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Expenses Expressly Disallowed In the Case of any ‘Assessee’-[ Section-40a]

  1. Any interest, royalty, fees for technical services, or other sum chargeable under Income-tax Act which is payable

    1. outside India; or

    2. in India to a non-resident, not being a company or to a foreign company on which tax has not been deducted before the end of the previous year or, after deduction, has not been paid before the due date specified under section 139(1).

    However, where in respect of any such sum,

    1. tax has been deducted in any subsequent previous year, or

    2. has been deducted during the previous year but paid after the due date specified u/s 139(1),

    then such sum shall be allowed as deduction in computing the income of the previous year in which such tax has been paid.
    Chargeable under the Income-tax Act means that receipt of such income must be taxable in India.

  2. 30% of any sum payable to a resident on which tax is deductible at source under sections 192 to 194LA (See chapter on Deduction of Tax at Source) shall not be allowed as deduction in the previous year in which the expense is incurred, while computing the income chargeable under the head 'Profits and gains of business or profession', if in respect of such expense,—

    1. tax has not been deducted during the previous year or

    2. after deduction has not been paid on or before the due date mentioned under section 139(1).

    However, where in respect of any such sum,—

    1. tax has been deducted in any subsequent year, or

    2. has been deducted during the previous year but paid after the due date specified under section 139(1),

    30% of such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.

  3. any sum paid on account of any rate or 'tax' levied on the profits or gains of any business or profession or assessed at a proportion of, or otherwise on the basis of, any such profits or gains. In other words, any income tax levied and paid in India. Further, any sum paid outside India which is eligible for relief under section 90 (double taxation relief) or deduction under section 91 (unilateral relief), is not allowable as a deduction;

  4. any sum paid on account of wealth tax under the Wealth Tax Act and any tax of a similar character chargeable under any law in force in any country outside India;

  5. (i) any amount paid by way of royalty, licence fee, service fee, privilege fee, service charge or any other fee or charge, by whatever name called, which is levied exclusively on, or
    (ii) any amount appropriated, directly or indirectly, from, a State Government undertaking, by the State Government;

  6. any payment which is chargeable under the head "Salaries", if it is payable:

    1. outside India, or

    2. to a non-resident

    and if the tax has not been paid thereon nor deducted therefrom under
    Chapter XVII-B;

  7. any payment to provident fund or other fund established for the benefit of employees of the assessee, unless the assessee has made effective arrangements to secure that tax shall be deducted at source from any payments made from the funds which are chargeable to tax under the head Salaries;

  8. any tax actually paid by any employer on the perquisites not provided by way of monetary payment shall not be eligible for deduction while computing the business income of the employer.

 

More Topics .... " Business or Profession"
Definition of the Head ' Business or Profession'-[Sec.-28]
Compensation Received as Business Income(Section-28(ii))]
Income of a Trade or Professional Association [Section 28(iii)]
Income from Export Incentives is chargeable to Income Tax
Any Amount Received Under certain Agreement for not to Carry on Business [Section 28(va)]
Speculation Business [Explanation to Section 28]
Profit Earned from an Illegal Business
Transfer of certain Assets Specified u/s 35AD in certain circumstances [Section 28(vii)]
Certain Incomes relating to business but not taxable under the head ‘Profits Gains of Business or Profession .
Computation of Income of Business or Profession - General Important Points
General Principles - for Deductions Allowed from Gross Income of Business and Professions
Deductions from Gross Income of Business or Profession [ Section 30 to 44DB]
Expressly Admissible Deductions from Gross Income from Business or Profession [Section 30-36]
Expenditure Incurred in the Field of Scientific Research [Section 35]
Expenses on Research Activities carried on by the assessee himself
Contribution to Approved Institutions to carry on Research is Allowed as Weighted Deductions for Calculating Profits and Gains of Business or Professions.
Expenditure incurred on the acquisition of Patents Rights or Copy Rights [Section 35A] [Applicable for expenditure incurred before 1-4-1998]
Expenditure on know-how [Section 35 AB] [Applicable for expenditure incurred before 1-4-1998]
Expenditure for obtaining License to operate Telecommunication Services [Section 35 ABB]
Expenditure on eligible projects or schemes [Section 35 AC]
Deduction in respect of expenditure incurred on setting up of a Specified Business [Sec. 35AD]
Any amount given to an institution or association [Section-35CCA]
Expenditure on Notified Agricultural Extension Project [Section-35 CCC] [w.e.f. A.Y. 2013-14]
Expenditure on Notified Skill development project [Section-35 CCD] [w.e.f. A.Y. 2013-14]
Amortisation of Certain Preliminary Expenses [Section 35D]
Expenditure on demerger or amalgamation [Section 35DD]
Amortisation of Expenditure Incurred Under Voluntary Retirement Scheme [Section 35DDA]
Expenditure on Prospecting etc., for certain Minerals [Section 35E]
Other Deductions Allowed to Compute Income from Business or Profession   [Section-36]
Interest on Borrowed Capital [Sec. 36(1)(iii)].
Deduction of discount on Zero Coupon Bond [Section 36(iiia)]
Contribution to Provident and Superannuation Fund [Sec. 36(1)(iv)].
Employee’s contribution towards staff welfare schemes [Sec. 36(1)(va)]
Bad debts [Sec. 36(1)(vii)]
Bad debts of Banks, financial institution and industrial investment corporation etc. [Section 36(1)(viia)]
Special Reserve Created and Maintained by Financial Corporation [Section 36(1)(viii)].
Expenditure on Family Planning [Section-36(1)(ix)].
General Or Allowable Deductions [Section 37]
Commission earned by the agents of Life Insurance Corporation, Unit Trust of India, Post Office or Mutual Funds
Legal Expenses in the Interest of Business are Allowable Expenses
Losses incidental to Business Allowed to be Debited.
Expenses Expressly Disallowed In the Case of any ‘Assessee’ [ Section-40a]
Expenses Expressly Disallowed In the Case of any Firm [Section 40(b)]
Expenses Expressly Disallowed In General Cases [Section 40(b)]
Disallowing of certain Expenses under certain circumstances like ‘Payments to Relatives’
Payments exceeding ` 20,000 by cash/bearer cheque [Section 40A (3)].
Provision for the Payment of Gratuity – [Section-40A(7)]
DEEMED PROFITS Under Profits and Gains of Business or Professions [Section 41]
VALUATION OF STOCK for Profit and Gains of Business or Professions
Deduction Of Certain Payments Only If Actually Paid [Section 43B]
Maintenance Of Accounts By Certain Persons Carrying On Profession Or Business. [Sec. 44AA]
Compulsory Audit For The Non-Corporate Assessees [Section-44 AB]
Computation of Income on Estimated Basis [Section 44AD]
Profit from the business of carriage of goods for truck owners [Section 44 AE]
Special provision for computation of income from royalties in case of nonresidents [Section 44DA]
Partly Agricultural and Partly Business Income
Adjustment In The Profit And Loss A/C Prepared By The Assessee
Computation of Profits and Gains of a Non-Resident from Shipping Business— [Section 44B]
Computation of Profits and Gains of business of Oil Exploration [Section 44BB]
Computation of Profits and Gains of the Business of operation of Aircrafts by Non-Resident [Section 44 BBA]
Computation of Profits of Foreign Enterprises [Section 44BBB]
Ceiling Limits in respect of Head Office Expenses [Section 440]
Special Provisions in case of Income of Public Financial Institutions etc. [Section 43D]
 
 
 
 
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