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Here are the solutions to the questions presented in the images, based on the provisions of the Indian Income Tax Act, 1961.
Q. 2. Income Tax is charged on the Previous year Income. Do you agree? If not Give exceptions.
Agreement: Yes, I agree. The fundamental principle is that income earned in the Previous Year (P.Y.) is taxed in the next financial year, known as the Assessment Year (A.Y.).
Exceptions to the General Rule (P.Y. Income Taxed in P.Y.)
In certain specific cases, income is assessed and taxed in the same P.Y. Itself, primarily to ensure tax recovery:
 * Non-Resident Shipping Business (Sec. 172): To tax freight income before the ship leaves India.
 * Persons Leaving India (Sec. 174): Individuals leaving India with no intention of returning.
 * AOP/BOI Formed for Short Duration (Sec. 174A): Bodies formed for a limited period.
 * Persons Transferring Assets to Avoid Tax (Sec. 175): Where assets are likely to be transferred to prevent tax assessment.
 * Discontinued Business or Profession (Sec. 176): Income earned up to the date of discontinuance can be assessed immediately.
Q. 3. Write a Short Note on the following:
(i) Tax Planning, Tax Evasion, Tax Avoidance
| Feature | Tax Planning (कर नियोजन) | Tax Avoidance (कर अपवंचन) | Tax Evasion (कर चोरी) |
|---|---|---|---|
| Legality | Legal and Ethical (using provisions). | Legal (technically, using loopholes). | Illegal (fraudulent/punishable). |
| Method | Claiming legitimate deductions (e.G., 80C) and exemptions. | Exploiting technicalities; against the spirit of the law. | Suppressing income, falsifying accounts, inflating expenses. |
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ii) Role of PAN & Aadhaar Number in Income Tax
 * PAN (Permanent Account Number): A unique 10-digit alphanumeric ID. It is mandatory for filing ITR, tracing all major financial transactions, and proper TDS/TCS deduction.
 * Aadhaar Number: The 12-digit unique ID. It is mandatory to link with PAN (Sec 139AA) for filing ITR and is required for applying for a new PAN, ensuring data accuracy and facilitating e-verification.
Q. 4. Give a detailed Note on the following:
(i) Gratuity (Section 10(10))
Gratuity is a lump sum payment received by an employee for service rendered.
 * Government Employees: Fully Exempt from tax.
 * Non-Government Employees: The exempt amount is the least of the following three:
   * Actual Gratuity Received.
   * Statutory Limit (₹20,00,000).
   * A calculated amount based on salary and years of service (15 days' wages for covered employees; 1/2 month's average salary for others).
(ii) Pension (Section 10(10A))
Pension is a payment received after retirement.
 * Uncommuted (Monthly) Pension: Fully Taxable under the head 'Salaries' for all employees.
 * Commuted (Lump Sum) Pension:
   * Government Employees: Fully Exempt.
   * Non-Government Employees: Exempt up to:
     * 1/3 of the full commuted value if Gratuity is also received.
     * 1/2 of the full commuted value if Gratuity is not received.

Q. 5. What do you mean by residential Status? Discuss the provisions to determine the residential Status of an Individual. / What are the different categories into which Assessees are divided with regard to residence? Give a brief Account of each of them.
Meaning and Categories
Residential Status is a tax concept determined every financial year to ascertain the scope of an individual's taxable income in India. It is not the same as citizenship.
Assessees are divided into three main categories:
 * Resident and Ordinarily Resident (ROR)
 * Resident but Not Ordinarily Resident (RNOR)
 * Non-Resident (NR)
Provisions to Determine Status (Individual)
An individual must satisfy at least one Basic Condition to be a Resident (R):
 * Stay in India in the P.Y. Is 182 days or more, OR
 * Stay in India in the P.Y. Is 60 days or more AND 365 days or more in the 4 preceding P.Y.S.
A Resident (R) is classified as ROR if they satisfy both Additional Conditions:
 * Resident in India for at least 2 out of 10 preceding P.Y.S, AND
 * Stay in India for 730 days or more during the 7 preceding P.Y.S.
If the Resident satisfies only one or neither, they are an RNOR. If neither Basic Condition is met, they are an NR.
Brief Account (Incidence of Tax)
 * ROR: Taxable on Global Income (all income, Indian and Foreign).
 * RNOR: Taxable on Indian Income + Foreign income only if derived from a business controlled/profession set up in India.
 * NR: Taxable only on Indian Income.

