236

INCOME FROM OTHER

8 SOURCES S. 56- 59]

THEORY AND ILLUSTRATIONS

OUTLINE
No. Topic Section
1.
2.
Introduction Pag237e
Basis of Charge [S. 56]
2.1 General 23
2.2 Specific
2.3 Other Taxable Items
3. Deductions [S. 57]
3.1 242
Expenses for Realisation of Dividends &Interest
3.2 Employees' Contribution to Provident Etc. Funds
3.3 Repairs, Insurance &Depreciation on Assets Let
3.4 Standard Deduction on Family Pension
3.5 Standard Deduction on Interest on Compensation
3.6 General Expenditure
4 Expenses Disallowed [S. 58] 243
5 Recovery Against Earlier Deductions [S. 59] 24
6. Exempt Incomes [S. 10] 244
6.1 Agricultural Income [S.10(1)]
6.2 Sums Received by a Member from
HUF (S.10(2)]
6.3 Exemption of Disaster
Compensation [S.10(10BC)]
6.4 Sum Received under a Life
Insurance Policy [Sec. 10(10D)]
6.5 Payment from Sukanya Samriddhi Account [S.10(11a)]
6.6 Scholarships [S.10(16)]
6.7 Interest on Securities [S.10(15)]
6.8 Allowances to M.P.I M.LA. (S.10(17)]
6.9 Govt. Awards &Rewards
[S.10(17A))
6.10 Pernsion to Fanmily Member of Gallantry Award
6.11 Pension of Family Members of Armed Winner [S.10(18)
Forces [S.10(19)]
7. WorksheetURapid Revision 248
8. lllustrations 249
 From Other. Sources (S. S6-59) 237
INTRODUCTION
hssthelastt andresidual head of income. Any item of income which does not fall under any of the
atdiscused,carlier (Salaries, Income from House Property, Profits ofbusiness or Capital gains)
RR under this head of income.

56 defines the items of income chargeable under this head.

lists the deductions allowable from
58 clarifies which income under this head.
deductions are not allowable.
hrings to tax any amount
recovered during the ycar against any deduction allowed earlier.
f2 BASIS OF CHARGE
(S. 56]
21 GENERAL

(S61)Statesthat-
AOmeof every kind
sshich is not to be excluded from thetotal income under this Act (e.g. income exempt u/s 10)
is notchargeable to Income-tax under any other head
frs and Gains of Business or (Salaries, Income from House Properties,
Profession or Capital Gains)
Bhall be charged to income-tax under the head - Income from
other sources.
22 SPECIFIC
24
62) provides that following incomes, in particular, shall be taxed as Income from
) dividends.
other sources:
Dsinnings from lotteries, crossword puzzles, races including horse races, card games,
bettings, gambling etc. other games,
S)any sum received by the assessee from his employees as
contribution to any staff welfareschemes.
4jnterest on securities, if not taxable as profits and gains of
business or profession.
6)income from machinery, plant, or furniture belonging to the assessee let on hire.
5) income from letting of machinery, plant, or furniture jointly with
24
letings are inseparable.
letting of building, where both
24
)Receipts from Keyman Insurance Policy (including Bonus), if not
taxed under any other head.
8) Money, movable or immovable property received by an individual or a
without consideration. Hindu undivided family,
9) Shares of a private company received by a firm ora company without
(10) Premium received on issue of shares by a private
consideration.
company.
) Interest on compensation deemed to be income in year of receipt.
2) Consideration in excess of FMV of shares in closely held
premium. company where shares issued at
3) Advance forfeited due to failure of negotiations for transfer ofa
capital asset.
14) Receipts without
consideration.
IShould be noted that income under this head should be computed either on
pending on the method of accounting regularly employed by the assessee.'due' or"receipt' basis.
lhe above items are explained below.
?22.1 Dividends
Ihe dividend received from an Jndian company was exempt until
31 March, 2020 (P.Y. 2019-20)
1034). That was because the company declaring such a dividend already paid dividend
aioution tax (DDT) u/s 115-0 before making payment.
238 Direct Tax(1.Y.B.Com.:SEMY
Fund was exempt until 31
MF declaring such a dividend March
Similarly the dividend reccived from a Mutual alreadw.
2019-20) W's 10(35). That was because themaking payment.
212
distribution tax (DDT) u/s 115-0 before of dividend taxation
However, the Finance Act, 2020 changed the method
dividend received on or after 1 April, 2020 from
in the hands of the
investor/shareholder.
an Indian company or a mutual
" The DDT liability on companies and mutual funds stands withdrawn.
Hfuenndceiorh tana
is
HUF and
the tax on 10% on dividend receipts of resident individuals,
Similarly.
of? 10 lakh (u/s 11SBBDA) upto P.Y. 2019-20 also stands withdrawn. firms in et
2.2.2 Winnings from Lotteries Etc.
The amount of winnings from lotteries, crossword puzzles, card games, betting and
taxed under S.56. "Lottery" includes prizes awarded to any person by draw of lots
orby gambling
any other manner whatsoever, under any scheme or arrangement by whatever
name chcalancleed (e
prizes under "Playwin"). "Cardgame" includes any game show, an entertainment
television or electronic mode, in which i people compete to win prizes (e.g. Kaun
2.2.3 Employees' Contribution to Staff Welfare Schemes
BanegaprogrCramomerepa
Section 2(24) which defines "Income" states that the contributions from employees towards prosy
fund, superannuation fund, Employees State Insurance Fund, etc. are to be included in the
the employer. Ifthe employer is not a businessman, such contributions are included i under thisincome
residuz
head of income.
2.2.4 Interest on Securities

