Sections 30-37 + s. 40 disallowances + s. 43B actual-payment + s. 32 depreciation.
13. Refund / credit
Standard.
14. Return / disclosure reporting
ITR Schedule BP + Form 3CA/3CB/3CD audit report.
15. Penalty exposure
Section 270A under-reporting; s. 271AAB search; s. 271B audit default.
16. Prosecution exposure
Section 276C wilful evasion.
17. Cross-statute interplay
Companies Act schedule III; ICDS; Indian GAAP / Ind AS.
18. Repeal & saving — 1961 → 2025
Preserved comprehensively in 2025 Act.
HISTORICAL CONTEXT
Section 32 is the operative depreciation framework. Architecture: (a) Block of assets — assets of same depreciation rate grouped; WDV (Written Down Value) method standard; straight-line method limited; (b) 180-day rule — assets used < 180 days in PY get 50% rate; (c) Section 32(2) — unabsorbed depreciation indefinite carry-forward (unlike s. 72 business loss 8-year CF).
Depreciation rates — Rule 5 schedule: general 15%; buildings 10%; furniture 10%; computers / software 40%; intangibles 25%; new manufacturing additional 20% (s. 32(1)(iia)). FA 2024 — additional depreciation framework reshuffled. Section 50 — block-of-assets capital gains framework operates parallel.
Practitioner significance — comprehensive computation discipline. Block-of-assets register quarterly + annually. Schedule DPM / DOA in ITR. Section 32(2) unabsorbed depreciation is structurally generous — INDEFINITE CF (distinguish from s. 72 8-year business loss CF). Section 79A — search assessment bar applies to unabsorbed depreciation too (FA 2022).
The transition to the Income-tax Act, 2025 preserves the PGBP framework.
FINANCE ACT AMENDMENT TIMELINE
■ FA 1962 — Section 32 came into force.
■ FA 1989 — Block of assets framework introduced.
■ FA 1992 — 180-day rule.
■ FA 1998 — Intangibles depreciation framework.
■ FA 2002 — Additional depreciation 20% for new manufacturing.
■ FA 2017 — Computer depreciation rate revised to 40%.
■ FA 2022 — Section 79A search loss bar (unabsorbed depreciation).
Facts. The Department sought to apply a surcharge provision retrospectively to block-period assessments. The assessee contended that the amendment was substantive and could not have retrospective operation absent express legislative direction.
Issue. Whether amendments to taxing statutes operate prospectively unless the legislature has expressly or by necessary implication conferred retrospective effect.
HELD. The Constitution Bench reaffirmed the general rule against retrospectivity of taxing statutes. A taxing provision must be construed prospectively unless the language compels otherwise; mere insertion or substitution by amendment is not sufficient to deny vested rights.
“Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation.”
Relevance. Anchor authority for any argument that an amendment to a charging or computational provision must apply only from the AY notified — useful in transitional disputes around FA 2025 and the 1961 → 2025 changeover.
▸ Commissioner of Income-tax v. B.C. Srinivasa Setty (1981) 128 ITR 294 ; (1981) 2 SCC 460 (Supreme Court)
Facts. The assessee transferred goodwill of a self-generated nature. The Department sought to tax the consideration as capital gains; the assessee contended that no cost of acquisition could be ascertained, hence the computation provisions failed.
Issue. Whether capital gains arises where the asset has no ascertainable cost of acquisition — i.e., whether the charging provision can be invoked independently of a workable computation provision.
HELD. The charging section and the computation provisions form an integrated code; if the computation provisions cannot apply (because the cost is incapable of ascertainment), the charge itself fails. Self-generated goodwill is not taxable as capital gains.
“The charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section.”
Relevance. Anchor for the 'charge fails when computation fails' doctrine — useful in valuation impasses, self-generated assets, and computational ambiguity (though now largely overtaken by section 55(2)(a)(i) deeming cost as nil).
Facts. Section 52(2) (since deleted) deemed sale consideration to be FMV where FMV exceeded the declared consideration by 15%. The Department applied it on a literal reading even when the assessee had not in fact received more than the declared price.
