It is taxable if received while in service. Leave encashment received at the time of retirement is exempt in the hands of the Government employee. In the hands of non-Government employee leave encashment will be exempt subject to the limit prescribed in this behalf under the Income-tax Law

In the hands of a Government employee Gratuity and PF receipts on retirement are exempt from tax. In the hands of non-Government employee, gratuity is exempt subject to the limits prescribed in this regard and PF receipts are exempt from tax, if the same are received from a recognised PF after rendering continuous service of not less than 5 years.

Yes. However, pension received from the United Nations Organisation is exempt.

A General Rule “ Expenses for Payer is Income for the Payee”. As such whenever a payment is made to a Non-Resident, an element of income is generated which brings it within the purview of TAX in India.

TDS is the first way of collecting taxes. As such section 195 has been introduced in the IT Act for collection of taxes on Non-Resident payments which bears the character of Income. Under section 195, the act prescribes the rates (to be increased by applicable surcharge & education cess) that would be applicable to the Non-Resident payments depending on the nature of Income. The rates are as follows:

Particulars	TDS Rates
Income in respect of investment made by a NRI	20%
Income by the way of long term capital gains in Section 115E in case of a NRI	10%
Income by way of Long term capital gains	10%
Short Term Capital gains under section 111A	15%
Any other income by way of long-term capital gains	20%
Interest payable on money borrowed in Foreign Currency	20%
Income by way of royalty payable by Government or an Indian concern	10%
Income by way of royalty, not being royalty of the nature referred to be payable by Government or an Indian concern	10%
Income by way of fees for technical services payable by Government or an Indian concern	10%
Any other income	30%

Besides, wherever applicable, in course of making payments to non-resident, DTAA provisions has to be read in order to determine the effective rate of TDS to be applicable for that payment. For this a CA certificate in Form 15CB is required (Form 15CA to be filed online) which certifies the details of the payment, TDS rate and TDS deduction as per section 195 of the Income Tax Act, if any DTAA (Double Tax Avoidance Agreement) is applicable, and other details of nature & purpose of the remittance.

TDS is the first source of collection of Taxes in India which if not deducted as per the IT Act will result in the increment of Tax payable.

Section 40a(i) provides the list of expenses which are specifically disallowed while computing income chargeable to tax under the head “Profits and gains of business or profession” for non deduction of TDS on such payments made to a non resident outside India / in India.

Any interest, royalty, fees for technical services or other sum (which is chargeable to tax under the Act) which is payable outside India to any person or in India to a non-resident, is not deductible, if the assessee has not deducted tax at source from such payments, or after deducting tax, he has not deposited such tax with the Government before the end of previous year [or before the due date of deposit specified under section 200(1) in case due date of deposit falls in next year]. However, if tax is deposited in next year(s) after the due date of deposit, then such amount is deductible in the subsequent previous year in which the said tax is deposited by the assessee with Government.

TDS is the act of collecting taxes onpayments for servicesby a resident to any person where such payments bears a character of Income in the hands of recipient. GST is an indirect tax that is levied on the supply of goods & services. According to the Indian Tax Laws, the receiver of service is required to do two things at the time of making any payment:

• Pay GST on the services received.
• Calculate TDS on Income and deduct it from the payment made. GST being an Indirect tax doesn’t bear the character of income and hence isnot liable to be part of TDS deduction. GST which is collected has to be deposited to the government. So logically, TDS is not required to be deducted from the amount that is inclusive of Income Tax and should be deducted from the amount that is exclusive of the GST. But if GST amount has not been disclosed separately in the invoice, then TDS in such case would be deducted from the total amount i.e the amount that is inclusive of GST.

Rental income from a property, being building or land appurtenant thereto, of which the taxpayer is the owner is charged to tax under the head “Income from house property”. To tax the rental income under the head “Income from house property”, the rented property should be building or land appurtenant thereto. Shop being a building, rental income will be charged to tax under the head “Income from house property”.

Composite rent includes rent of building and rent towards other assets or facilities. The tax treatment of composite rent is as follows:-

(a) In a case where letting out of building and letting out of other assets are inseparable (i.e., both the lettings are composite and not separable, e.g., letting of equipped theatre), entire rent (i.e. composite rent) will be charged to tax under the head “Profits and gains of business and profession” or “Income from other sources”, as the case may be. Nothing is charged to tax under the head “Income from house property”..

(b) In a case where, letting out of building and letting out of other assets are separable (i.e., both the lettings are separable, e.g., letting out of refrigerator along with residential bungalow), rent of building will be charged to tax under the head “Income from house property” and rent of other assets will be charged to tax under the head “Profits and gains of business and profession” or “Income from other sources”, as the case may be. This rule is applicable, even if the owner receives composite rent for both the lettings. In other words, in such a case, the composite rent is to be allocated for letting out of building and for letting of other assets.

In such a case, composite rent includes rent of building and charges for different services (like lift, watchman, water supply, etc.): In this situation, the composite rent is to be bifurcated and the sum attributable to the use of property will be charged to tax under the head “Income from house property” and charges for various services will be charged to tax under the head “Profits and gains of business and profession” or “Income from other sources” (as the case may be).

A self-occupied property means a property which is occupied throughout the year by the taxpayer for his residence. Income chargeable to tax under the head "Income from house property" in case of a self-occupied property is computed in following manner :

Particulars	Amount
Gross annual value	Nil
Less:- Municipal taxes paid during the year	Nil
Net Annual Value (NAV)	Nil
Less:- Deduction undersection 24
Deduction under section 24(a) 30% of NAV ➣Deduction under < href="http://www.incometaxindia.gov.in/Pages/faqs.aspx">section 24(b) n account of interest on borrowed capital	Nil (XXXX)
Income from house property	XXXX

From the above computation it can be observed that "Income from house property" in the case of a self occupied property will be either Nil (if there is no interest on housing loan) or negative (i.e., loss) to the extent of interest on housing loan. Deduction in respect of interest on housing loan in case of a self-occupied property cannot exceed Rs. 2,00,000 or Rs. 30,000, as the case may be (discussed later).

