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CMA Intermediate · Direct and Indirect Taxation · Income which does not form part of Total Income

Which statement about the scope of Section 14 of the Income-tax Act, 2025 is correct?

Section 14 covers expenditure in relation to any income that does not form part of total income under the Act. It is not limited to agricultural income, does not need actual receipt in the year, and maintaining accounts does not permit the deduction.

  1. AIt applies only to agricultural income and no other exempt income
  2. BIt disallows expenditure only when the exempt income has actually been received in the year
  3. CIt applies to expenditure in relation to any income which does not form part of the total income under the ActCorrect
  4. DIt permits deduction of such expenditure if the assessee maintains proper accounts

Explanation

Section 14 refers generally to income which does not form part of total income under the Act, not to one type of income. Sub-section (3) removes the receipt-in-the-year condition, and proper accounts do not override the disallowance in sub-section (1).

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