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Income Tax law and Practice II

INCOME FROM OTHER SOURCES

An assessee has to pay tax on his income and it is chargeable under different heads
according to Income Tax Act. As per sec. 56(1), any income, which is not specifically
exempted and not chargeable under any other heads of income, shall be chargeable under
the head "Income from other sources. This is the last and residuary head of income.

Specific Income [Sec.56(2)]

Sec. 56(2) lays down the list of incomes, which are specifically taxable under this head:

1. Dividend income by Indian and foreign company.

2. Casual income by way of winnings lotteries, cross word puzzles, races including horse
races, card games and other games of any sort, gambling, betting, etc.
3. Interest on compensation or enhance compensation received during the year.
4. Any sum of money, the aggregate value of which exceeds ₹ 50,000 received from any
person without consideration by an individual or HUF during the year.
ear.
5. Any movable property, the aggregate value of which exceeds ₹ 50,000, received from
any person as gift or without consideration or for inadequate consideration where such
inadequacy in aggregate exceeds ₹ 50,000 by an individual or HUF during the year.
6. Where an immovable property, stamp duty value of which exceeds ₹ 50,000 received
by an individual or HUF from any person without consideration, the stamp duty value
of such property.
7. Where a firm or closely held company receive shares of a closely held company, from
any person or persons, without consideration where the aggregation fair market value
exceeds ₹ 50,000 or for inadequate consideration where the inadequacy in aggregate
exceeds ₹ 50,000.

Following are some other incomes chargeable under this head:

1. Examinership remuneration received by a non non-professional

professional individual from a university
of any other institution.
2. Director's fees
3. Interest on loan, bank deposits, deposits, with companies.
4. Interest received on unrecognized provident fund to the extent of the employees'
contribution.
5. Interest on foreign govt. securities.
6. Rent from subletting of the house property.
7. Salary or pension received from a person other than the employer.
8. Ground rent received.
9. Income from ferries, fisheries etc.
10. Rate and Royalties
yalties received.
11. Income from unauthorized or undisclosed sources such as tuition fees charged by a
teacher.
12. Royalty received for writing books.

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13. Insurance commission or commission received for affecting a sale.

14. Salaries of MPs and MLAS (DA is exempt U/S 10 10).
15. Interest on a securities or dividends on shares issued by a co
co-operative
operative society or a co-
co
operative bank.
16. Income of other person included in the total income of the assessee.
17. Salary or pension received from a foreign govt.
18. Agricultural income from lands situated outside India.
19. Family pension. However, pension received by the widow of a U.N.O. employee is fully
exempt.
20. Director's commission for giving guarantee to bank.
21. Unexplained expenditure, unexplained income, unexplained investment.
22. Interest on NSC, Indira Vikasa Pathra, Kisan Vikasapathra, or postal Recurring deposits
or POMIS.
23. Dividends form a foreign company.
24. Rent of land not appurtenant to building.
Exceptions:
a. Money received from a relative out of natural love and affection.
b. Money received on the occasions of marriage.
c. Money received by or credited to an employee or dependents of a deceased employee
from an employer by way of bonus, gratuity, pension or insurance or any other sum
solely in recognition of the services rendered by the employee.
d. Money received from a local authority.
e. Money received from any fund, foundation, university or other educational institutions,
hospital or any trust.
f. Money received from charitable institution registered U/S 12AA.
Income from interest on securities U/S 56(2)
Following amounts due to an assessee in the P.Y. are chargeable to tax.
1. Interest on any securities of the Central Govt. or State Govternment.
Govternment
2. Interest on debenture or other securities issued by on behalf of local authority, a
company or a statutory corporation.
Expenditure allowed has deduction from Interest Income:
(a) collection charges (b) interest on loan
For charging tax on interest on diff. types of securities, we can classify securities into
different kinds.
1. Less tax Govt securities
securities: These are taxable securities ,but not tax is deducted at
source on such securities.Hence,the interest on such securities will not be grossed
up.The
.The amount received shall be included in total income.

