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CS Executive · Tax Laws and Practice · Incomes which do not form part of Total Income

Under section 14 of the Income-tax Act, 2025, when may the Assessing Officer determine the expenditure relating to income not forming part of total income using a prescribed method?

The Assessing Officer may apply a prescribed method when, having regard to the assessee's accounts, he is not satisfied with the correctness of the expenditure claimed or with the claim that no expenditure was incurred in relation to income not forming part of total income, as stated in section 14(2).

  1. AWhenever the assessee has earned any exempt income, regardless of accounts
  2. BOnly when the assessee admits that expenditure was incurred
  3. COnly when the exempt income has actually been received in the tax year
  4. DWhen, having regard to the accounts, he is not satisfied with the correctness of the expenditure claim or the claim that no expenditure was incurredCorrect

Explanation

Section 14(2) empowers the Assessing Officer to determine the amount by a prescribed method if, having regard to the accounts, he is dissatisfied with the claimed expenditure or with the claim that none was incurred. It is not automatic, and section 14(3) shows receipt in the year is not required.

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