Profit and Gains from Business and Profession

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Vijit Mittal Astt Prof.

Meaning of Business & Profession

B&P carried on by Assessee It should be carried on during pervious year Legal ownership Vs. beneficial ownership Profit in case of winding up Real profit Vs. anticipated profit Real profit Vs. notional profit Profit motive is not essential Business cannot be carried on with oneself Illegal business
Business & Profession are two type speculative and non speculative. For the income tax purpose we calculate above separately but there is no difference to charging the tax on these.
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General Deduction (Sec. 37)

Expenses are related to assessee business Exp. Are not of personal nature Exp. Are not of capital nature Exp. relate to previous year However any exp. Incurred for business propose which is prohibited by law shall not be allowed as deduction
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Other Major deduction

depreciation Scientific research Preliminary Exp. Bad debts Family planning exp.

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Vijit Mittal Astt Prof.

Depreciation
Assets must be owned by Assessee at the end of pervious year It must be used for B&P It should be available for tangible as well as intangible assets.

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Vijit Mittal Astt Prof.

Basic concepts for computation of depreciation

Method of depreciation :- written down value Rate of depreciation :- as per income tax Block of assets Actual cost Written down value Unabsorbed depreciation Capital gain/loss
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Expenses are Inadmissible

Payment made without TDS if applicable FBT IT Wealth Tax Unreasonable payment to relative or associate concern Payment in Cash
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Maintenance of prescribed books of account by certain person

Specified profession
Do not Exceed gross receipt Rs. 150000 P.A. Exceed gross receipt Rs. 150000 P.A.

Non specified profession

Do not exceed income from B&P Rs. 120000 or total sale, turnover, gross receipt Rs.1000000 P.A. Exceed income from B&P Rs. 120000 or total sale, turnover, gross receipt Rs.1000000 P.A.
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Audit of account of certain person

A person carrying on business and total sale, turnover, gross receipt Rs.4000000 P.A A person carrying on profession and total sale, turnover, gross receipt Rs.1000000 P.A A person covered under sec. 44AD(Civil construction or supply of labour for civil construction),44AE(plying, hiring or leasing good carriage), 44Af(retail trade),44BB(supplying plant and machinery on hire), or 44BBB( foreign civil construction company) and claim that profit is lower than specified limit.
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