272

Income under the Head

'Other Sources'

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Income from Other Sources is the residual head in Gross Total Income. Section 56 gives the
chargeability of income under the head of ‘Other Sources’ and section 57 and 58 specify the
basis of computation of Income. In this Chapter we will also discuss Deemed Dividends under
Section 2(22).

SECTION 145: METHOD OF ACCOUNTING

Under this head an assessee has an option to choose either cash basis of accounting or
accrual basis of accounting while calculating income from 'Other Sources'.
Illustration : Mr. V has invested Rs. 1,00,000 in the bank fixed deposits on 1/1/2022 for the
period of one year which will fetch him interest at the rate of 8% pa. On 31/12/2023 he will
earn interest of Rs. 8,000. If Mr. V follows:
(a) Cash basis of accounting then the full amount of Rs. 8,000 will be taxable when it is
received (31/12/2022), i.e., in PY 2019-2022.
(b) Accrual basis of accounting then Rs. 2,000 will be taxable in the PY 2019-2022 and Rs.
6,000 will be taxable in the PY 2022-2023.

SECTION 56(1): CHARGING SECTION

If following three conditions are satisfied then income is chargeable to tax under the head of
‘Income from Other Sources’:
(a) There is an income.
(b) Such Income is not excludable from total income.
(c) Source of such income does not fall under any one of the other four heads of income.
So it can be said that income shall be taxable under other sources only if it is not chargeable
to tax under four heads, namely
• Income from salary; or
• Income from house property; or
• Income from business and profession; or
• Income from capital gains.

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SECTION 56(2): INCOMES INCLUDED IN OTHER SOURCES

Following incomes are always included under “Income from other sources”
(1) DIVIDENDS: SECTION 56(2)(i)
Discussed in chapter Dividend
(2) WINNINGS FROM LOTTERIES, CROSS WORD PUZZLES, RACES INCLUDING
HORSE RACES, CARD GAMES AND OTHER GAMES, GAMBLING OR BETTING
OR CASUAL INCOMES: SECTION 56(2)(ib)
(a) Gross winnings are taxable at a rate of 30% flat under Section 115BB.
(b) No expenses are allowed to be deducted from such incomes.
(c) Income from lotteries etc. exceeding Rs. 10,000 and income from horse races exceeding
Rs. 10,000 are subject to TDS @ 30% under Sections 194B and 194BB respectively.
(d) If an assessee receives net income then it shall be grossed up before including the amount
of winnings in GTI.
Illustration 2: Mr. V has participated in the quiz game and the organizers of the game show
have paid him amount of winnings of Rs. 35 lakh after doing TDS of 30%. In this net amount
of Rs. 35 lakh, amount of TDS will be added to make the winnings amount as gross. Amount
of TDS shall be Rs. 35 lakh/70 Rs. 100 = Rs. 15 lakh. Therefore, the amount of gross winnings
shall be taken as Rs. 50 lakh. While calculating his gross total income we shall include the
gross amount of Rs. 50 lakh and not the net amount of Rs. 35 lakh.

(3) SUM RECEIVED BY ASSESSEE FROM HIS EMPLOYEES AS A

CONTRIBUTION TO CERTAIN FUNDS: SECTION 56(2)(ic)
If an employer has received contribution towards certain funds such as Provident Fund from
the employee and has not deposited such contribution of employee then it is regarded as the
Income of the employer. If not chargeable to tax for the employer under the head of Profit and
Gains from Business / Professions (PGBP) then it would be chargeable to tax for the employer
as Income from Other Sources. However, as per Section 57 if such sum is deposited on or
before the due date of filling of ITR then it shall be given a deduction.

(4) INTEREST ON SECURITIES: SECTION 56(2)(id)

(a) If securities are held as SIT then the interest received shall be taxed under the head of
PGBP. But if securities are held as investments then only interest shall be taxed under the
head of ‘Other Sources’.
(b) Interest income does not accrue on a day to day basis. So interest shall be taxable for the
full period for which interest has been received irrespective of the fact that the securities are
held for the lesser period.
(c) If the interest Income has been received as net of TDS then such interest Income has to
be grossed before including it in the GTI.
(d) Any amount of commission or remuneration paid to earn this Income however shall be
allowed as expenses from this Income under Section 57.

