A

PROJECT ON

“POWER AND DUTIES OF INCOME-TAX AUTHORITIES”

SUBMITTED TO:
MUKESH KUMAR GHOSH SIR
ASSISTANT PROFESSOR
INCOME TAX

SUBMITTED BY:
VIJAYANT PATEL
ROLL NO. 41, BCOM LLB 8th SEMSTER

DATE OF SUBMISSION: 03.04.2018

SCHOOL OF LAW
GURUGHASIDAS CENTRAL UNIVERSITY,
BILASPUR
 TABLE OF CONTENTS

Declaration……………………………………………………3

Certificate…………………………………………………….4

Acknowledgement……………………………………………5

Table of Cases………………………………………………...6

Research Methodology………………………………………7,8

Introduction – …………………………………………..........9, 10

Meaning Of Deduction ………………………………………..10,11

Deduction in respect of income………………………………11 14

Deduction in respect of payment……………………………..14, 16

Case law,s…………………………………………………………17
Conclusion…………………………………………………………18
Bibliography………………………………………………………..19
 DECLARATION

I, VIJAYANT PATEL, Roll No. 41, BCOM LLB 8th Semester of Guru Ghasidas
University do hereby declare that, this project is my original work and I have not copied this
project or any part thereof from any source without due acknowledgement. I am highly
indebted of the my subject professor who guide me and help me out in making this project,
authors of the books that I have referred in my project as well as the writers of the articles
and the owner of the information taken from website on it. It is only because of their
contribution and proper guidance of my faculty advisor MUKESH KUMAR GHOSH, that
I was able to gather lights on this project.

VIJAYANT PATEL

Roll No. 41

BCOM LLB 8TH SEMSTER

 CERTIFICATE

I am glad to submit this project on “POWER AND DUTIES OF INCOME-TAX

AUTORITIES” as a part of my academic assignment. The project is based on functions of
income tax authorities. It furthers them process of income tax authority.. I hope this be
significant for academic purposes as well as prove informative to all readers.

Here though I declare that this paper is an original piece of research and all borrowed texts
and ideas have been duly acknowledged.

VIJAYANT PATEL Faculty Signature:

Roll No. 31

B.COM LL.B 8TH SEMSTER

 ACKNOWLEDGEMENT

I would like to express my earnest and deepest gratitude to, MUKESH KUMAR GHOSH
Faculty for giving me this opportunity to do a project on such a valuable topic of “POWER
AND DUTIES OF INCOME-TAX AUTHORITIES”. I am grateful for the assistance,
guidance and support that were extended during the course of excellent research. I am also
thankful to the Department for providing the resources necessary for the research work. I
thank my parents and my friends for their moral support and love throughout my research
work and project preparation. Above all I thank God Almighty for blessing me with the
health and vitality to complete the project.

VIJAYANT PATEL

ROLL NO. 41

B.COM LL.B 8TH SEMESTER

 Case Name Page No.

1) Cambay Electric Supply Industrial Co. Ltd. vs. CIT , (1978) 113 17
ITR 84 (SC),

2) Udaipur Shahakari Upbhokta Thok Bhandar Ltd. vs CIT, 17

(2009) 315 ITR 21 (SC)

TABLE OF CASES
Research Methodology

Title

Deductiuon from gross total income.

Problem

It is very hard to write such a vast topic in few pages if we have to deal with all the
deduction from gross total income.

Rationale

To study the section 80 c to 80 u .

To study the other deduction.

Objective of the project

The objective of the project is for the fulfillment of assignment work given to me. The
fundamental objective of my research is to analyze the A doctrine repugency under
interpretation of statues. The object of writing this project is to give a clear picture of the
doctrine of approver in The Scope is confined only to Information technology..

Review of literature

1. Dr. Rai Kailash.

2. Prof. Atal Kumar
Source of Data

The secondary sources of data collection such as the books and various journals have been
used with the help of the access to the library and the software. The database which is used
in this particular project is from the library, Google books and articles from the internet.

Method of Research

For this project, I followed doctrinal method which includes both descriptive method and
analytical method of writing throughout this project. Books and other reference materials are
taken from the Department Library and this book are very helpful for the completion of this
research paper.

