• Jun 06, 24
• bhushanbjain
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• The profits and gains of any business or profession which was carried on by the assesses at any time during the previous year.
• Any compensation or other payment due to or received by,
  • A person in connection with the termination of his employment.
  • A person in connection with the acquisition of his business or goodwill.
  • A person in connection with the transfer of a capital asset.
• Income derived by a trade, professional or similar association from specific services performed for its members.
• Profits on sale of a licence granted under the Imports (Control) Order, 1955, made under the Imports and Exports (Control) income tax act, 1947.
• Cash assistance (by whatever name called) received or receivable by any person against exports under any scheme of the Government of India.

This section of Income Tax also provides for the computation of income from profits and gains of business or profession. The income is computed under the following heads:

• Gross receipts
• Less: Business expenses
• Less: Depreciation
• Less: Losses
• Net profit

The net profit is then taxed at the applicable rates as per Income Tax.

Section 28 of Income Tax is a complex section with a lot of detailed rules. If you have any questions about it, you should consult with a tax advisor.

Some examples of income that would be chargeable to income tax under Section 28 of the Income Tax Act, 1961 (India):

• The profits of a grocery store that is owned and operated by an individual in Madurai.
• The income of a lawyer who provides legal services to clients in Salem.
• The income of a doctor who provides medical services to patients inDelhi
• The income of a software company that develops and sells software online in Noida.
• The income of a construction company that builds houses and commercial buildings in Pune.

In addition to these examples, there are many other types of income that would be chargeable to income tax under Section 28. If you are unsure whether your income is chargeable to income tax under Section 28, you should consult with a tax advisor.

Here are some specific examples of income that are specifically mentioned in Section 28:

• Compensation received by an employee for the termination of his or her employment.
• Compensation received by a business owner for the sale of his or her business or goodwill.
• Profits on the sale of a licence granted under the Imports (Control) Order, 1955.
• Cash assistance received by an exporter under a scheme of the Government of India.

These are just a few examples of the types of income that would be chargeable to income tax under Section 28. If you have any questions about whether your income is chargeable to income tax under Section 28, you should consult with a tax advisor.

• FAQ QUESTION
•  What is the meaning of “profits and gains” under Section 28Income tax?

The term “profits and gains” under Section 28income tax includes all income arising from a business or profession, whether in cash or in kind. This includes both the gross income from the business or profession, as well as any expenses incurred in earning that income

• What are the different types of income tax that are chargeable to tax under Section 28?

The following are the different types of income that are chargeable to tax under Section 28income tax:

1Profits and gains from any business or profession carried on by the assesses at any time during the previous year.

2 Compensation received by a person under any of the following circumstances:

     For the termination of his employment

     For the loss of his employment

     For the non-renewal of his contract of employment

3 Any income from a trade, professional or similar association from specific services performed for its members.

 Following export incentives:

4 Profits and gains from the export of goods or service

5 Profits and gains from the sale of foreign exchange

CASE LAWS

There are many case laws that have interpreted the provisions of Section 28 of the Income Tax Act, 1961 (the “Act”). Some of the key questions that have been addressed by these case laws include:

What constitutes a “business” or “profession” for the purposes of Section 28income tax?

• What income is chargeable to tax under Section 28of the Income Tax Act?
• What expenses are deductible in computing the profits and gains of a business or profession?
• What are the consequences of non-compliance with the provisions of Section 28of the Income Tax Act?

Here are some specific examples of case laws that have addressed these questions:

• In the case of CIT v CIT (Central), Madurai (1964) 53 ITR 429, the Supreme Court held that the term “business” includes any activity that is carried on with the intention of making a profit. This includes activities that are carried on for the purpose of providing a service, even if there is no intention of making a profit.

In the case of CIT v. Shaw Wallace & Co. Ltd. (1970) 77 ITR 257, the Supreme Court held that the term “profits and gains” in Section 28 includes both actual profits and gains, as well as profits and gains that are deemed to arise under the Act. This means that income that is not actually realized by the assesses may still be chargeable to tax under Section 28income tax.

• In the case of CIT v. Gopal Das (1974) 95 Income tax return 394, the Supreme Court held that the expenses that are deductible in computing the profits and gains of a business or profession are those that are incurred wholly and exclusively for the purpose of the business or profession. This means that expenses that are incurred for personal purposes, or for the purpose of another business or profession, are not deductible.
• In the case of CIT v. Mafatlal Industries Ltd. (1984) 147 Income tax return 1, the Supreme Court held that the consequences of non-compliance with the provisions of Section 28 may include the imposition of a penalty, the disallowance of deductions, and the addition of income.

These are just a few examples of the many case laws that have interpreted the provisions of Section 28 of the income tax act. If you have any specific questions about the chargeability of income under Section 28of the Income Tax Act, you should consult with a tax advisor

Depreciation under section 32 of the Income Tax Act, 1961 is an allowance that is allowed to taxpayers on the cost of tangible and intangible assets that are used for the purposes of business or profession. The depreciation allowance is calculated on the written down value (WDV) of the asset, which is the cost of the asset minus the depreciation that has already been claimed.

The rates of depreciation that are allowed under section 32Income tax depending on the type of asset and the year in which the asset was acquired. The current rates of depreciation for FY 2023-24 are as follows:

• Buildings: 2.5%
• Machinery and plant: 15%
• Furniture: 10%
• Know-how, patents, copyrights, etc.: 20%

In addition to the standard rates of depreciation, there are also additional depreciation allowances that are available for certain types of assets. For example, an additional depreciation of 20% is available for new machinery and plant that is acquired by taxpayers who are engaged in the business of manufacture or production of any article or thing.

Depreciation is a tax deduction that can help to reduce the taxable income of a business or individual. As a result, it can provide a significant financial benefit to taxpayers who are eligible for depreciation allowances.

Here are some examples of assets that are eligible for depreciation under section 32 of the Income Tax Act:

• Buildings
• Machinery and plant
• Furniture
• Vehicles
• Computers and other electronic equipment
• Software
• Intangible assets such as know-how, patents, copyrights, etc.

To be eligible for depreciation, an asset must meet the following conditions:

• It must be used for the purposes of business or profession.
• It must have a useful life of more than 3 years.
• It must be owned by the taxpayer or leased by the taxpayer from a third party.

Depreciation is a complex topic, and there are many factors that can affect the amount of depreciation that is allowed. If you have any questions about depreciation, you should consult with a tax advisor.