Question

d) Reading references within the ITA can sometimes be confusing. For example, in subsection 13(7.3), it states: "For the purposes of paragraph (7)(e), ..." On which page of the IT A would we find this "paragraph (7)(e)" that is referred to? e) Which section number is the section between section 39 and section 40? f) Which subsection number is the subsection between subsections 6(1) and (2)? g) What is the section number between sections 118.8 and 118.9?

Answer 1

Effective from YA 2015, a new Section 39(1)(o) is introduced in the ITA to disallow a deduction for any amount paid or to be paid as goods and services input tax (GST input tax) by a person if he is: Liable to be registered under the Goods and Services Tax Act 2014 (GST Act 2014) and has failed to do so, or.

Under the Income tax Act, 1961 Profit or gain from Business or profession is considered income and such income is chargeable to tax. The expenses incurred in relation to business can be deducted from the revenue from Business or profession. However, there is certain restriction on such deduction of expenses. Certain expenses cannot be allowed as deduction. Section 40 & 40A of the Income Tax Act, 1961 specified it. The provisions of section 40(a) is discussed here.

Section 40(a) start with the wording “Notwithstanding anything contrary in section 30 to 38”. That means it had overriding effect on section 30 to 38.

Any sum paid on account of fringe benefit tax under the relevant chapter of Income tax Act, shall not be allowed as deduction.

Any sum paid on account of tax levied on the profits or gains of any business or profession shall not be allowed as deduction.

Any sum paid on account of wealth-tax not allowed as deduction (not in force).

Tax actually paid by an employer as per clause (10CC) of section 10 (Tax on perquisite provided to employees) not allowed as deduction.

Section 6 of the Income-tax Act, 1961 (the Act) contains provisions relating to residency of a person. The status of an individual as to whether he is resident in India or a non-resident or not ordinarily resident, is dependent, inter-alia, on the period for which the person is in India during a year.