Final Course

(Revised Scheme of Education and Training)

Study Material
(Modules 1 to 4)
Paper 7
Direct Tax Laws and
International Taxation
Part – I: Direct Tax Laws
[As amended by the Finance Act, 2021]
Assessment Year 2022-23

Module – 2
(Relevant for May, 2022 and
November, 2022 examinations)

BOARD OF STUDIES
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

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This study material has been prepared by the faculty of the Board of Studies. The objective of the
study material is to provide teaching material to the students to enable them to obtain knowledge
in the subject. In case students need any clarifications or have any suggestions for further
improvement of the material contained herein, they may write to the Director of Studies.
All care has been taken to provide interpretations and discussions in a manner useful for the
students. However, the study material has not been specifically discussed by the Council of the
Institute or any of its Committees and the views expressed herein may not be taken to necessarily
represent the views of the Council or any of its Committees.
Permission of the Institute is essential for reproduction of any portion of this material.

© The Institute of Chartered Accountants of India

All rights reserved. No part of this book may be reproduced, stored in a retrieval system, or
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otherwise, without prior permission, in writing, from the publisher.

Edition : October, 2021

Website : [Link]

E-mail : bosnoida@[Link]

Committee/ : Board of Studies

Department

ISBN No. :

Price (All Modules) : `

Published by : The Publication Department on behalf of The Institute of Chartered

Accountants of India, ICAI Bhawan, Post Box No. 7100,
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CONTENTS

PART I : DIRECT TAX LAWS

MODULE – 1
Chapter 1 : Basic Concepts

Chapter 2 : Residence and Scope of Total Income

Chapter 3 : Incomes which do not form part of Total Income

Chapter 4 : Salaries

Chapter 5 : Income from House Property

Chapter 6 : Profits and Gains of Business or Profession

Chapter 7 : Capital Gains

Chapter 8 : Income from Other Sources

MODULE – 2

Chapter 9 : Income of Other Persons included in assessee’s Total Income

Chapter 10 : Aggregation of income; set-off, or carry forward and set-off, of Losses

Chapter 11 : Deductions from Gross Total Income

Chapter 12 : Assessment of Various Entities

Chapter 13: Assessment of Charitable or Religious Trusts or Institutions, Political Parties and
Electoral Trusts

Chapter 14 : Tax Planning, Tax Avoidance & Tax Evasion

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MODULE – 3
Chapter 15 : Deduction, Collection and Recovery of tax
Chapter 16 : Income-tax Authorities
Chapter 17 : Assessment Procedure
Chapter 18 : Appeals and Revision

Chapter 19 : Dispute Resolution

Chapter 20 : Penalties
Chapter 21 : Offences and Prosecution
Chapter 22 : Liability in Special Cases
Chapter 23 : Miscellaneous Provisions

PART II: INTERNATIONAL TAXATION

MODULE - 4
Chapter 1 : Transfer Pricing & Other Anti-Avoidance Measures
Chapter 2: Non-resident Taxation
Chapter 3 : Double Taxation Relief
Chapter 4 : Advance Rulings
Chapter 5 : Equalisation levy
Chapter 6 : Application and Interpretation of Tax Treaties
Chapter 7 : Fundamentals of Base Erosion and Profit Shifting
Chapter 8 : Overview of Model Tax Conventions

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DETAILED CONTENTS : MODULE - 2

CHAPTER 9 - INCOME OF OTHER PERSONS INCLUDED IN ASSESSEE’S TOTAL INCOME

Learning Outcomes ............................................................................................................................ 9.1

Contents:
9.1 Clubbing of Income-An introduction ....................................................................................... 9.2
9.2 Income of other person’s includible in assessee’s total income ............................................. 9.2
9.3 Income of other person’s includible in an individual’s total income ......................................... 9.3
9.4 Cross transfers ..................................................................................................................... 9.11
9.5 Conversion of self-acquired property into the property of a HUF .......................................... 9.12
9.6 Income includes loss ............................................................................................................ 9.13
9.7 Distinction between section 61 and section 64 ..................................................................... 9.13
9.8 Liability of person in respect of income included in the income of another person ............... 9.13
Test Your Knowledge ....................................................................................................................... 9.15

CHAPTER 10 - AGGREGATION OF INCOME, SET OFF AND CARRY FORWARD OF LOSSES

Learning Outcomes .......................................................................................................................... 10.1

