INCOME TAX- Aggregation of Income/ Clubbing of the income under INCOME TAX ACT,1961
Income of other persons to be included in the income of individual( Section 60-65)
Income received from Firm assessed as Firm And Association of Persons (Section 66-67)
Deemed Income (Section 68-69)
Transfer of Income without Transfer of Assets[Sec. 60]
Revocable Transfer of Assets [Sec. 61]
PERSON:
Income-tax is charged in respect of the total income of the previous year of every person. Hence, it is important to know the definition of the word person. As per section 2(31),Person includes:
an Individual
a Hindu Undivided Family (HUF)
a Company
a Firm
an Association of Persons or a Body of Individuals (BOI) whether incorporated or not
a Local Authority
every Artificial, Juridical person, not falling within any of the above
Objectives & Agenda :
To know when income will be taxable in India and to understand the determination of residential status for individuals, HUF, Firms, AOP/BOI and Companies. To analyse the concept of POEM in relation to determination of residential status of Company.
Key Takeaways:
- Provisions dealing with set-off and carry forward
- Inter-head and Inter-Source Set-off of Losses
- Carry Forward and Set-off of Losses in Special Cases
Objectives & Agenda :
To analyse and interpret the provisions of the Income-tax Act relating to chargeability of Income from Sources other than Salary, House Property, Business or Profession and Capital Gains. In this Webinar, we will discuss the various incomes that are chargeable under the head 'Income From Other Sources' which covers Dividends, Gifts, Certain Interest, Advance money forfeited etc. Finally, the Webinar will touch upon relevant Judicial Precedents.
Background of Company Law in England,
Background of Company Law in India,
Definition of Company,
Nature & Characteristics,
Features of Company,
Lifting the corporate veil,
Types of Companies,
Formation of a Company,
Memorandum & Article of Association,
Prospectus,
Share & Share Capita,
Company Management & Director,
Meetings,
Borrowing Powers,
Debentures & Charges,
Accounts & Auditors,
Prevention of oppression & Mismanagement,
Winding up,
INCOME TAX- Aggregation of Income/ Clubbing of the income under INCOME TAX ACT,1961
Income of other persons to be included in the income of individual( Section 60-65)
Income received from Firm assessed as Firm And Association of Persons (Section 66-67)
Deemed Income (Section 68-69)
Transfer of Income without Transfer of Assets[Sec. 60]
Revocable Transfer of Assets [Sec. 61]
PERSON:
Income-tax is charged in respect of the total income of the previous year of every person. Hence, it is important to know the definition of the word person. As per section 2(31),Person includes:
an Individual
a Hindu Undivided Family (HUF)
a Company
a Firm
an Association of Persons or a Body of Individuals (BOI) whether incorporated or not
a Local Authority
every Artificial, Juridical person, not falling within any of the above
Objectives & Agenda :
To know when income will be taxable in India and to understand the determination of residential status for individuals, HUF, Firms, AOP/BOI and Companies. To analyse the concept of POEM in relation to determination of residential status of Company.
Key Takeaways:
- Provisions dealing with set-off and carry forward
- Inter-head and Inter-Source Set-off of Losses
- Carry Forward and Set-off of Losses in Special Cases
Objectives & Agenda :
To analyse and interpret the provisions of the Income-tax Act relating to chargeability of Income from Sources other than Salary, House Property, Business or Profession and Capital Gains. In this Webinar, we will discuss the various incomes that are chargeable under the head 'Income From Other Sources' which covers Dividends, Gifts, Certain Interest, Advance money forfeited etc. Finally, the Webinar will touch upon relevant Judicial Precedents.
Background of Company Law in England,
Background of Company Law in India,
Definition of Company,
Nature & Characteristics,
Features of Company,
Lifting the corporate veil,
Types of Companies,
Formation of a Company,
Memorandum & Article of Association,
Prospectus,
Share & Share Capita,
Company Management & Director,
Meetings,
Borrowing Powers,
Debentures & Charges,
Accounts & Auditors,
Prevention of oppression & Mismanagement,
Winding up,
The Chapter comprises of Carry Forward and Set Off of Losses in the case of Companies, Computation of Taxable Income of Companies; Computation of Corporate Tax Liability; Minimum Alternate Tax; and Tax on Distributed Profits of Domestic Companies. Surcharge, Minimum Alternate Tax, Problems on MAT.
