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Unit 13: Income from Other Sources

13.4 Tax Concessions Notes

The word “security” has not been defined by the Income-tax Act. Therefore, its natural meaning
as well as the meaning, as interpreted in the case laws, has to be adopted. The Shorter Oxford
English Dictionary defines “security” as: “a document held by a creditor as guarantee of his
right to payment. This implies that unless the payment of debt is secured in some way, a mere
“debt” is not a security.
The word “security” denotes a debt or claim, the payment of which is in some way secured.
Where the word is used in its normal sense, some form of secured liability is postulated. The
word “securities” must be construed in the above defined sense and does not include shares or
stock in a company”.

Notes The following amounts shall not be deducted in computing income chargeable
under the head ‘Income from other sources’ in the case of any assessee:
1. Any personal expenses of the assessee.
2. Any interest chargeable under the Income-tax Act which is payable outside India
and from which income-tax has not been paid or deducted at source.
3. Any payment which is chargeable under the head “Salaries” if it is payable outside
India unless tax has been paid thereon or deducted therefrom at source.
4. Any expenditure referred to in Section 40A of Income-tax Act.

Exempted Interest [Section 10(4)]

In the case of a non-resident, any income by way of interest on the securities or bonds notified
by the Central Government in the Official Gazette, including income by way of premium on the
redemption of such bonds.

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Caution No securities or bonds will be specified by the Central Govt. for this purpose on
or after 1.6.2002.
In case of an individual any income by way of interest on moneys standing to his credit in a
Non-resident (External) Account in any bank in India in accordance with the Foreign Exchange
Regulation Act, 1973 and the Rules made thereunder.
Provided that such individual is a person resident outside India as defined in Section 2(q) of the
said Act or is a person who has been permitted by the Reserve Bank of India to maintain such
account.

Exempted Interest [Section 10(15)]

The interest income from the following securities enumerated specifically at clause 15 of Section
10 of the Income-tax Act is exempted. Hence, the interest thereon shall not be included in the
income of the assessee.
1. Income by way of interest, premium on redemption or other payment on such securities,
bonds, annuity certificates, savings certificates, other certificates issued by the Central
Government and deposits as the Central Government may, by notification in the Official
Gazette, specify in this behalf, subject to such conditions and limits as may be specified in
the said notification.

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