2. Taxable Govt. securities

securities/less tax commercial securities:
In these securities,income tax is deducted at source ..If rate of interest is given no
need of grossing,if
,if amount is given it has to be grossed up.
Notes Compiled by Asst.Prof Anusha T
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3. Tax-free
free Govt. Securities: These securities may be issued by central Govt. or state
Govt. In case they are issued by a state Govt. the tax on the interest is payable by the
state-govt.
govt. to the central gov
government, the interest on tax free Government security is
fully exempt from tax U/S 10(15).

4. Tax-free commercial securities: These are issued by local authority or statutory

corporation or company in the form of debentures or bonds
bonds. These are called tax free
securities because assessee need not pay tax,
tax,the
the company itself pays the tax on
interest, but it is deemed income of security holder. So, interest on tax free
commercial securities should always be grossedup.

Grossing up of interest
The conversion of net interest to gross interest is known as grossing up of interest.
a. There is no need to grossing up of interest in the case of tax-free central government
securities,as it is fully exempt from tax U/S 10 (15).
b. Interest on tax free state gov
governmentt securities, tax free securities issued by a local
authority or statutory corporation should always be grossed up by 100/90,
100/90 unless it is
clearly given in the problem that such interest is fully exempt U/S 10(15).
c. Interest on less tax securities issued by local authority or statutory corporation should
be grossed up by 100/90 if net interest received is given. If rate of interest is given, it
should not be grossed up.
d. Interest on tax-free commercial securities should always be grossed up by 100/90.
e. Interest on less tax commercial securities should be grossed up if net interest
received is given, by 100/90. If rate of interest is given, interest on less tax commercial
securities should not be grossed up up.

Securities not subject to TDS:

No TDS In respect of interest payable on the following securities:
a. National development Bonds.

b. National saving certificates (1st issue)

c. 7-year NSC (IV issue)

d. Debenture issued by a co
co-operative society or any institution notified by the central govt.

e. Such securities issued by central or state govts to such class of persons and subject to
such conditions as may be notified by govt. of India in the official Gazette.
Gazet

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f. Debentures issued by a company in which the public are substantially interested

provided.
i. The debentures are listed in recognized stock exchanges in India.
ii. The interest is paid to a resident individual by an a/c payee cheque.
iii. The aggregate of interest so payable does not exceed ₹ 2,500.

Casual Income: Winning From Lotteries, Crossword Puzzles, Etc. [Sec.

56(2) (Ib)]
Winnings from -
1. Lotteries;
2. Crossword puzzles;
3. Races including horse races;
4. Gambling and betting of any nature or form; or
5. Card games, game show or entertainment program on television or electronic mode and
any other game of any sort,
sort,- are taxable under this head.
Lottery includes winnings from prizes awarded to any person by draw of lots or
by chance or in any other manner whatsoever, under any scheme or arrangement by
whatever name called.
Card game and other game of any sort includes any game show, an
entertainment programme on television or electron
electronic
ic mode, in which people compete
to win prizes or any other similar game.

Exemption/deduction [Sec. 58(4)]: Such income shall be fully taxable & no deduction
shall be allowed.

Tax rate (Sec. 115BB]: Tax is charged at a flat rate of 30%.

Notes:

a. Income of jockey: Income of jockey from such profession is not treated as winning
from horse races.
b. Winning from a motor car rally: Winning from a motor car rally is a return for
skill and effort and cannot be treated as casual income but taxable as normal income.
c. Lottery held as stock in trade: Winning from lottery to an agent or trader out of its
unsold stock (tickets) shall be treated as incidental to business and taxed under the
head "Profits & gains of business or profession".
d. Expenditure to be deducted: No deduction can be claimed from such income even
if such expenditure is incurred exclusively and wholly for earning such income.
e. Deduction: Deduction u/s 80C to 80U is not available from such income.
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This income is taxable in the hands of the assessee, but income accruing to an agent in
respect of prices won on unsold lottery tickets in his profession is income from business.
U/S 194B and 194BB tax is deducted at source @ 30% on winning from cross
word puzzles, lotteries, game shows exceeding 10,000 and winning from horse races
exceeding 5,000. While computing such winnings no deduction is permissible U/S 57.
Deduction U/S 80C to 80U is not permissible if the gross total income includes of such
wining alone. If net amount is given, it has to be gross up.
TDS on interest on Bank deposits is 10% where the interest payable to an
assessee is 10,000 or more on the other deposits if it is 5,000 or more.

