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CMA Intermediate · Direct and Indirect Taxation · Income which does not form part of Total Income

A business trust receives interest of ₹40 lakh from a special purpose vehicle (SPV), being an Indian company in which it holds a controlling interest. It also earns ₹10 lakh as a trading profit from a business activity unrelated to the SPV. Applying Schedule V (Sl. No. 3) of the Income-tax Act, 2025, how much is not included in the trust's total income under this entry?

₹40 lakh is excluded. Schedule V Sl. No. 3 covers only interest and dividend received from an SPV by a business trust. The ₹10 lakh trading profit is not of that nature, so it remains outside the exclusion and stays in the trust's total income.

  1. A₹50 lakh
  2. B₹40 lakhCorrect
  3. C₹10 lakh
  4. DNil

Explanation

Sl. No. 3 excludes interest and dividend received or receivable from an SPV by a business trust. So the ₹40 lakh interest is excluded. The ₹10 lakh trading profit is not interest or dividend from an SPV and therefore is not covered. Adding both (₹50 lakh) is wrong because it wrongly extends the entry to unrelated income.

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