Page 24 - DCOM301_INCOME_TAX_LAWS_I

Unit 1: Income Tax: Basic Framework

The profits and gains of any business of banking (including providing credit facilities) Notes
carried on by a co-operative society with its members.

Any winnings from lotteries, cross-word puzzles, races including horse races, card
games and other games of any sort or from gambling, or betting of any form or
nature whatsoever. For this purpose,

“Lottery” includes winnings, from prizes awarded to any person by draw of
lots or by chance or in any other manner whatsoever, under any scheme or
arrangement by whatever name called;
“Card game and other game of any sort” includes any game show, an
entertainment programme on television or electronic mode; in which people
compete to win prizes or any other similar game.
Any sum received by the assessee from his employees as contributions to any
provident fund (PF) or superannuation fund or Employees State Insurance Fund
(ESI) or any other fund for the welfare of such employees.
Any sum received under a Keyman insurance policy including the sum allocated by
way of bonus on such policy will constitute income.

Did u know? “Keyman insurance policy” refers to a life insurance policy taken by a person
on the life of another person where the latter is or was an employee or is or was connected
in any manner whatsoever with the former’s business.
Any sum referred to clause (va) of Section 28. Thus, any sum, whether received or
receivable in cash or kind, under an agreement for not carrying out any activity in
relation to any business; or not sharing any know-how, patent, copy right, trade-
mark, licence, franchise, or any other business or commercial right of a similar
nature, or information or technique likely to assist in the manufacture or processing
of goods or provision of services, shall be chargeable to income tax under the head
“profits and gains of business or profession”.
Any sum of money or value of property referred to in section 56(2)(vii) or section
56(2)(viia).

Any consideration received for issue of shares as exceeds the fair market value of
shares referred to in section 56(2)(viib).
(4) Dividend [Section 2(22)]: The term ‘dividend’ as used in the Act has a wider scope and
meaning than under the general law. According to section 2(22) of the Act, the following
receipts are deemed to be dividend:
Distribution of accumulated profits, entailing the release of company’s assets: Any distribution
of accumulated profits, whether capitalised or not, by a company to its shareholders
is dividend if it entails the release of all or any part of its assets. For example, if
accumulated profits are distributed in cash it is dividend in the hands of the
shareholders. Where accumulated profits are distributed in kind, for example by
delivery of shares etc. entailing the release of company’s assets, the market value of
such shares on the date of such distribution is deemed dividend in the hands of the
shareholder [section 2(22)(a)].

Distribution of debentures, deposit certificates and bonus shares to preference shareholders:
Any distribution to its shareholders by a company of debenture stock or deposit
certificate in any form, whether with or without interest, and any distribution of
bonus shares to preference shareholders to the extent to which the company possesses

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