The Finance Act, 2022 has inserted a new section 79A to the Income-tax Act to restrict set off of losses consequent to search, requisition and survey. It has been provided that in case the total income of any previous year of an assessee includes any undisclosed income detected as a result of:
(a) Search initiated under section 132; or
(b) A requisition made under section 132A; or
(c) A survey conducted under section 133A other than under section 133A(2A).
Then, no set-off of any loss, whether brought forward or otherwise, or unabsorbed depreciation, shall be allowed against such undisclosed income while computing the total income of the assessee for such previous year.
The total income of accompany is also computed in the manner in which income of any assessee is computed. A company is assessed in its own name; i.e. a company pays tax on its income as a distinct unit. A tax paid by a company is not deemed to have been paid on behalf of its shareholders. It is determined as follows:
1. First ascertain income under the different heads of income.
2. Income of other persons may be included in the income of the company under sections 60 and 61( para 206 and 207)
3. Current and brought forward losses should be adjusted according to the provisions of sections 70 to 80 (as per para 226 to 233).Para 335 of section 79 provides all the provisions regarding set off and carry forward of losses of closely held companies.
4. The total income so derived under computation of different heads of income is “Gross Total Income”.
5. Following deductions are allowed from the Gross total income so computed, under section 80C to 80 U
This presentation intents to explain the concepts of Set off and Carry Forward of losses under income tax law to students. For detail understanding of the concept viewers are invited to our YouTube Channel.
Every assessee earning more than the basic exemption are eligible to seek deduction from Gross Total Income by way of deductions allowed for investments or payments made, under Chapter VI-A of the Income Tax Act. Chapter VI-A helps an assessee to reduce the overall tax burden to the extent of investment and expenses made within the ambit of law and fulfilemt of prescribed conditions. In this Webinar, we shall be focusing on the provisions of Chapter VI-A which are essential for Individuals, HUF and Firms for the purpose of claiming deductions against their total income.
Understanding Income Tax - Profits & Gains of Business or Profession [Sec 36 ...DVSResearchFoundatio
Objectives & Agenda :
To analyse and interpret the provisions of the Income-tax Act relating to computation of 'Profits and gains of business or profession' (PGBP). In this Webinar, we shall look at the general admissible deductions, amounts not deductible, deductions subject to payments, Computation of income in case of construction and service contracts, Insurance business, etc. Finally, the Webinar will touch upon relevant Judicial Precedents.
Dividend Income
For the purposes of inclusion in the total income of an assessee,—
(a) any dividend declared by a company or distributed or paid by it within the meaning of section 2(22)(a)/(b)/(c)/(d)/(e) shall be deemed to be the income of the previous year in which it is so declared, distributed or paid, as the case may be;
(b) any interim dividend shall be deemed to be the income of the previous year in which the amount of such dividend is unconditionally made available by the company to the member who is entitled to it.
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WINDING UP of COMPANY, Modes of DissolutionKHURRAMWALI
Winding up, also known as liquidation, refers to the legal and financial process of dissolving a company. It involves ceasing operations, selling assets, settling debts, and ultimately removing the company from the official business registry.
Here's a breakdown of the key aspects of winding up:
Reasons for Winding Up:
Insolvency: This is the most common reason, where the company cannot pay its debts. Creditors may initiate a compulsory winding up to recover their dues.
Voluntary Closure: The owners may decide to close the company due to reasons like reaching business goals, facing losses, or merging with another company.
Deadlock: If shareholders or directors cannot agree on how to run the company, a court may order a winding up.
Types of Winding Up:
Voluntary Winding Up: This is initiated by the company's shareholders through a resolution passed by a majority vote. There are two main types:
Members' Voluntary Winding Up: The company is solvent (has enough assets to pay off its debts) and shareholders will receive any remaining assets after debts are settled.
