ITR 4

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sumit agarwal (Querist)
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25 March 2011 Dear Friends,

A Individual person is having Income from below mentioned sources:

1) Remuneration ( as a partner) from two partnership firms
2) Share of profit
3) Business Income from Proprietorship business
4) Capital Gains.
5) Other Income - Interest & Dividend.

My dilemma while preparing ITR-4 is that Should all his Income be shown in P&L a/c in ITR-4 and calculate business income through adjustment in Net profit OR different income under various heads be shown in that head only.

Your contribution will very much be appreciated.

CA KRISHNA KUMAR DARUKA

CA KRISHNA KUMAR DARUKA (Expert)
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26 March 2011 Profit & Loss account of proprietory business should only be incorporated in schedule PL. All other incomes have to be shown in different places assigned to them in the return. In case any other income is included in the PL of proprietory business then it should first be shown in schedule PL then should be deducted in point A3 or A5a or be shown under Point A23 in Schedule BP of ITR4.

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sumit agarwal

sumit agarwal (Querist)
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26 March 2011 @ CA KRISHNA KUMAR DARUKA : Sir I have followed the second approach(adjustment through BP)since presentation looks better by
following this method.I had a little confusion over correctness of the 2nd method which you have cleared.

Any further suggestion regarding this issue will utmostly be welcomed.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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02 August 2024 In ITR-4, the approach to handling different types of income should be systematic and adhere to the requirements of the Income Tax Act. Here's a detailed breakdown of how to report each type of income:

### 1. **Remuneration as a Partner**

- **Where to Show:** The remuneration received from partnership firms should be reported under the section for “Income from Partnership Firm” in ITR-4.
- **Treatment:** This is considered as part of the income from the partnership firm and should be included in the calculation of total income.

### 2. **Share of Profit from Partnership Firm**

- **Where to Show:** Share of profit from partnership firms, which is typically exempt from tax, should be reported under the section for “Share of Profit from Partnership Firm.”
- **Treatment:** This amount is generally exempt and should not be included in the P&L account of the proprietorship business.

### 3. **Business Income from Proprietorship Business**

- **Where to Show:** Business income should be shown under the “Profit & Loss Account” section of the ITR-4.
- **Treatment:** You need to prepare and attach the P&L account for the proprietorship business. The net profit as per the P&L account will be reported and adjusted accordingly.

### 4. **Capital Gains**

- **Where to Show:** Capital gains should be reported under the “Capital Gains” section in Schedule CG of ITR-4.
- **Treatment:** You need to separately calculate and report Short-Term Capital Gains (STCG) and Long-Term Capital Gains (LTCG). Ensure you differentiate between STCG and LTCG as per the holding period of the assets sold.

### 5. **Other Income (Interest & Dividend)**

- **Where to Show:**
- **Interest Income:** Report under “Income from Other Sources” in Schedule OS.
- **Dividend Income:** Also reported under “Income from Other Sources” in Schedule OS.
- **Treatment:** These should be shown separately and not included in the P&L account of the business.

### Approach to Filing ITR-4:

1. **Income from Proprietorship Business:**
- Report in the “Profit & Loss Account” section. This includes preparing and attaching the P&L statement. The net profit from this should be reflected here.

2. **Other Sources of Income:**
- **Interest & Dividend Income:** Report separately in the respective sections of Schedule OS.
- **Capital Gains:** Report in Schedule CG with detailed calculations.

3. **Remuneration as a Partner:**
- Report under “Income from Partnership Firm” or a similar section as specified in ITR-4.

### Summary of Reporting:

- **Proprietorship Business Income:** Show in P&L account and include adjustments for business income.
- **Remuneration from Partnership Firms:** Report separately as part of income from firms.
- **Share of Profit:** Report separately as exempt income.
- **Capital Gains:** Report in Schedule CG with appropriate classification.
- **Other Income:** Report under “Income from Other Sources” in Schedule OS.

### Further Suggestions:

- **Ensure Proper Documentation:** Maintain detailed records and documentation for each type of income, especially for capital gains and business expenses.
- **Consult a Tax Professional:** Given the complexity of multiple income sources, consulting with a tax professional or CA for accurate filing and compliance is highly advisable.
- **Double-Check Calculations:** Ensure that all calculations are accurate, particularly in the P&L account and capital gains.

Using the second approach (adjustment through the P&L account) is a valid method if it aligns with the presentation and accounting principles for your business. It helps keep income and expenses neatly organized.

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