. . -.· •r...'l~.l!

t'4\
~1J --~~~ ~~'

Inc' om
•' e From Other Sources \(8~ :;_ :-;d,~/tri;'L~'.r-

# Sec. 56(1) Any Income which not taxa ble under Salary, IFHP, PGBP or Cap·It
al 9ain
be chargeable under IfOS. , Sh~

# Sec. 56(2) Income taxable u/h IFOS, in particular:

1. Dividend;
2. Winning from lotteries, puzzles, card game etc.
. df
3. Any sum receive rom the employee toward contribution for any staf f welfare f
IJhd _
(like PF or ESI), if it is not chargeable under PGBP;
4. Inte rest on securities, if it is not chargeabl~ under :GB
P; . . . f
5. Rent from letting out of P&M or furniture wrth or with
out bu,ldrng, if not chargeable I
under PGBP;
6. Any sum received under keymen insurance policy if not
chargeable under PGBP or
Salaries;
7. Inte rest received on compensation of compulsory acqu
isition of capital asset .
8. Gift.
Other income taxable under IFOS:
» Amount received under family pension.
Inte rest on bank deposit &loan given.
Inte rest on Income tax refund.
Income from sub-letting of house property.
» Royalty income.
Agriculture income.
» Director setting fee.
Salary of MP/ MLA/ MLC etc.
Note: Inte rest from investment in Non-SLR Securities
of Banks : CBD T clarified that
the investments made by a banking concern are part
of the business of banking.
Theref ore, the income arising from such investments
is attributable to the business of
banking and chargeable under PGBP and not under IFO
S.
i - - - 1- - - - -
# Taxation of Gift
_ __ _ := ]
1. Any gift received by employee from employe r due t o
employee _ employer relationship ·
always taxable [even if received on marriage] under inco
r.. ~'. :_ ,-wCJ:. Bhanwar __~?ra _na
me from salary

lt_,~:._,l/._:.< :~·;.· .., -~: :. ·,,.~':;{~.;~:~_',.~--- ; .. ~

_ .
 --.:, -:> '
~ '::,;
\
IJ:> -<.
-o er
,-.. . {'-I
tJ'\ ::s
{'-I ~
n -+.
ired fo r low .N ➔
Any g ift /a ss et acqu ... .
H
co, \.0
Person ..._
consideration by Any "'Tl -+,
0 -+
(/) '-
""O
le ('>
Sec. 56(2)(x) applicab .,
.0
C
w.e.f. 01/04/2017 ti)

0 1

Otherwise .0 I
e -1 Cl
M.R.I. D.H.U.T.L.A.I.T.C Not C
~
➔
0
Sec. 56(2)(x)not applicable 0

not taxable
(la nd , bu ilding , both)
j.d.p.s.a.o.b] I /I Immovable property I

) Movable property (s .s. .,0

Money (without consideration ""O .,
0
-+,
('>
- -
ti)
Inadequate Consideration (A
11 1 1 1 1 1 Without 0
:3
II If Aggregate Without consideration
Inadequate Consideration
If per Property
"'
a) (SDV-Consideration) 0
I B
I-
Consideration If per property, > ~50,000 ~
Money > { 50,000 If Agg. FMV If Agg. (FMV - SDV > ~ 50 ,0 00 And
then whole of mone > { 50,000 then consid.) > ~ 50,000, then entire
mo
b) SDV is re than 110%
ta-+
of Consideration X
shall be taxable entire FM Vshall then dif fe re nt SDV shall 0
"' CT
be taxable then dif. fe rent between ~
be taxable between FM V & SDV& Consideration C
consider ation shall be taxable :3

shall be taxable .,g-.