While computing income chargeable to tax under the head "Income from house property" in case of a let-out property, the taxpayer can claim deduction under section 24(b) on account of interest on loan taken for the purpose of purchase, construction, repair, renewal or reconstruction of the property. Deduction on account of interest is classified in two forms, viz., interest pertaining to pre-construction period and interest pertaining to post-construction period. Post-construction period interest is the interest pertaining to the relevant year (i.e., the year for which income is being computed). Pre-construction period is the period commencing from the date of borrowing of loan and ends on earlier of the following:

• Date of repayment of loan; or
• 31st March immediately prior to the date of completion of the construction/acquisition of the property.

Interest pertaining to pre-construction period is allowed as deduction in five equal annual instalments, commencing from the year in which the house property is acquired or constructed.

Thus, total deduction available to the taxpayer under section 24(b) on account of interest will be 1/5th of interest pertaining to pre-construction period (if any) + Interest pertaining to post construction period (if any).

The provisions relating to deduction under section 24(b) on account of interest on housing loan in case of self-occupied property are same as applicable in case of let-out property. In other words, deduction available to taxpayer under section 24(b) in respect of self-occupied property will be 1/5th of interest pertaining to pre-construction period (if any) + Interest pertaining to post-construction period (if any). However, in the case of self-occupied property, deduction under section 24(b) cannot exceed Rs.2,00,000 or Rs. 30,000 (as the case may be). If all the following conditions are satisfied, then the limit in respect of interest on borrowed capital will be Rs.2,00,000:

• Capital is borrowed on or after 1-4-1999.
• Capital is borrowed for the purpose of acquisition or construction (i.e., not for repair, renewal, reconstruction).
• Acquisition or construction is completed within 5 years from the end of the financial year in which the capital was borrowed.
• The person extending the loan certifies that such interest is payable in respect of the amount advanced for acquisition or construction of the house or as re-finance of the principal amount outstanding under an earlier loan taken for acquisition or construction of the property. If any of the above condition is not satisfied, then the limit of Rs. 2,00,000 will be reduced to Rs. 30,000.

Any subsequent recovery of unrealized rent shall be deemed to be the income of taxpayer under the head “Income from house property” in the year in which such rent is realized (whether or not the assesse is the owner of that property in that year). It will be charged to tax after deducting a sum equal to 30% of unrealized rent.

The amount received on account of arrears of rent (not charged to tax earlier) will be charged to tax after deducting a sum equal to 30% of such arrears. It is charged to tax in the year in which it is received. Such amount is charged to tax whether or not the taxpayer owns the property in the year of receipt.

No, the income earned from subletting a house property is chargeable to tax under the head “income from other sources” rather than house property Income. Since, the assessee is not the owner of the property the said rental income cannot be held as income from house property. Since, the assessee was not engaged in the business of subletting, the same cannot be construed as business income of the assessee. Accordingly, such income shall be taxable as last resort income head i.e. income from other sources.

Deduction u/s 80CCD for deposit under NEW PENSION SCHEME has been introduced for all tax payers whether employed by the Government, any other employers or Self employed individuals in addition to Section 80C with a combined limit to Rs.2 Lakhs.
NPS Tax Benefits under Sec.80CCD (1)
The maximum benefit available is Rs.1.5 lakh (including Sec.80C limit).
An individual’s maximum 10% of annual income or an employee’s (10% of Basic + DA) contribution will be eligible for deduction.
As I said above, this section will form the part of Sec.80C limit.
NPS Tax Benefits under Sec.80CCD (1B)
This is the additional tax benefit of up to Rs.50,000 eligible for income tax deduction and was introduced in the Budget 2015 for voluntary contribution to NPS.
Introduced in Budget 2015. One can avail the benefit of this Sect.80CCD (1B) from FY 2015-16.
Both self-employed and employees are eligible for availing this deduction.
This is over and above Sec.80CCD (1) i.e. If the taxpayer contributes more than Rs.1.5 lakh to the NPS in a year, the amount in excess of Rs 1.5 lakh can be treated as voluntary investment and claimed as a deduction under the new Section 80CCD(1b).
NPS Tax Benefits under Sec.80CCD (2)
There is a misconception among many that there is no upper limit for this section. However, the limit is least of 3 conditions.
1) Amount contributed by an employer,
2) 10% of Basic Salary (Basic + DA) and
3) Gross Total Income.
This is additional deduction which will not form the part of Sec.80C limit.
The deduction under this section will not be eligible for self-employed.

A new saving scheme introduced vide Finance Act 2012 and amended vide Finance Act 2013 for the Resident Individuals (NO HUF) with a Gross total income of Rs.12 Lakhs or Less to claim deduction u/s 80CCG to an extent of Rs.50,000 in addition to 1.5 lakhs u/s 80C for investment in specified equity shares and mutual funds. The scheme was introduced by the government as RGESS (Rajiv Gandhi Equity Saving Scheme) under which an individual investing would be eligible to claim 50% of the invested amount as deduction from his total income to a maximum limit of INR 50,000.
Key features of the above deduction scheme:

• The allowed tax deduction u/s 80CCG will be over and above the Rs. 1.5 Lakhs limit permitted under Section 80C of the Income Tax (IT) Act, making it thus attractive for the middle class investors
  
• Further, the Dividend income is tax free, if the company is liable to dividend distribution tax
  
• The benefits can be availed for three consecutive years
  
• Investor is free to trade / churn the portfolio after the fixed lock-in period i.e 1 year, subject to certain conditions
  
• Gains arising out of higher market valuation of RGESS eligible securities can be realized after a year viz: fixed lock-in period. Provisions exist to protect the investor from general declines in the market to a certain extent. This is in contrast to all other tax saving instruments.
  
• Facility for pledging stocks after the fixed lock-in period
  
• For investments upto Rs.50,000 in your sole RGESS demat account, if you opt for Basic Service Demat Account, annual maintenance charges for the demat account is zero and for investments upto Rs. 2 lakh, it is stipulated at Rs 100
  
• The investments can be made in installments during the financial year in which tax deduction is claimed
  

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No, deduction under sections 80C to 80U is not allowed on short-term capital gains referred to in section 111A. However, such deductions can be claimed from STCG other than covered under section 111A. The above statement is applicable for both the Residents & Non residents.

No, deduction under sections 80C to 80U is not allowed to be adjusted against Long-term capital gains for any tax payer. However LTCG can be adjusted against Basic exemption limit in case of Resident Individuals.

Section 80EE was re-introduced by budget 2016 to provide for additional deduction of Rs.50,000 for payment of interest on home loan over and above that is allowed u/s 24.
This Deduction of Section 80EE would be applicable only in the following cases:-

This deduction would be allowed only if the value of the property purchased is less than Rs. 50 Lakhs and the value of loan taken is less than Rs. 35 Lakhs.