Issue. Whether a deeming provision in a charging schema can be construed literally where its plain reading produces a result manifestly contrary to legislative object.
HELD. The Court read down section 52(2) to apply only where the assessee had actually received consideration in excess of the declared sum. A literal construction yielding absurd or unjust results must yield to an object-based interpretation; the CBDT's contemporaneous Circular No. 96 was held binding on the Revenue.
“It is well settled that a literal construction of a statutory provision ought not to be adopted if it produces a manifestly unjust result… Where a literal construction creates an anomaly, the courts will adopt that construction which avoids the anomaly.”
Relevance. Anchor authority for purposive construction of deeming fictions across the 1961 Act — applies wherever a deeming clause (e.g., s. 50C, s. 56(2)(x), s. 2(22)(e)) yields a result contrary to legislative purpose.
▸ Commissioner of Income-tax v. Excel Industries Ltd. (2013) 358 ITR 295 ; (2014) 2 SCC 1 (Supreme Court)
Facts. The assessee, an export-oriented unit, received DEPB licences and Advance Licences. The Department sought to tax the value of these incentives on accrual at the time of issue; the assessee contended that no income accrued until the licence was actually used or sold.
Issue. When does income accrue under the mercantile system — at the moment a right is created, or at the moment the right becomes enforceable as a debt?
HELD. Income accrues only when there is a corresponding liability of the other party. Mere creation of a contingent or unmatured right does not amount to accrual; the right must crystallise into a debt before tax incidence.
“Income accrues when there arises in favour of the assessee a debt — when there is a corresponding liability of the other party to pay the amount. It is not enough that the right has come into being; the right must ripen into a debt.”
Relevance. Anchor for accrual-vs-receipt timing disputes under section 5 / section 145 — relevant for retention monies, export incentives, contingent claim settlements, milestone-based contracts.
▸ Mathuram Agrawal v. State of Madhya Pradesh (1999) 8 SCC 667 ; (2000) 1 SCR 1 (Supreme Court)
Facts. A municipal levy was challenged on the ground that the charging provision did not clearly specify the rate, the persons charged, and the measure of tax.
Issue. Whether a tax can be imposed in the absence of a clear, unambiguous charging provision identifying the subject, measure, rate, and incidence.
HELD. Article 265 demands that tax be levied only by clear authority of law. The four components — taxable event, person, rate, and measure — must be clearly discernible from the charging provision; ambiguity is fatal to the levy.
“The intention of the Legislature in a taxation statute is to be gathered from the language of the provisions, particularly when the language is plain and unambiguous. In a taxing Act it is not possible to assume any intention or governing purpose other than what is given expression to.”
Relevance. Foundational authority on the rigour required of charging sections — underpins arguments that ambiguous deeming fictions, surcharge formulas, and rate prescriptions must be strictly construed.
CBDT CIRCULARS — ECOSYSTEM
▸ CBDT Circular No. 14(XL-35) of 1955 dated 11 April 1955
Subject. Duty of officers to assist assessees in claiming and securing relief
Substance. Foundational circular directing that the AO should not exploit assessee ignorance to deny legitimate reliefs; officer is required to draw attention to refunds or reliefs to which the assessee is entitled. The circular has been judicially noted in several appellate decisions and remains operative for first-appellate practice.
Substance. Explained the FA 1987 / FA 1989 amendments unifying the previous year with the financial year preceding the AY, including transitional provisions for assessees with different accounting years. Useful in any controversy on the timing of accrual / chargeability for early post-1989 AYs.
▸ CBDT Circular No. 5 of 2014 dated 11 February 2014
Subject. Section 14A — dis-allowance even where no exempt income earned (since modulated)
Substance. Initially directed AOs to apply Rule 8D disallowance under section 14A even where no exempt income was earned in the year; subsequently modulated by Cheminvest (Del HC) and Maxopp (SC). FA 2022 amendment to section 14A re-asserted the position but remains under litigation.