Creditors' Voluntary Winding Up: The company is insolvent and creditors will be prioritized in receiving payment from the sale of assets.
Compulsory Winding Up: This is initiated by a court order, typically at the request of creditors, government agencies, or even by the company itself if it's insolvent.
Process of Winding Up:
Appointment of Liquidator: A qualified professional is appointed to oversee the winding-up process. They are responsible for selling assets, paying off debts, and distributing any remaining funds.
Cease Trading: The company stops its regular business operations.
Notification of Creditors: Creditors are informed about the winding up and invited to submit their claims.
Sale of Assets: The company's assets are sold to generate cash to pay off creditors.
Payment of Debts: Creditors are paid according to a set order of priority, with secured creditors receiving payment before unsecured creditors.
Distribution to Shareholders: If there are any remaining funds after all debts are settled, they are distributed to shareholders according to their ownership stake.
Dissolution: Once all claims are settled and distributions made, the company is officially dissolved and removed from the business register.
Impact of Winding Up:
Employees: Employees will likely lose their jobs during the winding-up process.
Creditors: Creditors may not recover their debts in full, especially if the company is insolvent.
Shareholders: Shareholders may not receive any payout if the company's debts exceed its assets.
Winding up is a complex legal and financial process that can have significant consequences for all parties involved. It's important to seek professional legal and financial advice when considering winding up a company.
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2. What is Set Off ?
• It refers to adjustment of losses against the eligible profits of the year. It is
governed by section 70 and section 71 of the Income Tax act.
4. Section 70 : Inter source adjustment
• Setting off loss of one source against income from other source within the
same head.
• Examples :-
► Loss of one self occupied property can be set off against income from
let out property.
► Loss from textile business can be set off against profit of leather
business.
5. Exceptions to the rule of Inter source
adjustment
• Loss from speculation business.
• Loss from activity of owning and maintaining racehorses.
• Set off of losses against casual winnings.
• Long term capital loss.
• Loss from an exempt source of income.
• Loss from business specified under section 35AD.
6. Section 71: Inter Head Adjustment
• Under this section , loss which could not be set off u/s 70 ( i.e. by way inter
source adjustment ), can be set off against income under other heads .
• Examples
► Losses from Non-speculative business can be set off against
Income from other Heads except Salary.
►Losses from house property can be set off against other heads
upto limit specified of Rs. 2,00,000. {Sec. 71(3A)}
7. Exceptions to the rule of inter head
adjustment
• Loss from a speculation business.
• Loss under the head “Profits and gains of business or profession” against
income from Salary. {Sec. 71(2A)}
• Loss from activity of owning and maintaining race horses.
• Set off of losses against casual winnings.
• Any loss under Capital Gains can’t be set off. {Sec. 71(3)}
8. Summary of rules for Set off
• Income from Salaries
• Business Income(Non Speculative)
• Capital Gains
• Income from other sources.
House Property
Losses(upto Rs. 2 lac.)
• Income from Speculative business only.
Speculative Business
Losses
• House Property
• Capital Gains
• Income from other sources.
Non Speculative
Business Losses
9. • Long term capital gains.Long term
Capital Loss
• Long term capital gains.
• Short term capital gains.
Short term
Capital Loss
• Salaries
• House Property
• Business Income
• Capital gains
Income from
other sources
10. Carry forward of Losses
• Losses which could not be set off against income of the assessment year , do
not lapse , but are allowed to be carried forward to be set off against income
of subsequent years .
• Carry forward of losses for each head is governed by different sections
which define the no’s of years it can be carried forward for, against which
income it can be set off etc.
11. Section 71B: Carry forward of loss from
“House Property”
• Set off against: Future income under the head “House Property” only .
• Time period : maximum of 8 AY .
• The time period is to be calculated from end of the relevant assessment year
in which loss was suffered .
• Example : if loss relates to AY 2012 -13 , it can be c/f up to AY 2020 -21 .
12. Section 72: Carry forward of loss of Non-speculation
business.
• Set off against : future income from any business of assessee .