The loan should be sanctioned between 1st April 2016 and 31st March 2017.

The benefit of this deduction would be available till the time the repayment of the loan continues.

This Deduction would be available from Financial Year 2016-17 onwards.

The above tax deductions are per person and not per Property. So in case you’ve purchased a property jointly and have taken a joint home loan, each person repaying the amount would be eligible to claim whole deduction separately.

If you are living in a rented premise and are taking Tax Benefit of HRA Allowance

Section 80D provides for the deduction from the gross total taxable income of any Individual or HUF (resident & non-resident)with respect to the premium amount paid by any mode other than cash towards the medical / health insurance policy taken for Self, spouse, dependent children & parents.
Limit of Deduction
For Self and Family:
Maximum deduction of Rs.25,000 per year on health insurance premium for self, spouse & kids.
Maximum deduction of Rs.30,000 per year if you are a senior citizen.
For Parents:
Maximum deduction of Rs.25,000 per year on health insurance premium paid on behalf of parents.
Maximum deduction of Rs.30,000 per year on premium payments for senior citizen parents.
Additional Deduction (Preventive Health checkups) :
A deduction of Rs.5,000 can be claimed every year on expenses related to health check-ups. This limit includes the check-up expenses of all members in a family, including spouse, kids and parents.

House Rent Allowance is a deduction from gross taxable salary that can be claimed by a Salaried Individual who lives in a rented house. HRA as provided by the employer is calculated and respective deduction is given in Form 16 and accordingly the TDS u/s 192 is calculated for every employee. However, if the employer doesn’t provide HRA to any employee who is paying rent towards any furnished / unfurnished accommodation, such employee can resort to Section 80GG for deduction from Gross Taxable Income. The lowest of these will be considered as the deduction under section 80GG –

• Rs 5,000 per month / Rs.60000 per year
  
• 25% of adjusted total income*
  
• Actual Rent less 10% of adjusted total Income* [Actual Rent – 10% of Adj.Total Income]
  

Adjusted Total Income* means Total Income Less long term capital gain, short term capital gain under section 111A and Income under section 115A or 115D and deductions 80C to 80U (except deduction under section 80GG)

The two terms often used interchangeably is “Medical Reimbursement” and “Medical Allowance” of which Medical Re-imbursement by employer is Not Taxable while Medical Allowance is taxable at the Marginal Income Tax Rate (Income Rate Slab) of the employee.
Both the employer and the employee try to structure salary to maximize in-hand income of the employee. There are certain allowances or expense reimbursements that are not taxable in the hands of the employee. One such payment from employer is reimbursement of the medical expenses of the employee or his family.
On the other hand, Medical allowance is a fixed part of an employees’ salary which is taxable in the hands of the employee under the head “Salary”.
The reimbursement is only on actual basis (employer can’t reimburse more than you have incurred). Contrast this with fixed medical allowance, which is guaranteed regardless of whether the employee (or his family member) undergo medical treatment or not.
Reimbursement of medical expenses by the employer is exempt to the extent of Rs.15000 per financial year. Any additional reimbursement would be taxable as Salary in the hands of the employee.
In addition to above, there are specific scenarios where the entire amount reimbursed/cost incurred by the employer is exempt from tax i.e. there is no cap on tax exemption.

The value of the treatment provided to the employee or his family member at a hospital maintained by the employer.

Amount paid by the employer in respect of the medical treatment availed by employee or his family member in a Government hospital or any hospital approved by Government for such employees.

Cost incurred for treatment of specific illness in any hospital approved by the Chief Commissioner. (You must file a certificate from the hospital specifying the disease/treatment and payment receipts).
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On February 1, 2018, the Finance Minister, Mr. Arun Jaitley, presented the Union Budget for the year 2018. List of all the proposals related to deductions under chapter VI-A is highlighted as under:

1. Hike in deduction limit for health insurance premium and/ or medical expenditure from Rs. 30,000 to Rs. 50,000 under section 80D.
   

The current deduction u/s 80D of INR 30,000 allowed to an Individual or HUF with respect to premium amount paid for health insurance (medical policy) for dependent parent / parents being Senior Citizen (age above 60 Yrs) has been enhanced vide Finance Bill 2018 to INR 50,000. The above increment of deduction is also applicable to an individual for premium amount of his medical policy if he has attained the age of 60 and above.

2. Deduction limit under section 80DDB is enhanced
   

The deduction limit for medical expenditure for certain critical illness has been increased from Rs. 60,000 (in case of senior citizens) and from Rs. 80,000 (in case of very senior citizens) to Rs. 1 lakh for all senior citizens, under section 80DDB. The differentiation between senior and super senior citizen is removed

3. Deductions under Section 80JJAA is extended to footwear and leather industry
   

Section 80JJAA allows deductions to the manufacturers who employ new employees for a minimum period of 240 days during the year. This deduction is calculated at the rate of 30% of the additional employee cost incurred by the assessee during the year. The eligibility of a manufacturer to claim this deduction is determined only if he gives employment for a minimum period of 240 days during the year. However, for apparel industry the minimum period of employment is relaxed to 150 days. The concession of minimum employment period for 150 days has been extended to footwear and leather industry. Manufacturers are often denied the deduction if an employee is employed in year 1 for a period of less than 240 days or 150 days, but continues to remain employed for more than 240 days or 150 days in year 2. To overcome some difficulties, the employment conditions has been proposed to be relaxed. Now in this situation the deduction shall be allowed to the manufacturer if an employee hired in last year continues to remain in employment in current year for more than 240 or 150 days, as the case may be.

4. New deduction introduced for Farm Producer Companies
   

• To promote agricultural activities a new section 80PA is proposed to be inserted. This new provision proposes 100% deductions of profits for a period of 5 years to farm producer companies.
  
• This deduction is allowed to farm producer companies who have total turnover of less than Rs. 100 crores during the financial year. For claiming this deduction, companies' gross total income should include income from:
  

Marketing of agricultural produce grown by its members

Purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members

Processing of agricultural produce of its members

5. Exemption of interest income on deposits with banks and post offices to be increased from Rs. 10,000 to Rs. 50,000 only for senior citizens.
   