-- ·e 7 !0 &
 Incom e From Othe r Sourc es

# Note -1: mon ey/ prop erty Not Taxa ble if it is recei ved,
M - on the ocasi on of Marr iage, ·
R - from any Relat ive (note- 3)
I - unde r will or way of I nher itanc e
D- in conte mpla tion of Deat h
T- from or by any Trus t regis tered u/s 12AA
H - from any Hosp ital or medical insti tution
U - from any Univ ersit y or educ ation al insti tutio n
LA- from any Local Auth ority defin ed uls 10(2 0)
I - from an individual by a trust crea ted solel y for the bene fit of the relat·
...:__ _ _ _ _ _ _ ___:__ _ _ __ _ _..:...____:_:::...:_:
~~1ve 0f
- -, ---:-: -----: --:-:: -::--: ---:---
the individual
institution
T- by any Fund , Trus t, Hosp ital , medical Insti tutio n, Univ ersity edu,
refe rred in secti on 10(23 C)
( HUF Parti tion, Holding t
C - by way of trans actio n not rega rded as tran sfer u/s 47
Subs idiar y, Subs idiar y to Hold ing, Amal gama tion & Dem erge
r) 1
0 - from such class of perso ns and subj ects to such cond ition
, as may be prescribe~
·
Note -2 : Prop erty (movable & immovable)
S hare s & secu ritie s
J ewel lery
Draw ing
Paint ing
Arch aeolo gical colle ction
S culp tures
Any othe r work of art
Bullion
I mmo vable prop erty
othe r than above ,
Any prop erty recei ved as gift or acqu ired for low cons idera tion
Sec. 56(2 )(x) Not appli cable - Not taxab le.
Car, ipho ne-x , T.V., Furn iture, Wris t Watc h, etc. recei
ved then not taxab le even volt

is more than t 50 ,000 /-

 anin of Rela tive
divid ual

b
An mem ber o HUF

case ma be refer red to Valua tion

# Note 4: if asse ssee is not satis fied with SDV then his
Offic er same as sec 50C

Note 5 : Sec. 56 2 is in the natu re of ca ital asse t of the

#
Not a licable CBDT circu lar
reci ient, if it is Stoc k- in-tra de then Sec. 56 2 (x

asse t as · uires for inade uate

# Note 6 : Sec. 49(4 ): if an erson recei vin
on FMV /SDV then COA of
cons idera tion & he alrea d assessed uls 56(2 )(x)
d unde r IFOS u/s Sec. 56(2 )(x)
such asse t shall be fMV /SDV which was considere
perio d of holding of the previ ous
When COA is comp uted as per secti on 49(4 ), the
owner shall not be inclu ded in the perio d of holding,

made outsi de India by Residence

Note 7 : Sect ion 56(2 )(x) is appli cable even gift (money)
Person to NR
 Example-1: f t3 lakh during PY 2001-02, He gifted
---L ~M~r:._.~R~am~a~cq~u~ir~e:::'.d'....:a::_:.:.ho~u~s-:e~p::ro:p~e:n-rty
or7 / 2021 [ SDV on date of gifting - '40 SlJth
kh
- _ _L JP~r~op~e::r~ty~to~h~is~f~r_:ie~n=d-=L:-a=:0 n on 16/0 d" IQkh
~;-ic
to Hori on 16102122
for~ 83 Lakhs is cuss
:1_::_~::-- - - - - ---..:. tax treQt 1
tl\et\1'
- Lakhan sells such property ____________ ·

# In hands of Ram C ·tal Gain due to Section 47

sfer - No ap1
Gift not treated as tran

# In hands of Lakhan . t nsideration & SD V > ~ 50,000, so tot

erty w1thou co Q1St)y
He received immovable prop ( ) ( ) ·n hands of lakhan for AY 2022-202 3
of~ 40 lakh shall be taxable u/s 56 2 x I •

Capital Gain applicable on transfer of asset

Computation of capital gain
py 2021-22 AY 2022-23

[POH 16/07/21 to 15/02/22]

83,00,000
FVOC
(-)Transfer ex enses
83,00,000

(-)COA [Sec.49(4)] 40,00,000

STCG 43,00,000

Exam le-2:
su ose in exam le : 1, Ram & Lakhan are relative brother what will be the tax f
treatment.