▸ CBDT Circular No. 6 of 2019 dated 20 March 2019
Subject. Withdrawal of low-tax-effect appeals — monetary thresholds
Substance. Revised monetary thresholds for departmental appeals — ITAT (Rs 50L), HC (Rs 1 Cr), SC (Rs 2 Cr); subsequently further revised. Operates as a non-statutory limitation on the Revenue's appellate engagement, binding under section 119.
Substance. Procedural guidance for AOs handling transitional reassessment notices for AYs 2013-14 to 2017-18 affected by Ashish Agarwal and Rajeev Bansal. Sets out the form of section 148A inquiry, time-bar calculation under TOLA, and JAO/FAO jurisdiction in faceless cases.
WORKED EXAMPLES
Illustration — Illustration 1 — Standard block depreciation
Facts. A's plant + machinery block: Opening WDV Rs 50 L; New addition Rs 20 L (used 200 days).
Computation.
Block addition > 180 days → full rate.
Total WDV before depreciation = Rs 70 L.
Depreciation 15% × Rs 70 L = Rs 10.5 L.
Closing WDV = Rs 70 L − Rs 10.5 L = Rs 59.5 L.
Result. Standard block depreciation; > 180 days full rate.
Illustration — Illustration 2 — 180-day rule
Facts. B's machinery purchased 1-November-2024; used 150 days only.
Computation.
S. 32 second proviso — Used < 180 days → 50% rate.
STATUTORY ARCHITECTURE — 18-ROW MAP
01. Section & marginal note
Section 32 — Depreciation — Chapter IV-C (PGBP head).
02. Sub-section structure
Per operative text.
03. Operative trigger
PGBP-related event — business / profession income / expenditure.
04. Persons affected
Business / professional assessees.
05. Time anchor — PY / AY
Mercantile / ICDS-modulated accrual basis.
06. Income anchor
PGBP head — section 14 D.
07. Residential-status nexus
ROR — worldwide PGBP; NR — Indian-source / s. 9(1)(i) business connection.
08. Rate / charge mechanism
Slab (individual/HUF) / flat company rate / partner remuneration framework.
09. TDS / TCS interaction
Section 192-194 / 195 framework; section 40(a)(i)/(ia) disallowance.
10. Advance-tax obligation
Quarterly under s. 207-211.
11. Presumptive provisions
Section 44AD / 44ADA / 44AE simplified frameworks.
12. Exemption / deduction mechanism
Sections 30-37 + s. 40 disallowances + s. 43B actual-payment + s. 32 depreciation.
13. Refund / credit
Standard.
14. Return / disclosure reporting
ITR Schedule BP + Form 3CA/3CB/3CD audit report.
15. Penalty exposure
Section 270A under-reporting; s. 271AAB search; s. 271B audit default.
16. Prosecution exposure
Section 276C wilful evasion.
17. Cross-statute interplay
Companies Act schedule III; ICDS; Indian GAAP / Ind AS.
18. Repeal & saving — 1961 → 2025
Preserved comprehensively in 2025 Act.
HISTORICAL CONTEXT
Section 32 is the operative depreciation framework. Architecture: (a) Block of assets — assets of same depreciation rate grouped; WDV (Written Down Value) method standard; straight-line method limited; (b) 180-day rule — assets used < 180 days in PY get 50% rate; (c) Section 32(2) — unabsorbed depreciation indefinite carry-forward (unlike s. 72 business loss 8-year CF).
Depreciation rates — Rule 5 schedule: general 15%; buildings 10%; furniture 10%; computers / software 40%; intangibles 25%; new manufacturing additional 20% (s. 32(1)(iia)). FA 2024 — additional depreciation framework reshuffled. Section 50 — block-of-assets capital gains framework operates parallel.
Practitioner significance — comprehensive computation discipline. Block-of-assets register quarterly + annually. Schedule DPM / DOA in ITR. Section 32(2) unabsorbed depreciation is structurally generous — INDEFINITE CF (distinguish from s. 72 8-year business loss CF). Section 79A — search assessment bar applies to unabsorbed depreciation too (FA 2022).