Ifa person is adealer in securities, income therefrom is taxed as business income. Otherwise,ite
from securities is taxable under this head of income. Securities refer to bonds, debentures etc. wh:
are secured against property of the borrower.
Interest on securities means [S. 2(28B)]:
(a) Interest on any security of the (i) Central Government or (ii) a State Government.
(b) Interest on debentures or other securities for money issued by or on behalf of() alocal authors
(1) a company or (i) a Corporation established by a Central, State or Provincial Act.
The following points should be noted in this connection:
(a) Interest from securities is taxed on receipt basis ifthe assessee maintains his books on cash bs
If the assessee maintains his books on mercantile basis, or maintains no books of accounts, its
charged on accrued basis.
(b) Interest is said to accrue on the due date as per the terms of issue of the security. The entire inters
aceruing on the due date is taxed in hands of the person holding the security on the due date.
(c) The amount taxable is the gross interest, i.e. net interest received plus the tax deducted at soura
(T.D.S.).
(d) The interest on securities exempt under section 10 is to be excluded while computing incom
under this head (see Para 6.6).
Illustration 1:
Mr. AB has invested 10,00,000 on 1-4-2022 in 10% Debentures of ABC LId. The interest is dueo
half yearly basis i.e. on 30th Sept. and 31st March of each year. Mr. AB was in urgent need o mom
and hence he sold the security on 1-9-2022 to Mr. CD. How much amount is taxable in the hanos
Mr. AB and Mr. CD, respectively ?
Solution:
In this case, interest income of Mr. AB shall be nil and that of Mr. CD shall be 1,00,000.
2.2.5 Income from Machinery, Plant or Furniture Let Out
taxable
Income from machinery, plant, furniture let on hire is taxable under this head, if not
income from business.
 239
Other,Sources (S. S6-59)
From
e
Income
from Machinery
Etc. with Bulldlng Let Out
assessee lets on hie machinery, plant or the letting of
an furniture and also building and under this
igs eseparable trom letting of machinery, plant or furniture, the income is taxable
income from business e.g. an auditorium or cinema theatre let along with
AItin
taxable as
not
. i facilities, air-conditioners, cquipments,
security ete.
KeymanInsurance Policy
7
receivedundera"Keyman Insurance Policy" including any bonus son such policy, is taxable
sumhead
gy
this
ater
if not charged as "Incomefrom Salaries" or "Income from Business".
p28ExcessConsideration for Shares [S. 56(2)(vlib)]
56(2)\vii)(b)) brings to tax the considerationreceived from aresident person bya company,
Sation excess ofthe fair
than a
other company in which public are substantially interested, which is in
marketvalue (FMV) of shares.
exCessissto be treated as the income of aclosely held company taxable under section 56(2)
Such
underthe head "Income from Other Sources", in cases where consideration
received for issue of
sharesexceeds the face value of shares i.e. where shares are issued at a premium.
HOwever,these provisions would not be attracted where consideration for issue of shares is
:
eceived:
Venture Capital Undertaking (VCU) from a Venture Capital Fund (VCF) or Venture
() by a
Capital Company (VCC); or
imby a company (1.e. a start-upP company) from a class or classes of persons as notified by the
Central Government for this purpose i.e. an Alternative Investment Fund (AIF) -Category
or II.
Failure by start-up to comply : Under section 56(2)(viib), the Central Government is empowered
onotify that the provisions of this section shall not be applicable to consideration received by a
wified company (i.e. astart-up company), For the purpose of section 56(2)(viib), exemption is
aailable to a"start-up" if afew conditions, given by notifications specified in the notification
ae satisfied. In case of failure to comply with the aforesaid conditions, the consideration received
for issue of shares (which exceeds the fair market value of such shares), shall be deemed to be the
income of the company chargeable to tax for the previous year in which the failure to comply
with any of the aforesaid conditions has taken place. Further, it shall be deemed that the company
has under-reported the said income in consequence of the misreporting referred to in section
270A(8)(9) for the said previous year.
S. Fair market value of the shares shall be the higher of, the value as may be -
(a) determined in accordance with the prescribed method; or
(b) substantiated by the company to the satisfaction of the Assessing Officer, based on the value
of its assets on the date of issue of shares.
For the purpose of computationof FMV, the value of assets would include the value of intangible
sSets being goodwill, know-how, patents, copyrights, trademarks, licenses, franchises or any
olher business or commercial rights of similar nature.
lo sum up, consideration received in excess of FMV of shares issued by a closely held company
Sto be treated as income of such company, where shares are issued at a premium.
Mlustratlon 2:
olowing are the details of the shares issued by Roy (P) Ltd. Discuss the applicability of provisions
Seclion 56(2)(vib) in the hands of the company.
Face Value of Shares FMV of Shares Issue Prlce of Shares
1 ( (3
100 120 130
3 100 120 110
100 90 110
 Dlrect Tax(1.
XB.Com.: S
240

Solutlon:
SEM-
1. The provisions
Applicablity of sectlon
of Sectlon 56(2)(vlib) are attractedinthls case slnce the shares are lssued a
56(2)(\vilb)
premium (i.e., issue price exceeds theface value ofshares). The excess ofthe ls9ue price ot th
shares over the FMV would be taaxeable under section 56(2)(viib). 10( 130 -? 120) ehall b

treated as income ln the hands of Roy (P) Lid. since shares are isSued al a
thesection
However, no sum shall be chargeable to
2. The provisions of section 56(2)(vib) are attracted
tax under the said as the shares are issued
premium
3. aThe provisions
price less thanofthesection 56(2)(viib)
FMV of shares. are attracted in this case sincethe shares are iBsued al
premium. The excess of the issue price of the shares over the FMV Would be taxable under
section 56(2)(viib). Therefore, 20( 110-90)shall be treated as income in the hands ol Poy

(P) Ltd.
2.2.9 Interestprovides
S. S6(2)\vii) on Compensation
that income by[S.way
56(2)(vl))
of interest received on compensation or on enhanced
compensation referred to in clause (b) of?section l45Ashall be taxable as income from other sources

in the year in which it is received.

2.2.10 Advance for Capital Asset Forfeited [S. 56(2)()]
Clause (ix) provides forthe taxability of any sum of money, received as an advance or otherwis in
Such sum shall be chargeable to income
the course of negotiations for transfer of a capital asset.
sum is forfeited and the negotiations do not restk
under the head 'Income from other sources!. if suchdefining income, also includes such sum forfeit
in transfer of such capital asset. Section 2(24),
within its scope.
2.2.11 Receipts Without Consideration [S. 56(2)(*))
sum of money or the property without
1. Charge : In order to prevent the practice of receiving56(2)\(x)
consideration or for inadequate consideration, section brings to tax any sum of money
without consideration or the value of any
or the value of any property received by any person
property received for inadequate consideration.
consideration, and the aggregate valye
2. Sum of money :Ifany sum of money is received without sum is chargeable to tax
of which exceeds50,000, the whole of the aggregate value of such
3. Immovable property :
(i) If an immovable property is received.
would be taxed as the
(a) Without consideration, the stamp duty value of such property
income of the recipient if it exceeds 50,000.
property by an
(b) For a consideration which is less than the stamp duty value of the
amount exceeding ? 50,000 or 10% of the consideration (w.e. is higher), the difference
chargeable to tax in the hands
between the stamp duty value and the consideration shall be
of the assessee as "Income from other sources".
(ii) Value to be considered where the date of agreement is different fromagreement date of registration:
and the date
Taking into consideration the possible time gap between the date of
date of agreement instead of the
of registration, the stamp duty value may be taken as on the amount
date of registration, if the date of the agreement fixing the of consideration for the
transfer of the immovable property and the date of registration are not the same, provided
whole or part of the consideration has been paid by way of an account payee chequeaccounl or an
account payee bank draft or by use of electronic clearing system (ECS) through a bank
on or before the date of agreement.
(iii) If the stamp duty value ofimmovable property is disputed byOfficer. the assessee, the Assessiny
Officer may refer the valuation of such property to a Valuation If such value is les
for determining the value of such propert)y
than the stamp duty value, the same would be taken hands of the buver
for computation of income under this head in the
 Other Sources |S, 56-59) 241
AMovableProperty : If movable property is received,
()wlthoutconslderation, the aggregate fair market value of such property on the date of receipt
would betaxed as the income of the
recipient, if it excecds ?50,000.
for
(b) inadequate consideratlon, the difference between the
and fair market value
andsuch consideration excecds 50,000, such difference wouldaggeyate be taxed as the income of
the recipient.
Appllcable only to
'Capltal Asset': The of the recipicnt
s property whichi is the nature of a capital asset provisions of section S62Xx)
and not would apply
stock-in-trade, only to
raw materiíal
orconsumable stores of any business of the recipient. Therefore, only transfer of z capital asset,
without consideration or for inadequate consideration would attract the provisions of section
56(2Xx).
Summary : The table below summarises the scheme of
taxability of gifts:
Nature of
Taxable Value
No. Asset
|1. Money The whole amount if the same
exceeds ? 50,000.
2.Immovable () Without consideration: The stamp value of the
if it exceeds 50,000. property
() Inadequate consideration: The difference between the
stamp duty value and the consideration, if such dífference
exceeds higher of 50,000 or 10% of consideration.
Movable () Without consideration : The aggregate fair market value of
the property, if it exceeds ? 50,000.
(ü) Inadequate consideration: The diference between the
aggregate fair market value and the consideration, if such
difference exceeds? 50,000.
1 Non-applicability of Section 56(2)(*): However, any sum of money or value ofproperty received
in the following circumstances would be outside the scope of section 56(2)(x) -
(a) from any relative; or
21 (b) on the occasion of the marriage of the individual; or
(c) under a will or by way of inheritance; or
(d) in contemplation of death of the prayer or donor, as the case may be; or
(e) from any local authority; or
(0) from any fund or foundation or university or other educational institution or hospital or other
medical institution or any trust or institution; or
(g) from any trust or institution registered; or
(h) by any fund or trust or institution or any university or other educational insitution or any
hospital or other medical institution.
0) by way of transaction not regarded as transfer under section 47(i)(iv)/(v)(vi/(viXb)/(viXd y
(vii).
0) from an individual by a trust created or established solely for the benefit of relative of the
individual.
(3) Trom such class of persons and subject to such conditions as may be prescribed.
) by an individual, from any person, in respect of any expenditure actually incurred by him on
his medical treatment of any member of his family, for any illness related to COVID-19
Subject to conditions notified by the Central Government.
m) by a member of the family ofa deceased person - (A) from the employer of the
deceased
Person (without any limit): or (B) from any other person or persons to the extent that such
or aggregate of such sums not exceeding * 10 lakhs, where the cause of death of such
Person is illness related to COVID-19 and the payment is (1) received within 12 months from
 Direct Tax (T. YB.
242