# In hands of Ram
Gift not treated as transfer - No Capital Gain due to Section 47
# In hands of Lakhan
Sec. 56(2)(x) not applicable, since asset received from relative.

i---r-- - - - - - - - - - - - - - - - - - 'I
 in applicable on transfer of such property
ion of capital gain
PY 2021-22 AY 2022 - 23
1-02 to 15/02/22]
voe 83 ,00,000
(-) Transfer expenses

83,00,000
(-) ICOA Sec. 49 (1)

300000 317 [21-22] (9 ,51,000)

X
100 [01-02]
I
LTCG 73,49,000

# section 43CA : SDV shall be treated as sales consideration I

In case of immovable property held as stock - in trade, if sales consideration is less than
SDV then such SDV shall be deemed to be sales consideration for computing PGBP.
I
However, where the SDV does not more than 110% of sale consideration, then sale
consideration shall be treated as FVOC.
If assessee not satisfied with SDV then his case may be transferred to a valuation
officer (same as Sec. 50C)

+ Amendment by FA.- 2021

I f following conditions are satisfied then allowed tolerance band 20% allowed instead
of 10%:-
a. t he transfer of residential unit takes place during the 12th Nov., 2020 to 30th June,
2021 I

b. such transfer is by way of first time allotment of the residential unit to any person; and
c. the consideration received or accruing as a result of such transfer upto 2 crore rupees.
+ Meaning of residential unit - An independent housing unit with separate facilities for
"--- living, cooking and sanitary requirement, distinctly separated from other residential
units within the building, which is directly accessible from an outer door or through an
interior door in a shared hallway and not by walking through the living space of another
household.
. c. r . 'f\iJ'~•·
CA Bhanwar Borana •
. ,~=--. -
 CHAPTER -8
Income From Other Sources

-+ Important Note :
Similar amendment is also made under section 56 (2 )(x) so if ~~er buys capital asset
(immovable property) for low consideration and above 3 cond1t1ons are satisfied the .
the last part of chart of sec. 56(2)(x), 120% consider instead of 110%. nin
Immovable property

Capital asset Stock in trade

Sec. 50C apply Sec. 43CA apply

Capital gain PGBP Income

Note : If date of agreement & registration are not same, SDV on the date of
agreement can be considered uls 50Cl43CAl56(2)(x), if full or part consideration
lI
received or paid by Alc Payee cheque, Alc Payee DD or any mode of electronic clearing j
system, through bank account or any other electronic modes as may be prescribed.

# SDV - Date of Agreement or Registration?

Section SDV Date
50Cl43CAl56(2)(x) Date of Registration or Agreement

SDV on date of agreement can be considered, if full or part consideration

received I paid upto date of agreement in

Section 50C Section 43CA Section 56(2)(x)

Alc Payee cheque
Alc Payee DD
Any mode of electronic
clearing system or any other
mode as may be prescribed
Alc Payee cheque, Alc Payee cheque
Ale Payee DD, Alc Payee DD Any mode
Any mode of ECS of electronic clearing
or any other mode as system or any other mode
may be prescribed as may be prescribed

...

ID5
.~--i...~~~.:.....~.:· ..._-. ~ . --
 CHAPTER-&

mple: 1
Ei<a ·iders transfer a residential house to Mr. Jay on 14/04/21 for ~1.9 Cr.
f BUI .
D~ h date of transfer ,s ~ 2.15Cr. DLF transfer a unit to Jay as a first-time
vont e---=-- - - - - - : -- --:---:-------------_:_---- - - -- ----i
SD t Discuss tax treatment in hands of DLF and Mr.JAY.
allotmen . -=-- - - - - - - - - - - - - - - - - - - - -- -- - - - - - - ---:
solution: . . . .
example cond1t1ons mentioned in amendment are satisfied so allowed
Jn above . . o
ce (SDV and cons1derat1on) 20 to applicable instead of 10%.
differe=n~_:_-- - - - - - - - - - - - - - -- - - - - - - - -- - - -- -----1
Jn hands of DLF: .
Aspe r section 43CA since SDV is not more than 120%. of consideration so
consideration of~ 1.9 Cr treated as FVOC for PGBP.
Jn hands of Jay:
Difference between SDV and consideration is more than~ 50,000 but SDV is not more
. than 120% of consideration so sec 56(2)(x) NOT applicable in this case.
Example: 2
suppose in above example date of transfer is 10/12/21 instead of 14/04/21.
Solution:
In hands of DLF:
As per section 43CA since SDV is more than 110% of consideration so SDV of ~ 2.15 Cr
treated as FVOC for PGBP.
In hands of Jay:
Difference between SDV and consideration is more than ~ 50,000 & SDV is more than
l10% of consideration so difference between SDV and consideration of ~ 25 Lakhs
taxable u/s 56(2)(x). For the purpose of section 49(4) ~ 2.15 Cr is treated as COA of Jay.

