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CS Executive · Tax Laws and Practice · Deductions

Under Section 122(4) of the Income-tax Act, 2025, where profits of an undertaking are claimed and allowed as a deduction under Part C for a tax year, what follows?

Once profits of an undertaking are allowed as a Part C deduction for a year, the same profits cannot be deducted again under any other provision for that year, and the deduction can never exceed the undertaking's profits.

  1. ANo deduction in respect of those same profits is allowed under any other provision for that yearCorrect
  2. BThe same profits may also be deducted under another provision to double the benefit
  3. CThe deduction may exceed the profits of the undertaking if gross total income is higher
  4. DThe deduction is limited to 25% of the profits

Explanation

Section 122(4) bars deduction of those profits under any other provision for that year and caps the deduction at the profits of the undertaking. Double claiming and exceeding the profits are therefore both prohibited; no 25% limit appears.

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