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(e) In case of interest payable by Central or State Government it shall always be deemed to
accrue or arise in India as per Section 9(1) and shall be taxable for all kinds of assessee
whether resident or non-resident.
(f) Interest income exempt from Tax is given under section 10(15) some of which are:
(i) Interest on Post Office Savings Account is exempt upto Rs. 3,500 in case of single holder
account and in case of joint holder account this limit will be Rs. 7,000.
(ii) Interest on capital investment bonds.
(iii) Interest on relief bonds.
(iv) Interest on PPF account is exempt u/s 10(11)

Find out the income chargeable to tax in the following cases for the assessment
years 2023-24 and 2024-25 -
a. On May 5,2022, X barrows Rs, 1,00,000 at the rate of 9 per cent annum from
a bank to invest in public issue of 12 per cent debentures of A Ltd. A ltd.
allots debentures on May 12, 2022 (as per the terms of allotment, interest is
payable every year on November 30. However, the first interest on November
30, 2022 would be for the period commencing May 12, 2022 to November 30,
2022).

b. On April 18, 2022, Y borrows Rs. 2,00,000 at the rate of 8 per cent per annum
from a bank to invest in public issue of 9.5 per cent debentures of B Ltd. B
ltd. allots debentures on April 30, 2022 (as per terms of allotment, interest is
payable every year on May 15, however, the first interest would be payable
only on May 15, 2023 for the period commencing April 30, 2022 to May 15
2023.

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(5) INCOME FROM LETTING OF MACHINERY, PLANT OR FURNITURE: SECTION

56(2)(ii),(iii)
Income from letting of machinery, plant or furniture along with building is not chargeable to tax
under the head PGBP. It shall be chargeable to tax as income from ‘Other Sources’. However
as per Section 57 expenses such as repairs, depreciation and insurance premium is allowed
as expenses.

(6) SUM RECEIVED UNDER A KEYMAN INSURANCE POLICY: SECTION 56(2)(iv)

Sum received under a Keyman insurance policy including bonus on such policy has the
following tax treatment:
(a) If such sum is received by a person who has taken insurance policy then it shall be taxable
as the PGBP income u/s 28
(b) If keyman for whom the policy has been taken receives such sum then it shall be taxable
as profit in lieu of salary u/s 17(3) if he has employer and employee relationship with the
person who has taken insurance policy.
(c) This amount shall be taxed under the head of ‘Other Sources' only if it does not fall under
above points. Such a case may be when insurance policy is taken where the employer-
employee relationship does not subsist.

(7) INCOME FROM SUB-LETTING OF HOUSE PROPERTY

Income from sub-letting of house property is always taxable as income from ‘Other Sources’.
However, expenses such as repairs, depreciation and insurance premium are allowed to be
reduced from such income.

(8) INTEREST RECEIVED ON COMPENSATION OR ENHANCED

COMPENSATION IN CASE OF COMPULSORY ACQUISITION: SECTION
56(2)(viii)
Interest received by an assessee on compensation or enhanced compensation shall be
deemed to be his income for the year in which it is received, irrespective of the method of
accounting followed by the assessee [Section 145B(1)] and such interest income shall be
charged to tax as the income from other sources u/s 56. Further u/s 57, deduction of 50% of
such interest shall be allowed and only balance amount shall be taxable.

(9) INTEREST RECEIVED ON COMPENSATION FROM MOTOR ACCIDENT

CLAIM TRIBUNAL
Interest received by an assessee on compensation from motor accident claim tribunal shall
be deemed to be his income for the year in which it is received, irrespective of the method of
accounting followed by the assessee and such interest income shall be charged to tax as the
income from other sources u/s 56. Further u/s 57, deduction of 50% of such interest shall be
allowed and only balance amount shall be taxable.

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(10) SHARE PREMIUM IN EXCESS OF THE FAIR MARKET VALUE: SECTION

56(2)(viib)
If a company is a closely held company and has received from any resident person
consideration for the issue of shares and if the consideration received for the issue of shares
exceeds the Market Value of shares, the aggregate consideration received for such shares as
exceeds the Market Value of shares shall be taxable as the income from other sources.

(11) ADVANCE AMOUNT FORFEITED: SECTION 56(2)(ix)

If any sum of money received as an advance or otherwise in the course of negotiations for the
transfer of capital asset if—
(a) Such sum is forfeited and
(b) The negotiations do not result in transfer of such capital asset.
Then such advance money forfeited shall be taxable as Income from other sources.

