‘Income’ in this Act connotes a periodical monetary return ‘coming in’ with some sort of regularity, or expected regularity, from definite sources.
As per Income Tax Act, 1961- “Income” includes:
1) profits and gains
2) dividend
3) value of any perquisite or profit in lieu of salary taxable under clauses (2) and (3) of section 17
4) voluntary contributions received by a trust created wholly or partly for charitable or religious
5) any capital gains chargeable under section 45
6) any sum chargeable to income-tax under clauses (ii) and (iii) of section 28 or section 41 or section 59
7) any winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever, etc.
Related Cases:
S. 2(24)(x) & 43B of IT Act, 1961—Business expenditure—Late deposit of employee contribution to PF and other incidental charges made by the assessee cannot be disallowed u/s 43B of the Act—CIT vs. Lakhani Rubber Works (2010) 232 CTR 350 (P&H)
S. 2(24) & 4 of IT Act, 1961—Income—The voting on the resolutions in a particular manner is not a business of the member of family. The money which is received by them is not a business receipt, but received as bounty or windfall for voting affirmatively and supporting the resolution. When the money was not to be paid to them at any time in past and never intended to be paid in future, thus, it is a receipt which was by way of a windfall and not an income within the meaning of S. 2(14) of the Act—CIT vs. Late David Lopes Menezes & Anr. (2011) 238 CTR 38 (Bom)
S. 2(24), 14A, 36(1)(va), 43B of IT Act, 1961—Business expenditure—The application of S. 36(1)(va)/2(24)(x) and treating the unpaid contributions as income can be valid only where no payments was made by the assessee as required u/s 43B within prescribed time. It the employers’ contribution are not paid within the time allowed u/s 43B, no deduction will be allowed for that amount but at the same time, these unpaid contributions will not become the income of the assessee. In the case of employees’ contribution, if the payments are not made within the period allowed u/s 43B, these contribution are not only to be disallowed if claimed as expenditure but also to be treated as income of the assessee u/s 2(24)(x) of the Act—Parry Agro Industries vs. ACIT (2009) 314 ITR 181 (ITAT-Cochin)
S. 2(24)(ix), Expln(ii), 115BB of IT Act, 1961—Income—Clause(ii) of the Explanation to S. 2(24)(x) was introduced w.e.f. April 1, 2002 and would have prospective effect. The assessee participated in a television game show programme and won a certain amount. Assessee having received the payment on Nov., 5, 2000. Therefore, the provisions of amendment to S. 2(24)(ix) by insertion of cl. (ii) in the Explanation are not applicable to the case of assessee because by said amendment receipts from television shows were brought within the definition of income for the first time w.e.f. April, 2002—Miss Lopamudra Misra vs. ACIT (2011) 337 ITR 86 (Orissa)
S. 2(24)(ix) & 115BB of IT Act, 1961—Income—S. 115BB of the act provides tax at 30 per cent on income-from lotteries. The assessee is an individual residing in India and Sikkim being a State in India. Income earned by the assessee in the form of prize money from Sikkim State lottery is chargeable to tax as per S. 2(24)(ix), r/w S. 115BB of the Act—M.K. Raghu vs. ACIT (2009) 226 CTR 269 (Ker)
S. 2(24)(x), 36(1)(va), 43B of the IT Act, 1961—Business expenditure—Belated payment of the employers’ contribution to provident fund beyond the stipulated period under the Act, cannot be treated as income of the assessee u/s 36(1)(va) r/w S. 2(24)(x) of the Act in view of the amendment to S. 43B of the Act—CIT vs. M.N. Chari (2009) 310 ITR 445 (Karn)
S. 2(24), 28(iiia) to (iiie), 80HHC of IT Act, 1961—Deduction—If the funds of the business are parked for safe keeping or with a view to earn interest income de hors the main business activity, the interest resulting there form cannot assume the character of business income but would fall under the head “Income from other sources” and only the deduction permissible u/s 57 of the Act. Hence such interest income cannot be considered for deduction u/s 80HHC of the Act—Topman Exports vs. ITO (2009) 318 ITR 87 (ITAT-Mumbai)
