Safe harbour for income attribution in case of income from business and profession

Acceptance (sub-rule 1). The authorities accept the option exercised under rule 101 where the income declared from the eligible business accords with sub-rule (2), unless the option is declared invalid under rule 101(3).

The minimum (sub-rule 2). Profits and gains chargeable under the head "Profits and gains of business or profession" must be at least 4% of gross receipts for selling raw diamonds, and at least 2% of gross receipts for storing components in a custom bonded area warehouse for sale to a contract manufacturer.

Consequences once the option stands (sub-rule 3).

• Any deduction allowable under sections 28 to 34, 44 to 49, 51, 52, Schedule IX and Schedule X is deemed already given full effect; no further deduction under those provisions is allowed.
• The written down value of the business's assets is deemed calculated as if depreciation for the tax year had been claimed and allowed.
• No set off of unabsorbed depreciation under section 33(11) or carried forward loss under section 112(1) is allowed.
• No set off of loss from other business under section 108(1) or from another head under section 109 is allowed against income from the business.

Other points (sub-rules 4 and 5). Sections 171 and 172 still apply to an international transaction or specified domestic transaction the eligible assessee enters into while carrying on the eligible business; those terms have the meanings in sections 163 and 164.