Time limit

Time limit for submission this project is 17 April 2017 and it takes two months for
completion of project on “deduction from gross total income.”
 [INCOME TAX]
“DEDUCTION FROM GROSS TOTAL INCOME”

Introduction- In order to further the Government Policy of attracting

investment and activity in the desired direction and to provide stimulus to
growth or to meet social objectives, concession in the form of ‘deduction’ from
Taxable Income is allowed. Chapter VI-A of the Income-tax Act, 1961 contains
such deduction provisions. With the advent of new philosophy of giving direct
assistance to the desired goal and avoiding indirect route of tax concessions, the
numbers of deductions are being omitted. This is also with a view to avoid
complexity of tax law. In computing Total Income of an assesses deductions
under sections 80CCC to 80U are permissible from “Gross Total Income”.
[Section 80A (1)] Indian tax laws contain certain provisions, which are intended
to act as an incentive for achieving certain desirable socio -economic objectives.
These provisions are contained in Chapter VIA and are in the form of
deductions (80C to 80U) from the Gross Total Income. By reducing the
chargeable income, these provisions reduce the tax liability, increase the post -
tax income and thus induce the tax-payers to act in the desired manner. The
aggregate amount of deductions under sections 80C to 80U cannot exceed the
Gross Total Income. In computing total income of assesses, there shall be
allowed from his gross total income, in accord ance with the subject to the
provisions of section 80A to 80U the deductions specified in Section 80C to
80U.

Meaning of Deduction - A tax deduction is a reduction in tax obligation from a

taxpayer's gross income. Tax deductions can be the result of a variety of events that the
taxpayer experiences over the course of the year. Tax deductions are removed from taxable
income, also known as the adjusted gross income, and thus lowers the taxpayer's overall tax
liability.

Standard Deduction - In the United States, a standard deduction is given on federal taxes
for most individuals. The amount of the federal standard deduction varies by year and is
based on the taxpayer's filing characteristics. Each state sets its own tax law on standard
deductions, with most states also offering a standard deduction at the state tax level.
Taxpayers have the option to take a standard deduction or to itemize deductions. If a
taxpayer chooses to itemize deductions, then deductions are only taken for any amount
above the standard deduction limit.
There are a number of common tax deductions and also many overlooked tax deductions at
the federal and state tax level that taxpayers can utilize to lower their taxable income.
Common tax deductions include property tax and charitable donations. Homeowners also
enjoy some added advantages in regards to tax deductions.

Some uncommon tax deductions include sales tax on personal property purchases and annual
tax on personal property, such as a vehicle. Many expenses incurred throughout the year for
personal and business reasons may also be eligible for itemized deductions, such as
networking expenses, travel expenses, health expenses and some transportation expenses.

Deduction not to be allowed unless return furnished [Sec. 80AC]1 - Where in computing
the Total Income of an assesses of the Previous Year relevant to the Assessment Year
commencing on the 1st day of April, 2006 or any subsequent Assessment Year, any
deduction is 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, no such deduction shall be allowed to him unless
he furnishes a return of his income for such Assessment Year on or before the due date
specified under sub-section (1) of section 139.

Deduction in respect of Payments [Section 80 C to 80 GG] - Any sums paid or

deposited by the assesses —1. As Life Insurance premium to effect or keep in force
insurance on life of (a) self, spouse and any child in case of individual and (b) any member,
in case of HUF. Insurance premium should not exceed 10%/15% / 20 % of the actual capital
sum assured as follows – In case of insurance policy issued up to 31.3.2012 – 20 % of the
actual capital sum assured, excluding the value of any premiums agreed to be returned or
any bonus. In case of insurance policy issued on or after 01.04.2012 - 10 % of the actual
capital sum assured, i.e. minimum amount assured excluding the value of any premiums
agreed to be returned or any bonus In case of insurance policy issued on or after 01.04.2013
on the life of a person suffering from disability / severe disability referred to u/s 80 U or
disease / ailment specifically referred u/s 80DDB - 15 % of the actual capital sum assured,
i.e. Minimum amount assured excluding the value of any premiums agreed to be returned or
any bonus.

