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CS Professional · Advanced Direct Tax Laws and Practice · Income Tax Implication on Specified Transactions

Under the Income-tax Act, 2025 (June 2027 session), where income is derived partly from agriculture and partly from business and cannot be definitely ascertained, or only with unreasonable trouble and expense, what may the rules made under section 533 do?

The rules may prescribe methods of estimating the income and specify the proportion deemed to be income liable to tax. Section 533(3) allows this where income cannot be definitely ascertained or only with unreasonable trouble and expense, and an assessment on that basis is deemed duly made.

  1. APrescribe methods for estimating the income and specify the proportion deemed to be income liable to taxCorrect
  2. BExempt the whole income from tax until it is ascertained
  3. CRequire the assessment to be kept pending until the assessee proves the exact figure
  4. DTreat the entire income as agricultural income

Explanation

Section 533(3) says that in such cases the rules may prescribe estimation methods and, for income derived partly from agriculture and partly from business, specify the proportion deemed to be income liable to tax. An assessment on that basis is deemed duly made. The other options have no basis in the provision.

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