the date of death of such person; and (ii) subject to

such other
conditione Com.t SEM-y
Central Govermment. notified by t
2.3 OTHER TAXABLE ITEMS under this head:
are taxable
In addition to the above, the items of income
following8
() agricultural income from aplace outside India.
(2) (a) casual
income.
(b) winnings from races.
(3) annuity payable under a will, contract or trust deed.
(4) annuity payable to a holder of a trade mark.
subletting earned by a
(5) rent from property not owned by the assessee i.e. income from tenant,.
(6) ground rent.
(7) rent of a vacant plot of land.
(M.P.) or M.L.A.
(O) Salar1es and allowances paid to a member of parliament
() tamily pension paid to a member of family of adeceased employee.
(10)
(11) director's
director's board meetingforfees.
commission standing as a guarantor to bank or for underwriting shares of ane
company.
(12) gratuity paid to a director who is not an employee of the company.
ateacher from
(13) remuneration from a non-employer e.g. examination fees received by
honorarium for lectures as visiting lecturer. upabu University.
(14) insurance commission.
(15) income from royalty on book, trade-mark etc.
(16) royalty and rent from mining.
(17) interest on bank deposits and loans.
(18) interest on securities issued by a foreign government.
(19) refund of deposit and interest under National Savings Scheme 1987 (NSS) under section 80CCA
(20) Refund of principal invested under Equity Linked Savings Scheme under section 80CCB.
(21) Interest on income tax refunds by the Income-tax department.
(22) The lump sum amount received by an employee on his retirement by way of interest on his
contributions to an unrecognised provident fund.
(23) Interest earned before commencement of business or during construction period.
(24) Income from undisclosed sources.

3. DEDUCTIONS [S. 57]

3.1EXPENSES FOR REALISATION OF DIVIDENDS & INTEREST

(a) In the case of dividend or income in respect of units of a mutual fund or income in respet
of units of a specified company : Interest expenditure to earn such income is allowed as deductiom
subject to a maximum of 20% of such income included in the total income, without deduction
under this section [amendment w.e.f. 1-4-2021].
(b) In the case of interest on securities: Any reasonable sum paid by way of commissIOn u
remuneration to a banker or any other person for the purpose of realising such interest on bend
of the assessee.
 FromOther.Sources (S. S6-59)
243
EMPLOYEES
'C ONTRIBUTION To
PROVIDENT fund,
contribution to provident fund, superannuation
ETC. FUNDS
Employces State Insurance
to
is he included in the
clc,
oned income
of theactually credited
deductiononly in respcct of such sums
cheme cmployer,
as seen The employer
tothe employees' accounts, turn,
is, inbefore
above.
edate.Thus,theeemployer lfailing to deposit within due date such contributions collected from
Menployees
istaxcd on such amounts.

REPAIRS,
INSURANCE &DEPRECIATION ON ASSETS LET OUT
nthecase
o fmachinery, plant, furniture or (in casc ofjoint lettings) building let onnhire,the following
nUnts be deducted :
DPayments for Current repairs to buildings.
MPAymentsforCurrent repairs to
eInsurance
machinery,
plant or furniture.
epremiumpaid in respect of machinery, plant or furniture.
MDepreciation,(including unabsorbed depreciation) in respect of
furmiture. building, machinery, plant or
STANDARDLDEDUCTION ON
FAMILY PENSION
Fumuily pension means a regular monthly amount paid by the employer to a family member of an
anployeeintheevent of the employee's death. Adeduction similar to the standardI dedduction allowed
income tfromsalaries is allowed in respect of such family pension. The deduction is equal to
BY%ofsuch,income or 15,000, whichever is less.

35SSTAANDARD DEDUCTION ON INTEREST ON

COMPENSATION
$S7(iv)providesthat 50% of income by way of interest received on compensation or on enhanced
aompensationforr compulsory acquisition of land etc. referred to in clause (b) of fsection 145A shall
eallowed assdeduction and no deduction shall be allowed under any other clause ofS. 57.
a6 GENERAL EXPENDITURE
imaiher expenditure, not being in the nature of capital expenditure, laid out or expended
wholly
iexclusively for the purpose of making or carning such income, can be deducted. The expenditure
lauahle. even if income is not actually received. Thus, ifloan is taken for investment in
uhich no income is received, yet, the interest on such loan can be deducted.
securities

4 EXPENSES DISALLOWED [S. 58]

The following expenses are expresly not deductible -
-any personal expenses of the assessee.
C}any interest payable outside India on which tax has not been paid or deducted.
B)any salaries payable outside India, unless tax has been paid or deducted thereon.
}wealth tax paid.
DJany expenses or allowance in connection with income by way of winnings from lotteries, crossword
puzlies, races, card games, other games, gambling, or betting. (However this prohibition does
uot apply to the owner of horses maintained for running in horse races).
aounts not deductible in accordance with the provisions of S.40A (see Chapter 6) so far as may
applicable to Income from other sources as they apply to computation of business profits, e.g.
(a)
Unreasonable
b) Expenses
or excessive payments to specified persons
(e)
Provision exceedi ng
? 10,000 paid in cash.
for gratuity on retirement.
(0)
Employer's c contribution to non-statutory funds.
244
Direct Tax (T. Y.B. Com,t
(7) deduction ofat 30% ofoxpenditure in respect ofdeducted
which sum is payable to aresident om
deductible
before the duesource, if such tax has not been
or afler deduction has not
which tax
date of retum specified in scction 139(1).

