CHAPTER 1 – BASIC CONCEPTS Overview of Income-tax law in India Important definitions Previous year and Assessment year Charge of Income-tax Rates of Tax Surcharge Rebate of up to 2500 for resident individuals having total income of up to ` 35 lakh [Section 87A] CHAPTER 2 – RESIDENCE AND SCOPE OF TOTAL INCOME Residential status [Section 6] Scope of total income CHAPTER 3-INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME Introduction Incomes not included in total income [Section 10] Tax Holiday for newly established units in Special Economic Zones [Section 10AA] Restrictions on allowability of expenditure [Section 14A] CHAPTER 4-SALARIES Introduction Basis of charge (Section 15) Salary, Perquisite and Profits in lieu of salary (Section 17) Deductions from salary Relief under section 89 Salary from United Nations Organisation CHAPTER 5 – INCOME FROM HOUSE PROPERTY Chargeability [Section 22] Conditions for chargeability Composite rent Income from house property situated outside India Determination of Annual Value [Section 23] Deductions from Annual Value [Section 24] Computation of “Income from house property” for different categories of property Inadmissible deductions [Section 25] Provision for arrears of rent and unrealized rent received subsequently [Section 25A] Treatment of income from co-owned property [Section 26] Deemed ownership [Section 27] Cases where income from house property is exempt from tax CHAPTER 6 – PROFITS AND GAINS OF BUSINESS OR PROFESSION Meaning of ‘Business’ and ‘Profession’ Method of Accounting Income chargeable under this head [Section 28] Speculation business Computation of income from business [Section 29] Admissible deductions Inadmissible deductions [Section 40] Expenses or payments not deductible in certain circumstances [Section 40A] Profits chargeable to tax [Section 41] Other provisions Compulsory maintenance of accounts [Section 44AA] Audit of accounts of certain persons carrying on business or profession [Section 44AB] Special provisions for computing profits and gains of business on presumptive basis [Section 44AD] Presumptive Taxation Scheme for assessees engaged in eligible profession [Section 44ADA] Special provisions for computing profits and gains of business of plying, hiring or leasing goods carriages [Section 44AE] Method of computing deduction in the case of business re-organization of Co-operative Banks [Section 44DB] 617 Computation of business income in cases where income is partly agricultural and partly business in nature CHAPTER 7- CAPITAL GAINS Introduction Capital Asset Short-term and long term capital assets Transfer: What its means? [Section 2(47)] Scope and year of chargeability [Section 45] Capital gains on distribution of assets by companies in liquidation [Section 46] Capital gains on buyback, etc of shares [Section 46A] Transactions not regarded as transfer [Section 47] Important definitions Withdrawal of exemption in certain cases Mode of computation of capital gains (Section 48) Ascertainment of cost in specified circumstances [Section 49] Cost of acquisition [Section 55] Cost of improvement [Section 55] Computation of capital gains in case of depreciable assets [Section 50 & 50A] Capital gains in respect of slump sale [Section 50B] Special provision for full value of consideration in certain cases [Section 50C] Special provision for full value of consideration for transfer of unlisted shares [Section 50CA] Fair MV of the capital asset on the date of transfer to be taken as sale consideration, Advance money received [Section 51] Exemption of capital gain Reference to Valuation Officer [Section 55A] Short term capital gains tax in respect of equity share/units of an equity oriented fund [Section 111A] Tax on long term capital gains [Section 112] Surplus on sale of shares and securities-whether taxable as capital gains or business income? [Circular No 06/2016, dated 29-2-2016] CHAPTER 8-INCOME FROM OTHER SOURCES 81 Introduction 82 Incomes chargeable under this head [Section 56] 83 Bond washing transactions and dividend stripping [Section 94] 84 Applicable rate of tax in respect of casual income [Section 115BB] 85 Deductions allowable [Section 57] 86 Deductions not allowable [Section 58] 87 Deemed income chargeable to tax [Section 59] 88 Method of accounting [Section 145] CHAPTER 9- INCOME OF OTHER PERSONS INCLUDED IN ASSESSEE’S TOTAL INCOME Clubbing of Income-An introduction Transfer of income without transfer of asset [Section 60] Income arising from revocable transfer of assets [Section 61] Exceptions where clubbing provisions are not attracted even in case of revocable transfer [Section 62] Clubbing of income arising to spouse Transfer of assets for the benefit of spouse [Section 64(1)(vii)] Income arising to son’s wife from the assets transferred without adequate consideration by the father-in-law or mother-in-law [Section 64(1)(vi) Transfer of assets for the benefit of son’s wife [Section 64(1)(viii)]] Clubbing of minor’s income [Section 64(1A)] Cross transfers Conversion of self-acquired property into the property of a Hindu undivided family [Section 64(2)] Income includes loss Distinction between section 61 and section 64 Liability of person in respect of income included in the income of another person [Section 65] CHAPTER 10-AGGREGATION OF INCOME, SET OFF AND CARRY FORWARD OF LOSSES Aggregation of Income Concept of set-off and carry forward of losses Inter-source adjustment [Section 70] Inter-head adjustment [Section 71] Set-off and carry forward of loss from house property [Section 71B] Carry forward and set-off of business losses [Section 72] Carry forward and set-off of accumulated business losses and unabsorbed depreciation in certain cases amalgamation/demerger, etc [Section 72A] Carry forward and set-off of losses of a banking company against the profit of a banking institution under a scheme of amalgamation Carry forward and set-off of accumulated loss and unabsorbed depreciation in business reorganization of co-operative banks Losses in speculation business [Section 73] Carry forward & set-off of losses by specified businesses [Section 73A] 1012 Losses under head ‘Capital Gains’ [Section 74] Losses from the activity of owning and maintaining race horses [Section 74A(3)] Carry forward and set-off of losses in case of change in constitution of firm or succession [Section 78] 1015 Carry forward of set-off of losses in case of closely held companies [Section 79] Order of set-off of losses Submission of Return for Losses (Section 80) CHAPTER 11 – DEDUCTIONS FROM GROSS TOTAL INCOME 111 General provisions 112 112 Deductions in respect of payments 114 113 Deductions in respect of certain incomes 1149 114 Deductions in respect of other income 1195 115 Other Deductions 1198 CHAPTER 12 – ASSESSMENT OF VARIOUS ENTITITES Assessment of Companies Tax on income distributed by specified company or a mutual fund Taxation Regime for Securitization Trusts and its Investors Scheme for taxation of Real Estate Investment Trust (REIT) and Infrastructure Investment Trust (INVIT) Special taxation regime for Investment Funds and income received from such funds Assessment of other entities Other provisions related to various entities CHAPTER 13- CHARITABLE OR RELIGIOUS TRUSTS AND INSTITUTIONS, POLITICAL PARTIES AND ELECTROAL TRUSTS Introduction 132 Income of Universities, Hospitals, Educational Institutions, Medical Institutions etc [Section 10(23C)] 132 Charitable or Religious Trusts and Institutions [Sections 11 to 13] 137 Tax on accreted income of certain trusts and Institutions [Chapter XII-EB] 135 Exemption to political parties [Section 13A] 1351 Exemption for voluntary contributions received by Electoral Trusts [Section 13B] CHAPTER 14 – TAX PLANNING, TAX EVASION AND TAX AVOIDANCE Tax planning, Tax evasion and tax avoidance-An Overview Tax planning considerations in respect of salary income Tax planning considerations in relation to business General Anti-avoidance Rules CHAPTER 15: DEDUCTION, COLLECTION AND RECOVERY OF TAX Deduction at source and advance payment [Section 190] Direct payment [Section 191] Deduction of tax at source