1

Any income which is not taxable under Salary, IFHP, PGBP, CG, that income shall
be taxable under IFOS.
# Items taxable under IFOS
1. Interest on securities
2. Rent from letting out of plant, machinery, furniture. (Exception If Business
PGBP)
3. Dividend on share.
4. Winning from lotteries, card games, puzzles etc.
5. Interest on bank deposit and loan given
6. Royalty income
7. Director sitting fees
8. Agricultural income from land outside India
9. Income from subletting of HP
10. Salary of MP/MLA/MLC
11. Interest on income tax refund
12. Income on any investment
13. Amt received under family pension (deduction u/s 57)
Allowed:
a) 1/3 of family pension
b) Rs.15000

Whichever is less
14. Interest on compensation of compulsory acquisition of capital asset (50%
deduction allowed u/s 57)
15. Gift etc.
TAXATION ON GIFT
1. Any gift received by employee from employer due to employer-employee
relationship-Always taxable under income from salary (even if received on
marriage)
2. Any benefit/gift/perquisite arising due to business/profession- Always taxable
under PGBP (sec 28)

[Refer Chart]
APT-Best classes for- XI/XII/CA/CS Call – 97 5555 7307
 Any gift/asset acuired for low
consideration by Any Person

Sec. 56(2)(x) applicable

w.e.f. 01/04/2017

M.R.I.D.H.U.T.L.A.I.T.C Note - 1 Otherwise

APT-Best classes for- XI/XII/CA/CS

Sec. 56(2)(x) not
applicable not taxable

Note - 2
Money (without consideration) Movable property (s.s.j.d.p.s.a.o.b) Immovable property (land, building, both)

If Aggregate Without Inadequate Without Inadequate Consideration

Consideration Consideration Consideration ↓
Money >
If per Property
If Agg. FMV If Agg. (FMV – If per Property
₹ 50,000 (SDV-Consideration)>
consid) > ₹ 50,000
> ₹ 50,000 SDV > ₹ 50,000,And
Then whole of
Then different 50,000 SDV is more than 110% of
money shall be Then entire FMV
between FMV & Consideration
taxable shall be taxable Then entire
Consideration shall Then different between SDV &

Call – 97 5555 7307

2

SDV shall be
be taxable Consideration shall be taxable
taxable
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Note 1: Money/property not taxable if it is received (MR. ID HUTLA ITC)

M- On the occasion of Marriage

R- from any relative under will or inheritance
ID- In contemplation of death
H- From any hospital or medical institution
U- From any university or educational institution
T- From or by any trust registered u/s 12AA
LA- From any local authority
I- From an individual by a trust created solely for the benefit of the relative of
individual
T- By any fund, trust, hospital, medical institution, university or educational
institution (referred in sec 10(23C))
C- By way of transaction not regarded as transfer under clause
(i),(iv),(v),(vi),(via),(viaa),(vib),(vic),(vica),(vicb),(vid) or (vii) of SEC 47
O- From such class of persons and subject to such conditions as may be
prescribed

NOTE 2: Property (Movable/Immovable):

Moveable (Remark : only 9 Assets)

1. Shares
2. Securities,
3. Jewellery,
4. Drawings,
5. Painting,
6. Archaeological collection,
7. Sculptures,
8. Any other work of art,
9. Bullion,
10. Virtual Digital Assets (Example Crypto)
Any property received as gift or acquired for low consideration other than
above sec 56(2)(x) not applicable (i.e., not taxable)
Example : Iphone Received in Gift - Not Taxable
Car Received in Gift – Not Taxable

APT-Best classes for- XI/XII/CA/CS Call – 97 5555 7307

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Immovable Property

Note 3: Meaning of Relative

a) In case of individual

Lineal Lineal
Ascendant Ascendant
& Spouse & Spouse

Brother
& Mother & Mother &
Spouse Father Father
Sister
&
Spouse
Individual/
Brother Brother
Spouse
& Assesses
&
Spouse Spouse

Sister Sister
& &
Spouse Spouse

Lineal
descendant &
Spouse

APT-Best classes for- XI/XII/CA/CS Call – 97 5555 7307

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b) In case of HUF
Any member of HUF

Note 4: if assesse is not satisfied with SDV then his case may be referred to
Valuation Officer (same as Sec. 50C)

NOTE 5: SEC 56(2)(x) – Applicable only if property is in the nature of capital

asset in the hand of recipient (i.e., not applicable in case of SIT)

NOTE 6: SEC 49(4)- If any person is receiving any asset as gift or acquires it for
inadequate consideration and he already assessed under section
56(2)(x) on FMV/SDV then COA of such asset shall be FMV/SDV which
was considered under IFOS, when COA is computed as per sec 49(4)
POH of previous owner shall not be included