Section 56(2 (viib) : Shares issued on Premium

If an closely held com any issues shares to any resident share holder on
re11f
_iu_m_th_e.:..:n..:__
-_-.!::[I=s~s~u~e:::.....t.p!-.r1~
·c=e:....:o~f~s~h~a~
re c::h...:s::.h.:::a::..r.:::::e:.::s..:!..]_ _ __ __ __ _~
~ -~F~M~V_o~f!.....::::s.:::u.::.
shall be taxable in hands of company under IFOS

. .-M.----=---- - - - - -- - -- ----,----:---::----c:---=-c:-::-=-=---=-=--=----:-:-----i
Exatnpl -:-:-
e · r . Ramesh acquired a house property on 16/7/20 for ~40,00,000. He
entered;":·~ - - - - -- -- -- -- -- - - - - - -,....-:,-----==-=--:--:--=---=--=-==---:-:--- ~
th •nto an agreement to sell on 14/02/21 with Mr. Suresh for ~70 lakhs & SDV on
at date;;•:::-;;~~-;-;--- - - - - -- - -- --:------=--=-~::-;:::-:---::-:---;----;-- - - ---;
is ~80 lakh. Suresh paid ~7,00,000 by cheque on 14/02/21 & the cheque was
 Income From Oth er sources

. 1•s given to Mr. Sur esh on 10/ 12/ 21 Wh

clea red on 18/ 02/ 21. The possession
• en SlJres
paid balance amount of ~ 63 Ia kh & pro per ty reg iste red the name of Mr S
in
.
h
· lJre.sh
10/ 12/ 202 1 SDV on the dat e Of re gistr atio n is ~110 lakhs. Dis cus tax tre t 0
n
' Q tne.nt .
hands of Ramesh & Suresh .f I pro per
ty is held as Capital ass et or Sto ck- in-t rod 1
n
e.

Sol utio n : PART A: Pro per ty held as capi·t aI ass et (in bot h Han ds)
In hands of Mr. Rames h
Computation of capital gain
P.Y. 202 1-2 2 A .Y. 202 2- 23
FVOC [50 C]
(-) COA
[POH 16/ 07/20 - 09/ 12/ 21)
STCG
In hands Mr. Sur esh .
P.Y. 202 1-2 2 AY 202 2-2 3
Sec. 56( 2)(x ) app lica ble
~ because diff ere nce between SDV &
80 lakhs Con side rati on is mo re tha n ~50,ooo
& SD v is >110% of Consideration
40 lakhs [~8 0 lak hs- ~70 lakh s) = ~ 1000000
Tax able und er I fOS in hands of
40 lakhs Sur esh for A. Y. 202 2-2 3

PAR T B : Pro per ty held as sto ck in trad e (in bot

h Hands)
In hand of Ramesh
In hands of Sur esh
Pro fit & Gain from business
As per CBDT circ ula r if ass et
Sal e pric e of sto ck [ 43CA) 80 lakhs rec eive d by any per son as sto ck in
(-) cos t of sto ck 40 lakhs trad e the n Sec. 56( 2)(x ) No t applicable.
PGBP 40 lakhs

# Sec tion : 56( 2)(x i): Compensation on term ina

tion of Employment
Any compensation or oth er payment, due or
received by any per son in connection with
term ina tion of his em loyment (or mod ifica
tion of term s of em loym ent ) is treated as
income und er section 56( 2)(x i)
Thi s sec tion is a licable onl if com ensation is rec eive d from
a erson oth er than
em lo er.

