Incomes which do not form part of total income
Sec 10(34A)
"Any income arising to an assessee, being a shareholder, on account of buyback of shares (not being listed on a recognized stock exchange) by the company as referred to in section 115QA"
Is this income completely Tax exempt?
Section 14A (Expenditure incurred in relation to income not includible in total income) and amended Rule 8D may be read alongside to check if any tax liability can come in this regard.
However, it may be noted that the disallowance cannot exceed aggregate total expenses claimed by the assessee in the financial year.
Some expenditures related to earning such exempt income shall be dis-allowed.
14A(2)
"The Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act".
14A(3)
"The provisions of sub-section (2) shall also apply in relation to a case where an assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this Act".
Rule 8D(2)
"The expenditure in relation to income which does not form part of the total income shall be the aggregate of following amounts, namely:
(i) the amount of expenditure directly relating to income that does not form part of total income; and
(ii) an amount equal to one percent of the annual average of the monthly averages of the opening and closing balances of the value of investment, income from which does not or shall not form part of total income:
Provided that the amount referred to in clause (i) and clause (ii) shall not exceed the total expenditure claimed by the assessee."
CAclubindia