• Time period: 8 AY
• It is not necessary that it is must be set off against income from same
business.
• Such loss can be can carried forward only if the return of income/loss of
the year in which loss is incurred, is furnished on or before the due date of
furnishing the return, as prescribed under section 139(1).
13. Section 73: Loss In Speculation Business
• Set off against : Income from any speculation businesses only .
• Time Period: 4 AY
• It cannot be set off against any other head .
• The business to which the loss pertains to may be discontinued .
• Such losses cannot be carried forward by an assesses if he has not filed his
Income Tax Return for the Financial Year within the due date
14. Section 73A: Loss Of Specified Business
u/s 35AD
• Any loss computed in respect of a specified business shall be allowed to be
adjusted only profit of some other specified business, if any.
• If any loss remains unabsorbed as above , It can be can be carried forward
so on.
• Such loss can be can carried forward only if the return of income/loss of
the year in which loss is incurred is furnished on or before the due date of
furnishing the return, as prescribed under section 139(1).
15. Section 74: Carry forward of loss under the
head “Capital gains’’
• Set Off Against :
► Unabsorbed Short Term capital loss
• Long term capital gains.
• Short term capital gains.
► Unabsorbed Long Term capital loss
• Only against long term capital gains.
• Time Period: 8 AY.
• Such loss can be can carried forward only if the return of income/loss of the year in which loss is incurred
is furnished on or before the due date of furnishing the return, as prescribed under section 139(1).
16. Section 74A: Carry forward of loss of activity of
owning and maintaining race horses.
• Set of against: future income of “same’’ business only.
• Time period: 4 AY.
• Such loss can be can carried forward only if the return of income/loss of
the year in which loss is incurred is furnished on or before the due date of
furnishing the return, as prescribed under section 139(1).
17. Section 75 : Losses of Firms
• Where the assessee is a firm, any loss in relation to the assessment year
commencing on or before the 1st day of April, 1992, which could not be set
off against any other income of the firm and which had been apportioned to
a partner of the firm but could not be set off by such partner prior to the
assessment year commencing on the 1st day of April, 1993, then, such loss
shall be allowed to be set off against the income of the firm subject to the
condition that the partner continues in the said firm and to be carried
forward for set off under sections 70, 71, 72, 73, 74 and 74A.
18. Section 78 : Carry forward and set off of losses in case of
change in constitution of firm or on succession.
• [1] Where a change has occurred in the constitution of a firm, nothing in this
Chapter shall entitle the firm to have carried forward and set off so much of
the loss proportionate to the share of a retired or deceased partner as
exceeds his share of profits, if any, in the firm in respect of the previous
year.
• [2] Where any person carrying on any business or profession has been
succeeded in such capacity by another person otherwise than by inheritance,
nothing in this Chapter shall entitle any person other than the person
incurring the loss to have it carried forward and set off against his income.
19. Section 79 : Carry forward and set off of
losses in case of certain companies.
• [a] in the case of a company not being a company in which the public are substantially interested and
other than a company referred to in clause [b], no loss incurred in any year prior to the previous year shall be
carried forward and set off against the income of the previous year, unless on the last day of the previous
year, the shares of the company carrying not less than fifty-one per cent of the voting power were
beneficially held by persons who beneficially held shares of the company carrying not less than fifty-one per
cent of the voting power on the last day of the year or years in which the loss was incurred
• [b] in the case of a company, not being a company in which the public are substantially interested but being
an eligible start-up as referred to in section 80-IAC, the loss incurred in any year prior to the previous year
shall be carried forward and set off against the income of the previous year, if, all the shareholders of such
company who held shares carrying voting power on the last day of the year or years in which the loss was
incurred,—
• [i] continue to hold those shares on the last day of such previous year; and
• [ ii] such loss has been incurred during the period of seven years beginning from the year in which such
company is incorporated:
20. Section 80 : Submission of return of losses.
• Although the above losses are allowed to be carried forward, but the carry
forward is allowed only when such loss has been determined in pursuance of
a return of loss submitted by the assessee on or before the due date for filing
of the returns prescribed under section 139(1).