Mr. Rajesh (aged 67 years) reported a net profit of 3,95,11,290 for the previous year 2024-25 after debiting/crediting the following items: Debits:…

Computation of total income of Mr. Rajesh for A.Y. 2025-26 under normal provisions of the Act Particulars ₹ ₹ ₹ I Income from business or profession Net profit as per profit and loss account 3,95,11,290 Add: Items of expenditure debited but not allowable while computing business income - Donation to Gurudwara in cash [Not allowable as deduction since it is not incurred wholly and exclusively for business purpose. Since the amount is already debited, the same has to be added back while computing business income] 15,000 - Contribution to a university approved and notified u/s 35(1)(ii) for scientific research [Eligible for deduction @100%. Since, 100% of the expenditure is already debited to profit and loss account, no adjustment is required] - - Interest on loan taken for purchase of e-vehicle [Interest on loan for purchase of e-vehicle for personal purpose is not allowed as deduction from business income since the same is not incurred wholly and exclusively for business purpose. Since it is already debited, the same has to be added back while computing business income] 1,75,000 - Employer's contribution to NPS in excess of 14% of salary [Employer's contribution to the extent of 14% of salary i.e., basic salary plus dearness allowance forming part of salary would be allowed as deduction. Thus, excess contribution i.e.,12,800 [₹ 80,000, being 20% of 4,00,000 less - 67,200 being 14% of 4,80,000 (₹ 4,00,000 + 20% of 4,00,000] has to be added back 12,800 - Sale of goods to brother at less than FMV [The provisions of section 40A(2) are not applicable in case of sale transaction, even if the same is to a related party. Therefore, no adjustment is necessary in respect of difference of 3 lakh] - 2,02,800 3,97,14,090 Less: Items of income credited but not taxable or taxable under any other head of income - Bad debt recovered [The excess of amount recovered i.e., 3 lakhs over the amount due after bad debt allowance i.e.,1,50 lakhs will be taxable as business income. Since the entire 3 lakhs is credited to the profit and loss account,1.50 lakhs has to be reduced] 1,50,000 - Short term capital gains on transfer of listed equity shares 10,00,000 11,50,000 3,85,64,090 Add: Undervaluation of Closing stock 25,000 3,85,89,090 Less: Allowable expenditure Depreciation on car [14lakh x 15%, since car is put to use for more than 180 days in the P.Y.2024-25] 2,10,000 3,83,79,090 II Capital Gain Short term capital gains Short term capital gains on transfer of listed equity shares 10,00,000 Long term capital gains Compulsory acquisition of industrial plot by the Central Government taxable as per section 45(5) Compensation received 15,00,000 Less: Indexed cost of acquisition [₹ 2,50,000 x 348/122] 7,13,115 Long-term capital gain [Since such plot is held for more than 24 months] 7,86,885 Less: Exemption u/s 54D Acquisition of industrial plot within 3 years from the date of transfer 7,00,000 86,885 10,86,885 III Income from Other Sources Interest on enhanced compensation 1,05,000 Less: 50% as deduction 52,500 52,500 Gross Total Income 3,95,18,475 Less: Deduction under Chapter VI-A Deduction under section 80D Mediclaim premium for self and spouse [In case of lump sum premium for medical policy, deduction is allowed for equally for each relevant previous years. [₹ 1,20,000/6 years, being relevant previous years in which the insurance is in force] 20,000 Preventive health check up of self and spouse [Preventive health check up paid in cash allowed to the extent of 5,000] 5,000 25,000 Deduction under section 80EEB [Since the loan is sanctioned by Bank during the P.Y. 2022-23, interest on loan taken for purchase of e-vehicle is allowed to the extent of 1,50,000] 1,50,000 Deduction under section 80G [Donation of 15,000 to Gurudwara not allowable as deduction since amount exceeding - 2,000 paid in cash] - 1,75,000 Total income 3,93,43,475 Total income (Rounded off) 3,93,43,480 Computation of tax payable by Mr. Rajesh for A.Y.2025-26 Particulars ₹ ₹ Tax on 10 lakhs, being short term capital gains on transfer of listed equity shares @20% u/s 111A 2,00,000 Tax on 86,885, being long term capital gains on compulsory acquisition of industrial plot @20% u/s 112 17,377 Tax on balance income of 3,82,56,595 Upto 3,00,000 Nil 3,00,001 -5,00,000 [@5% of 2lakh] 10,000 5,00,001 -10,00,000 [@20% of 5,00,000] 1,00,000 10,00,001 -3,82,56,595 [@30% of 3,72,56,595] 1,11,76,979 1,12,86,979 1,15,04,356 Add: Surcharge @15% on 2,17,377 32,607 Add: Surcharge @25% on 1,12,86,979 28,21,745 1,43,58,708 Add: Health and education cess@4% 5,74,348 Total tax liability 1,49,33,056 Less: TCS u/s 206C(1) @2.5% on 25 lakh i.e., sale of timber 62,500 TCS u/s 206C(1F) @1% of 14lakh i.e., sale of motor car where consideration exceeds 10lakh 14,000 76,500 Tax payable 1,48,56,556 Tax payable (rounded off) 1,48,56,560