The transition to the Income-tax Act, 2025 preserves the PGBP framework.
FINANCE ACT AMENDMENT TIMELINE
■ FA 1962 — Section 32 came into force.
■ FA 1989 — Block of assets framework introduced.
■ FA 1992 — 180-day rule.
■ FA 1998 — Intangibles depreciation framework.
■ FA 2002 — Additional depreciation 20% for new manufacturing.
■ FA 2017 — Computer depreciation rate revised to 40%.
■ FA 2022 — Section 79A search loss bar (unabsorbed depreciation).
■ FA 2024 / 2025 — Cosmetic refinements.
■ Income-tax Act, 2025 — Section 32 successor, operative 1-4-2026.
JUDICIAL EVOLUTION — VERIFIED LANDMARK AUTHORITIES
▸ Commissioner of Income-tax v. Vatika Township Pvt. Ltd. (2014) 367 ITR 466 ; (2015) 1 SCC 1 (Supreme Court — 5-Judge Constitution Bench)
Facts. The Department sought to apply a surcharge provision retrospectively to block-period assessments. The assessee contended that the amendment was substantive and could not have retrospective operation absent express legislative direction.
Issue. Whether amendments to taxing statutes operate prospectively unless the legislature has expressly or by necessary implication conferred retrospective effect.
HELD. The Constitution Bench reaffirmed the general rule against retrospectivity of taxing statutes. A taxing provision must be construed prospectively unless the language compels otherwise; mere insertion or substitution by amendment is not sufficient to deny vested rights.
“Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation.”
Relevance. Anchor authority for any argument that an amendment to a charging or computational provision must apply only from the AY notified — useful in transitional disputes around FA 2025 and the 1961 → 2025 changeover.
▸ Commissioner of Income-tax v. B.C. Srinivasa Setty (1981) 128 ITR 294 ; (1981) 2 SCC 460 (Supreme Court)
Facts. The assessee transferred goodwill of a self-generated nature. The Department sought to tax the consideration as capital gains; the assessee contended that no cost of acquisition could be ascertained, hence the computation provisions failed.
Issue. Whether capital gains arises where the asset has no ascertainable cost of acquisition — i.e., whether the charging provision can be invoked independently of a workable computation provision.
HELD. The charging section and the computation provisions form an integrated code; if the computation provisions cannot apply (because the cost is incapable of ascertainment), the charge itself fails. Self-generated goodwill is not taxable as capital gains.
“The charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section.”
Relevance. Anchor for the 'charge fails when computation fails' doctrine — useful in valuation impasses, self-generated assets, and computational ambiguity (though now largely overtaken by section 55(2)(a)(i) deeming cost as nil).
▸ K.P. Varghese v. Income-tax Officer, Ernakulam (1981) 131 ITR 597 ; (1981) 4 SCC 173 (Supreme Court — 3-Judge Bench)
Facts. Section 52(2) (since deleted) deemed sale consideration to be FMV where FMV exceeded the declared consideration by 15%. The Department applied it on a literal reading even when the assessee had not in fact received more than the declared price.
Issue. Whether a deeming provision in a charging schema can be construed literally where its plain reading produces a result manifestly contrary to legislative object.
HELD. The Court read down section 52(2) to apply only where the assessee had actually received consideration in excess of the declared sum. A literal construction yielding absurd or unjust results must yield to an object-based interpretation; the CBDT's contemporaneous Circular No. 96 was held binding on the Revenue.
“It is well settled that a literal construction of a statutory provision ought not to be adopted if it produces a manifestly unjust result… Where a literal construction creates an anomaly, the courts will adopt that construction which avoids the anomaly.”
Relevance. Anchor authority for purposive construction of deeming fictions across the 1961 Act — applies wherever a deeming clause (e.g., s. 50C, s. 56(2)(x), s. 2(22)(e)) yields a result contrary to legislative purpose.
▸ Commissioner of Income-tax v. Excel Industries Ltd. (2013) 358 ITR 295 ; (2014) 2 SCC 1 (Supreme Court)
Facts. The assessee, an export-oriented unit, received DEPB licences and Advance Licences. The Department sought to tax the value of these incentives on accrual at the time of issue; the assessee contended that no income accrued until the licence was actually used or sold.
