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    The term ‘income’ defined under Section 2(24) of Income Tax Act, 1961 (ITA/Act) is inclusive one. Charge of tax on income is subject to exemptions provided in Section 10 of ITA, 1961. The receipts mentioned in various clauses of Section 10 are not included in computing gross total income there by not part of taxable income for computing tax liability. 

    First receipt mentioned in Section 10, is income from agriculture. Sec 2(1A) has defined term ‘agricultural income’.Explanation 1 of this section provides that transfer of rural agricultural land is agriculture income. 

    Section 45 of Act provides that transfer of capital asset as defined under Section 2(14) is chargeable to tax in the year in which year in which transfer takes place. The definition of term ‘capital asset’ excludes rural agricultural land from its scope. Hence transfer of rural agricultural land is not subject to tax under Section 45 of Act. 

    Full value consideration arising from transfer of capital asset must be considered for the purpose of computing capital gain under Section 48 of Act. Sec 50C of Act provides that for the purpose of computing capital gains the value adopted or assessed or assessable by the Stamp Duty Authority or higher amount is deemed to be full value consideration for computing capital gains. 


    1. Background 

    In keeping with India’s commitment to implement the recommendations of Action Plan 13 of Base Erosion and Profit Shifting (BEPS), the Finance Act, 2016 introduced Section 286 of Income-tax Act, 1961 (the Act) providing for furnishing of Country-by-Country Report (CbCR) in respect of an International Group. 

    Section 92D of the Act which contained provisions for preparing TP documentation was also amended to provide for keeping and maintaining of Master File. 

    In continuation with the amendment, the Central Board of Direct Taxes (CBDT) on 6 October 2017, released the draft rules and forms in relation to manner of preparation and furnishing of Master File and CbCR. It is commendable, on part of CBDT, to consistently follow an inclusive approach and seeking public comments when introducing a new and important regulation. 


    1. What is Scrutiny? 

    Once the assessee files his return of income, irrespective of whether it is filed within the due date or in pursuance to a notice requiring the assessee to file his return U/s 142 , the department can initiate scrutiny proceedings if it has reason to believe that income is escaping has escaped assessment . 

    1. What is Scrutiny Assessment? 

    ‘Scrutiny Assessment’ means picking up the returns on a *scientific basis and then making detailed checking of the assessee’s return in order to make sure that: 

    1. The assessee has not concealed/understated any income
    2. The assessee has not claimed excess loss
    3. The assessee has not underpaid tax
    4. The assessee has not claimed excess refund. 

    *Scientific basis means the various criteria prescribed by Central Board of Direct Taxes (CBDT) on the basis of which the returns are to be picked up for scrutiny.

    Computer Assisted Scrutiny Selection System (CASS) picks up the returns for scrutiny which meets those criteria.


    What is Fixed Assets?

    FixedAssets are defined as the Assets held with the intention of being used for the purpose of producing orproviding goods or services and is not held for sale in the normal course of business. 

    Whichare expected to be used for moret han 1 accounting period. Some of the Examples are: 

    • Buildings o Furniture 

    o Machinery & Equipment o Computer 

    o  Vehicles. 

    Audit Objective: 

    Toensure Proper records relating to Fixed Assets are being maintained vToensure that only capital Expenses are being capitalized 

    ToValidate the correctness, accuracy and completeness of depreciation calculated and compliance of schedule II of Companies Act, 2013. 

    Compliance of relevant Accounting Standards/IND AS applicable. vCompliance of disclosure requirements as per schedule III of Companies Act,2013

    TDS Under section 194IA & 194A


    Tax deducted at Source:

    • On Sale of Immovable Property u/s 194IA.
    • On Interest other than Interest on Securities  u/s 194A


    Sec 194IA- TDS on Sale of Immovable Property

    • Transferor: Who is a Resident seller (Deductee).
    • Transferee: Who is a Buyer (any person) (Deductor).
    • When transferee is responsible for paying to a transferor any sum by way of sale consideration for transfer of an immovable property, shall,
    • at the time of credit of such sum to the account of the transferor (or) at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier,
    • TDS Deducted@1%
    • Where such sale consideration is equal to or more than 50 Lakhs.

    This article is contributed by Partners of SBS and Company LLP - Chartered Accountant Company. You can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.

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