Page 378 - DCOM301_INCOME_TAX_LAWS_I

Unit 13: Income from Other Sources

During the previous year the assessee withdrew a fixed deposit before maturity and had Notes
to refund ` 3,500 to the bank. The amount withdrawn was invested in shares. It was held by
Karnataka High Court under the earlier regime that the amount paid to the Bank was an
expenditure laid out wholly and exclusively for the purpose of earning the dividend
income and deduction thereof while computing income from dividend is in order.
2. From the contributions received by employer from employees towards P.F. or
Superannuation or other funds: In the case of income of the nature referred to in Section
2(24)(x), which is chargeable to income-tax under the head “Income from other sources”
deduction shall be allowable in accordance with the provisions of Section 36(1)(va), i.e., if
the employer has credited the employee’s accounts in the respective funds with the amounts
of contributions received, the employer shall be allowed credit thereof.

3. Income derived from letting: Where income is derived from letting out of machinery,
plant or furniture on hire and also buildings where the letting of building is inseparable
from the letting of such machinery, plant or furniture and the income from such letting is
not chargeable to Income-tax under the head “Profits and Gains of Business or profession”,
the following expenses incurred in respect of those assets:
a) Current repairs of buildings.
b) Insurance premium against risk of damage or destruction of the premises.
c) Repairs and insurance of machinery, plant or furniture.

d) Depreciation.
Where the expenses referred to at (a) to (d) hereinabove are incurred on property used
partly for the business of the assessee, a proportionate deduction shall be allowed.

4. Income in the nature of family pension: Where a regular monthly amount is payable by an
employer to a person belonging to the family of an employee in the event of his death, i.e.,
‘family pension’, a sum equal to 33-1/3% of the income or 15,000, whichever is less, is
allowable as a deduction. All these expenses will be allowed only when the prescribed
particulars are furnished by the assessee.
5. Interest on compensation or enhanced compensation: A deduction of a sum equal to 50%
of such income and no deduction shall be allowed under any other clause of this section.

6. Other deductions: Any other expenditure (not being in the nature of capital expenditure)
laid out or expended wholly and exclusively for the purpose of making or earning such
income.

Task Prepare in a group a list of Deductions in calculating income from other sources
giving suitable examples.

13.3.1 Conditions to be Satisfied for Claiming Deductions

Deductions under this clause will, therefore, be allowed only if the following conditions are
satisfied:

(a) The expenditure is laid out wholly and exclusively for the purpose of earning such income.
If the purpose of earning income is coupled with some other extraneous purpose, it will
not be possible to say that the deduction under Section 57 (iii) is earned by the assessee.
(b) It is not in the nature of capital expenditure.

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