The current deduction u/s 80 TTA for Individuals / HUF with respect to interest on savings bank account of Rs.10,000 has been enhanced for Senior Citizens by inserting a new section 80 TTB to Rs.50,000. That is to say, this provision allows deduction of up to Rs. 50,000 to the senior citizen who has earned interest income from deposits (both Fixed & Savings) with banks or post office or co-operative banks. After introducing this new deduction, the existing deduction of up to Rs. 10,000 under Section 80TTA shall not be allowed to the senior citizens.

6. Certain Deductions other than those covered under Heading A (Section 80A to 80C), Heading B (Section 80CC to 80GGC) & Heading D (Section 80U to 80VV) not to be allowed if return is not filed on time
   

As per existing provisions of Section 80AC of the Act, no deduction would be admissible under section 80-IA or section 80-IAB or section 80-IB or section 80-IC or section 80-ID or section 80-IE, unless the return of income by the assessee is furnished on or before the due date specified under Section 139(1). This burden of filing of return on time is not casted on other assesses who are claiming deductions under other similar provisions. Therefore, to bring uniformity in all income-based deduction, it is now proposed that the scope of section 80AC shall be extended to all similar deductions which are covered in heading "C.—Deductions in respect of certain incomes" in Chapter VIA (sections 80 H to 80RRB). The impact of such amendment shall be that no deduction would be allowed to a taxpayer under Heading C of Deductions Chapter if income-tax return is not filled on or before the due date. This amendment will take effect, from 1^st April, 2018 and will accordingly apply in relation to the assessment year 2018-19 and subsequent assessment years.

7. Amendment in section 80-IAC to promote new start-ups
   

Deductions under Section 80-IAC is available to an eligible start-up for 3 consecutive assessment years out of 7 years at the option of such start-up. These deductions are allowed subject to certain conditions as given below:

It is incorporated between 01/04/2016 and 31/03/2019

The total turnover of its business does not exceed Rs. 25 crores in any of the previous year 2016-17 to 2020-21; and

It is engaged in the eligible business which involves innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property.
In order to improve the effectiveness of the scheme for promoting start-ups in India, it is proposed to make following changes in the taxation regime for the start -ups:

The benefit would also be available to start up cos incorporated between 01/04/2019 and 31/03/2021;

The requirement of turnover not exceeding Rs. 25 Crore would apply to 7 previous years commencing from the date of incorporation;

The definition of eligible business has been expanded to provide that the benefit would be available if it is engaged in innovation, development or improvement of products or processes or services, or a scalable business model with a high potential of employment generation or wealth creation.

Section 80C of the Income Tax Act provides provisions for tax deductions on a number of payments, with both individuals and Hindu Undivided Families eligible for these deductions. Eligible taxpayers can claim deductions to the tune of Rs 1.5 lakh per year under Section 80C, with this amount being a combination of deductions available under Sections 80 C, 80 CCC and 80 CCD.

Some of the popular investments which are eligible for this tax deduction are mentioned below.

• Payment made towards life insurance policies (for self, spouse or children)
  
• Payment made towards a superannuation/provident fund
  
• Tuition fees paid to educate a maximum of two children
  
• Payments made towards construction or purchase of a residential property
  
• Payments issued towards a fixed deposit with a minimum tenure of 5 years
  

This section provides for a number of additional deductions like investment in mutual funds, senior citizens saving schemes, purchase of NABARD bonds, etc..

Basic exemption limit means the level of income up to which a person is not required to pay any tax. This Basic exemption limit is available only for Individual, HUF, AOP, BOI and artificial judicial persons
We all know that if the income is below the basic exemption limit, then there will be no tax liability. But always a question arises that ‘can an individual adjust the basic exemption limit against long-term capital gain?’
The answer will depend on the residential status of the individual that is whether the individual or HUF is resident or Non-resident.
Only a resident individual/HUF can adjust the exemption limit against LTCG. Thus, a non-resident individual and non-resident HUF cannot adjust the basic exemption limit against LTCG.
A resident individual can adjust the LTCG with Basic exemption limit, but only after making adjustment of other income. That means, first income under other heads (other than LTCG) is to be adjusted against the basic exemption limit and then the remaining limit (if any) can be adjusted against LTCG.

Section 54 provides exemption from payment of Tax on Long term capital gain earned by virtue of sale of a Long term immovable property, being a House property to the extent of Lower of the following:

Amount of capital gains arising on transfer of residential house; or

Amount invested in purchase/construction of new residential house property [including the amount deposited in Capital Gains Deposit Account Scheme] 
An individual or HUF only can claim benefit u/s 54 upon fulfillment of following basic conditions:

The asset transferred should be a long-term capital asset, being a residential house property.

Within a period of one year before or two years after the date of transfer of old house, the taxpayer should acquire another residential house or should construct a residential house within a period of three years from the date of transfer of the old house. In case of compulsory acquisition the period of acquisition or construction will be determined from the date of receipt of compensation (whether original or additional).
However, with effect from assessment year 2015-16 exemption can be claimed only in respect of one residential house property purchased/constructed in India. If more than one house is purchased or constructed, then exemption under section 54 will be available in respect of one house only. No exemption can be claimed in respect of house purchased outside India. Text of Amendments in for the above Sections is given as under: “In section 54 of the Income-tax Act, in sub-section (1), for the words “constructed, a residential house”, the words “constructed, one residential house in India” shall be substituted with effect from the 1st day of April, 2015.” Besides, to keep a check on the misutilization of this exemption, a restriction is imposed upon the assessee availing this exemption. The provisions of Section 54 reads as:

• The restriction will be attracted, if after claiming exemption under section 54, the new house is sold before a period of 3 years from the date of its purchase/completion of construction.
  
• If the new house is sold before a period of 3 years from the date of its purchase/completion of construction, then at the time of computation of capital gain arising on transfer of the new house, the amount of capital gain claimed as exempt under section 54 will be deducted from the cost of acquisition of the new house.
  

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Any profit or gain arising from transfer of a capital asset [as defined u/s 2(14) of IT Act,1961] during the year is charged to tax under the head “Capital Gains”.

Capital asset is defined to include:

a) Any kind of property held by an assesse, whether or not connected with business or profession of the assesse.

b) Any securities held by a FII which has invested in such securities in accordance with the regulations made under the SEBI Act, 1992.
However, the following items are excluded from the definition of "capital asset":

• Any stock-in-trade, consumable stores, or raw materials held by a person for the purpose of his business or profession.
  