Q. 6. Give a detail note on Capital Gains exempt from Tax U/s 54.
Section 54 provides an exemption from Long-Term Capital Gains (LTCG) arising from the transfer of a Residential House Property if the proceeds are reinvested into a new residential house.
Conditions for Exemption
 * Assessee: Must be an Individual or a Hindu Undivided Family (HUF).
 * Asset Transferred: Must be a Long-Term Capital Asset, being a Residential House Property (land and building).
 * Asset Acquired (New House): The assessee must purchase one new residential house in India one year before or two years after the date of transfer, OR construct one new residential house in India three years after the date of transfer. (A key amendment allows investment in two residential houses in India, subject to the capital gain not exceeding ₹2 crore.)
Amount of Exemption
The exemption is the least of the following:
 * The LTCG arising from the transfer.
 * The amount invested in the New Residential House.
Consequences if New House is Sold
If the new asset (house) is transferred (sold) within three years of its purchase/construction, the capital gain previously exempted under Section 54 will be withdrawn (taxable as LTCG in the year of sale).

The method of computing Income from Other Sources is governed by the principles laid out in the Income Tax Act, 1961 (India), particularly Section 56 to Section 59. This head of income is considered the residuary head, meaning it includes any income that is taxable but does not fall under the other four major heads of income (Salaries, House Property, Profits and Gains of Business or Profession, and Capital Gains).
The computation method involves two main steps: Identifying the Gross Income and then subtracting the Allowable Deductions.
1. Determining Gross Income from Other Sources
Gross income under this head includes two main categories:
A. Specifically Taxable Incomes
These incomes are always taxed under the head "Income from Other Sources," irrespective of whether the taxpayer has a business or profession.
 * Dividend Income: Generally taxable.
 * Winnings from Lotteries, Crossword Puzzles, Races (including horse races), Card Games, and other Games of any sort or Gambling/Betting: These are taxed at a flat rate of 30% (plus surcharge and cess) and no expenditure is generally allowed as a deduction against them. The income is also usually 'grossed up' if it is received net of Tax Deducted at Source (TDS).
 * Interest on Securities.
 * Gifts (Section 56(2)(x)): Any sum of money or property received without consideration or for inadequate consideration, if the value exceeds a specified limit (currently ₹50,000 in a financial year), is generally taxable, except for gifts received from specified relatives or on occasions like marriage.

* Interest on Enhanced Compensation: 50% of the interest received is taxable.
B. Residual Incomes
Any income that is not exempt from tax and is not chargeable under any of the other four heads of income is charged under this head. Examples include:
 * Interest on Bank Deposits (Savings, Fixed Deposits, etc.) and Loans.
 * Rental Income from the letting out of Plant, Machinery, or Furniture (if not incidental to a business).
 * Family Pension: A monthly amount received by a family member of a deceased employee.
 * Director's Sitting Fees.
 * Income from Sub-letting a house property by a tenant.
2. Calculation of Taxable Income (Section 57 Deductions)
Taxable income is computed by taking the Gross Income and subtracting the allowable deductions as per Section 57 of the Income Tax Act.
The key allowable deductions include:
| Income Type | Allowable Deduction (u/s 57) | Specific Conditions/Limits |
|---|---|---|
| Dividend or Interest on Securities | Commission/Remuneration paid to a banker or any other person for realizing the income. | Deduction for interest paid on borrowed capital for acquiring shares/units is restricted to 20% of the dividend/interest income. |
| Rental from Plant, Machinery, Furniture (and optionally, building) | Expenses like Repairs, Insurance, Local Taxes, and Depreciation on the asset. | Depreciation is allowed as per the Act. |

| Family Pension | A Standard Deduction of the lower of: 
 1. ₹15,000 
 2. One-third (1/3rd) of the family pension received. | This is a fixed, non-optional deduction. |
| Interest on Compensation or Enhanced Compensation | 50% of such interest. | No other deduction is allowed from this interest income. |
| Any Other Income | Any expenditure (not being capital or personal expenditure) laid out or expended wholly and exclusively for the purpose of making or earning such income. | The expense must be directly related to earning the specific income. |
Deductions Specifically Disallowed (Section 58)
The following are expressly disallowed as deductions:
 * Personal expenses of the assessee.
 * Any expenditure for earning the casual income (Winnings from lotteries, etc.).
 * Any interest or salary payable outside India on which tax has not been deducted or paid in India.
3. Final Step
The computed Net Taxable Income from Other Sources is then added to the net income from the other four heads to arrive at the Gross Total Income.
 * For most incomes under this head (like interest and rent), the normal slab rates of income tax apply.
 * For specific incomes like Winnings from Lotteries, a flat special rate (currently 30%) applies.
Would you like to see a specific example of how to calculate the taxable income for one of these sources, such as Interest on Compensation or Family Pension?