RECOVERY AGAINST EARLIER DEDUCTIONS

If any anmount is deducted
of recoveredagainstt any Loss, Expenditureor Liability earlofierecove
r, (e.g.
d debts deducted earlier),
similar to the provisions of it is taxed as income under this head inthe year
section 41(1) applicable in respect of such recoveries to be
computing income from business. includea
6.
EXEMPT INCOMES
6.1
AGRICULTURAL INCOME (S.10(1)]
6.1.1 Definition
Under the Constitution of India, income from agriculture can be taxed only by a State
The Central
Government cannot tax income from agriculture under the Income-tay
income from agriculture is exempt from income-tax. GoActve.rnme
He
Agricultural income, defined in Section 2(1A) of theAct, means in brief:
(a) any rent or revemue derived from land which is situated in India and is used for
purposes, excluding capital gain on transfer of such land. agricultun
(b) any income derived from such land by agricultural operations including processing of agrion
produce, raised or received as rent-in-kind, to render it fit to be taken to market; or sale ot.
agricultural produce.
(c) income attributable to a farm house. However, income arising from the use of such build:
land for any non-agricultural purpose (e.g. letting for residential purpOse or for the pumo
any business or profession) shall not be agricultural income.
(d) income derived from saplings or seedlings grown in a nursery.
6.1.2 Examples of Agricultural Income
1. Income from lease of agricultural land.
2. Income from land used for agriculture purposes e.g. produce grown for consumption by m
(grains, vegetables or fruits) or animals (grass or pastures); cash crops (cotton, jute etc.), lum:
items such as coffee, tobacco; crops grown for self-consumption etc.
3. Compensation received from Insurance company for damage to crop or tea garden.
4. Income from growing flowers or creepers.
5. Salary or interest on capital received by a partner from a firm engaged in agriculture (as salar
interest is only a way of distributing profits).
6.1.3 Examples of Non-Agricultural Income
1. Income not directly derived from land: interest on arrears of rent; interest on loan given t
farmer; dairy farming, poultry farming, dividend received from a limited company having o)
agricultural income; salary of a manager of an agricultural estate, rent for land used for star
crops; manufacture of salt from sea-water.
2. Income without performing basic agricultural operations: sale of plants which have gro
spontaneously (on their own without any sowing of seeds e.g. mushrooms); sale of trees
were already standing on the agricultural estate when purchased.
pr
3. Income from produce sold by others and not by the cultivator: sale of agricultural
received as interest on loan; received as price for water supplied to agricultural lano,
agricultural produce by a broker.
 From other Sources (S. 56-591 245
SUMS RECEIVED BY A
2
MEMBER FROM HUF (S.10(2)]
Conditionsfor Exemption: Under s. 10(2):
1) received
sum
2. any
1. bya member of a Hindu Undivided Family (HUF),
3. Outo f

(a) the income of the family, or

L any impartible (indivisible) estatle of the family, e.g, rent received by the
family from a
house-property belonging to the family,
from tax,
is exempt
Exemption Denied: However, the above is not available where the provisions of
2)Section 64(2) ofthe Act apply (dealing withexemption
the income from self-earned property transferred to
the HUF, by a member of Fthe family).
AvoidDouble Taxation: We have seen that HUF is a
(3) separate taxable entity under the Income-
s Act. The income earned bythe HUF is to be assessedin its own hands. So, any sum received
omember of the HUF might already been taxed in the hands of the HUF. Therefore, any sum
distributedto its members by the HUF out ofsuch income, is exempt from tax under this provision,
0avoid doubletaxation. (However, the exemption does not depend on any tax being actually
paid by the HUF].
lustration 3 : (Answer in brlef)
ac. an individual has personal income of 1,40,000. He is a member of a Hindu Undivided Family.
ihich has an income oft 30,000.
position. ABC gets 15,000 out of the income of the HUF as his share.
Discuss ABC' s tax
Solution:
ABC willbe taxed on his income of? 1,40,000. 15,000 received by ABC as his share in the income
ofthe HUF is exempt from tax u/s 10(2). (The exemption is regardless of the fact that the HUF has
d no tax on its income which is below the taxable limit of 2,50,000].
6.3 EXEMPTION OF.DISASTER cOMPENSATION [S. 10(10BC)] T
1. This clause exempts any amount received or receivable as compensation by an individual or his
legal heir on account of any disaster.
2. Such compensation should be granted by the Central Government or a State Government or a
local authority.
3. However, exemption would not be available in respect of compensation for alleviating any damage
or loss, which has already been allowed as deduction under the Act.
4. "Disaster" means a catastrophe, mishap, calamity or grave occurrence in any area, arising from
natural or man-made causes, or by accident or negligence. It should have the effect of causing -
(i) substantial loss of life or human suffering; or
(ü) damage to, and destruction of, property; or
(iii) damage to, or degradation of, environment.
It should be of such a nature or magnitude as to be beyond the coping capacity of the community
of the affected area.
6.4
SUM RECEIVED UNDERA LIFE INSURANCE POLICY [SEC..10(10D))
Y Sum received under a life insurance policy including bonus on such policy is wholly exempt
Om tax. However, exemption is not available on:
any sum received /s 80DD(3) or ws 80DDA(3); or
any sum received undera Keyman insurance policy; or
ysum received under an insurance policy issued on or after 14-2012 in respect of which the
Penium payable for any of the years during the term of the policy exceeds 10% of the actual
pial sum assured (exceeds 20% if policy is issued between 01-04-2003 and 31-3-2012; or
246
Direct Taxc
exceeds I$% if policy is issucd
as per on or afer 0]-04-2013 and insured is disabled (T.Y.B.Com.t SEM
or.
4.
sec, 80U or
suffering discase
Where any Unit Linked from specified w/s 80DDB).
on or after 01-02-2021
payable for any of Insurance Policy(ULIP), 0s íssuedsuch
eanoverely inats
the previous
the premium is payable, by a person,
year for more
during policy excecds
termonof ULIP, issued on or
thethan lhe
exemption
policies.
shall apply only with respect to those ULIP, where the aggregate
does not exceed the aforesaid limit in any of the previous year during the amount
term
of
250,0 ), ptertie
of
Wh
Notes : any Ílho
(a) Point (3) and (4) shall not death oof a person.
(b) apply to any sum received on the
Actual capital sum mean the minimum amount assured under the policy,
of the
insured assured shall on
event
(c) Ifthe exemption
taxable under
at any time during the term ofthe policy.
ws 10(10D) is not available in respect of ULIP due to point (4),
the head Capital Gains w/'s 45(IB) and tax liability shall be computed
hap eni
income shall m
112A. as per e
(d) For se,
valuecalculating
of any actual capital sum assured (for point 3), no account shall be taken
any benefit by way of bonus orfor -() e
over and abovepremiums agreed to be returned; or (ii)
person.
sum actually assured which is to be or
polic otherwayie
may be received under
yby the
6.5
PAYMENT FROM SUKANYA SAMRIDDHI ACCOUNT (SECTION 10(11AN
Section 10(11A)
Samriddhi Accountprovides that any payment from an account opened in accordance with the
Rules, 201 14, made under the Government Savings Bank Act, 1873, Sukany
deposi,shalts linnot, adb
included in the total income of the assessee. Accordingly, the interest accruing on
withdrawals from any account under the said scheme would be exempt.
6.6 SCHOLARSHIPs [S.:10(16)]