2. To effect or keep in force a Non Commutable deferred annuity contract on life of self,
spouse and any child in case of individual

3. By way of deduction from salary payable by or on behalf of the Government to any

individual for the purpose of securing to him a deferred annuity or making provision for his
spouse or children. The sum so deducted does not exceed 1/5th of the salary.

1
Inserted by the Finance Act, 2006. Rai Kailash,Taxation Laws p.319, (Allahabad Law Agency, Allahabad,
Reprint 2015)
4. As contribution (not being repayment of loan) by an individual to Statutory Provident
Fund

5. As contribution to PPF scheme, 1968 in the name of self, spouse & any child in case of
individual and any member in case of HUF.

5. As contribution to PPF scheme, 1968 in the name of self, spouse & any child in case of
individual and any member in case of HUF.

6. As contribution by an employee to a recognized provident fund.

7. As contribution by an employee to an approved superannuation fund.

8. Subscription to the NSC (VIII issue) and IX issue including accrual interest for 6 years.

9. As a contribution to Unit-linked Insurance Plan (ULIP) of UTI or LIC Mutual Fund

(Dhanraksha plan) in the name of self, spouse and child in case of individual and any
member in case of HUF.

10. Bank Fixed Deposit with 5 Years Lock in Period.

11. Subscription to Notified Bonds of NABARD.

12. Deposit with Senior Citizen Saving Scheme.

Cumulative monetary ceiling - 80CCE - By virtue of section 80CCE, the aggregate

amount of deduction under sections 80C, 80CCC and 80CCD(1) [i.e., contribution by an
employee (or any other individual) towards NPS] cannot exceed `1,50,000 (`1,00,000 for the
assessment years 2012 - 13 to 2014 - 15). The ceiling limit is not applicable (from the
assessment year 2012 - 13) in respect of employer's contribution towards NPS.

Limit of deduction under section 80-c, 80-ccc, 80-ccd (section 80-ccce)2 – The aggregrate of
amount of deduction under section 80-c, 80-ccc & 80-ccd shall not, in any case exceed one
lac rupees.

Rajeev Gandhi Equity Saving Scheme – 80CCG - Deductions in respect of investment

made under any equity savings scheme: Total Income does not Exceed 12 Lacks -

 Deduction – 50% of Investment or 25,000, whichever is higher

 For 3 Consecutive Years.
 Lock-in Period – 3 Years.
 Over & above Deduction of `1,50,000/- under 80C
 Gross total income of the assesses for the relevant assessment year shall not exceed
`12 lakhs

2
Finance act, 2005 w.e.f 1-4-2006, Atul Kumar,Taxation Laws,p.256, (Central Law Publications, Allahabad,
nd
2 Edn, 2014.)
Deduction u/s.80D - Deductions in respect of Medical insurance premia, health check up
and medical treatment: Medical insurance premium (Med claim Policy) paid: On the health
of taxpayer, spouse, parents and dependent children. The premium can be paid by any mode
other than cash-

 Amount of deduction 25,000.

 Additional deduction 5,000 is allowed if the policy is taken on the health of senior
citizen.
 Preventive Medical Check up 5,000 from 2012-13 (included in the above
deductions).

Following conditions are to be satisfied-

 Tax payer is an individual or HUF

 Medical Insurance premium is to be paid to Insurance Company.

Deduction:-

 Insurance Premium paid or 25,000 whichever is less.

 The above limit is increased to 30,000 in case any assesses, his spouse or member of
family (in case of HUF)is 65 years of age.
 Additional Limit of ` 25,000 for parents – medical insurance premium or preventive
health checkup (30,000 - for parents who are senior citizens)
 The priorities for senior citizens (80 years or more) – For medical treatment
expenditure of any parents, aged 80 Years or above, not having medical insurance
cover, maximum limit is `30,000 ( aggregate cover under above 2 points not to
exceed 30,000)

Deduction u/s.80DD - Deduction in respect of maintenance including medical treatment of a

handicapped dependent:

 Furnish a certificate issued by the medical authority in form No.10-IA.

 Amount of deduction 75,000 is allowed, irrespective of actual amount of
expenditure incurred.
 In case severe disability (of 80% or more) - `1, 00,000 is allowed.
 The person claiming deduction under this section, he should not claim any deduction
under section 80U

The following conditions should be satisfied.-

(a) Tax payer is a resident individual (b) Tax payer has incurred an expenditure for medical t

Deduction u/s.80DDB

Deductions in respect of:

• Medical treatment of dependent or self for specified disease/ailment.