Issue. When does income accrue under the mercantile system — at the moment a right is created, or at the moment the right becomes enforceable as a debt?
HELD. Income accrues only when there is a corresponding liability of the other party. Mere creation of a contingent or unmatured right does not amount to accrual; the right must crystallise into a debt before tax incidence.
“Income accrues when there arises in favour of the assessee a debt — when there is a corresponding liability of the other party to pay the amount. It is not enough that the right has come into being; the right must ripen into a debt.”
Relevance. Anchor for accrual-vs-receipt timing disputes under section 5 / section 145 — relevant for retention monies, export incentives, contingent claim settlements, milestone-based contracts.
▸ Mathuram Agrawal v. State of Madhya Pradesh (1999) 8 SCC 667 ; (2000) 1 SCR 1 (Supreme Court)
Facts. A municipal levy was challenged on the ground that the charging provision did not clearly specify the rate, the persons charged, and the measure of tax.
Issue. Whether a tax can be imposed in the absence of a clear, unambiguous charging provision identifying the subject, measure, rate, and incidence.
HELD. Article 265 demands that tax be levied only by clear authority of law. The four components — taxable event, person, rate, and measure — must be clearly discernible from the charging provision; ambiguity is fatal to the levy.
“The intention of the Legislature in a taxation statute is to be gathered from the language of the provisions, particularly when the language is plain and unambiguous. In a taxing Act it is not possible to assume any intention or governing purpose other than what is given expression to.”
Relevance. Foundational authority on the rigour required of charging sections — underpins arguments that ambiguous deeming fictions, surcharge formulas, and rate prescriptions must be strictly construed.
CBDT CIRCULARS — ECOSYSTEM
▸ CBDT Circular No. 14(XL-35) of 1955 dated 11 April 1955
Subject. Duty of officers to assist assessees in claiming and securing relief
Substance. Foundational circular directing that the AO should not exploit assessee ignorance to deny legitimate reliefs; officer is required to draw attention to refunds or reliefs to which the assessee is entitled. The circular has been judicially noted in several appellate decisions and remains operative for first-appellate practice.
▸ CBDT Circular No. 549 dated 31 October 1989
Subject. Explanatory notes — Finance Act 1989 amendments (incl. PY unification)
Substance. Explained the FA 1987 / FA 1989 amendments unifying the previous year with the financial year preceding the AY, including transitional provisions for assessees with different accounting years. Useful in any controversy on the timing of accrual / chargeability for early post-1989 AYs.
▸ CBDT Circular No. 5 of 2014 dated 11 February 2014
Subject. Section 14A — dis-allowance even where no exempt income earned (since modulated)
Substance. Initially directed AOs to apply Rule 8D disallowance under section 14A even where no exempt income was earned in the year; subsequently modulated by Cheminvest (Del HC) and Maxopp (SC). FA 2022 amendment to section 14A re-asserted the position but remains under litigation.
▸ CBDT Circular No. 6 of 2019 dated 20 March 2019
Subject. Withdrawal of low-tax-effect appeals — monetary thresholds
Substance. Revised monetary thresholds for departmental appeals — ITAT (Rs 50L), HC (Rs 1 Cr), SC (Rs 2 Cr); subsequently further revised. Operates as a non-statutory limitation on the Revenue's appellate engagement, binding under section 119.
▸ CBDT Circular No. 5 of 2024 dated 15 March 2024
Subject. Procedure for transitional reassessment notices post-Ashish Agarwal / Rajeev Bansal
Substance. Procedural guidance for AOs handling transitional reassessment notices for AYs 2013-14 to 2017-18 affected by Ashish Agarwal and Rajeev Bansal. Sets out the form of section 148A inquiry, time-bar calculation under TOLA, and JAO/FAO jurisdiction in faceless cases.