E.g., Motor car for a motor car dealer or gold for a jewellery merchant, are their stock-in-trade and, hence, they are not capital assets for them.

• Personal effects of a person, that is to say, movable property including wearing apparels (*) and furniture held for use, by a person or for use by any member of his family dependent on him.
  

(*) However, jewellery, archeological collections, drawings, paintings, sculptures, or any work of art are not treated as personal effects and, hence, are included in the definition of capital assets. The term jewellery has been given a wider meaning and includes ornaments made up of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stones, and whether or not worked or sewn into any wearing apparel. It also includes precious or semi-precious stones, whether or not set in any furniture, utensil, or other article or worked or sewn into any wearing apparel.

• Agricultural Land in India, not being a land situated:
  

Within jurisdiction of municipality, notified area committee, town area committee, cantonment board and which has a population of not less than 10,000;

Within range of following distance measured aerially from the local limits of any municipality or cantonment board:

• not being more than 2 KMs, if population of such area is more than 10,000 but not exceeding 1 lakh;
  

not being more than 6 KMs , if population of such area is more than 1 lakh but not exceeding 10 lakhs; or

not being more than 8 KMs , if population of such area is more than 10 lakhs.
Population is to be considered according to the figures of last preceding census of which relevant figures have been published before the first day of the year.

• 6½% Gold Bonds,1977 or 7% Gold Bonds, 1980 or National Defense Gold Bonds, 1980 issued by the Central Government.
  
• Special Bearer Bonds, 1991, issued by the Central Government
  
• Gold Deposit Bonds issued under Gold Deposit Scheme, 1999.
  
• Deposit certificates issued under the Gold Monetization Scheme, 2015.
  

Following points should be kept in mind : The property being capital asset may or may not be connected with the business or profession of the taxpayer. E.g. Bus used to carry passenger by a person engaged in the business of passenger transport will be his Capital asset. Any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992 will always be treated as capital asset, hence, such securities cannot be treated as stock-in-trade.

Any capital asset held by a person for a period of more than 36 months immediately preceding the date of its transfer will be treated as long-term capital asset.
     Any capital asset held by a person for a period of not more than 36 months immediately preceding the date of its transfer will be a short-term capital asset.
However, in respect of certain assets like shares (equity or preference) which are listed in a recognised stock exchange in India, units of equity oriented mutual funds, listed securities like debentures and Government securities, Units of UTI and Zero Coupon Bonds, the period of holding to be considered is 12 months instead of 36 months.
In case of unlisted shares in a company, the period of holding to be considered is 24 months instead of 36 months.
Illustration
Mr. Raj is a salaried employee. On 8th April, 2014, he purchased a piece of land and sold the same on 29th June, 2016. In this case, land is a capital asset for Mr. Raj. He purchased the land on 8th April, 2014 and sold it on 29th June, 2016, i.e., after holding it for a period of less than 36 months. Hence, land will be a short-term capital asset.
Illustration
Mr. Kumar is a salaried employee. On 8th July, 2015, he purchased shares of SBI Ltd. (listed in BSE) and sold the same on 29th June, 2016. In this case, shares are capital assets for Mr. Kumar. He purchased shares on 8th July, 2015 and sold them on 29th June, 2016 i.e., after holding them for a period of less than 12 months. Hence, shares are short-term capital assets.

Gain arising on transfer of long-term capital asset is termed as long-term capital gain and gain arising on transfer of short-term capital asset is termed as short-term capital gain. However, there are a few exceptions to this rule, like gain on depreciable asset is always taxed as short-term capital gain.

The taxability of capital gain depends on the nature of gain, i.e. whether short-term or long-term. Hence to determine the taxability, capital gains are classified into short-term capital gain and long-term capital gain. In other words, the tax rates for long-term capital gain and short-term capital gain are different. Similarly, computation provisions are different for long-term capital gains and short-term capital gains.

No, the benefit of indexation is available only in case of long-term capital assets and is not available in case of short-term capital assets. Indexation is a process by which the cost of acquisition/improvement of a capital asset is adjusted against inflationary rise in the value of asset. Hence it is applicable only in the case of long term capital assets.

Yes, the method of computation of cost of acquisition for capital asset acquired before 1^st April, 1981 differs. Generally, cost of acquisition of a capital asset is the cost incurred in acquiring the capital asset. It includes the purchase consideration plus any expenditure incurred exclusively for acquiring the capital asset.   However, in respect of capital asset acquired before 1st April, 1981, the cost of acquisition will be higher of:

• the actual cost of acquisition of the asset; or
  
• fair market value of the asset as on 1st April, 1981.
  

This option is not available in the case of a depreciable asset.

Generally, transfer means sale, however, for the purpose of Income-tax Law "Transfer”, in relation to a capital asset, includes:
i.Sale, exchange or relinquishment of the asset;
ii.Extinguishment of any rights in relation to a capital asset;
iii. Compulsory acquisition of an asset;

Conversion of capital asset into stock-in-trade;

Maturity or redemption of a zero coupon bond;

Allowing possession of immovable properties to the buyer in part performance of the contract;

iv. Any transaction which has the effect of transferring an (or enabling the enjoyment of) immovable property; or
v. Disposing of or parting with an asset or any interest therein or creating any interest in any asset in any manner whatsoever

Capital gain arises if a person transfers a capital asset. section 47 excludes various transactions from the definition of 'transfer'. Thus, transactions covered under section 47 are not deemed as 'transfer' and, hence, these transactions will not give rise to any capital gain. Transfer of capital asset by way of gift, will, etc., are few major transactions covered in section 47. Thus, if a person gifts his capital asset to any other person, then no capital gain will arise in the hands of the person making the gift (*).

If the person receiving the capital asset by way of gift, will, etc. subsequently transfers such asset, capital gain will arise in his hands. Special provisions are designed to compute capital gains in the hands of the person receiving the asset by way of gift, will, etc. In such a case, the cost of acquisition of the capital asset will be the cost of acquisition to the previous owner and the period of holding of the capital asset will be computed from the date of acquisition of the capital asset by the previous owner.

(*) As regards the taxability of gift in the hands of person receiving the gift, separate provisions are designed under section 56.