S. 2 (24) of the IT Act, 1961—Income—The assessee is a family member of Menezes family who owned 58.88 per cent of equity shares in the capital of colfax. Forty per cent of the equity of Colfax was held by a British company, Shulton (GB) which is a 100 percent subsidiary of Shulton, USA, and is registered proprietor in India of trade mark Old spice. By an agreement entered in the year 1967, Shulton (GB) granted to Colfax right to produce and market products under the brand name Old Spice. In the year 1990-91, P&G, USA acquired Shulton, USA and became the holding company of Shulton (GB). P&G, USA decided to use the trade mark Old Spice by itself or through its Indian subsidiary PGI and not to renew the agreement with Colfax permitting it the use of the trade mark Old Spice. In order to avoid any dispute about use of the trade mark Old Spice, PGI wanted confirmation from Colfax about its right to exclusive use the trade mark Old spice. It therefore, started negotiations with Menezes family who were holding majority of the equity shares in Colfax and were as majority of the directors on its board and requested them to get a resolution passed in the general meeting of Colfax giving up the right of marketing, selling and distribution of Old Spice rang of products in favour of PGI and it offered to pay to the Menezes family a sum of Rs. 3.5 crores in consideration of their casting affirmative vote in favour of resolution of the transfer of business of marketing the products under the trade name Old Spice in favor of PGI. Therefore, such amount is not liable to be taxed as an income within meaning of S. 2(24) of the Act—CIT vs. David Lopes Menezes (2010)
S. 2(24)(iv) of IT Act, 1961—Business income—According to securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, “registered owner” means a depository whose name is entered as such in the register of the issuer. A “beneficial owner” means a person whose name is recorded as such with the depository. Though the securities are registered in the name of the depository actually holding them, the rights, benefits and liabilities in respect of the securities held by the depository, remain with the beneficial owner. In this case, the assessee is the chairman and managing director of RIL and was appointed as a company by name M/s RCIL and RCIL held fully paid equity share of face value of Rs. 1 per share of another company by name of RIC. The claim of the assessee was that he had taken physical possession by having his name registered as beneficial owner but that in law he held the share only a pawnee and that RCIL was the beneficial owner of the security, was in accordance with the Companies Act, 1956 whereunder the formalities regarding the declaration to be made u/s 187C of the Act, 1956 had been duly complied with. When as a pawnee the assessee did not have absolute rights over the shares he could sell the security in a manner contemplated by law. In case the proceeds are greater than the amount due to him, he has to pay the surplus to the pawnor. Therefore, assessee could derive no benefit or perquisite, the value of which can be brought to tax u/s 2(24)(vi) of the Act, 1961—JCIT vs. Mukesh D. Ambani (2011) 8 ITR (Trib) 353 (ITAT-Mum)
S. 41(1), r/w s. 2(24) and 28(iv) of the IT Act, 1961—Income—Remission or cessation of trading liability—Remission of the principal amount of loan does not amount to income u/s 41(1) nor u/s 28(iv) nor u/s 2(24) of the IT Act, 1961—CIT vs. Tosha International Ltd.
S. 2(24) of IT Act, 1961—Income—Definition—Interest on interest-free loans advanced to the assessee by the company in which she is director be treated as deemed income in terms of S. 2(24)(iv) of the Act—CIT vs. Madhu Gupta (2012)
S. 2(24), 5 & 145 of IT Act, 1961—Income—All receipts are not income. Only those receipts which are in the character of income can be assessed to tax. The definition of Income as given in the Act, u/s 2(24) is an inclusive definition. In the present case, the dividends were received of shares which were held as investments. At the time of receipt of the dividends, the shares did not form part of the investment portfolio of the assessee and, therefore, it cannot be said that it was received by the assessee in its character as an investor. Thus, the dividend received by the assessee on shares which it had transferred and the right to receive dividend vests with the transferees cannot be assessed in the hands of the assessee—DCIT vs. Tata Investment Corporation Ltd. (2011) 142 TTJ 335 (ITAT-Mum)
S. 4 r/w S. 2(24) of the IT Act, 1961—Income—All receipts by assessee would not necessarily be deemed to be the income for the purpose of Income-tax Act and the question whether any particular receipt is income or not will depend on the nature of the receipts and the true effect of the relevant taxing provision—Ansal Properties & Industries Ltd. vs. DCIT
S. 36(1)(va) & 43B of the IT Act, 1961—Business expenditure—Deduction u/s 36(1)(va) r/w S. 2(24)(x) and S. 43B allowable to the assessee in respect of employer/employees contributions towards provident fund payment which made after the due date prescribed under the employees provident fund Act and the Rules made thereunder but before the due date for furnishing the return of income—CIT vs. P.M. Electronics Ltd.