1. Scholarships granted to meet the cost of education are exempt.

2. The entire amount of scholarship would be exempt, irrespective of the actual expendiure
education.
3. The scholarship may be for a course not leading to a degree.
4. 'Cost of education' covers not only the tuition fees but also other incidental expenses related h
education.
5. Scholarship granted to the children of employees by a company would be exempt u/s 10(16) and
would not be taxed as salary in the hands of the employees.
6.7: INTEREST ON `ECURITIES (S.10(15)]
The following amounts are exempt from tax -
(1) interest, premium on redemption or other payment on the securities, bonds, annuity certificals
savings certificates or other certificates issued by the Central Government and deposits notiied
by the Central Government, subject to the specified conditions and limits (e.g. Post Ofice Saving
Alc upto3,500 [Notification No. 32/2011 dt. 3-6-2011]).
(2) interest on the securities held by the Issue Department of the Central Bank of Ceylon.
(3) interest payable to any foreign bank authorised to act as a central bank in that country on30)
deposits made by it, with the approval of the Reserve Bank of India, with any scheduled bank
(4) interest payable (including hedging transaction charges on account of currency fluctuations, DB
excluding interest paid on delayed payment of loan or on default of it if it exceeds 2% p.a. oid
the interest) -
(a) bya scheduled bank to a non-resident or to a not ordinarily resident in India on depos"
foreign currency, approved by the RBl;
 Fhom other Sources (S. S6-59) 247
notificd public
scctor bond, paid to the Central
the (IICL),
)on a
Government his specificd
tax frec bonds issued by registered holder. Accordingly,
India Infrastructure Company Ltd.
free.secured, redecmable, Railway Finance
and tax
Corporation Ltd,.
(IRFCL),
Corportion Ltd. (RECL),
National non-convertible bonds of the Indian
Highways Authority of India (NHAD, ,Rural Electrification
and Power Einance CorporationHousing andthe Urban
(PFC), Development
interest Ltd, (HUDCO)
from which would be exempt under this
Corporation
section;
by
sernment, on deposits by
Government/public sector emplovees, under any notificd
(c)
scheme, out of moncys 1 received/due on rctiremcnt.
Interest eecurities held
on by the Welfare Commissioner, Bhopal Gas Victims,
India's SGL Account No. SL/DH Bhopal, in Reserve
)
Bank ofLimited for victimssof 048 (the interim deposited by Union
Carbide
notificd
Bhopal leak disaster).
gas compensation
nterest on
deposit account with Reserve Bank of India or a public sector bank for the
benetit of the
victims of theBhopal Gas Leak Disaster.
Interest on Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 notified by the
Central Government or Deposit Certificates issued under the Gold Monetisation Scheme,, 2015.
Interestan bonds, issued by (a) a local authority: or (b) a State Pooled
(8)
Finance Entity, and
specifiedby the Central Government by notification in the Official Gazette.""State Pooled Finance
Entity" means such entity which is set up in accordance with the guidelines for the Pooled Finance
Development Scheme notified by the Central Government in the Ministry offUrban Development.
Accordingly, the Central Government has specified the "Tax-free Pooled Finance Development
Bonds" under Pooled Finance Development Fund Scheme of Governmenttof India, interest from
Dch would be exempt under section 10(15).
9) Interest income received by a non-resident/not-ordinarily resident in India from a deposit made
on or after I|-4-200S in an Offshore Banking Unit referred to in section 2(u) of the SEZ Act, 2005
hranch of abank located in a SEZ and which has obtained permission under section
23(1)(a)
of the Banking Regulation Act, 1949.
aD Interest income receivable by a non-resident from a unit located in Intermational Financial
Corvices Centre (IFSC) n respect of moneys borrowed by it on or after 1-9-2019.

68ALLOWANCES TO M.P.1 M.LIAS[S.10(17))

This exemption is in respect of
du(0 daily allowances received by a member of Parliament (M.P), or of a Legislative Assembly
(M.L.A.), or of any committee thereof;
2) any allowance received by a M.P. under the Members of Parliament (Constituency Allowance)
Rules, 1986:
3) any constituency allowances received by'a M.L:A.
Thus, any allowance (other than Daily/Constituency Allowance) received by an M.P. or M.L.A. is
fully taxable.
d6.9 GOVT AWARDs & RENARDS [S.10(17A)] 1
This exemption is in respect of -
) any payment made whether in cash or in kind,
14) as an award, instituted in public interest, by the Central/State Government or any other
body and
approved by the Central Government
)or as a reward by the Central/State Government, for such
purposes as may be approved by the
Central Governmnent.
JCell-known examples ofeligible awards are: Sir C.V. Raman Award; Meghanand Saha Award:
Sanse Award; Bharativa Jnanpith Award; National Awards for Films; Ramon Magsaysay Award:
Cet Natak Academy Awards Swatantra Sainik Sanman Pension; medal
Cames or Common Wealth Games or Asian Games. winners of the Olympic
248 Direct Tax (T.
Y.B.Com.t
6.10 PENSION RECIPIENT OF
GALLANTRY AWARDS
SEM
() Exemption
RECEIVED
BY

award as the C'entral Govemment may, by

behalf, is exemp.
C'hakra" or
award "Param Vir (hakrn" or "Maha Virnotification
received by an individual
ef Pension tAny income by way ofpension "Vir Chakra" or uch
in the Official Gazette
ISs.p1e0c(if1y8N
olhewht o galaasn
n
any of the above
case of the death of the family of
thethe wardee
(2) Exemptlon of Family :In
income by way of familyPension any member of
also be exempt
under :this
(3) Meaning of Family
pension received by
clause.in relation to an individual, means -
FFamily, individual
the spouse and children of the individual; and
mainl.
the parents, brothers and sisters ofthe individuals or any of them wholly or

