Mr. Abhishek Seth, aged 42 years, is working as a CEO of Soil Limited. He provides you the following information for preparation and filing of his income-tax return for the year ended 31st March 2022: Salary, allowances and perquisites from Soil Limited * 1,35,00,000 Dividend from ABC Ltd. which was declared in February, 2021 and received in April, 2021 - 4,55,000 (d) Dividend from PRQ Ltd. declared and received in July, 2021 - *5,90,000 (Gross) Interest income on saving bank account in SBI-* 24,530 Long term capital gains on transfer of residential house in Mumbai on 15th December, 2021 - 1,73,540 Short term capital gain on transfer of listed equity shares (STT paid both at the time of transfer acquisition) of In Ltd. - * 73,00,000 He also furnished the following details of investment/ payments made by him during the P.Y. 2021-22: (a) (b) (c) Three-year post office time deposit - * 25,000 Contribution to PPF - 35,000 Tuition fees of three children in Bharti Sr. Sec. School in Delhi - *20,000 per annum per children Subscription to NHAI redeemable bonds after 5 years on 16th March, 2022 - 2,00,000. Further, his son Mr. Dhaval, aged 15 years, has also earned the following income: (a) Income from a quiz competition - 25,000 (b) Interest on bank fixed deposit - * 9,500 Based on the above case scenario, answer the following questions: [1 mark + 4 marks] 1. Should Mr. Dhaval's income be included in Mr. Abhishek's income? Justify with reasons. 2. Compute the Gross Total Income of Mr. Abhishek.
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Answer:
Explanation:
Inclusion of Mr. Dhaval's Income in Mr. Abhishek's Income:
According to the Income Tax Act, the income of a minor child is clubbed with the income of the parent whose total income is greater, except for the child's income arising from manual work or any activity involving the application of skill, talent, or specialized knowledge and experience.
In this case, Mr. Dhaval's income includes income from a quiz competition and interest on bank fixed deposits. Since these sources of income do not fall under the exceptions mentioned above, Mr. Dhaval's income should be included in Mr. Abhishek's income.
Computation of Gross Total Income of Mr. Abhishek:
Salary, allowances, and perquisites from Soil Limited: ₹1,35,00,000
Dividend from ABC Ltd.: ₹4,55,000 (Note: This is for the previous year but needs to be included in the current year)
Dividend from PRQ Ltd.: ₹5,90,000
Interest income on a saving bank account in SBI: ₹24,530
Long-term capital gains on the transfer of a residential house: ₹1,73,540
Short-term capital gain on the transfer of listed equity shares of In Ltd.: ₹73,00,000
Total Income:
1,35,00,000+4,55,000+5,90,000+24,530+1,73,540+73,00,000
Investment/ payments made by Mr. Abhishek:
Three-year post office time deposit: ₹25,000
Contribution to PPF: ₹35,000
Tuition fees for three children: ₹20,000 per annum per child
× 3 children = ₹60,000
Subscription to NHAI redeemable bonds: ₹2,00,000
Deductions:
25,000+35,000+60,000+2,00,000
Gross Total Income:
Total Income−Deductions
Calculate these values to get the Gross Total Income of Mr. Abhishek.