NOTE 7: SEC 56(2)(x) is applicable even if gift is made outside India by resident
to non-resident

Note 8: SEC 56(2)(x) is not applicable if any benefit is received

(Retrospective Amendment w.e.f PY 19-20
i. By an individual,
from any person, in respect of any expenditure actually incurred by him
on his medical treatment or treatment of any member of his family,
for any illness related to COVID-19
subject to conditions notified by the CG.
ii. or By a member of the family of a deceased person -
(a) from the employer without any limit; or
(b) from any other person or persons, if it is upto 10,00,000.
where the cause of death of such person is illness related to COVID-19
and the payment is received within 12 months from the date of Death and
subject to such other conditions as CG may Notify.
Note: Family means spouse, children and dependent relative (parents,
brother, sister).
Conditions Notified by CG
1a. Death should be within 6 months from the date of testing positive or from the
date of being clinically determined as a COVID-19 case.
1b. The family member of the individual shall keep a record of the following
documents,

APT-Best classes for- XI/XII/CA/CS Call – 97 5555 7307

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i. The COVID-19 positive report, or medical report if clinically determined

to be COVID-19 positive
ii. A medical report or death certificate issued by a medical practitioner or
a Govt. civil registration office clearly stating reason of death as Covid.
2. Statement of any money received by a family of a deceased person on account of
death due to COVID-19
and which shall be verified and furnished in Form A.

Example 1:
Mr. Maaz acquired a house property for Rs. 3,00,000 during PY 2001-02 he gifted
such property to his friend lakhan on 18-08-2018. (SDV on date of gifting –
40,00,000)
Lakhan sells such property to hari on 15-01-2019 for 83,00,000 discuss tax
treatment.
Solution:
In hands of Maaz
Gift not treated as transfer hence no CG (sec 47)
In hands of Lakhan
He received Immovable property without consideration & SDV >
50,000, so total SDV of 40,00,000 lakh shall be taxable u/s 56(2)(x) during AY 2019-
20
Further Capital Gain on Transfer of Asset
FVOC 83, 00,000
Less: Transfer Expenses -
Net Consideration 83, 00,000
Less: COA Sec 49(4) 40, 00,000
STCG 43, 00,000
Example 2:
Suppose in example 1 Mr. Maaz and Lakhan are relatives (brother) what will be the
tax treatment.
Solution:
In hands of Maaz
Gift not treated as transfer hence no CG (sec 47)

APT-Best classes for- XI/XII/CA/CS Call – 97 5555 7307

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In hands of Lakhan
Sec 56(2) (x) not applicable, since asset received from relative.

Further Capital Gain on Transfer of Asset

FVOC 83,00,000
Less: Transfer Expenses -
Net Consideration 83,00,000
Less: ICOA (3,00,000*280/100) 8,40,000
STCG 74,60,000

Sec 43CA/Sec 50C/Sec 56(2) (x)

In case of land and building or both held as Stock in trade if sales consideration is
less than SDV and SDV is more than 110% of sales consideration, then Such SDV
shall be treated as FVOC.
However, if SDV is not more than 110% then actual sales consideration will be
FVOC.
Percentage of SDV may vary according to the condition of Sec 43CA
Where assesse claims that SDV is more than FMV and such SDV has not been
disputed in any appeal etc. then the AO may on application by assesse refer the case
of Valuation officer.
If value so find by the VO is more than actual SDV then it shall be ignored
However, if it is less than actual SDV then it shall be treated as FVOC
When Registration date and agreement dates are different then SDV on Agreement
date may be considered as FVOC if any amount has been received through
1. Account payee cheque
2. Account payee Demand Draft
3. Any mode of ECS/RTGS
4. BHIM UPI
5. Any other electronic mode

Temporary Amendment in Sec 43CA Substitute 110% by 120% in following conditions

satisfied (Remarks : irrelevant from May-23 attempts Onwards)

1. First Time allotment of Residential Unit

2. Consideration is up to 2 Crore
3. Transaction is undertaken between 12/11/2020 to 30/06/2021

APT-Best classes for- XI/XII/CA/CS Call – 97 5555 7307

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Three section

 Section 50C Section 43CA Section 56(2)(x)

(CG) (PGBP) (Exception) (IFOS)
(New amendment as stated above)

Same
Sec 56(2)(viib) shares issued at premium

If any closely held company issues shares to any resident share holder on Premium