6.11
on the individual.
PENSION TO FAMILY MEMBERS OF ARMED FORCES [S.10(19) dependen
This exemption applies if the
following conditions are satisfied
(1) Family pension is received by the widow (or children or nominated heirs) of a
armed forces (including para -military forces ) of the Union. member of the
ie death of such member has occurred in the course of operational duties.
(3) The death has occurred in suuch circumstances and subject to such conditions, as mav be
prescribe
7. WORKSHEET/RAPID REVISION
WORKSHEET 1: COMPUTING INCOME FROM OTHER SOURCES
ASSESSEE:
PREVIOUS YEAR: 2022-23 ASSESSMENT YEAR:202a
Particulars
INCOME FROM OTHERSOURCES
1. Dividend
Less: Interest on loans upto 20%
2. Winnings from Lottery etc.
3. Employees' contribution to PF etc.
Less :Paid/Credited within Due Date
4 Interest on securities
Less: Exempt u/s 10(15)
Less : Realisation Charges/lnterest on loans
5. Income from machinery, building, furniture on hire
Less: Repairs/Insurance/Depreciation
6. Family pension
Less: Exempt u/s 10(18)
Less : Standard Deduction (lower of 1/3 or 15,000)
7. Gifts> 50,000 from non-relatives
8. Keyman Insurance Policy
9. Shares of Private Company wlo Consideration
10. Premium on Shares by Private Company
11. Interest on Compensation / Enhanced Compensation
Less : 50% of such Interest
 Other SorCes(S S6-$9) 249

for Capltal Asset

Govt.Awards & Transfer, Forfelted
Rewards
Less:
General Expenditure For exempt ws 10(17A)
Less.
(Except: Earning Income
Capital Expenditure
Personal Expenditure
G aterest/Salary
Wealth tax paidPayable Oulside India without T.D.S.
Expenses regarding lotteries etc.
Provision of S.40A)
f. aor, of
Expenditure if TDS not
Add:Recovery against earller deducted / paid
Incomefrom Other Sources deductions

ITR-2
Income-tax Qeturn format requires Compuation of Income fromn other sources in the following
e
emat.
Other Sources:
Income From
a Dividends,Gross
b. Interest, GrosS
from machinery, plants, buildings, etc.,
elelee| 1a

Rental income Gross 1c

d. Others, Gross (excluding income from owning race horses) 1d
1c+ 1d)
Total (1a+ 1b +
.
Deductions under Section 57
(i) Expenses f
(ü) Depreciation fi
(iii) Total fiiü
- fiii)
g. Balance (1e
Winning from lotteries, crOSSWord, puzzles, races, etc.
me from other sources (other than from owning race horses) (1g+ 2)
income from owning and maintaining race horses
a. Receipts 4a
b. Deductions under section 57 in relation to (4) 4b
c. Balance (4a - 4b)
5. Income chargeable under the head "Income from other sources" (3 + 4c)
8 ILLUSTRATIONS
lustration 4:
Mrs. Batliboi is a professor of law in M.K. college. The particulars of her income for the year ending
31-3-2023 are as follows:
Salary - 32,000.
Oyaltyfrom books - 25,000. Expenses on typing etc. were 2,000.
nonorarium received from a management Institute as a visiting lecturer - 3,000. Conveyance
1or visiting the
Institute -200.
FamiExami
ly nership
. fees from the University of Mumbai - 1,000.
pension of 42,000 on death of her husband from his employer.
She
received
Date Government. the'Dronacharya' Award of 10,000 for the'Best Teacher of the Year' from the
 Dlrect Tax
250
(T.Y.B.Com.tSEM
ass0ssment year 2023-24.
the
Batlibolfor
Compute Gross Taxable Income of Mra,
Solutlon : (RESIDENT) ASSESSMENT YEAR
BATLIBOL
COMPUTATION OF INCOME OF MAS.
PREVIOUS YEAR :2022-23
Particulars
SALARY 25,000
INCOME FROM OTHER SOURCES 2.000
(1) Royalty from Books 3,000
Less: Expenses on typing
(2) Honorarlum trom Management Institute 209
Less: Conveyance
(3) Examinershlp Fees 42,000
(4) Family Penslon
Less: Standard deduction
1/3 or 15,000 whichever is less
14.009| 280
(5) Dronacharya Award is exempt u/s 10(17A)
GROSS TOTAL INCOME
Mr. Hari, received the following without consideration during the P.Y. 2022-23 from his fiend
Illustration 5:
Rajesh:
() Cash gift of 51,000 on Diwali. on his birthday.
which was 55,000,
(i) An expensive wrist watch, the value of
of which is 10lakh on
(üi) A plot of land at Bangalore on New Year,
the stamp value
lakn.
lhal dg
Compute the income in August,
of Mr. Hari chargeable 2018 for 3
under the head "Income from other sourceslor
Mr. Rajesh had purchased the land
(CA-PCC, Nov.
A.Y. 2023-24.
2010, adaçlx
Solution:
COMPUTATION OF INCOME OF MR. HARI ASSESSMENT YEAR: 20.
PREVIOUS YEAR: 2022-23

Particulars
INCOME FROM OTHER SOURCES ? 50,000
Cash gift is taxable under section 56(2)(vi), since it exceedsbe taxable under
5.00
1.
The value of property received without consideration would the definition of
2. watch is not included in
section 56(2)(vi). However, wrist Therefore, receipt of wrist watch without
property under section 56(2)(vii). provisions of section 56(2)(vi)
consideration would not attract the received without
Bangalore,
3. Stamp value of plot of land at 10,00 0
consideration, is taxable under section 56(2)(vii)
Income From Other Sources |10,51,0

Illustration 6 :
during the previous year 2022
gifts received by Mrs. Rashmi 2023-24.
Check the taxability of the followingfrom gifts for assessment year
and compute the taxable income
she has receivedR 90,000 as gift out of wtd
1. On the occasion of her marriage on 14-8-2022,friends.
?70,000 are from relatives and balarnce from
18,000 from cousin of her mother.
2. On 12-9-2022, she has received gift of 15-8-2022.
friend on
3. Acell phone worth ? 21,000 is gifted by her
of her husband's grandfather on 25-1020
4. She gets a cash gift of ? 25,000 from the elder brotherfriend on 14-4-2022.
from her
5. She has received a cash gift of 12,000
Solution :
COMPUTATION OF INCOME OF MRS. RASHMI ASSESSMENT YEAR: 202
PREVIOUS YEAR: 2022-23
 Other Sources (S 36-39)

COMEoNOTHER 8OURCES
received on the o0caaion of
mother marriage ere not Hence, Nil
COusinof Mra. Rashmi'
is not included
not e relative. taxablethe caeh gift ie laxeble.
18,000
Collphone in the
58(2)(vil).definition property as per
Explanatlonto section ot
Brotherofhusband's grandtaiher isHence,
NH
nol aNe not taxable
relatlve. Hence, the cash git ie taxable 25,000
gitfrom friend is texable 12,000
Cash
& Income From Other Sources 55.000
 Dlreet Tar(T.Y.B.Com.1
252
EXERCISES

OUTLINE

No. Tople
Theory Quentlons
9.1 Descriptive Questlons [7 or 8 Marks)
0.2 Short Notes (5 Marks]
10. ObjectBve Questions
10.1 Multiple Choice Questlons
10.2 Fil in the Blanks
10.3 Match the Following Column8
10.4 State Whether True or False
10.5 Check Your Answers
11. Practical Problems