(12) TAXABILITY OF COMPENSATION IN CONNECTION WITH EMPLOYMENT:

SECTION 56(2)(xi)
A receipt satisfying the following conditions shall be taxable as income from other sources in
the hands of the recipient:
(a) any compensation or other payment is due to any person or is received by him
(b) such compensation or payment could be by whatever name called
(c) such compensation/payment is made in connection with:
(i) the termination of the employment of the recipient; or
(ii) modification of the terms and conditions relating to such employment.
This covers those payments which are not taxable under the head salary. Thus, it could cover
a payment by a person other than an employer or former employer. The compensation may
be in the nature of revenue receipt or capital receipt.

(13) ANY GIFT RECEIVED BY ANY PERSON FROM ANY OTHER PERSON OR
PERSONS: SECTION 56(2)(x)

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SOME OTHER INCOMES WHICH SHALL BE TAXABLE AS INCOME FROM

‘OTHER SOURCES’
 Director’s fee
 Agriculture income from land situated outside India
 Rent of open plot of land
 Salary payable to Members of Parliament
 Family pension received by family members of deceased employee
 Interest on employee’s own contribution in URPF when he gets retired
 Any income from undisclosed sources
 Any other casual income
 Income from royalty
 Ground Rent recovered
 Examination fees received by a teacher from a person other than his employer
 Honorarium etc.

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SECTION 57: DEDUCTIONS FROM INCOME OF ‘OTHER SOURCES’

The following expenses are allowed to be deducted from the Income chargeable under this
chapter:
(1) The remuneration or commission paid to a banker for realization of dividends and/or
interest. However if the dividend is exempt from tax then its expenses are not allowed to be
deducted.
(2) Expenses such as repairs, insurance premium, depreciation etc. are allowed to be reduced
from the rental incomes by letting out of plant or machinery.
(3) In respect of the family pension the lower of the following shall be allowed as a deduction:
(a)5,000
(b) l/3rd of such family pension received by the assessee
(4) Interest received by an assessee on compensation or enhanced compensation shall be
deemed to be his Income for the year in which it is received, irrespective of the method of
accounting followed by the assessee and such interest income shall be charged to Tax as the
Income from Other Sources u/s 56. Further u/s 57, deduction of 50% of such interest shall be
allowed and only balance amount shall be taxable.
Expenses other than expenses mentioned as above are still allowed as deduction if all of the
following conditions are fulfilled:
(1) It is not capital expense in nature
(2) It is expended wholly and exclusively for the purpose of earning Income of Other Sources
(3) It is not personal expenditure
(4) Expenditure is incurred during the previous year
(5) There is a clear relationship between the Income earned and expenditure incurred

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SECTION 58: DEDUCTIONS NOT ALLOWED

This Section provides specific amounts, which are not deductible in computing the income
chargeable under this head of ‘Income’. Disallowances under this Section are listed below:
(1) Personal expenses
(2) Any interest which is payable outside India on which no TDS has been done or paid
(3) Any payment of salary outside India on which no TDS has been done or paid
(4) Any amount of wealth tax
(5) While calculating the income from winning of lotteries, races, games etc. no kind of
expenses in respect of such incomes shall be allowed to be reduced. This point shall not apply
while calculating incomes earned from activity of owing and maintaining of race horses.
(6) Expenditure in relation to incomes not included in total income is also not deductible.

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Tax Treatment of Gifts Received

ANY GIFT RECEIVED BY ANY PERSON FROM ANY OTHER PERSON OR PERSONS:
SECTION 56(2)(x)
All type of gifts received can be divided into two categories
(1) Monetary gifts
(2) Gift in kind i.e. value of property, received as gift

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DEFINITION OF RELATIVE:

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MEANING OF IMMOVABLE PROPERTY:

Immovable property means land or building or both

MEANING OF MOVABLE PROPERTY:

Movable Properties will include
(1) shares and securities

(2) jewellery

(3) archaeological collections

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(4) drawings

(5) paintings

(6) sculptures

(7) any work of art and

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(8) bullion i.e. gold and silver in the form of biscuits/bricks/bars

NOTE: The term property shall include only those assets which are in the nature of capital
assets and not those assets which are in the nature of stock-in-trade or raw material or
consumable stores of any business.