Family Pension
Family pension means a regular monthly amount payable by the employer to a
person belonging
longing to the family of a deceased employee (e.g. widow or legal heirs of a
deceased employee)
Tax Treatment: It is taxable under the head "Income from other sources" after
allowing standard deduction.
Standard Deduction [Sec. 57(iia)]
Minimum of: 1/3rd of such pension; or Rs.15,000 .

Relief u/s 89 on arrears of family pension

Relief is available on arrears of family pension received by the family member
of a deceased employee, as in case of arrears/advance salary.
Notes
a. Lump-sum payment made gratuitously or by way of compensation or otherwise to the
widow or other legal heirs of an employee, who dies while still in service, is non
non-
taxable income.
b. Ex-gratia
gratia payment made to the widow or other legal heir of an employee, who dies
while still in active service would not be taxable as income provided it is paid by the
Central Government or State Government or local authority or Government or public
sector undertaking.

Avoidance of Tax by Certain Transaction in Securities [Sec. 94]

1. Bond Washing Transactio
Transactions [Sec. 94(1)]: Interest on securities shall not accrue on
day-to-day
day basis. It accrues on the due date of interest as prescribed by issuing
authority. Entire interest shall be charged in the hands of assessee who holds security
on such date (irrespective of the date of acquisition of such security). Tax liability may
be evaded by transferring securities just before the due date of interest (interest
includes dividend) to any person (like friend or relative who has low income) and

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reacquiring the same, after the interest is received by the transferee. With this practice,
income, which should have been charged at higher rate, shall be charged at lower rate
or nil rates. To avoid these practices, sec. 94(1) provides that where an assessee
transfers the securities before the due date of interest and reacquires the same, then
the interest received by the transferee will be deemed to be the income of the
transferor.
E.g: Mr. X transferred 1,000 10% debentures (due date of interest of such debenture
is 31st March every year), to his brother Mr. Y on 27/03/2020 to evade tax. Such
security is repurchased by him on 5/04/2020. Interest for the previous year 2019
2019-20,
though received by Mr. Y shall be taxable in hands of Mr. X due to sec. 94(1).

1. Transaction relating to securities resulting into less or no income: Sec. 94(2)

provides that-
Where a person has had at any time during the previous year any beneficial interest
in securities; &
The result of any transaction relating to such securities him or the income received
by him is less than the income from such securities on day day-to--day basis, then the
income from such securities for such year shall be deemed to be the income of such
person.

Exceptions to sec. 94(1) & 94(2)[Sec. 94(3)]

However, nothing provided in sec. 94(1) and (2) shall be applicable, if the owner
of securities satisfies the AO that -
(i) There has been no avoidance of income tax or the avoidance of income tax is
exceptional and not systematic; and
(ii) There was not any avoidance of income tax u/s 94 during 3 years preceding the
previous year.
Note: The Assessing Officer may (by notice in writing) require any person to furnish
within
such time (not less than 28 days), such particulars as he considers necessary in
respect of all securities -
 of which such person was the owner; or

 in which he had a beneficial interest at any time during the period specified in
the notice [Sec. 94(6)]

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Deductions U/S 57
Following are the permissible deductions while computing income from other sources.
1. Commission or remuneration for realizing interest on securities etc paid to agents or
banks. If the assessee himself collects the amount of interest, no deduction is
allowed.
2. Deductions in respect of employee's contribution towards Staff Welfare Scheme
U/S 57 (la): This deduction is allowed only if the employer to the employee's
account in the relevant provident fund credits such sum before the due date.
3.Repairs, depreciation in the case of letting out of plant, machinery, furniture,
building U/S 57(ii)

- Current repairs on building.

- Insurance premium against risk of damage or destruction of premises.
- Repairs and insurance of machinery, furniture and plant.
- Depreciation on building, plant, machinery, furniture.