WORKED EXAMPLES
Illustration — Illustration 1 — Standard block depreciation
Facts. A's plant + machinery block: Opening WDV Rs 50 L; New addition Rs 20 L (used 200 days).
Computation.
Block addition > 180 days → full rate.
Total WDV before depreciation = Rs 70 L.
Depreciation 15% × Rs 70 L = Rs 10.5 L.
Closing WDV = Rs 70 L − Rs 10.5 L = Rs 59.5 L.
Result. Standard block depreciation; > 180 days full rate.
Illustration — Illustration 2 — 180-day rule
Facts. B's machinery purchased 1-November-2024; used 150 days only.
Computation.
S. 32 second proviso — Used < 180 days → 50% rate.
Normal rate 15% × 50% = 7.5% applicable.
Half-year depreciation framework.
Result. 180-day rule operative; preserve usage-date evidence.
Illustration — Illustration 3 — Unabsorbed depreciation CF
Facts. C has Rs 30 L depreciation; PGBP profit only Rs 10 L; Rs 20 L unabsorbed.
Computation.
S. 32(2) — Indefinite CF.
PY 2024-25: Use Rs 10 L; balance Rs 20 L → CF.
Future PY: Rs 20 L absorbed against future PGBP / other heads (except salary).
Distinct from s. 72 business loss 8-year CF.
Result. Section 32(2) unabsorbed depreciation — indefinite CF + cross-head absorption.
Illustration — Illustration 4 — Additional depreciation
Facts. D's new manufacturing plant Rs 1 cr; eligible for s. 32(1)(iia) additional depreciation.
Computation.
S. 32(1)(iia) — Additional 20% for new manufacturing.
Standard 15% + Additional 20% = 35% in year of acquisition.
If used < 180 days → 17.5% in year + balance 17.5% next year.
Significant first-year tax shield.
Result. Section 32(1)(iia) additional depreciation incentive.
Illustration — Illustration 5 — Intangibles
Facts. E acquires patent Rs 50 L.
Computation.
S. 32(1)(ii) — Intangibles framework.
Rule 5 — Intangibles 25% depreciation.
PY 1 (200 days use) Rs 50 L × 25% = Rs 12.5 L.
Subsequent years on WDV.
Result. Intangibles depreciation post-1998 framework; 25% rate.
PRACTITIONER PLANNING NOTES
■ Books of accounts maintenance under s. 44AA + Rule 6F — comprehensive discipline.
■ Tax audit u/s 44AB — Rs 1 cr turnover (most); Rs 10 cr (digital transactions); Rs 50 L professional gross receipts.
■ Mercantile accounting basis — ICDS-modulated.
■ Section 43B — Actual-payment basis for statutory liabilities / employee PF / specific items.
■ Section 40(a)(i)/(ia) — Non-TDS disallowance (30% resident; 100% NR).
■ Section 40A(3) — Cash > Rs 10,000 disallowance.
■ Section 40A(2) — Excessive payment to specified persons.
■ Section 32 depreciation — block of assets; 50% rate for assets used < 180 days.
■ Section 44AD / 44ADA / 44AE — Presumptive frameworks (small businesses / professionals / transport).
■ Section 80-IA / 80-IB / 80-IAC interaction.
■ Form 3CD comprehensive disclosure — 41 items; CA tax audit.
■ ICDS compliance — 10 standards; reconciliation with books.
■ Section 14A — Disallowance for exempt-income expenditure (Maxopp).
■ Documentation 7 years (regular); 17 years (foreign-asset BMA-safe).
■ Annual practitioner update — FA framework changes.
LITIGATION DEFENCE
■ Strict construction — Mathuram Agrawal anchor.
■ Object-based — K.P. Varghese.
■ Vatika Township — prospective amendment.
■ BC Srinivasa Setty — charge/computation failure.
■ Excel Industries accrual — for accrual disputes.
■ Maxopp Investment — section 14A apportionment.
■ Reliance Petroproducts — bona-fide claim not concealment.
■ Hindustan Coca-Cola — no double recovery for TDS defaults.
■ GE India — s. 195 chargeability.