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Illustration:

Particulars Situation 1 Situation 2

A. Declared consideration 200 200

B. Stamp duty value 225 208
C. Stamp duty value as a percentage of declared consideration 112.5% 104%
[B x 100 / A]
D. Whether stamp duty value exceeds 110% of declared Yes No
consideration?
For the purpose of computing income under section 56(2)(x),
(a) in Situation 1, Rs 25 lakhs ( Rs 225 lakhs less Rs 200 lakhs) will be regarded as income, since the
stamp duty value exceeds the declared consideration by more than 10% of the declared consideration.
Section 50C shall be applicable.
(b) in Situation 2, since the difference is less than 10% of declared consideration no addition will be
made under section 56(2)(x). Section 50C shall not be applicable.

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MONETARY GIFTS RECEIVED FROM RELATIVES

Monetary gifts received from relatives are always fully exempt, in every situation and
irrespective of the amount.
Illustration: Mr. V qualifies as a CA in July 2022 and his father has gifted him cash of Rs.
5,00,000 on the same occasion. In this case, father is a relative and cash gift of Rs. 5,00,000
shall be fully exempt for Mr. V

MONETARY GIFTS RECEIVED FROM NON-RELATIVES

> Gift received by any person

> from any other person or persons
> in Cash or Cheque or Draft or by way of credit
> otherwise than as consideration of goods or services received or by any other mode
> shall be considered as income under section 2(24) and
> shall be taxable under the head of ‘Other Sources’.
> However, it is exempt if the amount in aggregate is Rs. 50,000 pa or less.
> Any sum in aggregate exceeding Rs. 50,000 pa shall be fully taxable as the income of other
sources.
Illustration: Mr. V receives gift of Rs. 67,000 from his friend Mr. A on the occasion of his
birthday on 30/8/2023. Now Rs. 67,000 shall be fully taxable for Mr. V.
Illustration : Mr. V receives three gifts of Rs. 30,000 each from his three friends Mr. A, Mr. B,
Mr. C, on the occasion of his birthday on 30/8/2023. Now Rs. 90,000 shall be fully taxable for
Mr. V since the amount is more than Rs. 50,000pa in aggregate.
Illustration : Mr. V receives three gifts of Rs. 10,000 each from Mr. A who is his friend. Now
Rs. 30,000 shall not taxable since aggregate amount is less than Rs. 50,000.

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GIFTS OF IMMOVABLE PROPERTY RECEIVED FROM RELATIVE, WITHOUT

CONSIDERATION

 Stamp Duty Value of immovable property shall be regarded as income.

 Such stamp duty value shall always be fully exempt when immovable property is
received without consideration from relatives
Illustration : Mr. V qualifies as a CA in July 2023 and his father has gifted him cash of Rs.
5,00,000 and his mother has gifted him a flat which has stamp duty value of Rs. 45,00,000 on
the same occasion. In this case, father and mother are relatives and thus gifts received by Mr.
J from them shall be fully exempt for Mr. V. Thus, full Rs. 50,00,000 shall be exempt for Mr.
V.

GIFTS OF IMMOVABLE PROPERTY RECEIVED FROM RELATIVE, FOR

INADEQUATE CONSIDERATION

 The difference between Stamp Duty Value of immovable property and consideration
paid shall be regarded as value of gift i.e. income.
 Such difference shall always be fully exempt when immovable property is received
from relatives.

GIFTS OF MOVABLE PROPERTY RECEIVED FROM RELATIVE, WITHOUT

CONSIDERATION

 FMV of movable property shall be regarded as value of gift i.e. income.

 FMV of movable property received from relatives without consideration are always fully
exempt irrespective of the FMV of such movable property.
Illustration : Mr. V qualifies as a MBA in July 2022 and his sister gifts him a gold bracelet
which has market value of Rs. 90,000. Value of gold bracelet being Jewellary item, received
by Mr. V shall be exempt for Mr. V since movable property (Jewellary) has been received by
Mr. V from his sister (relative).

GIFTS OF MOVABLE PROPERTY RECEIVED FROM RELATIVE, FOR

INADEQUATE CONSIDERATION

 The difference between FMV of movable property and consideration paid shall be
regarded as value of gift i.e. income.
 Such difference shall always be fully exempt when movable property is received from
relatives.