4.Standard deduction in the case of family pension: It is allowed at 33.3333% of such

pension or 15,000 whichever is less.

5. Interest on money borrowed; any interest paid on money borrowed for

investment in securities is deductible. Even if the investment yields no income,
deduction is allowed.

6. Section 10(15)(i) of the Income

Income-tax Act, 1961- Income by way of interest, etc., on
bonds, securities - Specification of bonds, securities, etc., issued by Central
Government.
As per sub-clause (i) of clause (15) of Section 10 of the Income Tax Act, income by way of
interest (among certain other incomes) will not form part of taxable income, if notified by the
Government and subject to conditions in the notification. Government had notified vide number
GS.R. 607(E), dated the 9th June, 1989, certain securities, bonds etc, for this purpose. As per
Sl. No. 9 of the table to this notification, interest from Post Office Savings Bank Account was
not to be computed as income. Now, this is amended to restrict the exemption to interest up to ₹
3500/- for individual account and ₹ 7000 in the case of joint account
Dividend
Dividend usually refers to the distribution of profits by a company to its shareholders.
However, in view of Section 2(22) of the Income
Income-taxtax Act, the dividend shall also
include the following.
a. Distribution of accumulated profits to shareholders entailing release of the company's
assets;
b. Distribution of debentures or deposit certificates to shareholders out of the accumulated
profits of the company and issue of bonus shares to preference shareholders out of
accumulated profits;

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c. Distribution made to shareholders of the company on its liquidation out of accumulated

profits;
d. Distribution to shareholders out of accumulated profits on the reduction of capital by the
company, and
e. Loan or advance made by a closely held company to its shareholder out of accumulated
profits.

Taxability of dividend received on or after 01-04-2020

The taxability of dividends in the hands of the company as well as shareholders from
Assessment Year 2021
2021-22 would be as under:
Section 10(34), which provides an exemption to the shareholders in respect of dividend
income, is withdrawn from Assessment Year 2021 2021-20.
20. Thus, dividend received during
the financial year 2020
2020-21 and onwards shall now be taxable in the hands of the
shareholders. Consequently, Section 115BBDA which provides for taxability of
dividend in excess of Rs. 10 lakh has no relevance as the entire amount of dividend
shall be taxable in the hands of the shareholder.
The domestic companies shall not be liable to pay DDT on dividend distributed to
shareholders on or after 01
01-04-2020.
2020. However, domestic companies shall be liable to
deduct tax under Section 194.
As per the Section 194, which shall be applicable to dividend distributed, declared or
paid on or after 01-04-2020,
2020, an Indian company shall deduct tax at the rate of 10% from
dividend distributed to the resident shareholders if the aggregate amount of dividend
distributed or paid during the financial year to a shareholder exceeds Rs. 5,000.
The amount received as divided from the coco-operative
operative soceity shall be included in the
income. However, the coco-operative
operative society is not empowered to deduct tax at source.
Hence, the question of grossing up of dividends does not arise.
Income from units of Mutual Fund: Mutual fund means units specified under section
10(23D) of the Income Tax Act. Any income arising in respect of the units of the
specified mutual fund which was exempted under section 10(35) of the Income Tax Act
shall not be available to income arising in respect of units received on or after 1st April

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Income From Other Sources:

Format for reference

Interest on State/ Central Government Tax free security Exempt

Interest on taxable Govt Security(NO TDS,NO GROSSING) Taxable

Interest on tax free commercial securities Taxable

Interest on Taxable commercial securities Taxable

(100/90 if Amount is given,if rate is given no grossing)

Interest on POSB A/c(Exempt upto Rs.3500) Taxable

Divident Received(Indian co,Foreign Co,Co oper

operatives ) Taxable

Royalty received,interest received Taxable

Director Fees received Taxable

Examiners remuneration,Lecture fees recei

received Taxable
Agriculture Income Exempt

Salary Of MP’s/MLA’s Taxable

(Daily allowance is exempted)
Gifts Received(taxed as per Gift provisions) Taxable
Gift from relatives,marriage gifts,Gifts amount upto Rs.50000 exempted)
Casual Winnings (Horse race,lottery,puzzles,gambling etc)If net is given 100/70 to Taxable
Gross up

