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  • Income Tax Act, 1961 (ITA)

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    June Hayden
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    The Income Tax Act, 1961 (ITA) is the comprehensive legislation governing income taxation in India. It covers all aspects of income tax including definitions, tax rates, deductions, assessments, and collections. The Finance Act 2023 recently amended the ITA by introducing a new tax regime, increasing the tax rebate threshold, reducing surcharge rates, introducing a new tax rate for manufacturing cooperatives, and extending the alternate tax regime. The ITA also contains specific regulations related to business taxation, such as deductions for expenses, depreciation, capital expenditures, accounting standards, tax rates, advance tax payments, and tax return filings.

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    The Income Tax Act, 1961 (ITA) is the comprehensive legislation governing income taxation in India. It covers all aspects of income tax including definitions, tax rates, deductions, assessments, and collections. The Finance Act 2023 recently amended the ITA by introducing a new tax regime, increasing the tax rebate threshold, reducing surcharge rates, introducing a new tax rate for manufacturing cooperatives, and extending the alternate tax regime. The ITA also contains specific regulations related to business taxation, such as deductions for expenses, depreciation, capital expenditures, accounting standards, tax rates, advance tax payments, and tax return filings.

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    2 views3 pages

    Income Tax Act, 1961 (ITA)

    Uploaded by

    June Hayden
    The Income Tax Act, 1961 (ITA) is the comprehensive legislation governing income taxation in India. It covers all aspects of income tax including definitions, tax rates, deductions, assessments, and collections. The Finance Act 2023 recently amended the ITA by introducing a new tax regime, increasing the tax rebate threshold, reducing surcharge rates, introducing a new tax rate for manufacturing cooperatives, and extending the alternate tax regime. The ITA also contains specific regulations related to business taxation, such as deductions for expenses, depreciation, capital expenditures, accounting standards, tax rates, advance tax payments, and tax return filings.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    Income Tax Act, 1961 (ITA)

    Comprehensive piece of legislation that covers all aspects of income taxation, including the following:
    definition of tax, tax rates, deductions and exemptions, assessment, collection and recovery of tax
    Recent amendment was made by Finance Act 2023. Changes brought were:
    ● New tax regime
    ● Increased threshold for tax rebate
    ● Reduced surcharge rate
    ● New tax rate for manufacturing co-operative societies
    ● Extended applicability of alternate tax regime
    Income Tax Act, 1961 (ITA)

    Some specific regulations related to business aspects of the ITA:

    ● Section 37(1) :Provides a list of expenses that can be deducted from business income. These include expenses
    on salaries, rent, repairs, and maintenance, as well as interest on loans taken for business purposes.
    ● Section 43B :Provides for depreciation on assets used for business purposes. The amount of depreciation that
    can be claimed depends on the type of asset and its useful life.
    ● Section 48 :Provides for a number of deductions in respect of capital expenditure incurred on business assets.
    These deductions can be claimed in full or over a period of time.
    ● Section 203 :Requires businesses to maintain proper books of accounts and prepare financial statements in
    accordance with the prescribed accounting standards.
    ● Section 206 :Prescribes the different tax rates for different types of taxpayers and income. For businesses, the
    tax rate is typically higher for larger businesses and lower for smaller businesses.
    ● Section 209 :Requires businesses to pay advance tax on their estimated tax liability for the year.
    ● Section 139 :Requires businesses to file tax returns on an annual basis. These returns must disclose the
    taxpayer's income and expenses, and the tax payable.
    Case: ITO v. Ashok Leyland Ltd. (2012)
    Involved the interpretation of Section 35D of the Income Tax Act, which allows for the deduction of certain preliminary expenses incurred by an
    assessee in connection with the setting up or expansion of an industrial undertaking.

    The assessee appealed the ITO's decision to the Income Tax Appellate Tribunal (ITAT), which held that the assessee was entitled to the deduction
    under Section 35D. The ITAT reasoned that the proposal to expand the industrial undertaking was tantamount to the actual expansion of the industrial
    undertaking.

    The Revenue appealed the ITAT's decision to the Madras High Court, which upheld the ITAT's decision. The High Court held that the word "expansion"
    in Section 35D should be interpreted liberally to include any activity that is undertaken with the intention of increasing the capacity of the industrial
    undertaking.

    The Supreme Court has not yet ruled on this issue. However, the Madras High Court's decision in ITO v. Ashok Leyland Ltd. is widely followed by the
    lower courts.

    The significance of the ITO v. Ashok Leyland Ltd. case is that it allows assessees to claim a deduction for preliminary expenses incurred in connection
    with a proposal to expand an industrial undertaking, even if the expansion is not ultimately undertaken. This can provide significant tax relief to
    assessees who are planning to expand their businesses.

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