How eve r, if it is received from em lo er, the

n it is tax abl e as rof its in lieu of sala
und er sec tion 17 3 i under the hea d" Salarie
s" --- --- ---

CA Bha nwa r Bor ana

 CH AP TE R- 8

id en d i- -- -- -== = = =- - - - -J
. of Dividend & De em ed D iv
.
d r eg 1s
ompany: Company fo r me d an ter ed un de r Co
mp
.
an,es Ac t, 19 56 /20 13
y.
n aw of sta te/ un ion ter rit or

an y oth er company (fo rei )

~ Company: In dia n Company or gn com pan y who ma de
D0
·bed arr an ge me nts fo r th e d ec 1ora tio n an d pa ym en t of dividend within Ind ia
.
11
ir
cr1 ·
PreS •
e tre ate d as Do me sti c C me sti c Company
ThUS, all Ind ian Company ar ompany bu t all Do
d. c
are not In ,an ompany.
a for eig n Co mp any ma ke s pr es cri be d arr an ge me nt s f or payment of dividends in
If
me sti c Company.
India it shall be tre ate d as Do

.
ich is no t a Do me sti c Company
foreign Company: Company wh
Dividend income

fro m Foreign company

from Domestic co mp an y

Ta xa ble in hands of rec eiv er

Taxable in ha nd s of rec eiv er
at Normal tax rat e
at Normal tax ra te

De em ed Di vid en d
y
ts ar e no t div ide nd bu t fo r the purpose of income tax the
In rea lit y th e pa ym en
ob jec tiv e is to plu g the loo ph oles in the tax provision & to
are tre ate d as div ide nd s. Th e nd to th e
e fol low ing pa ym en ts I dis tri bu tor s are de em ed as di~ide
check avoidance . Th
extent of Ac cu mu lat ed pr of its . th e
its in se cti on 2(2 2)( a), (b) , (d) an d (e) include all pro fit s of
Accumulated pr of fit s
dis tri bu tio n or pa ym en t of dividend an d u/s 2(2 2)( c) all pro
company up to th e da te of
up to da te of liquidation. acc um ula ted pro fit s, wh eth er
am at ed com pan y, the
In the ca se of an am alg acc um ula ted
t, or los s, as th e ca se ma y be , shall be inc rea sed by the
capitalised or no da te of
pit ali sed or no t, of th e amalgamating company on the
Profits , wh eth er ca
I I • I I

·- "~

CA Bh an wa"(i~ o ran a
 Income From Other Sources CHAPTER - a

# Sec 2(22)(a): Any distribution of assets

Any distribution of Assets by a comoanv to its shareholders t o t he ex t ent t h
e coh'I
Possesses accumulated profit (Capitalised or not). QI)

Notes:
1. In case of Bonus shares, there is no release of assets hence, issue of bonus shar .
es is llot
deemed as dividend.

-_ 2
_ .- t_ W
~ h~en~ as~s~e~ts::....=
ar~e~d~i~st~r~ib~u~t ~
ed-=-=-
us=---
2~( 2_2~)(~a~)/~(~c)~/~(d~)~, _
t h_e_F
_M_ V_o_f_t_h_e_a_ss_e_t~o~n~t~
he~ d t
Q eO
f
distribution has to be taken for computing the dividend.

# Sec 2(22)(b) : Distribution of Debentures, etc.

a) Any distribution
- -- 1 --<----- -- to-------_
its shareholders by Co. of debentures, debentures stock or dep .
_.!._--- -----------. .:....::..:.... .::~os,t
certificates, and ~ ="
b) Any distribution to its preference shareholders of shares by way of Bonus,~
I

I to the extent to which Co. possesses accumulated profit (capitalised or not).I 1-7
# Sec 2(22)(c) Distribution of assets on liquidation
Any distribution of assets by company on liquidation extent to which company possesses
accumulated profit (capitalised or not).

# Sec 2 (22)(d): Reduction of share Capital.

Any distr ibution to its shareholder by company on reduction of its capital to the extent
to which company has accumulated profit (Capitalised or not).

# Some differences between 2(22)(a)/(b)/( c)/(d)&(e).

Sec 2(22)(aV(b)/( cV(d) Sec 2(22) <e) -

1. Treated as Deemed dividend to the Treated as deemed dividend to the
extent accumulated Profit extent accumulated profit,
(capitalised or not).
2. Applicable to all Companies Applicable to only closely held Companies.

,,; ~ . ., . • . . . ,_._.-~ - ··.--.-_,J

, r CA Bhanwar Borana .-··1sa'·~: 1

;~~----~- .. - .' ., !~~'.·:. ·-~~

 Closely Held Co./
Unlist ed Co.

Share holde r

[Company, Firm, AOP, etc.]

