Assignment -3

Law of Taxation
Under the Income Tax Act of 1961 (IT Act), the provisions related to income from other
sources are outlined in Section 56 to Section 59. These provisions cover various types of
income that do not fall under the specific heads of income, such as salaries, house property,
business or profession, or capital gains. Here is a brief overview of the provisions related to
income from other sources:
Section 56(1)(a): Income from gifts: Any sum of money, immovable property, or specified
movable property received without consideration or for inadequate consideration is treated as
income from other sources. It is taxable in the hands of the recipient under certain
circumstances.
Section 56(1)(b): Income from winning lotteries, crossword puzzles, races, etc.: Any sum of
money or value of property received as winnings from lotteries, crossword puzzles, races
(including horse races), gambling, or any other game of any sort is considered income from
other sources and is taxable.
Section 56(2)(vii): Income from transfer of immovable property: Any sum of money, the fair
market value of any property, or any other consideration received as a result of the transfer of
immovable property without adequate consideration or for inadequate consideration (in
certain cases) is taxable as income from other sources.
Section 56(2)(x): Income from transfer of movable property: Any sum of money, the
aggregate fair market value of which exceeds Rs. 50,000, received without consideration or
for inadequate consideration by an individual or Hindu Undivided Family (HUF) is taxable as
income from other sources.
Section 57: Deductions from income from other sources: This section allows certain
deductions from income from other sources to arrive at the taxable amount. These deductions
include expenses incurred to earn such income, such as interest on borrowed capital, family
pension, and any other expenditure laid out or expended wholly and exclusively for the
purpose of earning such income.
b.Discuss the types of income included under this head and any specific deductions or
exemptions available.
Under the head of "Income from Other Sources" in the Income Tax Act of 1961, various
types of income are included. Here are some common types of income that fall under this
head:
Interest Income: This includes interest earned from bank deposits, fixed deposits, savings
accounts, bonds, loans, and other types of interest-bearing instruments.
Rental Income: Income received from letting out properties, such as houses, buildings, land,
or machinery, is considered rental income under this head.
Dividend Income: Income received in the form of dividends from investments in shares of
companies is categorized as income from other sources.
Income from Royalties: Royalty income is generated from the use or transfer of intellectual
property rights, such as copyrights, patents, or trademarks.
Income from Winnings and Lotteries: Any winnings from lotteries, crossword puzzles, races
(including horse races), gambling, or any other game of any sort are included as income from
other sources.
Income from Gifts: If an individual receives any sum of money, immovable property, or
specified movable property without consideration or for inadequate consideration, it is
considered income from other sources.
Income from Annuities: Payments received as annuities or pensions from insurance policies
or other financial instruments fall under this category.
Specific deductions or exemptions available under the head "Income from Other Sources" are
as follows:
Deductions under Section 57: Section 57 of the IT Act allows certain deductions from income
from other sources. These deductions include expenses incurred to earn such income, such as
interest on borrowed capital, family pension, and any other expenditure laid out or expended
wholly and exclusively for the purpose of earning such income.
Standard Deduction for Income from Family Pension: Individuals receiving family pension
can claim a standard deduction of ₹15,000 or one-third of the pension, whichever is less,
under Section 57 of the IT Act.
Deduction for Interest on Savings Account: Under Section 80TTA, individuals and HUFs can
claim a deduction of up to ₹10,000 on interest earned from savings accounts with banks, co-
operative societies, or post offices.
R.GOWSIK
PES1UG20BL008