Certificate for deduction of tax at a lower rate [Section 197) No deduction in certain cases [Section 197A] Miscellaneous provisions Tax collection at source [Section 206C] Processing of TCS Statements [Section 206CB] PAN quoting mechanism in the TCS Regime [New Section 206CC] Advance payment of tax [Section 207 to 219] Interest chargeable in certain cases Collection and recovery of tax – Other Methods Refunds CHAPTER 16: INCOME TAX AUTHORITIES Appointment and Control [Section 116 to 119] Jurisdiction Powers of Income-tax Authorities [Section 131 to 136] CHAPTER 17 ASSESSMENT PROCEDURE Return of income Compulsory filing of return of income [Section 139(1)] Interest for default in furnishing return of income [Section 234A] Option to furnish return of income to employer [Section 139(1A)] Income tax return through computer readable media [Section 139(1B)] Specified class or classes of persons to be exempted from filing return of income [Section 139(1C)] 177 Return of Loss [Section 139(3)] Belated Return [Section 139(4)] Return of Income of Charitable Trusts and Institutions [Section 139(4A)] Return of Income of Political Parties [Section 139(4B)] Mandatory filing of returns by Scientific Research Associations, News-Agency, Trade Unions, etc [Section 139(4C)] Mandatory filing of returns by Universities, Colleges etc [Section 139(4D)] Filing of return of income by a Business Trust [Section 139(4E)] Filing of Return of Income by Investment Fund [Section 139(4F)] Revised return [Section 139(5)] Particulars to be furnished with the return [Section 139(6)] Particulars to be furnished with return of income in the case of an assesse engaged in business or profession [Section 139(6A)] 1718 Defective return [Section 139(9)] Permanent Account Number (PAN) [Section 139A] Quoting of Aadhar Number [Section 139AA] Scheme for submission of returns through Tax Return preparers [Section 139B] Power of CBDT to dispense with furnishing documents etc with the return and filing of return in electronic form [Sections 139C & 139D]…… 1723 Persons authorized to verify return of income [Section 140] Self assessment [Section 140A] Inquiry before assessment [Section 142] Audit under section 142 Power of Assessing Officer to make a reference to the valuation officer [Section142A] 1728 Assessment [Section 143] Power of Joint Commissioner to issued direction in certain cases [Section 144A] Reference to Principal Commissioner or Commissioner in certain cases [Section 144BA] 1731 Provision for constitution of Alternate Dispute Resolution Mechanism [Section 144C] Method of Accounting [Section 145] Valuation of Inventory [Section 145A] Income escaping assessment [Sections 147 to 149] Sanction for issue of notice [Section 151] Other provisions [Section 152] Time limit for completion of assessments and reassessments [Section 153] Assessment procedure in case of search or requisition [Section153A/153B/153C] Rectification of mistakes [Section 154] Other amendments [Section 155] Notice of demand [Section 156] Intimation of loss [Section 157] CHAPTER 18: APPEALS AND REVISION Appeals before Commissioner (Appeals) Appeals to the Appellate Tribunal [Sections 252 to 255] Appeals to High Court [Sections 260A & 260B] Appeals to the Supreme Court [Section 261] Revision of monetary limits for filing of Appeals by the Department before Income Tax Appellate Tribunal and High Courts and SLP before Supreme Court 186 Provision for avoiding Repetitive Appeals [Section 158A] Procedure for appeal by revenue when an identical question of law is pending before Supreme Court [Section 158AA] Revision by the Principal Commissioner or Commissioner [Sections 263 and 264] Doctrine of partial merger and doctrine of total merger CHAPTER 19: SETTLEMENT OF TAX CASES Introduction Definition of ‘Case’ [Section 245A(B)] Application for settlement of cases [Section 245C] Procedure on receipt of Application [Section 245D] Power of Settlement Commission to order provisional attachment to protect revenue [Section 245DD] 196 Re-opening of completed proceedings [Section 