House sold by you is a long-term capital asset. Any gain arising on transfer of capital asset is charged to tax under the head “Capital Gains”. Income-tax Law has prescribed the method of computing capital gain arising on account of sale of capital assets. Thus, to check the taxability in your case, you have to compute capital gain by following the rules laid down in this regard, and if the result is gain, then the same will be liable to tax.

Section 10: provides list of incomes which are exempt from tax Amongst these the major exemptions relating to capital gains are listed below:

Section 10(33): Long-term or short-term capital gain arising on transfer of units of Unit Scheme, 1964 (US 64) (transferred on or after 1-4-2002).

Section 10(37): An individual or Hindu Undivided Family (HUF) can claim exemption in respect of capital gain arising on transfer of agricultural land situated in an urban  area by way of compulsory acquisition. This exemption is available if the land was used by the taxpayer (or by his parents in the case of an individual) for agricultural purpose for a period of 2 years immediately preceding the date of its transfer. .

Section 10(38): Long-term capital gain arising on transfer of equity shares or units of equity oriented mutual fund (*) or a unit of a business trust other than a unit allotted by the trust in exchange of shares of a special purpose vehicle as referred to in section 47(xvii), will be exempt from tax, if the following conditions are satisfied:

The asset transferred should be equity shares of a company or units of an equity oriented mutual fund or a unit of a business trust other than a unit allotted by the trust in exchange of shares of a special purpose vehicle as referred to in section 47.
The transaction should be liable to securities transaction tax at the time of transfer.
Such asset should be a long-term capital asset.
Transfer should take place on or after October 1, 2004.
Note: Any long-term capital gain arising from a transaction undertaken in recognized stock exchange located in an International Financial Service Center shall be exempt from tax. Such exemption is available if such transaction is undertaken in foreign current and even if no STT is paid on such transaction. [Inserted by the Finance Act w.e.f. 1-4-2017]
(*) Equity oriented mutual fund means a mutual fund specified under section 10(23D) and 65% of its investible funds, out of total proceeds of such fund are invested in equity shares of domestic companies.

A taxpayer can claim exemption from certain capital gains by re-investing the capital gain into specified asset. The following table highlights the assets in respect of which the benefit of re-investment is available:  

Section under which benefit is available	Gain eligible for claiming exemption	Asset in which the capital gain is to be re-invested to claim exemption
section 54	Long-term capital gain arising on transfer of residential house property.	Gain to be re-invested in purchase or construction of one residential house property in India.
section 54B	Long-term or short-term capital gain arising on transfer of agricultural land.	Gain to be re-invested in purchase of agricultural land.
section 54EC	Long-term capital gain arising on transfer of any capital asset.	Gain to be re-invested in bonds issued by National Highway Authority of India or by the Rural Electrification Corporation Limited.
Section 54EE	Long-term capital gain arising on transfer of any capital asset.	Gain to be re-invested in units of specified fund, as may be notified by Govt. to finance start-ups.
section 54F	Long-term capital gain arising on transfer of any capital asset other than residential house property.	Net sale consideration to be re-invested in purchase or construction of one residential house property in India.
section 54D	Gain arising on transfer of land or building forming part of industrial undertaking which is compulsorily acquired by Government and was used for industrial purpose for a period of 2 years prior to its acquisition.	Gain to be re-invested to acquire land or building for industrial purpose.
section 54G	Gain arising on transfer of land, building, plant or machinery in order to shift an industrial undertaking from urban area to rural area	Gain to be re-invested to acquire land, building, plant or machinery in order to shift the industrial undertaking from an urban area to a rural area
section 54GA	Gain arising on transfer of land, building, plant or machinery in order to shift an industrial undertaking from urban area to any Special Economic Zone	Gain to be re-invested to acquire land, building, plant or machinery in order to shift the industrial undertaking from urban area to any Special Economic Zone.
section 54GB	Long-term capital gain arising on transfer of residential property (a house or a plot of land). The transfer should take place during 1st April, 2012 and 31st March 2017. However, in case of investment in “eligible start-up”, sunset limit of 31st march 2017 is extended to 31st march 2019.	The net sale consideration should be utilised for subscription in equity shares of an "eligible company".  W.e.f. April 1, 2017, eligible start-up is also included in definition of eligible company

The amendment brought about under the existing section 40A(3) vide Finance Bill 2017 with effect from 01.04.2018 is basically to promote the concept of Digital India and there by discourage cash transaction. As per the amendment, the existing threshold of cash payment of Rs.20,000 has been reduced to Rs.10,000 per person in a single day, i.e any payment in cash above ten thousand rupees to a person in a day, shall not be allowed as deduction in computation of Income from “Profits and gains of business or profession“.
Extract of relevant clause from Finance Bill, 2017
Amendment of section 40A.
In section 40A of the Income-tax Act,—
(a) in sub-section (2), in clause (a), in the proviso, after the words “Provided that”, the words, figures and letters “for an assessment year commencing on or before the 1st day of April, 2016” shall be inserted; (b) with effect from the 1st day of April, 2018,—
(A) in sub-section (3), for the words “exceeds twenty thousand rupees”, the words “or use of electronic clearing system through a bank account, exceeds ten thousand rupees,” shall be substituted;
in sub-section (3A),—
(i) after the words “account payee bank draft,”, the words “or use of electronic clearing system through a bank account” shall be inserted; (ii) for the words “twenty thousand rupees”, the words “ten thousand rupees” shall be substituted;
(iii) in the first proviso, for the words “exceeds twenty thousand rupees”, the words “or use of electronic clearing system through a bank account, exceeds ten thousand rupees,” shall be substituted; (iv) in the second proviso, for the words “twenty thousand rupees”, the words “ten thousand rupees” shall be substituted;

TUnder certain circumstances as given in section 64(1)(ii) , remuneration ( i.e., salary) received by the spouse of an individual from a concern in which the individual is having substantial interest is clubbed with the income of the individual. Provisions in this regard are as follows:

• The individual is having substantial interest in a concern (*).
• Spouse of the individual is employed in the concern in which the individual is having substantial interest.
• The spouse of the individual is employed without any technical or professional knowledge or experience ( i.e., remuneration is not justifiable).

(*) An individual shall be deemed to have substantial interest in any concern, if such individual alone or along with his relatives beneficially holds at any time during the previous year 20% or more of the equity shares (in case of a company) or is entitled to 20% of profit (in case of concern other than a company).
Relative for this purpose includes husband, wife, brother or sister or lineal ascendantor descendent of that individual [ section 2( 41 ) ].

