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CA Final · Direct Tax Laws & International Taxation · Deductions from Gross Total Income

Meera Textiles, a partnership firm, has gross total income of Rs. 6,00,000 for the tax year. Its eligible deductions under Part C of the deductions Chapter aggregate Rs. 7,50,000 on the face of the claims. Based on the overall ceiling in section 122 of the Income-tax Act, 2025, what is the maximum aggregate deduction allowable under this Chapter?

The maximum aggregate deduction is Rs. 6,00,000. Section 122(2) states that deductions under the Chapter cannot exceed the assessee's gross total income, so the claim of Rs. 7,50,000 is restricted to the gross total income, reducing total income to nil.

  1. ARs. 7,50,000
  2. BRs. 6,00,000Correct
  3. CRs. 1,50,000
  4. DRs. 13,50,000

Explanation

Section 122(2) provides that the aggregate deductions under the Chapter cannot exceed the gross total income. Hence the cap is Rs. 6,00,000 and total income becomes nil. Rs. 7,50,000 ignores the ceiling; Rs. 1,50,000 is merely the excess claim, not the allowable deduction.

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