Amount of deduction `40,000 or amount of expenditure whichever is lower: if the person is a

senior citizen 80,000 is allowed.

This deduction is not allowable by the employer Following conditions has to be satisfied -
(a) Taxpayer is resident Individual or HUF. (b) Taxpayer has actually incurred expenditure
for the medical treatment of a specified disease or ailment as prescribed by the Board. (c)
The expenditure is actually incurred for medical treatment of the assesses himself or
dependent spouses parents, children’s, brothers & sisters. (d) The assesses shall have to
submit a certificate in the prescribed form.

Deductions -u/s.80G3 - Deduction in respect of donations to certain funds, charitable

institutions etc.

 Deduction can be allowed by the employer only in respect of donations made to

Prime Minister Relief Fund, Chief Ministers Relief Fund, Earthquake Fund, National
Children Fund, etc.
 In respect of donations to charitable institutions, deductions cannot be allowed by
the employer.
 Deduction is available to any Taxpayer

Conditions:

(a) Donation should not be in kind. (b) Donation exceeding `10,000 must not be paid by
cash, may be paid by other mode. (c) Donation should be made to specified funds or
institution.

 Donation to Certain Funds or institution can be given without any restrictions.

 Other Donations are eligible for deduction subject to limit of
 10 % of Gross Total Income Less
 Long Term Capital Gains & other Deduction.
 100 % Deduction in some cases

(A) Donations made to the following are eligible for 100% deduction without any qualifying
limit –

 Prime Minister’s National Relief Fund.

 National Defence Fund.
 Prime Minister’s Armenia Earthquake Relief Fund.
 The Africa (Public Contribution - India) Fund.
 The National Foundation for Communal Harmon.
 Approved university or educational institution of national eminence.
 The Chief Minister’s Earthquake Relief Fund, Maharashtra.

3
The present position has been stated w.e.f. 2014 – 15, Atul Kumar,Taxation Laws,p.262, (Central Law
Publications, Allahabad, 2nd Edn, 2014.)
  Donations made to Zila Saksharta Samitis.
 The National Blood Transfusion Council or a State Blood Transfusion Council.
 The Army Central Welfare Fund or the Indian Naval Benevolent Fund or The Air
Force Central Welfare Fund.
 The National Illness Assistance Fund
 50 % Deduction in other cases

(B) Donations made to the following are eligible for 50% deduction without any qualifying
limit -
 Jawaharlal Nehru Memorial Fund.
 Prime Minister’s Drought Relief Fund.
 National Children’s Fund.
 Indira Gandhi Memorial Trust.
 The Rajiv Gandhi Foundation.

Deductions -u/s.80GG –

 Deduction in respect of rent paid.

 The assesses, his spouse, or minor child or the HUF of which he is a member should
not own any residential house at the place of his employment / business or
profession, Assesses should not be in receipt of HRA .
 The least of the following amount is exempted.
 Rent paid in excess of 10% of total income before allowing deduction under this
section.
 Rs.5, 000 per month.
 25% of total income before allowing deduction under this section

Following conditions is to be satisfied - (a) Tax payer is an individual. (b) Tax payer is a self
employed person or salaried person who is not receipt of HRA. (c) Tax payer/spouse/minor
child does not own a residential accommodation at a place of employment or business.

Deduction in respect of certain Incomes [80HH TO 80 TT] –

Deductions in respect of profits and gains from industrial undertakings or enterprises

engaged in infrastructural

Development (Sec 80IA) Amount of deduction - In case of undertaking providing telecom

services - 100 % of profits and gains for initial 5 AY, 30 5 for next 5 AY In case of other
eligible undertaking, 100 % of profits and gains for 10 consecutive AYs.

Deductions for profits and gains of an undertakings or enterprises engaged in

development of SEZ (Sec 80IAB)

Amount of deduction - 100 % of profits and gains for 10 consecutive AY s - (1) Where the
Gross Total Income of an assessee, being a Developer, includes any profits and gains
derived by an undertaking or an enterprise from any business of developing a Special
Economic Zone, notified on or after the 1st day of April, 2005 under the Special Economic
Zones Act, 2005, there shall, in accordance with and subject to the provisions of this Section,
be allowed, in computing the Total Income of the assesses, a deduction of an amount equal
to one hundred per cent of the profits and gains derived from such business for ten
consecutive Assessment Years.