The presumptive taxation scheme of section 44ADA can be opted by the eligible persons if the total turnover or gross receipts from the business do not exceed the limit prescribed under section 44AB (i.e., Rs. 2,00,00,000). In other words, if the total turnover or gross receipt of the business exceeds Rs. 2,00,00,000 then the scheme of section 44ADA cannot be adopted.

A person who is earning income in the nature of commission or brokerage cannot adopt the presumptive taxation scheme of section 44AD. Insurance agents earn income by way of commission and, hence, they cannot adopt the presumptive taxation scheme of section 44AD

The scheme of sections 44AE is available to the person who owns not more than ten goods carriages at any time during the previous year and who is engaged in the business of plying, hiring or leasing such goods carriages.

There is no concession as regards payment of advance tax in case of a person who is adopting the presumptive taxation scheme of section 44AE and, hence, he will be liable to pay advance tax even if he adopts the presumptive taxation scheme of section 44AE

The report of the tax audit conducted by the chartered accountant is to be furnished in the prescribed form. The form prescribed for audit report in respect of audit conducted under section 44AB is Form No. 3CB and the prescribed particulars are to be reported in Form No. 3CD.
In case of persons covered under those who are required to get their accounts audited by or under any other law, the form prescribed for audit report is Form No. 3CA/3CB and the prescribed particulars are to be reported in Form No. 3CD.

According to section 271B, if any person who is required to comply with section 44AB fails to get his accounts audited in respect of any year or years as required under section 44AB, the Assessing Officer may impose a penalty. The penalty shall be lower of the following amounts:
(a) 0.5% of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession, in such year or years.
(b) Rs. 1,50,000.
However, according to section 273B, no penalty shall be imposed if reasonable cause for such failure is proved.

A person who is engaged in any profession as prescribed under section 44AA(1) cannot adopt the presumptive taxation scheme of section 44AD.
However, he can opt for presumptive taxation scheme under section 44ADA and declare 50% of gross receipts of profession as his presumptive income. Presumptive Scheme under section 44ADA is applicable only for resident assessee whose total gross receipts of profession do not exceed fifty lakh rupees.

Generally, as per the Income-tax Law, the taxable business income of every person is computed as follows :
Particulars Amount
Turnover or gross receipts from the business XXXXX
Less : Expenses incurred in relation to earning of the income (XXXXX)
Taxable Business Income XXXXX
For the purpose of computing taxable business income in the above manner, the taxpayers have to maintain books of account of the business and income will be computed on the basis of the information revealed in the books of accounts.

Let us understand the inter source and inter head setoff process in brief in a tabular format:

Particulars of loss		Income from Salary	Income from House property	Long Term Capital Gain	Short Term capital gain	Non Speculative Business profit	Speculative Business Profit	Income from other Sources	Gains from Activity of owning and maintaining race horses
				Capital Gains		Business/ Professional Income
Loss from House property		ü	ü	ü	ü	ü	ü	ü	ü
Short Term Capital loss	Capital Gains	O	O	ü	ü	O	O	O	O
Long term capital loss		O	O	ü	O	O	O	O	O
Non Speculative Business loss	Business Income	O	ü	ü	ü	ü	ü	ü	ü
Speculative business loss		O	O	O	O	O	ü	O	O
Loss from owning and maintaining race horses		O	O	O	O	O	O	O	ü

Carry forward of Losses:
Many times it may happen that after making intra-head and inter-head adjustments, still the loss remains unadjusted due to inadequacy of eligible profits, such losses are carried forward to the next assessment year for adjustment against the eligible profits of that year. The maximum period for which different losses can be carried forward for set-off has been provided in the Income Tax Act.
Carry forward and set off of business loss:

If loss of any business/profession cannot be fully adjusted in the year in which it is actually incurred, then the unadjusted loss can be carried forward to the next year for making adjustment. In the next years such loss can be adjusted only with the income under the head “Profits and gains of business or profession”

Loss under the head “Profits and gains of business or profession” can be carried forward only if the Income tax return of the year in which loss is incurred is filed on or before the due date of filing the return.

Non speculative Business loss:

Loss from non speculative business can be carried forward for eight years immediately next to the year in which the loss is incurred.

Loss from owning and maintaining race horses:

Loss from the business of owning and maintaining race horses cannot be set off against any income other than income from the business of owning and maintaining race horses. Such loss can be carried forward only for a period of 4 years

Speculative Business loss:

If loss of any speculative business cannot be fully adjusted in the year in which it is incurred, then the unadjusted speculative loss can be carried forward for making adjustment in the next year. In the subsequent years such loss can be adjusted only against income from speculative business (may be same or any other speculative business). Such loss can be carried forward for 4 years immediately succeeding the year in which the loss is incurred.

Specified Business loss:

Loss from business specified under section 35AD cannot be set off against any other income except income from specified business. Such loss can be carried forward for adjustment against income from specified business for any number of years

Section 35AD is applicable in respect of certain specified businesses like setting up a cold chain facility, setting up and operating warehousing facility for storage of agricultural produce, developing and building a housing projects, etc.

If loss under the head “Income from house property” cannot be fully adjusted in the year in which such loss is incurred, then unadjusted loss can be carried forward to next year.

In the subsequent years(s) such loss can be adjusted only against income chargeable to tax under the head “Income from house property”

Such loss can be carried forward for eight years immediately succeeding the year in which the loss is incurred.

Loss under the head “Income from house property” can be carried forward even if the Income Tax Return of the year in which loss is incurred is not filed on or before the due date of filing the return.

In case if loss under the head “Capital gains” incurred during a year cannot be adjusted in the same year, then unadjusted capital loss can be carried forward to next eight immediate years.

Such loss can be carried forward only if the Income Tax Return is filed on or before the due date of filing the return.

Such loss can only be set off under the head capital gain. Long-term capital loss can be adjusted only with long-term capital gains. Short-term capital loss can be adjusted with long-term capital gains as well as short-term capital gains.