GIFTS OF IMMOVABLE PROPERTY RECEIVED FROM NON RELATIVE,

WITHOUT CONSIDERATION

 Stamp Duty Value of immovable property shall be regarded as value of gift i.e. income.
 Where stamp duty value of immovable property does not exceed Rs. 50,000 per
property the whole of the stamp duty value of such property shall be exempt for the
recipient.

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Illustration : Mr. X gifts a flat to his friend Mr. V on the occasion of his 25th marriage
anniversary on 17/11/2023, which has the stamp duty Value of Rs. 40,000. In this case Rs.
40,000 shall be exempt for Mr. V.
> Where stamp duty value of immovable property exceeds Rs. 50,000 per property the whole
of the stamp duty value of such property shall be taxable for the recipient as the income from
other sources.
Illustration : Mr. X gifts a flat to his friend Mr. V on the occasion of his 25th marriage
anniversary on 17/11/2023, which has the stamp duty Value of Rs. 3,35,000. In this case Rs.
3,35,000 shall be taxable for Mr. V as income of other sources.
Illustration : Mr. X gifts a flat to his friend Mr. V on the occasion of his 25th marriage
anniversary on 17/11/2023, which has the stamp duty Value of Rs. 3,35,000. On the same
day Mr. Y gifts a flat to Mr. V which has the stamp duty Value of Rs. 45,000. In this case Rs.
3,35,000 shall be taxable for Mr. J as income of other sources and Rs. 45,000 shall not be
taxable for Mr. V.

GIFTS OF IMMOVABLE PROPERTY RECEIVED FROM NON RELATIVE, FOR

INADEQUATE CONSIDERATION

This provision will apply if the following conditions are satisfied:

(a) an immovable property is received for a consideration
(b) the Stamp Duty Value is more than 110% of the declared consideration
(c) the difference between Stamp Duty Value and declared consideration is more than Rs.
50,000
If all of above mentioned conditions are fulfilled, the difference between the stamp duty value
and the declared consideration shall be regarded as income of the recipient and will be taxable
as income from other sources.

STAMP DUTY VALUE TO BE TAKEN ON THE DATE OF AGREEMENT

If the date of the agreement fixing the amount of consideration for the transfer of the
immovable property and the date of registration are not the same, the stamp duty may be
taken as on the date of the agreement, instead of that on the date of registration.
This shall apply only in a case where the amount of consideration, or a part thereof, has been
paid by an account payee cheque or an account payee bank draft or by use of electronic
clearing system through a bank account or through such other electronic mode as may be
prescribed (Amended from AY 2022- 2023) on or before the date of the agreement fixing the
amount of consideration for the transfer of such immovable property.

GIFTS OF MOVABLE PROPERTY RECEIVED FROM NON RELATIVE, WITHOUT

CONSIDERATION

Where movable property is received without consideration and the aggregate Fair Market
Value of all such properties exceeds Rs. 50,000, the whole of the aggregate Fair Market Value
of such properties shall be taxed for the recipient as the income from other sources.
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Illustration : Mr. A gifts a gold biscuit to his friend Mr. V on the occasion of his 25th marriage
anniversary on 17/11/2023, which has the Fair Market Value of Rs. 90,000. In this case Rs.
90,000 shall be taxable as income from other sources for Mr. V.
Illustration : Mr. X gifts a gold biscuit to his friend Mr. V on the occasion of his 25th marriage
anniversary on 17/11/2023, which has the market value of Rs. 38,000. He also gifts a wrist
watch on his 50th birthday on 30/8/2023 which has the market value of Rs. 45,000. In this
case nothing shall be taxable as income from other sources for Mr. V. This is because value
of gold is less than Rs. 50,000 and wrist watch is not regarded as a movable asset and it will
not be taxable.