9. THEORY QUESTIONS [15 MARK

9.1 DESCRIPTIVE QUEsTIONS [7 OR 8 MARKS)
1. What kinds of income are generally included under the head - Income from other sources)
2. What are the items specifically taxable under the head -Income from other sources? [Ans.: Pan
3. Explain - (Ans.: Para2
(a) Income taxable under - Income from other sources.
(b) Dividends taxable under Income from other sources. (Ans.: Paraz
[Ans.: Para 22
(c) Casual Income taxable under Income from other sources. [Ans.: Para 22
(Þ) Interest on securities taxable under Income from other sources.
(e) Income from assets let on hire.
[Ans.: Para 224
[Ans.: Para 223
4. Discuss any eight items of income taxable under the head -Income from Other Sources
(Ans.:fromParnzote
5. What are the deductions allowed while computing income under the head- Income
SOurces ?
6. What are the expenses which are expressly not allowed as deduction while [Ans.: Para
under the head-income from other sources under the Income-taxX Act? computing incong
[Ans.: Para
9.2SHORT NOTES (5 MARKSj
Write a short note on:
1. Agricultural Income
[Ans: Para 6.1
2. Receipts from LIC
[Ans.: Para 84
10. OBJECTIVE QUESTIONS

10.1 MULTIPLE CHOICE QUESTIONS

1. Income under the head income from other
sources is taxable on
(a) Due basis
(b) Receipt basis
 Other SouPCes /S. S6-59) 233
basisof
the method of accounting rogularly by the assese00
On ofthe above
e)None, employed
Ddonds declared by Unit Trust of Indla is
exemptin the hands of unlt
Fuly
taxablein the hands of unit holders
Fuly
Taxablebut
holders
deduction is allowed under sec. 80
c)
(0)
Noneofthe above
#nosystemof accounting is followed, interest on securities is taxable on
a)Due
basis
(c)Hyrbidbasis (b) Receipt basis
(d) None of the above
comPutinglottery income, the
For assessee shal
(a)
Beentitledto any deduction for purchase of lotery tickets
Not entitledto any deduction for purchase of lottery tickets
antitled to deduction upto 10% of total purchase of tickets
None ofthe above
deduction
Thelegal
heir of the deceased who
family pension is allowed a standard
receives
from Such pension to the extent of
(a)1/3ofsuch pension, subject to maximum of 25,000
b) 1/3 ofsuch pension or 15,000 whichever is less
(c)1/3of.Such pension or 15,000 whichever is more
above
(d) None of the
treceived by an individual 70,000from his relative M shall be
la) Fully exempt (b) Fully taxable
Exempt upto 50,000 (d) None of the above
lc)
1.Rakeshreceived 70,000 from his friend on the occasion of his birthday.
amount tof 70,000 is taxable
(a) The entire taxable
(b) 20,000 is
Ic) The entire amount is exempt
(d) None of the above
AFamily pension received by a widow of a member of the armed forces is, subject to conditions,
Exempt upto 3,00,000 (b) Exempt upto 3,50,000
Totally exempt under section 10(19) (d) Totally chargeable to tax
0 Gift of 5,00,000 received on 10 th July, 2019 through account payee cheque from a non
relative regularly assessed to income-tax, is
(a) Acapital receipt not chargeable to tax
(b) Chargeable to tax as income from other sources
(c) Chargeable to tax as business income
(d) Exempt upto 50,000 and balance chargeable to tax as income from other sources
10. Income from letting of machinery, plant and furniture is -
a) always chargeable to tax under the head "Profits and gains of business and profession"
(b) always chargeable to tax under the head "Income from other sources"
chargeable under the head income from other sources" only if not chargeable under the
head "Profits and gains of business and profession"
(d) exempt from tax
11. The deduction allowable in respect of family pension taxable under Income from other sources
(a) 33-1/3% of the pension
(b) 30% of the pension or 15,000, whichever is less
(9) 33-1/3% of the pension or 15,000, whichever is less
(d) Nil
2.Any sum received under a"Keyman Insurance Policy including any bonus on such policy, is
laxable as income from other sources
a) in all cases
only if not charged as "Income from Salaries"
 254 Dieet TuN(10.Coma
(c) onty it not Irom Buslness"
(d) only IM not charged as "ncome from Salarien" or "Income from
13. charged as Income Bualnena",
Agricultural
(a) exempt fromIncome from place outalde Indla(b)ls taxablo only In onno
(c) taxable as ax
14.Income
(a)
Income trom buslneas (d) taxable as income from other
trom etting of machinery, plant and furnlturo ls
always chargenble the hond "Profite and galna of buainena
non-ra ident
tax under
to tax
(b) always chargenble to under the hend "Income from othor BOUrcos and
(c)
chargeable under the head "Income from other sources" only I
not
proflon
head "Profits and gains of business and profosslon"
Tnargable to tax under the head "Income from houso propery
15.The deduction allowable in rrespect of family penslon taxable undor "Income
ch(arrogmenolbahor underue
(a) 33'7,% of the
pensionor &
(0) 30o of the pension 15.000, whlchever Is l08B
(C) 38,% of the pension or 15.000, whichever ls loss
(d) 30% of the
pension
oanesh received 60,000 from his triend on the occasion of his birthday.
(a) The entire amount of 60,000 is taxable
(b) ? 50,000 is
taxable
(c) The entire amount is
(d) 10,000 is taxable exempt
17. Mr. Y has
received a sum of 51,000 on 24-10-2022 from relatives on the
marriage.
(a)
Entire 51,000 is chargeable to tax (b) Only 1,000 is chargeable to tax
0ccasBon ol h
(C) Entire 51,000 is (d) Only 50% i.e. R 25,,500 is
exempt from tax
18. Mr. Mayank has received a: sum of 75,000 on 24-10-2022 from his friend on
the chargoable to \ax
marriage
(a)
anniversary.
Entire ? 75,000 is chargeable to tax (b) Entire 75,000 is exempt from tax
occasion ol ha
(c) Only? 25,000 is (d) Only 50% 0.e. 37,500 is chargeable tot.
chargeable to tax
19. The deduction in respect of interest on enhanced
the previous year 2022-23, would be compensation of 1,50,000 received d
(a) ? 1,50,000 being 100% of ? 1,50,000 (b) 75,000 being 50% ofR 1,50,000
(c) ? 45,000 being 30% of 1,50,000 (d) Nil
10.2 FILL IN THE BLANKS
1. Any gift received by an individual from his relative is fully
2. An income which does not fall under the first four
heads of income is taxable under the head
3. Amount exceeding received without
under the head income from other sources.
consideration from non-relatives is taxable
4. Agricultural income from Bangladesh is taxable under the head
5. Family pension received by member of the family of the government
employee who has ben
awarded 'Param Vir Chakra' is (Exempt/ Taxable) income.
6. Share of income received by a member of HUF is
(Exempt/ Taxable) income.
7. Scholarships to meet are exempt.
8. Amount received under a Life Insurance policy is from tax but amount received under
a Keyman Insurance Policy is from tax.
9 allowance and allowance received by a Member of Legislative Assemb)
are exempt from tax.
10. HK has received gift of 50,000 in cash from his friend. It (is / is not) taxable.
11. VJ has received gift of ? 1,50,000 in cash from his brother, It. (is / is not) taxable.
12. KS has received gift of ? 1,50,000 in cash from his mother's sister. It (is / is ndl
taxable.
 Other Sonrces |S. S6-59)
255
received gift of
has 1,50,000 \n cash from hie
receivedgittof tather's brolher. M (is / is not)
11,50,000 in cash from hls cousin. It
SW
has, in
gift of (ls/ la not) taxable.
1,50,000 cash from brother of his (ia/ ls not)
Brable,
. HA
haSreceivedaift of 1,50,000in cash from his qrand lalher, I spouse. I -(ls/ls not) faxable.
a has
received aift of 1,50,000 in cash trom husband of his slster. I (s / ls not)

SOhasreceivedaift of ? 1,50,000In cash from sister of his brolher's wife.