245E] Jurisdiction and powers of the Settlement Commission Power to grant immunity from prosecution and penalty [Section 245H] Abatement of proceeding before the Settlement Commission [Section 245HA & 245HAA] Order of Settlement Commission to be conclusive [Section 245-I] Recovery of settled amount [Section 245J] Bar on subsequent application for settlement [Section 245K] Proceedings to be judicial proceedings [Section 245L] Order to be conclusive CHAPTER 20: PENALTIES Introduction Penalties Penalty leviable for under-reporting of income [Section 270A] Immunity from imposition of penalty and prosecution [Section 270AA] Penal provisions on undisclosed income found during the course of search [Section 271AAB] Commencement of limitation for penalty proceedings under sections 271D and 271E 207 Limitation for penalty proceedings under sections 271D and Whether to be determined u/s 275(1)(a) or u/s 275(1)(c)? Penalty for failure to furnish Statement of Financial Transaction Reportable Account [Section 271FA] Penalty for furnishing Inaccurate Statement of Financial Transaction or Reportable Account [Section 271AA] Penalty not leviable in certain cases [Section 273B] Procedure for assessment of penalties [Section 274] Reduction or waiver of penalty and interest Power of Principal Commissioner or Commissioner to grant immunity from penalty [Section 273AA] Time limit for passing an order for waiver of interest and penalty [Sections 220(2A), 273A, 273AA] Time limit for imposition of penalty [Section 275] CHAPTER 21: OFFENCES AND PROSECUTION Summary of offences and prosecution Power of commissioner to grant immunity from prosecution [Section 278AB] Presumption with regard to assets, books of accounts [Section 278D] Presumption as to culpable mental state [Section 278E] Prosecution to be made at the instance of the Chief Commissioner or Commissioner [Sections 279 and 279A] Proof of entries in records or documents [Section 279B] Disclosure of particulars by Public Servants [Section 280] Constitution of Special Courts & Offences triable by Special Court [Sections 280A & 280B] Trial of offences as summons case [Section 280C] Application of Code of Criminal Procedure, 1973 to proceedings before Special Court [Section 280D] CHAPTER 22: LIABILITY IN SPECIAL CASES Legal Representatives [Section 159] Representative Assessee Taxation of discretionary trusts [Section 164(1)] Direct assessment or recovery not barred [Section 166] Remedies against property in cases of representative Assessees [Section 167] Executors and Administrators [Sections 168 and 169] Liability of successor to business in respect of tax chargeable from the predecessor [Section 170] Income earned in a financial year assessed in the same financial year-exceptions to the general rule [Section 174 to 176] Liabilities arising when an association carrying on business is dissolved or business is discontinued [Section 177] Companies under liquidation [Sections 178 and 179] CHAPTER 23: MISCELLANEOUS PROVISIONS Mode of taking or accepting certain loans, deposits and specified sum [Section 269SS] 232 Mode of undertaking transactions [Section 269ST] Mode of repayment of certain loans or deposits [Section 269T] Special Bearer Bonds [Section 269TT] Transfers to defraud revenue void [Section 281] Provisional attachment to protect the interest of the revenue [Section 281B] Service of Notice [Sections 282, 283 & 284] Authentication of notices and other documents [Section 282A] Non-resident having liaison office required to submit statement in prescribed form to the Assessing Officer [Section 285] 2310 Furnishing of information or documents by an Indian concern [Section 285A] Submission of statements by producers of films [Section 285B] Obligation to furnish Statement of Financial Transaction or Reportable Account [Section 285BA] Publication of information [Section 287] Appearance by registered valuers [Section 287A] Appearance by authorized representative [Section 288] Rounding off of income, tax etc [Sections 288A & 288B] Receipt [Section 289] Indemnity [Section 290] Power