■ Engineering Analysis — software royalty / FTS treaty.
■ Calcutta Discount — Article 226 jurisdiction.
■ Section 273B reasonable-cause defence for procedural lapses.
■ Wholly-and-exclusively defence (s. 37) — preserve commercial purpose.
■ Capital vs revenue — preserve characterisation arguments.
■ Beneficial circulars — UCO Bank anchor (s. 119).
■ Section 270A bona-fide claim defence.
PROCEDURE
Step 1. Verify business/profession status
Per s. 2(13)/(36).
Step 2. Maintain books u/s 44AA + Rule 6F
Comprehensive.
Step 3. Audit u/s 44AB if threshold breached
Form 3CA/3CB/3CD.
Step 4. Apply ICDS compliance
10 standards reconciled.
Step 5. Compute PGBP head income
Section 28-44 framework.
Step 6. Apply section 32 depreciation
Block-of-assets + 180-day rule.
Step 7. Apply section 36 specific deductions
Interest / bad debts / etc.
Step 8. Apply section 37 general residual
Wholly + exclusively + revenue.
Step 9. Apply section 40 disallowances
TDS / payments compliance.
Step 10. Apply section 40A excessive / cash
Specified persons + Rs 10K limit.
Step 11. Apply section 43B actual-payment
PF / GST / interest / etc.
Step 12. Section 44AD / 44ADA / 44AE presumptive (where applicable)
Simplified framework.
Step 13. ITR Schedule BP + Form 3CD
Comprehensive disclosure.
Step 14. Section 14A apportionment (if exempt income)
Maxopp framework.
Step 15. Documentation 7-17 years
Books / audit / vouchers.
PRACTITIONER CHECKLIST
☐ Business/profession status verified.
☐ Books u/s 44AA maintained.
☐ Tax audit u/s 44AB done (if threshold).
☐ Form 3CA/3CB/3CD filed.
☐ ICDS compliance verified.
☐ PGBP head income computed.
☐ Section 32 depreciation applied.
☐ Section 36 deductions claimed.
☐ Section 37 general residual.
☐ Section 40 TDS / payment disallowances.
☐ Section 40A cash + excessive checked.
☐ Section 43B actual-payment basis.
☐ Section 44AD / 44ADA / 44AE (if applicable).
☐ Section 14A apportionment (if exempt).
☐ Section 80-IA / IB framework (if eligible).
☐ ITR Schedule BP populated.
☐ Documentation 7-17 years.
☐ Annual FA update.
☐ Section 273B defence prepared.
CROSS-REFERENCES
▸ Section 2(13) — Business.
▸ Section 2(36) — Profession.
▸ Section 4 — Charge.
▸ Section 14 — Heads (PGBP).
▸ Section 28-44 — PGBP framework.
▸ Section 14A — Disallowance exempt.
▸ Section 80-IA / 80-IAC / 80JJAA — Deductions.
▸ Section 115BAA / 115BAB — Concessional company rates.
▸ Section 115BAC — Individual / HUF new regime.
▸ Section 119 — CBDT binding.
▸ Section 139 — Return.
▸ Section 143 — Assessment.
▸ Section 195 — NR TDS framework.
▸ Section 270A — Penalty.
▸ Section 271B — Audit default penalty.
▸ Section 273B — Reasonable cause.
▸ Section 276C — Prosecution.
▸ Rule 5 / 5A / 6F — Operative rules.
▸ Form 3CA / 3CB / 3CD — Audit reports.
▸ ICDS — 10 standards.
▸ Companies Act, 2013 — Schedule III.
▸ Income-tax Act, 2025 — Successor, operative 1-4-2026.
▸ Income-tax Act, 2025 — Section 536 (saving).
▸ Section 32(1)(iia) — Additional depreciation.
▸ Section 32(2) — Unabsorbed depreciation CF.
▸ Section 35AD — Specified business 100% deduction.
▸ Section 50 — Depreciable asset CG.
▸ Section 79A — Search-loss bar.
▸ Rule 5 / 5A — Rates.
▸ Companies Act Schedule II.