Mr. Ramesh is an authorized wholesale distributor of fertilizers and other agricultural products. An analysis of his trading and profit & loss…

Computation of total income of Mr. Ramesh for A.Y. 2024-25 under normal provisions of the Act Particulars Amount (₹) Amount (₹) Income from house property Rent received (Rent received has been taken as gross annual value, due to absence of information relating to expected rent) 5,40,000 Less: Municipal tax paid by Ramesh (₹ 10,000 x 1/2) 5,000 Net Annual Value 5,35,000 Less: Deduction u/s 24(a) – 30% of NAV 1,60,500 3,74,500 Profits and gains from business or profession Net profit as per profit and loss account 75,43,000 Add: Expenses/Payments debited to profit and loss account but not allowed - Fee for late filing of income-tax return for A.Y. 2023-24 - disallowed 1,000 - Salary paid to an accountant in cash exceeding - 10,000 – disallowed under section 40A(3) 35,000 - Interest paid to NBFC on loan which is used for personal purposes (₹ 1,20,000 x 2,00,000/10,00,000) – not allowed as per section 37 24,000 - Interest paid to NBFC on which tax is not deducted attracts disallowance @30% of 96,000 under section 40(a)(ia) [Since Mr. Ramesh's turnover for the immediately preceding previous year i.e., P.Y. 2022-23 exceeds 1crore, he is required to deduct tax at source. Disallowance @30% of interest is attracted for non-deduction of tax at source] 28,800 - Municipal taxes paid for let out portion [₹ 10,000 x 1/2] 5,000 76,36,800 Add: Undervaluation of Closing stock 40,000 76,76,800 Less: Income chargeable under other heads and income not chargeable to tax but credited to profit and loss account - Rent received (Taxable under the head "Income from house property") 5,40,000 - Income-tax refund 15,000 - Dividend received from Indian companies (Taxable under the head "Income from other sources") 2,50,000 68,71,800 Capital Gains Long-term capital gains on sale of land (since held for more than 24 months) Full Value of Consideration [Higher of stamp duty value of 14lakhs and Actual consideration of 10lakhs, since stamp duty value exceeds actual consideration by more than 10%] 14,00,000 Less: Indexed Cost of acquisition [₹ 3,00,000 x 348/100] 10,44,000 3,56,000 Cost of acquisition Higher of - - Actual cost - 1.80 lakhs +0.10 lakhs = 1.90 lakhs and Fair Market Value (FMV) 4lakhs as on 1.4.2001 restricted to stamp duty value of 3lakhs as on 1.4.2001 = 3 lakhs Income from Other Sources Interest on income-tax refund 2,000 Dividend from Indian companies 2,50,000 2,52,000 Gross Total Income 78,54,300 Less: Deduction under Chapter VI-A Section 80D - Health insurance premium paid for self, spouse and his children allowable as deduction to the extent - 25000 25,000 Total Income 78,29,300 Computation of tax payable by Mr. Ramesh for the A.Y.2024-25 Particulars Amount (₹) Tax on 3,56,000@20% under section 112 71,200 Tax on balance income of 74,73,300 Upto 2,50,000 Nil 2,50,001 -5,00,000 [i.e.,2,50,000 @5%] 12,500 5,00,001 -10,00,000 [i.e.,5,00,000 @20%] 1,00,000 Above - 10,00,000 [i.e.,64,73,300 @30%] 19,41,990 20,54,490 21,25,690 Add: Surcharge @10% since total income exceeds - 50,00,000 but does not exceed 1crore 2,12,569 23,38,259 Add: Health and Education cess@4% 93,530 Tax liability 24,31,789 Less: Advance Tax 15,00,000 Tax Payable 9,31,789 Tax Payable (Rounded off) 9,31,790