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CA Final · Direct Tax Laws & International Taxation · Income from Other Sources

Rohit Nair, a salaried individual, received Rs. 40,000 from a friend (not a relative) in June and Rs. 30,000 from another friend (not a relative) in December, both without consideration, in the same tax year. Neither receipt is on marriage, under a will or from a notified source. What is the amount taxable under 'Income from other sources' on these receipts?

Rs. 70,000 is taxable. The Rs. 50,000 limit is tested on the total of sums received without consideration from any persons in the tax year. The total of Rs. 70,000 exceeds the limit, so the whole amount is charged, not merely the excess, as neither receipt is from a relative.

  1. ANil, as each receipt is below Rs. 50,000
  2. BRs. 20,000, being the excess over Rs. 50,000
  3. CRs. 30,000, being the later receipt
  4. DRs. 70,000, being the whole of the totalCorrect

Explanation

Under the provision on sums received without consideration, the test applies to the total received from any person or persons in the tax year. The total is Rs. 40,000 + Rs. 30,000 = Rs. 70,000, which exceeds Rs. 50,000, so the whole sum is taxable. Taxing only the excess (Rs. 20,000) is wrong because the section taxes the whole sum, not the excess.

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