(2) The deduction specified in sub-section (1) may, at the option of the assessee, be claimed
by him for any ten consecutive Assessment Years out of fifteen years beginning from the
year in which a Special Economic Zone has been notified by the Central Government
Provided that where in computing the Total Income of any undertaking, being a Developer
for any Assessment Year, its profits and gains had not been included by application of the
provisions of sub-section (13) of Section 80-IA, the undertaking being the Developer shall
be entitled to deduction referred to in this Section only for the unexpired period of ten
consecutive Assessment Years and thereafter it shall be eligible for deduction from income
as provided in sub-section (1) or sub-section (2), as the case may be Provided further that in
a case where an undertaking, being a Developer who develops a Special Economic Zone on
or after the 1st day of April, 2005 and transfers the operation and maintenance of such
Special Economic Zone to another Developer (hereafter in this Section referred to as the
transferee Developer), the deduction under sub-section (1) shall be allowed to such
transferee Developer for the remaining period in the ten consecutive Assessment Years as if
the operation and maintenance were not so transferred to the transferee Developer.

(3) The provisions of sub-section (5) and sub-sections (7) to (12) of Section 80-IA shall
apply to the Special Economic Zones for the purpose of allowing deductions under sub-
section (1).

Deductions in respect of profits and gains of an eligible start-up from eligible business
(Sec 80-IAC)

Amount of deduction - 100 % of profits and gains for 3 consecutive AYs.

Conditions: 1.The eligible start up should fulfill the specified conditions. Where deduction
is claimed under this provision in respect of profits of an eligible start up, deduction to the
extent of such profits shall not be allowed under sections 80 HH to 80 RRB and deduction
under this provision shall not exceed the profits of the start-up.

2. The accounts of the start-up are required to be audited and an audit report is to be
furnished in the prescribed form.

Deductions for profits and gains from developing and building affordable housing
projects (Sec 80-IBA)

Amount of deduction - 100 % of profits and gains from business of such housing projects

Interim question - Deduction under Section 80-IB is available to: (a) Charitable Trust. (b)
Tour and Travels. (c) Industrial Research. (d) Convention Centre.

Which of the following gets 50% deduction on the profits and gains derived from its
business for a period of five consecutive years beginning from the initial assessment year in
any place (a) Multiplex Theatre (b) Convention Centre (c) Hospital (d) Charitable Trust?

Deduction under section 80-IB in respect of profits and gains from certain industrial
undertakings other than infrastructure development undertakings:
Deduction under section 80-IB is available to different industrial undertakings as
follows –

 Business of an industrial undertaking.

 Operation of Ship.
 Hotels.
 Industrial research.
 Production of mineral oil.
 Developing and building housing projects.
 Integrated handling, storage and transportation of food grains units.
 Multiplex theatres.
 Convention centre.
 Operating and maintaining hospital in rural area.
 Hospital located in certain areas

Deduction in respect of royalty on patents (Section 80RRB) - Conditions to be satisfied

for claiming deduction under this section: (a) The deduction is available to an individual
who is resident in India and is a patentee. (b) The patent should be registered on or after 1

4-2003 under the Patents Act, 1970. (c) His gross total income of the previous year includes
royalty in respect of such patent. Amount of deduction 100% of such royalty income or Rs.
3,00,000, whichever is less.

 Where any income is earned from any source outside India, only so much of the
income shall be taken into account for the purpose of this section as is brought into
India by, or on behalf of, the assessee in convertible foreign exchange within a
period of six months from the end of the previous year in which such income is
earned or within such further period as the competent authority may allow in this
behalf.
 Where a compulsory license is granted in respect of any patent under the Patents
Act, 1970, the income by way of royalty for the purpose of allowing deduction
under this section shall not exceed the amount of royalty under the terms and
conditions of a license settled by the Controller under that Act.

