Examine whether the following persons are required to file return of income for A.Y.2025-26, giving brief reasons for your answer – (I) Mr. Govind,…
CA Final · Direct Tax Laws and International Taxation · MTP · May 2025
Examine whether the following persons are required to file return of income for A.Y.2025-26, giving brief reasons for your answer – (I) Mr. Govind, 28 years old, started his business in P.Y. 2024-25, making it his first year of operations. During the year, his turnover from business amounted to 70 lakhs, and his total income, as computed from his books of account is 2 lakhs. He has no other sources of income and has not claimed any deductions under Chapter VI-A or Section 10AA of the Income-tax Act, 1961. (II) Mr. Vicky, aged 54 years, received a gift of 50 lakhs from his son, Mr. Shravan (aged 26 years), who is employed in a company. He deposited the entire amount in his savings bank account with IDFC Bank on 28th March 2025. Subsequently, on 25th April 2025, he utilized 30 lakhs from the said sum to purchase a residential flat for self-occupation, while the remaining balance was transferred to a one-year fixed deposit on 28th April 2025. Mr. Vicky does not maintain any other bank account and does not have any additional sources of income, except for the interest accrued on the fixed deposit.
Suggested Answer and Working Notes:
(I) As per section 139 (1) (b), an individual is required to file his return if his total income, without giving effect to deductions under, inter alia, Chapter VI-A and section 10AA, exceeds the basic exemption limit. In this case, Mr. Govind's total income of 2,00,000 is lower than the basic exemption limit of 3,00,000/2,50,000, as the case may be. However, such a person who is not required to file his return on account of his total income being lower than the basic exemption limit, would be required to file return of income if, inter alia, his turnover in business exceeds 60lakhs during the previous year. In this case, since Mr. Govind's turnover from business for the P.Y.2024-25 is 70lakhs, he has to file return of his income for A.Y.2025-26. (II) Gift of 50lakhs received from son is not taxable under section 56 (2) (x) in the hands of Mr. Vicky, since his son is his relative, and gifts from a relative are excluded from the applicability of section 56 (2) (x) . The only income of Mr. Vicky for the P.Y.2024-25 would be interest on savings account for a period of 4 days from 28th March, 2025 to 31st March, 2025 on 50 lakhs, which would be lower than the basic exemption limit. As per section 139 (1) (b), an individual is required to file his return if his total income exceeds the basic exemption limit. In this case, Mr. Vicky's total income is lower than the basic exemption limit of 3,00,000/2,50,000, as the case may be. However, such a person who is not required to file his return on account of his total income being lower than the basic exemption limit, would be required to file return of income if, inter alia, the deposit in his savings account is 50lakhs or more during the previous year. Since a deposit of 50lakhs has been made in the savings account of Mr. Vicky in the P.Y.2024-25, he is required to file his return of income for A.Y.2025-26.
Topics: Assessment Procedure, Appeals and Revision
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