S. 2(24)(ix) & 10(3) of the IT Act, 1961—Exemption—Giving of Coupon against purchase of National Saving Certificates would not fall within the definition of lottery, hence incentive prize received by the assessee on account of such coupon also would not fall within the definition of lottery and exempted u/s 10(3) of the IT Act 1961—B.K. Suresh vs. ITO
S. 2(24)(x), 36(1)(va) & 43B of IT Act, 1961—Business expenditure—Both the employer’s and employee’s contribution are to be considered for allowing as deduction if they have paid their contributions to PF and ESI before the last date of filing return u/s 139(1) of the IT Act, 1961—Kuber Hinges (P) Ltd. vs. ITO
Sec. 2(24) & 80HHC of IT Act, 1961—Deduction—When the assessee received export incentive like profit on sale of DEPB entitlements, duty draw back and NOE Quota transfer fee, he will be entitled to deduction with reference to profit on sale of DEPB entitlement only – Yesmeen Silk Corporation vs. ITO
S. 4, r/w S. 28(i) and 2(24) of the IT Act, 1961—Income—Voluntary payment came to the assessee in the course of carrying on the profession of accountancy, would constitute income chargeable to tax—JCIT vs. Khanna & Anndhanam
S. 2(24)(x), 36(1)(va), 56(2)(ic) of the IT Act, 1961—Income from other sources—The unpaid provident fund contribution of employees cannot be said to be a business receipt and it is income from other sources—Patni Telecome Pvt. Ltd. vs. ITO
S. 2(24) of the IT Act, 1961—Income—The Income tax Act considers the income earned legally as well as tainted income alike. There is nothing like an illegal income so far as the tax collector is concerned. Even if the assessee was prosecuted by law enforcing authorities for commission of offence, the income earned by the offender still would be an income liable for assessment. It is not a defence in such a cases that the State is also becoming a party to the illegal act by sharing the booty. Therefore, refunds collected by producing bogus TDS certificates will be income of the assessee under head “Residuary”—CIT vs. K. Thangamani (Mad)
S. 2(24) & 4 of the IT Act, 1961—Income—IT Act considers the income earned legally as well as trained income alike and there is nothing like an illegal income so far as the tax collector is concerned and even if the assessee was prosecuted by law enforcing authorities for commission of offence, the income earned by the offender still would be an income liable for assessment—CIT vs. K. Thangamani (Mad)
Income-tax Act, 1961, sections 2(24)(iv)—Perquisites benefits—An addition of Rs. 1,64,000/- was made in the hands of assessee on account of perquisites in the form of rent free accommodation and other amenities. The Appellate Tribunal deleted those additions by following its own earlier decision in ITA Nos. 619& 523 and 1509/JP/90 dated 20.07.1996. While dismissing the reference application, the Rajasthna High Court held that:—”Once the issue was settled in the case of the Company, the reference application made against individual Director cannot give rise to a referable question thus application was rejected. In these facts and circumstances, similar questions raised in this reference application cannot be accepted to have a referable question having already been decided by this court holding it not to be a referable question.” CIT, Jodhpur vs. H.H. Maharaja Sh. Gaj Singh Ji (RHC)
S. 2(24) of IT Act, 1961—Income—Incentive prize received by the assessee on account of the coupon given to him on the strength of Small Saving Certificate would not fall within the definition of ‘lottery’ and would, thus, not be included in the expression ‘income’—CIT vs. Tilak Raj Kalra (2012)
S. 2(24)(vi) & 4 of IT Act, 1961—Capital or revenue receipt—Assessee being a member of a housing society, entered into an agreement with a developer to demolish the residential building owned by the housing society, and reconstruct a new multi-stored building. Assessee under such agreement received a flat in the new constructed building and also compensation in cash. Hence such cash compensation constitutes capital receipt in the hands of the assessee—Kushal K. Bangia vs. ITO (2012) 145 TTJ (UO) 37 (ITAT-Mum)
Reference:
As Per Section 2(24), Of the Income Tax Act, 1961-
“Income” includes-
(i) profits and gains;
(ii) dividend;
(iia) voluntary contributions received by a trust created wholly or partly for charitable or religious purposes or by an institution established wholly or partly for such purposes [or by an association or institution referred to in clause (21) or clause (23), or by a fund or trust or institution referred to in sub-clause (iv) or subclause (v) [or by any university or other educational institution referred to in sub-clause (iiiad) or sub-clause (vi) or by any hospital or other institution referred to in sub-clause (iiiae) or subclause (via) of clause (23C) of section 10 or by an electoral trust.
