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CS Professional · Advanced Direct Tax Laws and Practice · Computation of Total Income, Tax Liability and Filing of Returns of various Entities excluding Companies

For a society that has exercised the section 204 option, how is its total income to be computed under section 204(3) of the Income-tax Act, 2025?

Total income is computed without Chapter VIII deductions, except those under section 146 or 150, and without deductions under the sections specified in section 205(1)(a) to (g). Brought-forward losses or depreciation attributable to those deductions are also not set off.

  1. AWith all Chapter VIII deductions, but without set-off of brought-forward losses
  2. BWithout any Chapter VIII deduction other than section 146 or 150, and without deductions under the sections specified in section 205(1)(a) to (g)Correct
  3. CWith every deduction available to other co-operative societies, but with brought-forward depreciation disallowed
  4. DWithout any deduction whatsoever, including those under sections 146 and 150

Explanation

Section 204(3)(a) excludes deductions under Chapter VIII except section 146 or 150, and those under the sections listed in section 205(1)(a) to (g). Option 4 is wrong because 146 and 150 are allowed. Option 1 reverses the rule, as Chapter VIII deductions are generally denied. Loss set-off is also restricted only where attributable to those deductions.

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