DEDUCTION IN RESPECT OF INTEREST ON DEPOSITS IN SAVINGS

ACCOUNTS TO THE MAXIMUM EXTENT OF 10,000 [SECTION 80TTA] [W.E.F.
A.Y. 2013-14]4 Allowable to: an individual or a Hindu Undivided Family.

Conditions: Where the Gross Total Income of an assessee, includes any income by way of
interest on deposits (not being time deposits) in a saving account with-

(a) A banking company to which the Banking Regulation Act, 1949 applies (including any
bank of banking institution referred to in Section 51 of that Act);

(b) A co-operative society engaged in carrying on the business of banking (including a co-
operative land mortgage bank or a co-operative land development bank); or

(c) A Post Office as defined in clause (k) of Section 2 of the Indian Post Office Act, 1898.

4
Rai Kailash,Taxation Laws p.338, (Allahabad Law Agency, Allahabad, Reprint 2015)
Allowable Deduction: A deduction of such interest shall be allowed to the maximum extent
of ` 10,000. However, where the income referred to in this Section is derived from any
deposit in a savings account held by, or on behalf of, a Firm, an Association of Persons or a
Body of Individuals, no deduction shall be allowed under this Section in respect of such
income in computing the Total Income of any partner of the firm or any member of the
association or any individual of the body.

Other Deduction - Deduction allowed to a person with disability - u/s.80U

Deduction in case of a person with disability: blindness, low vision, leprosy, hearing
impairment, mental retardation and mental illness.

 Conditions: Furnish a certificate issued by the medical authority in form No.10-IA.

For this section, the following conditions must be satisfied
 The assessee is an individual being a resident
 He is a person with disability like
 He is certified by the medical authority to be a person with disability, at any time
during the previous year.
 He furnishes a certificate issued by the medical authority in the prescribed form along
with the return of income
 Amount of deduction –A fixed deduction of 1) 75,000 in case of a person with

CASE LAW’S –

{1} Cambay Electric Supply Industrial Co. Ltd. vs. CIT,5 continues to haunt the incentive
provisions and concessions. Co-operative sector is no exception. The Supreme Court, in CIT

5
(1978) 113 ITR 84 (SC), The Institute of Cost Accountants of India CMA Bhawan, 12, Sudder Street, Kolkata - 700 016.
vs. Kotagiri Industrial Co-operative Tea Factory Ltd. (1997) 224 ITR 604 (SC) has held that
the definition of gross total income would taken into consideration the past losses or
unabsorbed depreciation as well as has been decided even for the purposes of sections
80HHC, 80-I and 80-IB. Further, the more liberal language “attributable to” instead of
“derived from” has been used for section 80P. Past unabsorbed loss, it was held, would go to
reduce the eligible profit for section 80P, since it is required to set-off against current income
for the purposes of relief, in CIT vs. Ganganagar Sahkari Spinning Mills Ltd. (2004) 265
ITR 540 (Raj.) following Kotagiri Industrial Co-Operative Tea Factory’s Case.

{2} Udaipur Shahakari Upbhokta Thok Bhandar Ltd. vs CIT6, the society was storing goods
given by the Government and supplying it to fair price shops. The Supreme Court held that
the Commission earned was not from letting on hire of godowns and so was not entitled to
exemption, the goods having stored in its own godown not for the purpose of storing,
processing or facilitating the marketing of the commodities.

CONCLUSION – I will conclude that this is also with a view to avoid

complexity of tax law. In computing Total Income of an assesses deductions
under sections 80CCC to 80U are permissible from “Gross Total Income” The
aggregate amount of deductions under sections 80C to 80U cannot exceed the
Gross Total Income. In computing total income of assesses, there shall be
allowed from his gross total income, in accordance with the subject to the
provisions of section 80A to 80U the deductions specified in Section 80C to
80U.

6
(2009) 315 ITR 21 (SC), The Institute of Cost Accountants of India CMA Bhawan, 12, Sudder Street, Kolkata - 700 016.
Bibliography –

Book – Taxation Laws.

Author – Dr. Rai Kailash.

Published by – Allahabad Law Publication

Published place – Allahabad.

Year – 2014.

Book – Taxation Laws.

Author – Atal Kumar

Published By – Central Law Publications

Published place – Allahabad

Years – 2013

Internet Sources –

Available at – www.paper16.com