Issue Price – FMV of such shares

Shall be taxable in the Hands of Company (IFOS)
Example:
Ms. Shreya acquired a House property on16-07-2017 for Rs.40, 00,000. She entered
into an agreement to sell on 14-02-2018 with Mr. Varun for Rs. 70, 00,000 and SDV
on that date is 80, 00,000. Varun paid 7, 00,000 by cheque on 14-02-2018 & the
cheque was cleared on18-02-2018. The possession is given to Mr. Varun on 10-12-
2018 when Varun paid balance amount of 63lakh & property is registered in Varun
name on 10-12-2018, SDV on date of registration is 110lakh. Discuss tax
treatment.in hands of Shreya and Varun if property is held as

a) Capital Asset
b) Stock in Trade

APT-Best classes for- XI/XII/CA/CS Call – 97 5555 7307

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Case a) Property held as Capital Asset:

In hands of Shreya In hands of Varun
Computation of CG (PY 2018-19)
Sec 56(2)(x) is applicable because
difference 10 lakh (80lakh-70lakh)
FVOC 80,00,000
between SDV & Consideration is more
Less : COA 40,00,000
than 50,000 and SDV is more than
(POH 16-07-2017 TO
110% of consideration, hence Rs
09-12-2018)
10lakh is taxable in IFOS

STCG 40,00,000

Case b) Property held as Stock in Trade (both hands)

In hands of Shreya (IF SIT) In hands of Varun
Sec 56(2)(x) is not applicable
PGBP
SP(Sec 43CA) 80,00,000
Less : Purchase price 40,00,000
PGBP 40,00,000

Sec 56(2)(xi) Compensation on termination of Employment

Any compensation or other payment, due or received by any person in connection

with termination (or modification) of his employment is treated as Income in IFOS
However, if it received from employer it is taxable under Salary.
Taxation of Dividend & Deemed Dividend
Dividend Income

From Domestic Company from Foreign Co.

Taxable in hands of Taxable in hands of

receiver at normal receiver normal tax
tax rate

APT-Best classes for- XI/XII/CA/CS Call – 97 5555 7307

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Sec 22 - Deemed Dividend

Sec 2(22)(a) Distribution of Any Asset

Distribution of Assets by Company to it’s Shareholder shall be treated as
Deemed Dividend to the Extent of Accumulated Profit whether
Capitalised or not.

Note 1 – Section 2(22)(a) will not attract in Case of distribution of Bonus

Shares as they are not asset.
Note 2 – FMV of asset shall be Deemed Dividend.

Sec 2(22)(b) Distribution of Debenture etc.

Distribution of Debentures, Debenture Stock or Deposit Certificate by
Company to it’s Shareholder or Distribution of Bonus shares to Preference
Shareholder, shall be treated as Deemed Dividend to the Extent of
Accumulated Profit whether Capitalised or not.

Sec 2(22)(c) Distribution of Assets on Liquidation

Distribution of Assets by Company on Liquidation to it’s shareholder, shall be
treated as Deemed Dividend to the Extent of Accumulated Profit
whether Capitalised or not.

Sec 2(22)(d) Reduction of Share Capital

Any Distribution to it’s Shareholder by way of Reduction of It’s Capital, shall
be treated as Deemed Dividend to the Extent of Accumulated Profit
whether Capitalised or not.

Sec 2(22)(e) Loan & Advances given by Closely held Company.

Loan & Advances by Closely held Company to -

a) Shareholder having Voting Power which is 10% or more.
b) Any Concern in which such shareholder has substantial Interest.
(20% or more)
c) Any person on behalf of Shareholder.
APT-Best classes for- XI/XII/CA/CS Call – 97 5555 7307
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Shall be treated as Deemed Dividend to the Extent of Accumulated Profit

whether only. (Khatra)

Non Applicability of 2(22)(e) -

Not applicable in case of Trade Advance.
Remarks :
1) Loan is repaid or company charges market rate of Interest is
immaterial.
2) Accumulated Profit means Reserve & Surplus as per Books of
Accounts
3) Capitalised means Bonus Shares issued or Transferred to Capital
Reserve.
4) If Loan & Advances given to Any Concern then it is treated as
Deemed Dividend in the Hand of that Concern. (Disputed Area)

Exceptions : Cases where No Deemed Dividend Provisions apply :

(i) Loan granted in the ordinary course of business where Money
lending is substantial part of business.
(ii) Dividend paid is set off against the deemed dividend u/s. 2(22)(e)
(iii) Payment on buy back of shares.
(iv) Any Distribution made u/s. 2(22)(c) or 2(22)(d) with respect to
Preference Share.
(v) Distribution of shares to the shareholders on demerger by the
resulting company.

LIC Proceeds Taxable if Premium Exceed ₹ 5,00,000

Receipts arising from life insurance policies issued on or after April 1st,
2023 shall be considered as income from other sources if the premium
paid exceeds Rs. 5,00,000 in a given year. The exemption for receipts in
the event of the insured person's death shall remain unchanged.
(Finance Act 2023)

APT-Best classes for- XI/XII/CA/CS Call – 97 5555 7307