) taxable. I t ( i s /is
received gift of 1,50,000in cash from the sister of his not)
is
xAble.
SYhasreceived aift of 5,000 in cash on his birthday from each spouse. Itof his eleven- (is/
friends. It
(is / is not) taxable.
of
sreceived gift
h a/ s
(1,50,000
in kind
coceived gift of 1,0,000 in cashfrom
fromhis hifriend. (ls / is ofnot)histaxable.
s triendIt on the occasion
RS
p marriage. It
(is / is not) taxable.
received
AANhas aift of 75,000 in
cash from his
ASUmof 1.20,000 was received as gift from fiancee. It. by Ra (ison / the
non-relatives is not) taxable.
occasion of the
marmiage of his son Pravin, It (is / is
s Cashgift of not)friend
51,000 received by VM from her taxable.on the Occasion of her 25h wedding
anniversary.It (is / is not) taxable.
Areceived a cheque for 18,000 as interest net of TDS O 10% on debentures of B Tea Ltd
worth 2 50,000 held by him. The amount taxable under Income from other sources is
L;and TDS is
9. Mrs. SB receivess 75,000 as yearly family pension after the death of her husband. She pays
(200 per month to AB to collect it from the ofice of the employer. The net taxable pension is

n3 MATCH THE FOLLOWING COLUMNS

Column A Column B

1 Dividend from foreign Company (a) Lesser of V, or 15,000

2 Income from interest on securities by a dealer (b) Agricultural income
3 Taxable gift to non-relatives (c) Sundry income
4. Standard deduction on family pension (d) Business income
5 Compensation received from insurance (e) Exceeding 50,000
company for damage to crop () Taxable as other sources
6 Manufacture of salt-from sea-water (g) Lesser of 1, or 25,000
(h) Non-agricultural income

10.4STATE WHETHER TRUE OR FALSE

1. Income under the head income from other sources is taxable on due basis.
2. Winning from lotteries, cross word puzzles, horse races and other races, card game, etc. are
casual income and hence fully exempt.
3. For computing lottery, cross word puzzles races, card games income etc., the assessee shall be
entitled to deduction for purchase of ticketany expenditure incurred for earning such income.
4. The legal heir of the deceased who receives family pension is allowed a standard deduction
Irom such family pension received to the extent of 1/3rd of such pension or 12,000 whichever
is less.
Uvidend is taxable as profits of business if shares are held as business assets by a dealer in
shares.
la person is a dealer in securities, interest on securities is taxed as business income.
Uvidend is exempt income if it is paid out of agricultural income of the company.
Ovidend is taxable even if it is paid out of capital gains of the company.
 Direct Tax
256
the hands of
the. sharaholder,
(T.YB.Com.: SEM
9. Dividends trom a Bhall betaxedin
10. Dividend from co--torelgn
operativecompany
society are exempt fromtax.
11.An assessee can never have aloss from lottery Income. year particular
12.Git given by the employerIn klnd upto 60,000 Iin aggregate during a
10.5 CHECK YOUR
ANSWERS
10.1
16. (a)
1. (c) (b) 7. (a) 10. (C) 13. (0)
17. (c)
18. (b)
2 14. (C)
(b 8 (c) 1. (c) 18. (a)
3 (a) (d 15. (C)
(a) 9 (b) 12.
other
10.2 (1) Exempt (2) Income from (4) Income from sOurces
other s8OUrces (3) 50,000exempt (9) Daly; constituency (5) Exem
(6) Exempt
(11) is not (12)(7) is Cost
not (13) is not (14)(8)
of education )1is (15) is notnot(16) is not (17) Is not (18) is (19) is (20) ia (2
Exempt;
is (22) is not (23) is (24) is (25) is (26) 20,000; 2,000 (27) 60,000
Hints :
25. Gift received by the parents of the person getting married shall be taxable.
28.75,000- Std. Deduction 15,000
10.3 1- (), 2 - (d), 3- (e), 4- (a), 5- (b), 6- (h)
10.4 True : 6, 8,9, 11
False : 1, 2,3, 4, 5, 7, 10, 12
l. False; on the basis of method of accounting regularly employed by the asSessee
2. False; fully taxable
3. False; not entitled to any deduction for purchaselany expenditure
4. False; 1/3rd of such pension or 15.000 whichever is less.
5. False; Dividend is taxable as held as
income trom other sources, even if shares are busines
assets by a dealer in shares.
I. False; Dividend is taxable even if it is paid out of the exempt income of the company e.g. oun
of agricultural income of the
company.
10. False; Dividend from co-operative society shall be chargeable to taX
11. True; Since no expenses can be deducted from lottery prze.
12.False; Gift given by the employer in kind upto 5,000 in aggregate during a particular year s
exempt.
11. PRACTICAL PROBLEMS

Q.1:Following is the Receipts and Payment Alc of Mr. Girija Shankar for the year ended 31st
March, 2023.

Receipts Payments
Cash in hand b/d 18,500| Personal Drawings
Net Salary 40,000
48,000 Cost of ScCooter 15,000
Interest from bank 8,000| nterest paid
Dividends
2,000
12,000 Donation 1,000
Gift from father 2,500| Collection charges on L.I.C. Cheque 500
Received from L.I.C Agricultural land purchased 40,000
on maturity: Cash in hand cld 22,500
principal 20,000
-bonus 2.000 22,000
Received as member of H.U.F. 10,000
1,21,000 1,21,000
 FromOthe Sources (S. S6-59)
nformatkon:
sslaryisaherthe folowing deducbon -Provident Fund: 2,000, prolessionaltax 600,
doducted
atsource- 500.
Aon
spai¡
amoumts borowed for ivestment in shares.
taxable income for the
33008ment year 2023-24.
GTI:42,660+ 0.000m C50,660;
Hlnts :(1) lgnore payments forAn.:
drawings, cOoter, donatlon 4Land.
(2) Exciude git, ecolpt from LLC. &recopt from H.U.EJ
Fromthefollowing parbculars submited by A, comoute hisincome from other SOUrces lorthe
Pnentyear2023-24,

aorsmeeting fees received from YLtd. 3,000

income frormland 10,000
alincome from
Nepalsituated in India 15,000
tom
1bankon FD.R.(Net after TDS O11%) 10,680
ofice saving accOunt 600
post
Govt.securities
on
1,200
Public Provident Fund alc 4,000
National Savings Certficate VIl issue 3,000
Ddendfrom,ALimited declared on 25-8-2022 8,000
Ddendfrom ZLimited I declared on 28-5-2022 1,800
ateryprize 50,000
fromSUb-letingof aa flat 12,000
fent
paid lanndlord forthe flat is ? 6,000)
Aent to
600for realising the rent. He had also spent
^pent
A receivedthe prize on one ticket. 10,000for the purchase of lottery tickets
nd
áns:3,000 +15,000+ 12,000 +1,200 +3,000+ 8000+1.800 + 50.000 +5,400 =99,400;
Dlvidends exempt upto 10 lakhj