Deemed Incomes and Clubbing of Incomes

1. Deemed Incomes and Clubbing of Incomes

2. DEEMED INCOMES • Cash Credits • Unexplained Investments • Unexplained Money • Amount of Investments not fully disclosed • Unexplained Expenditure • Amount borrowed or repaid on hundi Tax on these incomes is charged @30%

3. Clubbing Of Incomes • Transfer of income without transfer of assets. • Revocable transfer of assets. • Income of spouse: -income of spouse by way of salary, commission, fees or any other form of remuneration from a concern in which such individual has a substantial interest. -If an asset(excluding house property)is transferred by an individual to his or her spouse neither for adequate consideration nor in connection with an agreement to live apart, the income from such asset to the spouse, will be included in the income of the transferor.

4. Income of daughter-in-law. • Transfer of assets to other persons or association of persons for the benefit of spouse • Income from assets transferred to a person or association of persons for the benefit of his son’s wife….after 31-5-73 • Income from business • Income of a minor child • Transfer of separate individual property or self-acquired property to hindu undivided family of which he is a member or conversion of property • Benami transactions

5. Set-Off And Carry Forward Of Losses • Set-off under the same head: Exceptions:- -loss from speculation business -loss of specified business -long term capital loss -loss from the activity of owning and maintaining race horses -losses of lottery, gambling etc -loss from an exempted source of income

6. Set-off against income under other heads: Exceptions:- -speculation losses -loss from specified business -loss from activity of owning and maintaining race horse -loss under the head capital gains -loss under the head business and profession cannot be set-off against income under the head salaries -no loss is to be adjusted from the winning from races, lotteries, etc

7. Carry-forward and Set-off of losses • Loss from house property- for max. of 8 years • Loss from non speculation business- for max. of 8 year -losses of discontinued business after revival -losses after succession takes place by inheritance • Loss of speculation business- for max. of 4 years • Loss of specified business- upto it is fully set off • Capital losses- for max. of 8 years • Loss from owning and maintaining race horses- for max. of 4 years

8. Accumulated non-speculative business loss and unabsorbed depreciation in case of amalgamation • Accumulated non-speculative business loss and unabsorbed depreciation in case of demerger • Accumulated non-speculative business loss and unabsorbed depreciation in case of succession • Accumulated non-speculative business loss and unabsorbed depreciation in case of amalgamation of a banking company • Accumulated non-speculative business loss and unabsorbed depreciation in case of business reorganisation of co-operative bank

9. Treatment of carried forward losses of certain assesses • Losses of firm • Losses of a firm in the case of change in its constitution • Losses of closely-held companies Unabsorbed depreciation, unabsorbed capital expenditure on scientific research and family planning can be carried forward for unlimited period till it is fully set-off.