Compute the income chargeable to tax for Assessment Year 2024-25 of Ujjawal Ltd. indicating reasons for treatment of each item for the benefit of…

Computation of income chargeable to tax for A.Y. 2024-25 of Ujjawal Ltd. Particulars ₹ (in lakhs) Profits and gains from business or profession Net profit as per profit and loss account 505.00 Add: Items debited to profit and loss account, but to be disallowed and items not considered in accounts but to be taxed Value of group free air ticket provided by a supplier [The value of any benefit or perquisite arising from business or the exercise of any profession, whether convertible into money or not or in cash or in kind or partly in cash and partly in kind is taxable as business income under section 28(iv)] 15 Amount waived by the supplier of raw materials [Since the expenditure of raw material was allowed as deduction and there is a benefit by way of remission or cessation of a trading liability, waiver of the amount by the supplier is deemed income under section 41(1)] 3 Payment of Interest to a company incorporated in USA [Since the tax has been deducted on interest payable outside India to a foreign company during the previous year 2023-24 and the same has been deposited before the due date of filing return of income under section 139(1), no disallowance would be attracted under section 40(a)(i)] - Salary paid to employee Pradeep in cash [In respect of payment of salary to sales executive in cash, no disallowance under section 40A(3) is to be made as the payments fall within the scope of Rule 6DD(i). Salary paid to him in cash is allowable as the executive was temporarily posted for a continuous period of more than 15 days in Bangalore which is not the place of his normal duty. Further tax was deducted from such salary under section 192 and he does not maintain any bank account in Bangalore. No disallowance under section 40A(3) is attracted in respect of such salary] - Contribution to electoral trust [Contribution to electoral trust is not allowable as deduction while computing business income of the company. Hence, the same has to be added back, since it is included in general expenses] 0.75 18.75 Business Income 523.75 Less: Amount of deduction allowable Under section 43B, interest on loan due to any scheduled bank, etc. is allowed as deduction, if such interest is actually paid irrespective of the method of accounting followed by the Assessee. Conversion of arrear interest into a fresh loan by a bank cannot be considered as actual payment of interest. However, the amount of funded interest (i.e., converted loan) actually paid is allowable as deduction. Hence, 3,20,000, being two instalments of 1,60,000 each, actually paid is deductible. 3.20 Gross total income 520.55 Less: Deduction under Chapter VI-A Under section 80GGB [Contribution by a company to an electoral trust is allowable as deduction, since payment is made otherwise than by cash] 0.75 Total Income/ Income chargeable to tax 519.80