illustrations on Computation of Income from other Sources

Illustration 1 – Dividend, Interest and Family Pension

Mr. A received dividend of ₹80,000, interest on securities of ₹60,000 and family pension of ₹1,20,000 during the tax year. Assume an allowable deduction of ₹30,000 from family pension under the applicable provisions.

Particulars Amount (₹)
Dividend Income 80,000
Interest on Securities 60,000
Family Pension 1,20,000
Less: Allowable Family Pension Deduction (30,000)
Taxable Family Pension 90,000
Income from Other Sources 2,30,000

Therefore, taxable Income from Other Sources = ₹2,30,000.

illustration 2 – Lottery Winnings

Ms. B won ₹5,00,000 from a lottery. She spent ₹20,000 on purchasing lottery tickets and ₹10,000 on other related expenses. Under Section 94, expenditure or allowance relating to lottery winnings is not deductible.

Particulars Amount (₹)
Gross Lottery Winnings 5,00,000
Less: Cost of Lottery Tickets Nil
Less: Other Related Expenses Nil
Taxable Income from Lottery 5,00,000

Therefore, ₹5,00,000 is taxable under Income from Other Sources. The ₹30,000 expenditure cannot be deducted.

illustration 3 – Interest on Securities

Mr. C received ₹1,50,000 as interest on securities held as investments. Assume he incurred ₹10,000 of expenditure that qualifies for deduction under the applicable provisions.

Particulars Amount (₹)
Gross Interest on Securities 1,50,000
Less: Eligible Deduction (10,000)
Taxable Interest Income 1,40,000

Thus, ₹1,40,000 will be included in Income from Other Sources, assuming the ₹10,000 expenditure satisfies all statutory conditions for deduction.

illustration 4 – Taxable Gift

Mr. D receives ₹90,000 in cash from a non-relative without consideration. Assume the receipt satisfies the statutory conditions for taxation and no exemption for a specified occasion or circumstance applies.

Particulars Amount (₹)
Money received without consideration 90,000
Less: Exempt amount Nil
Taxable Gift 90,000

Since the applicable conditions for taxation are satisfied, the taxable amount of ₹90,000 is included under Income from Other Sources.

illustration 5 – Letting of Machinery

Mr. E lets out machinery and receives ₹2,40,000 during the year. He incurs ₹20,000 on repairs, ₹10,000 on insurance and ₹30,000 as other expenditure. Assume all these expenses are specifically allowable under the applicable provisions.

Particulars Amount (₹)
Income from letting of machinery 2,40,000
Less: Repairs (20,000)
Less: Insurance (10,000)
Less: Other allowable expenditure (30,000)
Taxable Income 1,80,000

Therefore, taxable Income from Other Sources = ₹1,80,000.

illustration 6 – Comprehensive Computation

Mr. F has the following receipts during the tax year:

Particulars Amount (₹)
Dividend 1,00,000
Interest on Securities 75,000
Family Pension 1,50,000
Lottery Winnings 2,00,000
Taxable Gift 80,000

Assume an allowable family-pension deduction of ₹30,000 and no other deduction.

Computation

Particulars Amount (₹)
Dividend Income 1,00,000
Interest on Securities 75,000
Family Pension 1,50,000
Less: Family Pension Deduction (30,000)
Taxable Family Pension 1,20,000
Lottery Winnings 2,00,000
Taxable Gift 80,000
Income from Other Sources 5,75,000

Hence, Mr. F’s Income from Other Sources is ₹5,75,000. The lottery income remains included in the total, although its tax treatment/rate may be governed by special provisions.

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