Section 28 :

1. FMV on the conversion of SIT into Cap asset

2. Profits & gains from any activities of business or profession
3. Benefit/perquisite received during the course of business
4. Profit on sale of Duty entitlement passbook scheme / Duty-free replenishment certificate
5. Interest/salary/remuneration received by a partner from a partnership firm/LLP
6. Non-compete fees
7. Compensation on modification/cancellation of any contract
8. Any amt received by the employer from key man insurance policy
9. Duty drawback/cash compensatory support
10. Profit on sale of import entitlement license
11. Income derived from trade or profession or similar association from specified service performed for its members

Speculative Business:

Transaction in a contract where purchase & sale of commodities like shares, or securities which is periodically/
ultimately settled otherwise than by actual delivery or transfer of commodity/ scrips.

Transactions that are NOT speculative:

1. Derivatives in recognized Stock exchange

2. Hedging
3. Commodity derivatives
4. Forward contract

Losses of speculation business can be set off only against profits of the speculative business.
If a company’s part business is engaging in dealing in shares/securities of another company it shall be treated as
a speculative business unless
a. Principal business activity is dealing in shares/ securities, advancing loans & guarantee, insurance
b. GTI consists mainly of income from IFOS, IFHP, interest from securities, CG

Chennai Properties & investment ltd VS Rayala Corporation Ltd: MOA & AOA said ki main object is letting
out and acquiring & holding HP

K and Co. (Del)

Assessee deposit margin money with the bank for getting guarantee, the interest earned on such deposit
= PGBP & NOT IFOS

Section 30: Rent, Rates, Taxes, Insurance & Repairs of Building

Section 31: Repairs & Insurance for P&M

Section 32 Depreciation :
1. Used ( actively / passively ) for B/P
2. Owned by the assess ( not registered owner, beneficial owner ): I.C.D.S LTD.
a. Depreciation always claimed by lessor
 b. HP: Depreciation from beginning
c. Standby & spare/ emergency spares = depreciation allowed even if not put to use/ ready to use

Classification of depreciable assets :

Class 1: Building ( Includes temples and other religious places, Roads constructed in factory premises)
Class 2 : P& M
Class 3: Furniture & Fixtures
Class 4: Intangible assets

Method of depreciation = SLM = Power : generating , Generating & distributing : Individual asset system
WDV = other: Block of asset method
Block of asset = assets falling within a class of assets having the same rate of depreciation

CALCULATION OF DEPRECIATION WDV METHOD:

Op WDV of the block of asset

+ assets acquired during the previous year falling within this block of asset
1. put to use for 180 days or more
2. put to use for less than 180 days
3. not put to use
(-) Money payable
(-) WDV of assets transferred in slump sale
(-) Depreciation ACTUALLY allowed
= Closing WDV

Proviso to sec32(1) : depreciation is restricted to 50% only in the year of acquisition & put to use less than 180
days
Proviso to sec 32(1): depreciation in case of amalgamation, demerger, successor = Ratio in number of days for
which asset is used by them

Section 50 : sale of asset : CG in case of depreciable asset :

Where asset is a depreciable asset: always short term capital gain/ loss

FULL BLOCK TRF : Where the sale value is MORE than op WDV + Actual cost = STCG, otherwise STCL

Some assets in the block are transferred : sale price >op wdv + acquired = capital gain , if not then no capital gain
provisions, depreciation will be charged.

Goodwill shall not be allowed for depreciation from PY 20-21,

CASE 1 : GOODWILL IS THE ONLY ASSET IN THE CLASS OF ASSETS: INTANGIBLE

Then OP WDV + WDV upto PY 20-21 considering depreciation up PY19-20, No capital gain shall be attracted
where the block se bhi zyada be sale ho jata hai

Always note : Block can be Nil never negative

CASE 2 : GOODWILL ISNT THE ONLY ASSET IN THE CLASS OF ASSETS :

OP WDV XX

+ Actual cost of assets acquired during PY XX

(-) WDV of goodwill (till 19-20) XX

Then depreciation actually allowed = becomes opening balance for 21-22

Section 32(1)(iia) : Additional Depreciation

KISKO: Manufacturing, transmission or generation or distribution of power. (includes printing & publishing) + WDV
method of depreciation

KISKE LIYE: Plant & Machinery (not second hand, not for office or residential accommodation, not ships,
aircraft/transport vehicles, p&m allowed 100% deduction) NOTE THAT FORKLIFT TRUCK USED IN FACTOR ISNT TREATED
AS TRANSPORT VEHICLE.

KITNA: 20% in 1st year in which its put to use , ( less than 180 days then 50% of 20% i.e 10% )

Section 43(1): Actual Cost

Includes installation cost, transport expenses for assets, trial run/test run expenses, taxes & duties for which no ITC, and
Interest up to date of acquisition of an asset.

MINUS: Subsidy/ govt grant & amt recd on the trial run product.

If any expenditure >10,000 is made in a day to a person in any mode other than by electronic clearing system, account
payee cheque, A/c payee DD then disallowed = not form a part of actual cost of the asset.

Actual cost in following cases:

Where 100% deduction, scientific research Is claimed for the asset : NIL AC

Where asset acquired by way of gift/will/inheritance = Cost to the previous owner – depreciation actually allowed

Conversion of SIT into Capital asset = FMV on date of conversion

Asset acquired with an intention to claim higher depreciation = Determined by AO w approval of JC

Asset reacquired : WDV @ Original transfer / Reacquisition Cost ( which ever is lower )

Asset purchased & leased back: WDV to the previous owner ( lessee)

BUILDING was used for other purpose & now brought into business : Original Cost – notional depreciation till date @

current rate of depreciation = AC

Asset brought into India by NRI for business/ professional use : Actual Cost – depreciation calculated at the rate in force
as if it was used in india from date of acquisition

Amalgamation/ Demerger/Ho-So = cost/ wdv to transferor co.

Explanation 7 to section 43(6) : Composite Income : Agriculture Vs Business income

Category Agriculture Business Remember

Rubber 65% 35% Na idhar ka na udhar
ka
Tea 60% 40% Drinkable so business
more
(Grow, cured, roasted, grounded: 60% 40% Drinkable so business
coffee more
Grow, cured 75% 25% Less work so most
agriculture

SLM method sale :

Actual cost depreciation sales price effect

100 20 72 8: terminal depreciation ( SP<WDV)

100 20 90 10: Balancing charge ( AC>SP>WDV)

100 20 120 20: STCG(AC-SP)&20=Balancing charge(AC-WDV)

Note that any subsidy/grant/duty drawback / waiver of loan from government shall be treated as income, if such subsidy
is for acquiring any asset then reduced from the cost.

Any subsidy / grant received as a corpus fund from CG to institution or trust established by CG ( NOT INCOME )

LPG Subsidy / subsidy for welfare of individual ( NOT INCOME )

Section 32(2) : unabsorbed depreciation

Added to the depreciation allowance of the next PY and shall be deemed to be a part of that allowance.

KAB TAK? : infinite set off

KISKE SAMNE : all except salaries

Order of set off : CY Depreciation>B/F Business loss> Unabsorbed Depreciation

Section 33AB : Deduction for growing & mfg of tea, coffee, rubber business in India,

Allowed only if deposited in NABARD : upto due date of ROI or 6M from end of PY ( early )

Amount of deduction : Actual amt deposited or 40% of PGBP (before this ded) ( LESS WALLA)

Utilised acc to purpose prescribed by tea,coffee,rubber board.

Section 33ABA : Deduction for

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