Scholarships from recognized Institute Exempt

National Plan certificate, ,capital investment bonds Exempt

Postal NSC Exempt

Family Pension -Actual

Actual Amount received xxxx Taxable
Less : Exempt 33.33% % of Pension
Pension(i.e 1/3) Or Rs.15000 xxxx
(Whichever is Less)

Any other Incomes Taxable under this Head Taxable

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Problems

1) From the following particulars of income of Mr. X compute his income from other
sources:
(a) 10% ₹18,000 tax free debentures of a steel company.

(b) 20,000 units of UTI (Dividend received ₹ 5,000 Gross)

(c) Gift from foreign friend on the occasion of wedding anniversary ₹ 50,000
(d) Winning from lottery ₹ 73,50,000 (net)
(e) Gift from brother Rs.25000
2) From the following particulars of incomes of Mr. Ganesh, compute his Income from
Other Sources.
a) 12.5%, ₹ 20,000 tax
tax-free debentures (listed) ABC Steel Co. Ltd.
b) 30,000 units of UTI (Dividend received ₹8,500)(Gross)
c) Gift from foreign friend on the occasion of wedding anniversary ₹ 65,000.
d) Winning from lottery ₹ 4,20,000 (net)

3) The following incomes are received by Smt. Radha during the previous year 2022-23.
2022
a. Dividend received from Indian Company Rs.11000
Rs.11000(Gross)
b. Winnings from lottery Rs.70000
c. Winnings from card games (gross)Rs.25000
d. Interest on govt securities held as investments Rs.14000
e. Family pension received Rs.24600
f. Gift from friend Rs.25600
Ravi incurred the following expenses:
1. Interest paid on amount borrowed for purchasing shares Rs.700
Rs.7000
2. Collection charges in respect of interest on government securities @2.5%on
amount received
3. Purchased lottery tickets Rs.500.

4) Compute income from other sources.

a) Income from undisclosed source Rs.10000
b) Winnings from horse race Rs.4000
c) Winnings from puzzle Rs.3500
d) Gift from a friend Rs.20000
e) Received gift from younger brother Rs.50000
f) Received gift Rs.60000 on the occasion of marriage
g) Gift received from NRI Friend Rs.70000
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5) Mr. Pareek’s investments during the year ended on 31st March, 2023 consisted of
the following.
a) ₹ 35,000 -10% Govt. Securities
b) ₹ 20,000 -12% Poona Municipal bonds
c) ₹ 40,000 -9% Bombay Port Trust Bonds
d) ₹ 20,000-7 Year Post Office NSC.
e) ₹ 20,000 9% Securities issued by foreign government
f) 7%-Govt. Bonds ₹18,000
g) 7%-National Plan Certificates ₹ 5,000
He paid ₹120/- as commission for collecting the interest taxable under the head interest
on securities and ₹ 2,400/
2,400/- as interest on loan taken for the purpose of purchasing the
Bombay Port Trust Bonds. Find out his income from other sources.

6) Mrs. Parvathi furnishes the following particulars of her income for the year 2022-23
Compute her income from other sources:
i) Dividend on equity shares ₹ 3,800.
ii) Income from letting on hire of Building and Machinery under one composite lease ₹
30,000
iii) Interest on bank deposits ₹ 2,500
iv) Winnings from lotteries (net) ₹ 6,910
v) Income from undisclosed sources ₹ 10,000
vi) Interest received on investment in National Development Bonds ₹ 7,000
vii) Interest on post office Recurring Deposit ₹ 780
viii) Gift received from father ₹ 95,000
The following deductions are claimed by her
a) Collection charges of dividend ₹ 38
b) Allowable depreciation on Building and Machinery ₹ 4,000
c) Fire insurance on Building and Machinery ₹ 100.