to tender immunity from prosecution [Section 291] Cognizance of offences and Bar of suits in Civil Courts [Section 292 and 293] Certain laws not to apply [Section 292A] Return of income etc not to become invalid [Section 292B] Notice deemed to be valid in certain circumstances [Section 292BB] Presumption as to assets, books of account, etc [Section 292C] Concessions for encouraging participation in the business of prospecting for extraction etc of mineral oils [Section 293A] 2326 Authority empowered to grant an approval under the Income-tax Act, deemed to have power to withdraw the approval granted [Section 293C] 2327 Act to have effect pending legislative provision for charge of tax [Section 2328 Rules [Section 295 and 296] 2327 Schedules to the Income-tax Act, 1961 2327 CHAPTER 1 – NON RESIDENT TAXATION Introduction Residential status and scope of total income Exempt income of Non-residents Presumptive taxation for Non-residents Capital gain taxation for Non-residents Special provisions prescribed under Chapter XII-A Determination of tax in certain special cases [Chapter XII] Withholding tax provisions for Non-residents Miscellaneous provisions CHAPTER 2 – DOUBLE TAXATION RELIEF Concept of Double Taxation Relief Types of Relief Double Taxation Relief provisions under the Income-tax Act, 1961 Concept of Permanent Establishment Taxing Foreign Income Taxation of Business Process Outsourcing Units in India CHAPTER 3 – TRANSFER PRICING AND OTHER PROVISIONS TO CHECK AVOIDANCE OF TAX Introduction Meaning of the term “Arm’s Length Principle” Significance of Arm’s Length Principle Practical difficulties in application of ALP The Indian Scenario Transfer of income to Non-residents [Section 93] Transactions in securities [Section 94] Introduction of specific anti-avoidance measures in respect of transactions with persons located in notified jurisdictional area [Section 94A] Limitation of interest deduction in certain cases [Section 94B] CHAPTER 4 – ADVANCE RULINGS Introduction Definitions Authority for Advance Rulings [Section 245-O] Qualifications, terms and conditions of service of Chairman, Vice Chairman and Members [Section 245-OA] Vacancies, etc, not to invalidate proceedings [Section 245P] 46 Application for advance ruling [Section 245Q] Procedure on receipt of application [Section 245R] Applicability of Advance Ruling [Section 245S] Advance Ruling to be void in certain circumstances [Section 245T] Powers of the Authority [Section 245U] Procedure of Authority [Section 245V] CHAPTER 5 – EQUALISATION LEVY Growth of e-commerce and concerns emerging therefrom Taxation issues relating to e-commerce OECD Recommendations under Action Plan 1 of the BEPS project Equalisation Levy – Chapter VIII in the Finance Act, 2016 CHAPTER 6 – OVERVIEW OF MODEL TAX CONVENTIONS Introduction Comparative Analysis of some of the Significant Articles of OECD and UN Model Conventions CHAPTER 7 – APPLICATION AND INTERPRETATION OF TAX TREATIES Introduction Double Taxation and Connecting Factors Other important concepts Application of Tax Treaties Interpretation of Tax Treaties CHAPTER 8- FUNDAMENTALS OF BASE EROSION AND PROFIT SHIFTING Background Overview of BEPS Action Plan 1 – Addressing the challenges of the digital economy Action Plan 2 – Neutralise the effects of Hybrid Mismatch arrangements Action Plan 3 – Strengthen Controlled Foreign Company (CFC) Rules Action Plan 4 – Interest deductions and other financial payments Action Plan 5 – Counter harmful tax practices Action Plan 6 – Preventing treaty abuse Action Plan 7– Prevent the artificial avoidance of Permanent Establishment (PE) status Action Plan 8-10-Transfer Pricing Outcomes in line with Value Creation/Intangibles/Risk and Capital and other high-risk transactions Action Plan 11 – Measuring and monitoring BEPS Action Plan 12 – Disclosure of aggressive tax planning arrangements Action Plan 13 – Re-examine transfer pricing documentation Action Plan 14 – Making dispute resolution more effective Action Plan 15 – Developing a multilateral instrument 816 Challenges ahead