Explanation.—
For the purposes of this sub-clause, “trust” includes any other legal obligation;
(iii) the value of any perquisite or profit in lieu of salary taxable under clauses (2) and (3) of section 17;
(iiia) any special allowance or benefit, other than perquisite included under sub-clause (iii), specifically granted to the assessee to meet expenses wholly, necessarily and exclusively for the performance of the duties of an office or employment of profit;
(iiib) any allowance granted to the assessee either to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at a place where he ordinarily resides or to compensate him for the increased cost of living;
(iv) the value of any benefit or perquisite, whether convertible into money or not, obtained from a company either by a director or by a person who has a substantial interest in the company, or by a relative of the director or such person, and any sum paid by any such company in respect of any obligation which, but for such payment, would have been payable by the director or other person aforesaid;
(iva) the value of any benefit or perquisite, whether convertible into money or not, obtained by any representative assessee mentioned in clause (iii) or clause (iv) of sub-section (1) of section 160 or by any person on whose behalf or for whose benefit any income is receivable by the representative assessee (such person being hereafter in this sub-clause referred to as the “beneficiary”) and any sum paid by the representative assessee in respect of any obligation which, but for such payment, would have been payable by the beneficiary;
(v) any sum chargeable to income-tax under clauses (ii) and (iii) of section 28 or section 41 or section 59;
(va) any sum chargeable to income-tax under clause (iiia) of section 28;
(vb) any sum chargeable to income-tax under clause (iiib) of section 28;
(vc) any sum chargeable to income-tax under clause (iiic) of section 28;
(vd) the value of any benefit or perquisite taxable under clause (iv) of section 28;
(ve) any sum chargeable to income-tax under clause (v) of section 28;
(vi) any capital gains chargeable under section 45;
(vii) the profits and gains of any business of insurance carried on by a mutual insurance company or by a co-operative society, computed in accordance with section 44 or any surplus taken to be such profits and gains by virtue of provisions contained in the First Schedule;
(viia) the profits and gains of any business of banking (including providing credit facilities) carried on by a co-operative society with its members;
(ix) any winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever.
Explanation.—
For the purposes of this sub-clause,— (i) “lottery” includes winnings from prizes awarded to any person by draw of lots or by chance or in any other manner whatsoever, under any scheme or arrangement by whatever name called ; (ii) “card game and other game of any sort” includes any game show, an entertainment programme on television or electronic mode, in which people compete to win prizes or any other similar game;
(x) any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set up under the provisions of the Employees’ State Insurance Act, 1948 (34 of 1948), or any other fund for the welfare of such employees;
(xi) any sum received under a Keyman insurance policy including the sum allocated by way of bonus on such policy.
Explanation.—
For the purposes of this clause*, the expression “Keyman insurance policy” shall have the meaning assigned to it in the Explanation to clause (10D) of section 10;
(xii) any sum referred to in 31[clause (va)] of section 28;
(xiii) any sum referred to in clause (v) of sub-section (2) of section 56;
(xiv) any sum referred to in clause (vi) of sub-section (2) of section 56;
(xv) any sum of money or value of property referred to in clause (vii) of sub-section (2) of section 56.