7) Mr. Vikranth has the following investments and incomes in the previous year:

(a) ₹ 20,000 10% central Govt securities

(b) ₹36,000, 12% tax free commercial securities

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(c) ₹40,000, 12% debentures of Bata industries

(d) ₹ 25,000, 13.5% debentures of Bhakta chemicals

(e) ₹ 30,000 in POSB a/c which earns interest at 6% p.a.

(f) ₹ 40,000 units of UTI (dividend received ₹ 3,000)
(g) ₹ 9,000 as interest received on debentures of a local authority
(h) ₹ 8,000 as interest received on Karnataka Govt bonds.
(i) ₹ 12,000 interest on tax free Govt of India bonds
(j) ₹ 5,000 dividend received from a co-operative society
(k) Interest on deposits under National Deposit Scheme ₹10,000.
On 1 August, he sold debentures of Bata Ltd. at a profit of ₹ 3,000 and purchased ₹
60,000, 9% Indian Railway bonds. For this purpose, he borrowed 30,000 from his friend
at 12% p.a. The bank commission for collecting the interest was ₹ 400 and for buying
and selling the securities is ₹ 1,000. Interest is payable on 1st July and 1st January every
year. Compute his income from other sources.

8) Mr. Naresh has the following Investments/Incomes in the previous year ended
31st March 2023.

i. ₹15,000, 10% central govt. securities.

ii. 36,000, 10% tax
tax-free commercial securities.
iii. ₹30,000, 13.5% debentures of Reliance industries.
iv. ₹25,000 14% debentures of Srinidhi Chemicals (listed).
v. ₹10,000 in POSB A/c which earns interest at 5% p.a.
vi. ₹ 20,000 units of U.T.I (dividend received ₹ 2,000).
vii. ₹ 8,970 as interest received on debentures of local authority.
viii. ₹ 5,000 as interest received on Karnataka govt. bonds.
ix. ₹ 6,000 interest on tax-free govt. of India bonds.
x. ₹ 5,000 dividends received from a co-operative society.
xi. Interest on deposit under National Deposits Scheme ₹ 8,000.

On 15th November, 2022 he sold debentures of Reliance Industries at a profit of ₹

2,000 and purchased ₹50,000
50,000 9% Indian Railway Bonds for ₹48,000 For this
purpose he borrowed ₹20,000
20,000 from his friend at 10% p.a. The bank commission
for collecting the interest was ₹300
300 and for buying and selling the securities 1%
interest is payable on 1st July and 1st January every year.
Compute his income from other sources.

9) The following incomes are received by Mr. Chetan during the PY 2022--23.

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a. Directors’ fees ₹30,000

b. Income from Agricultural land in Nepal ₹12,000
c. Income from Agricultural land in Punjab ₹16,000
d. Ground rent for land in Bhopal ₹28,000
e. Dividend from a foreign company ₹16,000
f. Rent earned from Sub
Sub-letting the house ₹24,000
g. Rent paid for the house to the landlord (2/3 rd portion was sublet) ₹30,000
h. Winnings from Horse race (net) ₹56,000

Compute taxable income from other sources for the AY 2023-24.

2023
10) Ms. Namratha gives the following information from which compute the income from
other sources :
a. Received ₹ 9,000 as interest on debentures of Reliance Co.
b. Dividend received from co-operative society ₹ 8,500
c. Purchased 10 % ₹ 1,80,000 as tax-free debentures of Tata Steel Ltd. 10.10.2022
d. Invested ₹ 50,000 in 10% U.P. Govt bonds on 1.06.2022
e. Received ₹ 63,000 from Maharashtra state lottery
f. Interest received on POSB a/c ₹ 6,500
g. Dividend received ₹ 5,000 on shares of Wipro Ltd.
h. Invested in the bonds of Konkan Railway Corporation ₹ 90,000 on 1.11.2022.
1.11.202
Interest on all securities becomes due on 30th June and 31st Dec every year.
She incurred ₹ 100 as collection charges on interest.