GIFTS OF MOVABLE PROPERTY RECEIVED FROM NON RELATIVE, FOR

INADEQUATE CONSIDERATION

If a movable property is received for a consideration which is less than the aggregate Fair
Market Value of the property and the difference between the two exceeds Rs. 50,000, then
the difference between the Fair Market Value of such property and such consideration shall
be taxed as the income of the recipient under the head of Other Sources.
Illustration : Mr. X sells a gold bar to his friend Mr. V for Rs. 2,00,000 on 30/8/2023, which
has the market value of Rs. 2,35,000. In this case nothing shall be taxable as income for Mr.
V
Illustration : Mr. X sells a gold bar to his friend Mr. V for Rs. 2,00,000 on 30/8/2023, which
has the market value of Rs. 2,75,000. In this case Rs. 75,000 shall be taxable as income for
Mr.V
Illustration : Mr. V, a dealer in shares, received the following without consideration during the
PY 2023-2024 from his friend Mr. B
(1) Cash gift of Rs. 75,000 on his anniversary, 17/11/2023
(2) Bullion, the Fair Market Value of which was Rs. 60,000, on his birthday on 30/8/2023
(3) A plot of land at KOLKATA on 1/7/2023, the Stamp Duty Value of which is Rs. 5 lakhs on
that date. Mr. B had purchased the land in April 2011.
(4) Mr. V purchased from his friend C, who is also a dealer in shares, 1,000 shares of X Ltd.
@ Rs. 400 each on 19/6/2023, the Fair Market Value of which was Rs. 600 each on that date.
Mr. V sold these shares in the course of his business on 23/6/2023.
(5) On 1/11/2023, Mr. V took possession of property (building) booked by him two years ago
for Rs. 20 lakhs. The Stamp Duty Value of the property as on 1/11/2023 was Rs. 32 lakhs and
on the date of booking was Rs. 23 lakhs. He had paid Rs. 1 lakhs by cheque as down payment
on the date of booking.
Compute the income of Mr. V chargeable under the head ‘Income from other sources’
for AY 2024-2025 i.e. PY 2023-2024.

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Solution: Computation of Income of other sources for AY 2024-25( PY 2023-2024 )

Particulars Rs.

Cash gift is taxable under Section 56(2)(x), since it exceeds Rs. 50,000 75,000

Bullion is taxable since the aggregate fair market value exceeds Rs. 50,000 60,000

Stamp Duty Value of plot of land at Faridabad, received without consideration, is 5,00,000
taxable under Section 56(2)(x)

Difference of t2 lakh in the value of shares of X ltd. purchased from Mr. C, a dealer NIL
in shares, is not taxable as it represents the stock-in-trade of Mr. V. Since Mr. V is
a dealer in shares and it has been mentioned that the shares were subsequently
sold in the course of his business, such shares represent the stock-in-trade of Mr.
V

Difference between the stamp duty value of Rs. 23 lakh on the date of booking and 3,00,000
the actual consideration of Rs. 20 lakh paid is taxable. (Difference amount is more
than Rs. 50,000 and more than 5% of the consideration)

Income from other sources 9,35,000

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X a c q u i r e a C o m m e r c i a l f l a t f ro m Y o n 1 6 - 0 6 - 2 0 2 3 . C O Aa n d s t a m p d u t y v a l u e a re a s f o l l o w s

Ca s e 1 Ca s e 2 Ca s e 3 Ca s e 4 Ca s e 5

Co n s i d e r a t i o n 8,00,000 8,00,000 8,00,000 8,00,000 8,00,000

Stamp duty value 8,39,000 8,46,000 8,70,000 12,59,000 12,80,000

Di s c u s s t h e t a x c o n s e q u e n c e s i n t h e h a n d s o f X a n d Y

Ca s e 1 Ca s e 2 Ca s e 3 Ca s e 4 Ca s e 5

Co n s i d e r a t i o n a

110% o f considera tion b

Stamp duty value C

Re l e v a n t c o n d i t i o n to
attract 56(2)(x)

a. Whether c
is more
than b

b. Whether
the excess
of c over a
is more
than Rs
50,000

Taxable u/s 56(2)(x)

Section 5 0C

Full value of
c o n s i d e ra t i o n for
calculating capital gain
in the ha nds of Y

S E CT I O N 4 9 ( 4 )

Co s t o f a c q u i s i t i o n in
the hands of X

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X a c q u i r e a n i m m o v e a b l e p r o p e rt y d u r i n g t h e A p r i l 2 0 2 3 f ro m Y . Re l e v a n t d a t a i s g i v e n b e l o w