The report of the tax audit conducted by the chartered accountant is to Apart from several other deductions, in computation of income chargeable to tax under the head “Profits and gains of business or profession” a person is allowed to claim deduction on account for depreciation, capital expenditure incurred by him on scientific research and capital expenditure incurred by a company for promoting family planning amongst its employees.
If the income of the year in which these expenses are incurred falls short of these expenses, then the unabsorbed expenses can be carried forward to next year in the form of unabsorbed depreciation or unabsorbed capital expenditure on scientific research or unabsorbed capital expenditure on promoting family planning amongst the employees.
The unabsorbed portion shall be added to the amount of depreciation for the following year and shall be deemed to be the part of depreciation for that year (similar treatment would be given to other allowances as mentioned above).
However, while doing set off, following order needs to be followed:

First adjustments are to be made for current scientific research expenditure, family planning expenditure and current depreciation.

Second adjustment is to be made for brought forward business loss.

Third adjustments are to be made for unabsorbed depreciation, unabsorbed capital expenditure on scientific research or on family planning.

As per the amendment in the finance budget 2017 with effect from 01-04-2018:
Till the financial year 2016-17(AY 2017-18) there is no limit on the amount of house property loss set off with other heads of income but from financial year 2017-18 (AY 2018-19) that is from 01^st of April 2017, set off for the house property loss with other heads of income is limited to Rs. 2 Lakhs.
The loss if any in excess to 2 Lakhs can be carried forward and set off with the income from house property in the next 8 Assessment years (Immediate).
One should be clear about the amendment; it is not limiting the housing loan interest u/s 24b for a let out property but is limiting the amount of loss that can be set off with other heads of income
This amendment is not impacting those only having a single self occupied property because for self occupied property the housing loan interest that can be claimed as deduction under sec 24b is limited to Rs. 2 Lakhs and the loss of house property which actually arises due to housing loan interest will also be less than or equal to Rs. 2 lakhs.
When we see the let out/rented out property the housing loan interest that can be claimed as deduction under sec 24b is unlimited and loss arising from the house property may be more than 2 lakhs. In this way the new amendment impacts the let out/ rented out property.

After successful filing of Return of Income by an assessee u/s 139, the major notices that can be expected to come within a period of 1 year from the end of Financial Year in which the said return was filed is Intimation Notice U/s 143(1), Notice for Scrutiny Assessment u/s 143(2) ( within a period of 6 months from the end of the Financial Year in which the said return was filed) and Notice for Best Judgement Assessment u/s 142(1).
In addition to above, a notice u/s 133C as inserted by the Finance (No.2) Act 2014 w.e.f 01/10/2014 can also be issued by the prescribed Income Tax authority for Return of Income filed for AY 2015-16 and onwards within a time period of 4 years or 6 years as prescribed u/s 153.
Every taxpayer has to furnish the details of his income to the Income-tax Department. These details are to be furnished by filing up his return of income. Once the return of income is filed up by the taxpayer, the next step is the processing of the return of income by the Income Tax Department. The Income Tax Department examines the return of income for its correctness. The process of examining the return of income by the Income Tax department is called as “Assessment”. Assessment also includes re-assessment and best judgment assessment under section 144.
Under the Income-tax Law, there are four major assessments given below:

Assessment under section 143(1), i.e., Summary assessment without calling the assessee.

Assessment under section 143(3), i.e., Scrutiny assessment.

Assessment under section 144, i.e., Best judgment assessment.

Assessment under section 147, i.e., Income escaping assessment.

All the above mentioned notices are issued which leads to the given assessment proceedings.

Notice u/s 139(9) is basically intimation from the Income Tax Department for the Income tax return filed for a financial year being defective due to following common reasons:
The assessee having filed in the return the details of taxes paid, but failed to provide income details, the Income Tax Department deems the return as defective.
The assessee having claimed the tax deducted at source (TDS) as refund, failed to provide income details in the return. In such cases the return will be deemed to be defective.
The assessee having liability to pay taxes fails to pay the taxes in full before filing the return.
The Assessee who is required to maintain balance sheet and profit and loss statement as per the provisions of Income tax Act, 1961, but fails to provide such statements while preparing the income tax return.
When there is a mismatch of name in the return filed with the name as per PAN card.
In order to clear the defects in the original return filed i.e. in response to the notice sent by the department u/s 139(9), the assessee is required to file response within 15 days of the receipt of intimation or within such other time as extended by the AO on a written request filed for the same. For filing the response one should mention in the return the section under which the return is being filed and the communication reference number which is already there on the intimation given by the department.

Notice for scrutiny assessment u/s 147 is issued u/s 148 if the Assessing Officer(AO) has reason to believe that any income has escaped assessment which should be chargeable to tax . The main objective of
How the scrutiny assessment can be made by the assessing officer (AO)?
For making the scrutiny assessment the AO has to issue a notice to the assessee (i.e., the tax payer) u/s 148 and assessee should be given an opportunity of being heard. The time-limit for issuance this notice u/s 148 is a period of 4 years from the end of the relevant assessment year. If the income escaped by the assessee is Rs. 1,00,000 or more and certain other conditions are satisfied, then notice can be issued upto 6 years from the end of the relevant assessment year.
In case the income which is escaped relates to any asset located outside India, notice can be issued upto 16 years from the end of the relevant assessment year.
Notice under section 148 can be issued by AO only after getting prior approval from the prescribed authority.
The objective of carrying out assessment under section 147 is to bring under the tax net any income which has escaped assessment in original assessment under sections 143(1), 143(3), 144 & 147 (as the case may be).
In the following cases, it will be considered as income having escaped assessment:

Where no return of income has been furnished by the taxpayer, although his total income or the total income of any other person in respect of which he is assessable during the previous year exceeded the maximum amount which is not chargeable to income-tax.

Where a return of income has been furnished by the taxpayer but no assessment has been made and it is noticed by the Assessing Officer that the taxpayer has understated the income or has claimed excessive loss, deduction, allowance or relief in the return.

Where the taxpayer has failed to furnish a report in respect of any international transaction which he was required to do under section 92E.

Where an assessment has been made, but:

income chargeable to tax has been under assessed; or

income has been assessed at low rate; or

income has been made the subject of excessive relief; or

excessive loss or depreciation allowance or any other allowance has been computed;

Where a person is found to have any asset (including financial interest in any entity) located outside India.

Where a return of income has not been furnished by the assessee and on the basis of information or document received from the prescribed income-tax authority under section 133C(2), it is noticed by the Assessing Officer that the income of the assessee exceeds the maximum amount not chargeable to tax.

Where a return of income has been furnished by the assessee and on the basis of information or document received from the prescribed income-tax authority under section 133C(2), it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return.