27 June 2009
income tax is chargeable on income which may be actual or deemed as law prescribe, instead of profit. income is divided in five sources, income from house salary, house property, business and profession, capital gain and other sources. Profit is calculate after subtracting of expenditure from revenue but income tax is chargeable on income. there are some income which has expenditure relation to it, but for calculating taxable income, expenditure does not deduct from revenue. therefore taxable income will be that which prescribe by law whether it is revenue receipt or capital receipt.