Contents:
10.1 Aggregation of Income.......................................................................................................... 10.2
10.2 Concept of set-off and carry forward of losses ..................................................................... 10.2
10.3 Inter-source adjustments [Section 70] .................................................................................. 10.2
10.4 Inter-head adjustments [Section 71] ..................................................................................... 10.3
10.5 Carry forward and set off of loss from house property [Section 71B].................................... 10.5
10.6 Carry forward and set-off of business losses [Section 72] .................................................... 10.5
10.7 Carry forward and set-off of accumulated business losses and unabsorbed depreciation
in certain cases of amalgamation/demerger, etc. [Section 72A] ........................................... 10.8
10.8 Carry forward and set off of accumulated business losses and unabsorbed depreciation
in a scheme of amalgamation in certain cases [Section 72AA] .......................................... 10.12

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10.9 Carry forward and set off of accumulated loss and unabsorbed depreciation in
business reorganisation of Co-operative Banks [Section 72AB] ........................................ 10.13
10.10 Losses in speculation business [Section 73] ...................................................................... 10.16
10.11 Carry forward & set-off of losses by specified businesses [Section 73A] ........................... 10.17
10.12 Losses under head ‘Capital Gains’ [Section 74] ................................................................. 10.17
10.13 Losses from the activity of owning and maintaining race horses [Section 74A(3)] ............. 10.19
10.14 Carry forward and set-off of losses in case of change in constitution of firm or succession ..... 10.20
10.15 Carry forward and set-off of losses in case of closely held companies [Section 79] ........... 10.21
10.16 Order of set-off of losses .................................................................................................... 10.23
10.17 Submission of Return of Losses [Section 80] ..................................................................... 10.25
Significant Select Cases ............................................................................................................. 10.26
Test Your Knowledge .................................................................................................... 10.27

CHAPTER 11 – DEDUCTIONS FROM GROSS TOTAL INCOME

Learning Outcomes .......................................................................................................................... 11.1
Contents:
11.1 General provisions ..................................................................................................... 11.2
11.2 Deductions in respect of payments ............................................................................. 11.5
11.3 Deductions in respect of certain incomes ................................................................. 11.51
11.4 Deductions in respect of other income ...................................................................... 11.87
11.5 Other Deductions ..................................................................................................... 11.89
Significant Select Cases ..................................................................................................... 11.90
Test Your Knowledge .......................................................................................................... 11.95

CHAPTER 12 – ASSESSMENT OF VARIOUS ENTITITES

Learning Outcomes .......................................................................................................................... 12.1
Contents:
12.1 Assessment of Companies ......................................................................................... 12.2
12.2 Taxation Regime for Securitization Trusts and its Investors ...................................... 12.64

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12.3 Scheme for taxation of Real Estate Investment Trust (REIT)

and Infrastructure Investment Trust (INVIT) [Chapter XII-FA] .................................... 12.66
12.4 Special taxation regime for Investment Funds and income received
from such funds [Chapter XII-FB] ............................................................................. 12.78
12.5 Assessment of other entities .................................................................................... 12.84
12.6 Other provisions related to various entities ............................................................. 12.135
Significant Select Cases ................................................................................................... 12.145
Test Your Knowledge ........................................................................................................ 12.150

CHAPTER 13 - CHARITABLE OR RELIGIOUS TRUSTS AND INSTITUTIONS,

POLITICAL PARTIES AND ELECTROAL TRUSTS
Learning Outcomes .......................................................................................................................... 13.1
Contents:
13.1 Introduction .............................................................................................................. 13.2
13.2 Income of Universities, Hospitals, Educational Institutions, Medical
Institutions etc. [Section 10(23C)]. .............................................................................. 13.2
13.3 Charitable or Religious Trusts and Institutions [Sections 11 to 13] ............................. 13.13
13.4 Tax on accreted income of certain trusts and Institutions [Chapter XII-EB] ................ 13.48
13.5 Special Provisions relating to income of political parties [Section 13A] ...................... 13.58
13.6 Special Provisions relating to voluntary contributions received
by Electoral Trusts [Section 13B] .............................................................................. 13.59
Significant Select Cases ..................................................................................................... 13.66
Test Your Knowledge .......................................................................................................... 13.68

CHAPTER 14 – TAX PLANNING, TAX EVASION AND TAX AVOIDANCE

Learning Outcomes ................................................................................................................ 14.1
Contents:
14.1 Tax planning, Tax evasion and tax avoidance-An Overview ........................................ 14.2
14.2 Tax planning considerations in respect of salary income .......................................... 14.24
14.3 Tax planning considerations in relation to business .................................................. 14.30
14.4 General Anti-avoidance Rules .................................................................................. 14.53
Test Your Knowledge .......................................................................................................... 14.70

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