Ca s e 1 Case 2 Ca s e 3 Case 4 Ca s e 5

Stamp duty value on date of 8,00,000 8,00,000 9,00,000 9,00,000 10,00,000

agreement

Stamp duty value on date of 8,70,000 8,70,000 9,80,000 9,80,000 10,70,500

Re g i s t r a t i o n

Co n s i d e r a t i o n for acquiring 7,62,000 7,62,000 8,55,000 8,55,000 10,20,000

property from Y

Whether advance is paid to Y by an Yes No Yes No no

a c c o u n t p a y e e c h e q u e / Dr a f t / b a n k
t r a n s f e r o n o r b e f o re t h e d a t e o f
agreement

Di s c u s s t h e t a x c o n s e q u e n c e s i n t h e h a n d s o f X a n d Y

Ca s e 1 Case 2 Ca s e 3 Case 4 Ca s e 5

Co n s i d e r a t i o n a

110% of consideration b

Stamp duty value if advance is C

p a id b y wa y o f a c c o u n t p a y e e
cheque

Re l e v a n t c o n d i t i o n t o a t t r a c t
56(2)(x)

a . w h e t h e r c is m o r e t h a n b

b . wh e t h e r t h e e x c e s s o f c o v e r
a is more than 50,000

Section 50C

F u l l v a lu e o f c o n s id e r a t i o n f o r
c a l c u l a t i n g c a p i t a l g a i n in t h e
hands of Y

S E CT I O N 4 9 ( 4 )

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EXCEPTIONAL CASES TO SECTION 56(2)(x)

To avoid hardship, following sums/value of assets shall not be considered as income and shall
not be taxable

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GIFT RECEIVED BY EMPLOYEE FROM EMPLOYER

Gift, Voucher or Gift Token: Section 17(2)(viii): Tax treatment in hands of employee

Nature of gift Amount/value of gift which is Amount/value of gift which is

less than or equal to Rs. 5,000 more than Rs. 5,000

Gift in cash Fully taxable Fully taxable

Gift in kind or gift voucher or Fully exempt Fully taxable

gift token

Illustration : Mr. V is employed in A Ltd. He has received a cash gift of Rs. 15,000 from his
employer on the occasion of his birthday.
In this case full amount of Rs. 15,000 shall be taxable for Mr. V as his income under the head
Salary.
Illustration Mr. V is employed in T Ltd. He has received a wrist watch as a gift which has Fair
Market Value of Rs. 3,000 from his employer on the occasion of his birthday.
In this case full amount of Rs. 3,000 shall be exempt for Mr. V.
Illustration : Mr. V is employed in P Ltd. He has received a wrist watch as a gift which has Fair
Market Value of Rs. 15,000 from his employer on the occasion of his birthday.
In this case full amount of Rs. 15,000 shall be taxable for Mr. V as his income under the head
Salary.
GIFT RECEIVED IN CONNECTION WITH BUSINESS/PROFESSION.
Gifts or Perquisites from Clients which are in connection with business or profession are
covered under section 28. If any person has received any gift or perquisite or benefit either in
cash or in kind from any of his clients, it will be considered to be business receipt and shall be
taken into consideration while computing PGBP income. Further asset received may be capital
asset or may not be a capital asset.
Illustration : A Doctor has received an ambulance as gift from one of his patients and its Fair
Market Value is Rs. 10,00,000. Doctor has been fully compensated for his services and this
has been given to him over and above the normal professional fees.
In this case it will be considered to be PGBP income of doctor and taxable will be full Rs.
10,00,000.

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COMPENSATION OR OTHER PAYMENT IN CONNECTION WITH EMPLOYMENT:

SECTION 56(2)(xi)
Any compensation or other payment, due to or received by any person in connection with the
termination of his employment or the modification of the terms and conditions, shall be taxable
as income of other sources if it is not taxable under the head salary.

GIFT BY RESIDENT TO NON RESIDENT

If gift has been paid/given outside India on or after 5/7/2019 by resident to non-resident or to
foreign company then it shall be deemed to accrue or arise in India and shall be taxable in
India for that non-resident or foreign company as income of other sources: Section 9(l)(viii)

RECEIPT OF SHARES BY A FIRM OR A CLOSELY HELD COMPANY: SECTION

56(2)(viia)
This Section is applicable if all of the following conditions are satisfied
(1) Recipient is a firm or a closely held company
(2) The asset received is in the form of shares in closely held company
(3) Shares are received from any person
(4) Such shares are received without consideration or for inadequate consideration
(5) Such shares are not received under the transactions referred in section 47
If all of the above conditions are satisfied then value of such shares will be taxable in the hands
of the recipient in the following manner:
(1) If shares are received without consideration and the aggregate market value of those
shares does not exceed 750,000 then nothing is taxable in the hands of the recipient.
(2) If shares are received without consideration and the aggregate market value of those
shares exceeds 750,000 then the aggregate of the market value will be taxable in the hands
of the recipient.
(3) Shares are received for the consideration which is less than market value and the
aggregate difference does not exceed 750,000 then nothing is taxable in the hands of the
recipient.
(4) Shares are received for the consideration which is less than market value and the
aggregate difference exceeds 750,000 then value shall be taken the market value less
consideration paid.