Taxab le in Hand of Share holde rs

which company
Loan or advances is treate d as deemed dividend to the exten t to - - - - - - - - --i
--:---::-:-:-------------
l. 1-- --- - - - : - - : -profit
possesses accumulated .

,. Concern means HUF, Firm, Company, AOP /BOI

at any t ime during
l Substantial intere st means 20% .or more voting power /share in profit
theP.Y.
any differ ence
4. Loan is repaid or Company charg es marke t rate of intere st doesn' t make
inthe applic ability of sec 2(22)( e).
nting profit ) Not
5. Accumulated profi t means profi t as per Company Act (means accou
Assessable profit .
means advance
0, Section 2(22)( e) is Not Applic able in case of trade advances
17]
which is in the natur e of comm ercial transa ction. [CBDT Circul ar 19/20
Advance was
Example: advance made by company to sister concern for job work,
the share holde r 's
tnade by a company to its share holde r to instal l plant and machi nery at
ny could fulfi l
Premises to enable him to do job work for the company so that the compa
an export order etc.

hall not includ e -

of money
nee or Loans given by Company in the ordina ry course of its business
usiness
 . . . hich is set off by Company against the loan h·
2. An d1v1dend aid b a com any, w W1ch hQs
been deemed as dividend us 2(22)(e).
3. Buy back of shares.
4. Shares allotted to shareholder of demerged Company by resulting C

scheme of Demerger.
5. Any distribution made us 2(22)(c) / 2(22)(d) is respect of preference shares.

# Sec. 57 : While calculating Income under IFOS following deductions allowed

1. In the case of dividend or income on units of MF/UTI: only interes t expenses is allowed
as deduction subject to maximum 20% of such dividend or income from MF/Un.
2. In the case of interest on securities, any reasonable sum paid by way of commission or
remuneration to a banker or any other person f or the purpose of realising such interest
on behalf of the assessee;
3. In the case of employee contribution toward any welfare fund: any Amount remitted
before due date under respective Acts;[as per sec 36(1)(va)]
4. In the case of rental income from machinery, plant or furnitur e: amount paid on
current repair & Insurance and normal deprecia tion allowance on such P&M and
furnitur e;
5. In case of income under family pension,. deduction shall be lower of 113rd of family
pension or 15,000 p.a.
certain exemption in respect of family pension:
• The family pension received by the widow or children or nominated heirs, of a
member of the armed forces (including para-mil itary forces) of the Union, where the
death of such member has occurred in the course of operational duties, in specified
circumstances would, however, be exempt u/s 10(19).
• The fami ly pension received by any member of the family of an individual who had
been in the service of Central or State Government and had been awarded uparam Vir
Chakra" or "Vir Chakra" or Vir Chakra" or other notified gallantry awards would be
exempt u/s 10(18)(ii).
6. In case of interest on compens t · f
a ion° compulsory acquisition amt equals to 50°'10 0f
such income shall be allowed d d . ' y
as e uct,on and no deductio n shall be allowed under an
other clause of this section.

CA Bhanwar Borana
 enditure (not being in the nature of c p·t I d"t ) I ·d
a I a expen I ure 01 out or
lly and exclusively for the purpose of m k. · h·
a 1ng or earning sue income.

: Expenses Not allowed as deductions under IFOS

sec 58
· nal expenses of the assesse.
nyperso .
nd th
. terest chargeable u er is Act which is payable outside India on which TDS
aanY in
been paid or deducted.
has not . .
is chargeable under the head II Salaries11 , if it is payable outside
~~Yment which .
. unless TDS has been
1nd1a, . paid thereon or deduct ed.
cash Expenditure exceeding 10,000. Provisions of section 40A(3) shall apply.
30%of any sum payable to a resident on which TDS has not been paid or deducted at
Provision of section 40(a)(ia) shall apply.
50urce•
expenditure incurred in connection with casual income:
anyy_::::.:r.:. : . . . : . , _ - - - - - - - - - - - - - - - - - - - - - - - - - - - ---i
However, this prohibition will not apply in respect of the income of an assessee, being
the owner of race horses, from the activity of owning and maintaining such horses. Any
expenses incurred in respect of such activity shall be allowed even in the absence of
any stake money earned. Such loss shal I be al lowed to be carried forward u/s 7 4A.