11) Mrs. Geetha gives the following particulars of her income for the previous year. Compute
her income from other sources.

a) Dividend on preference shares ₹ 5,000

b) Interest on bank deposits ₹ 3,500

c) Income from letting on hire of building and machinery under one composite lease
₹35,000.

d) Income from undisclosed source ₹12,000

e) Winnings from horse

horse-race ₹14,000 (net)

f) Gift received from father ₹ 80,000

g) Interest received from National Development Bonds ₹15,000

h) Interest on post-office
office SB A/c ₹4,000

She claimed the following deductions:

i) Collection charges of dividend ₹200

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ii) Allowable depreciation on building and machinery ₹ 6,000

iii) Fire insurance on building and machinery ₹ 500.

12) From the following Information compute income from other sources of Mr. Dravid
for the A.Y.: 2022
2022-23

a) Rent from sub-letting

letting the house ₹ 36,000. He paid a rent of ₹ 48,000 for
the entire portion. 1/3 of the house was sublet.
b) Agricultural income from Patna ₹ 18,000.

c) Royalty received by publishing a book on management ₹ 1,60,000. He paid

salary to the Clerk ₹ 10,000 for the typing and proof-reading work.

d) He received a family pension of ₹ 75,000.

e) He published articles in journals and received ₹ 25,000.

f) He received ₹ 48,000 salary as MLC and ₹ 16,000 as daily allowance for attending
the sessions.
g) He received interest on tax-free Govt. of India Bonds ₹ 12,000.

h) Gift received from friends ₹ 80,000.

i) As a cricketer he played one test match in India for which he received a

remuneration ₹ 80,000.
j) Directors’ fees received ₹ 12,000.

k) Examinership remuneration ₹ 3,000.

1) Income from guest talks ₹ 16,000.

m) He held 7% capital investment bonds worth ₹ 80,000.

n) He had 12%, tax

tax-free bonds of Agra municipality worth ₹ 60,000, which he sold
on 1-9-2020. On the same date he purchased, 10% debentures worth ₹ 50,000, of
ABC Ltd. interest on these securities becomes due on 30th June and 31st
December each year.

o) He won ₹ 84,000 from lottery.

He paid a commission of ₹ 200 for the collection of interest on securities. The
cost of lottery ticket was ₹ 100.

13) Dr. Ramakrishna is a professor of commerce. He submits before you the

following Incomes. Compute his income from other sources for the A.Y.2023-24

Notes Compiled by Asst.Prof Anusha T

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a) Salary ₹ 75,600 p.m. from the college.

b) He is the author of a text book 'Book Keeping and Accountancy' which fetched
him a gross royalty of ₹ 20,000 in lump sum and which is in consideration of the
transfer of copyright. He claims the following deductions from the amount

i) Salary to a clerk who collects for him necessary data and goes through the
final proof reading Rs. 3,000.

ii) Purchased books worth Rs. 400 in connection with the revision of the book

iii) Telephone expenses of Rs. 1,600 attributed to the publication and sale his
book.

c) Income from articles which were published in Indian Express ₹ 4,000.

d) He lives in a rented house paying rent of ₹ 3,000 p.m. He has sublet 1/3 portion
of the house on a rent of ₹ 1,500 p.m. He has undertaken the liability of paying
municipal taxes of ₹ 5,400 on the whole house and also the current repairs of the
whole house amounting to ₹ 6,000.
e) He received ₹ 600 per lecture delivered at Ambedkar Institute. During the
year he delivered 20 lectures.
f) He is the examiner of number of universities. This source gave him a
remuneration of ₹ 8.000.
g) His other incomes were:

i) Winnings from card games and betting ₹ 6,500

ii) Winnings from chess ₹ 1,000

iii) Received interest on Govt. of Nepal bonds ₹ 1,500.

h) Received ₹ 2,000 as dividend from an Indian Co.

i) ₹ 7,000 income from agriculture (land situated at Mangalore).

j) ₹ 800 p.m. scholarship for research work from U.G.C.

k) Received ₹ 3,600 as interest on tax-free bonds issued by Govt. of Karnataka.

1) ₹ 6,300 as interest national development bonds.

l) He received ₹20,600
20,600 as interest on fixed deposit with Canara bank.
ban

Notes Compiled by Asst.Prof Anusha T