income from other heads such as salary, house
property etc-if included in the P/L /A/c deduct.
Ravikishore
103. Points to solve problems
Outstanding statutory liability-
before due date to be paid
statutory penalty-disallowed
Contractual penalty-allowed
Personal expenditure-disallowed
Ravikishore
104. Points to solve problems
Entertainment expenditure-fully
allowed
Maintenance of guest house-fully
allowed
Revenue advertisement including
gift to customers-fully allowed.
Ravikishore
105. Points to solve problems
Capital expenditure on advertisement-
depreciation is allowed.
Amount paid for expenses beyond 20,000
without crossed a/c payee cheque or draft -
20% disallowed
Any expenditure incurred (traveling) out side
india –allowed to the extent of RBI’s permission
Ravikishore
106. Points to solve problems
paid on borrowing-Not allowed
Expenditure to audit-allowed
Expenditure to prepare
accounts for IT –allowed
interest
Ravikishore
107. Points to solve problems
Interest on borrowing to pay direct tax such as
Income tax-disallowed
Copy right , technical know how, patent right-
amount paid disallowed but depreciation 25%
only allowed.
Employee’s contribution to PF- treated as
income
If such employee’s contribution is paid before
due date as per the PF act- allowed.
Ravikishore
108. Points to solve problems
Capital expenditure on travelling-disallowed
Traveling expenditure to buy stock-allowed
Insurance to asset or employees-fully allowed
expenditure
Profit on sale of capital asset which is included
in the P/L /a/c- disallowed
Ravikishore
109. Points to solve problems
Rent received from outsider other than
employee- credited to P/L A/c-
disallowed income-subtract from net
profit-Income from House property.
Any payment to
workers/Government-Before the last
date of filing returns is allowed
Ravikishore
110. Points to solve problems
All reserves/provision except depreciation
provision-disallowed
Interest on own capital-disallowed
Direct taxes refund like It refund shown in P/L
A/C –disallowed income= subtract from profit
Revenue repair to building , furniture even
leasehold –allowed expenditure
Ravikishore
111. Points to solve problems
Capital expenditure on family planning- 1/5 is
allowed
Loss of cash, goods-allowed.
Donation and charity-disallowed
Fringe benefit tax-disalowed
Expenditure on issue of shares-disallowed
;where as expenditure on issue of debentures,
arrangement of loan (borrowed capital)- allowed
Ravikishore
112. Points to solve problems
Income from other heads-inadmissible income
Advance payment of tax, provision for tax,
income tax refund-disalloed
Life insurance premium of owner paid from
business-disallowed
Scientific Research (in house)-fully allowed
including capital expenditure
Family planning revenue expenditure-allowed
Ravikishore
113. Points to solve problems
Unapproved statutory funds-
disallowed
Closing stock and opening stock to
be valued in the same manner
Ravikishore
114. particulars Amount
Rupees
particulars Amount
Rupees
Salaries
Rent and rates
Office expenses
Stock destroyed
Depreciation
Discount
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Interest on loan
Scientific research expenses
Bad debts
RBD
Insurance on building
Insurance stock
Income tax
Gross profit
Interest on bonds
Dividend received
Rent
Rent paid in advance
Profit on sale of
investment
discount
10,00,000
Profit and loss account
Ravikishore
115. Closing stock is 10% less than the actual value
Opening stock was over valued by 8%
Advance payment of tax
provision for tax
income tax refund
Loss of cash, goods
Capital expenditure on family planning
Loss of cash, goods
Donation and charity
Fringe benefit tax
Expenditure on issue of shares
expenditure on issue of debentures,
arrangement of loan on borrowed capital
Bonus paid on 2nd september
Copy right
technical know how
patent rights
Cash Amount paid for expenses 25000
Ravikishore
116. Bad debts written off recovered (earlier
disallowed)
statutory penalty
Contractual penalty
Personal expenditure
Interest paid on borrowed funds to pay
Income tax
Interest paid on installment of the price of
property
Expenditure to raise capital
Expenditure on shifting of registered office
Ravikishore
117. THANK YOU
ALTERNATIVE WORK IS REST
Happiness by giving but not receiving
Learn every day
No bad day. It depends upon our mind set
Contact me at
ravikishoreforall@yahoo.com
Accepting failure leads to success
Enjoy whatever you do
Everyone is good
Ravikishore