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QUESTIONS FROM PAST

Question 1:
X, a lady received the following gifts during the month of Dec., 2023. Rs 90,000 from her
elder sister, Rs 60,000 from the daughter of her elder sister; and Rs 1,25,000 from various
friends on the occasion of her marriage. Discuss the taxability or otherwise of these gifts
in the hands of X. [MAY 2006]
Answer:
Section 56(2)(x) of the Income Tax Act, 1961 provides that the following shall be taxable as
Income from Other Sources:
Where any sum of money, the aggregate value of which exceeds fifty thousand rupees, is
received without consideration, by any person or persons, in any previous year from any person
or persons, the whole of the aggregate value of such sum:
Provided that this clause shall not apply to any sum of money or any property received from
inter-alia, any relative; or on the occasion of the marriage of the individual.
The word “relative” is defined exhaustively.
In the present question, since elder sister is a relative as defined but daughter of elder sister is
not a relative as per definition. Rs 60,000 shall be chargeable to tax in the hands of X as income
from other sources for the assessment year 2024-25, being gift received from daughter of elder
sister. Gift of Rs 90,000, received from elder sister is not taxable. Any sum of money received
on the occasion of marriage of the individual is not covered by section 56(2)(x) and therefore,
gifts of Rs 1,25,000 received on occasion of marriage are not taxable.
Question 2:
Discuss the taxability or otherwise of the following gifts received by M, an individual,
during the financial year 2023-24:
(i) Rs 24,000 each from his four friends on the occasion of his birthday in the month of
October, 2023.
(ii) Wrist watch valued at Rs 60,000 on the occasion of New Year. [MAY 2007]
Answer:
(i) Section 56(2)(x) of the Income-tax Act, 1961 provides for taxability of gifts, which reads as
under:
Where any sum of money, the aggregate value of which exceeds fifty thousand rupees, is
received without consideration, by any person, in any previous year from any person or
persons, the whole of the aggregate value of such sum is taxable under the head Income from
Other Sources.
Provided that this clause shall not apply to any sum of money or any property received from,
inter-alia, any relative; or on the occasion of the marriage of the individual.
Gift received from friends on birthday party do not fall in proviso to section 56(2)(x) and
therefore taxable.
In the present question, Rs 96,000 (i.e., Rs 24,000 X 4) is chargeable to tax in the hands of M
as income from other sources.
(ii) Section 56(2)(x) provides for the taxability of the gift received by way of money, or
immovable property or movable property being shares & securities, jewellery, archaeological
collections, drawings, paintings, sculptures, and any work of art and bullion.
Gift of watch is not covered by the provisions of section 56(2)(x) and is therefore, not
chargeable to tax.

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Question 3:
Radhe received on 11.2.2024 gifts each of Rs 21,000 from his two friends Shiva and
Krishna and of Rs 51,000 from his sister living in UK. Explain in brief about the treatment
to be given under the I.T. Act, for Assessment Year 2024-25. [NOVEMBER 2008]
Answer:
Section 56(2)(x) provides that the following shall be taxable under the head "Income from
Other Sources":
Where any sum of money, the aggregate value of which exceeds Rs 50,000, is received without
consideration, by any person, in any previous year from any person or persons, the whole of
the aggregate value of such sum.
Provided that this clause shall not apply to any sum of money or any property received inter-
alia, from any relative.
Therefore, gifts received by Radhe on 11.2.2024 from his two friends of Rs 21,000 each shall
not be included in the total income of Radhe since, the aggregate value of all such sums
received during the previous year does not exceed Rs 50,000. Further, the gifts from sister
living the UK would be exempted under proviso to section 56(2)(x).
Question 4:
Chitra received gifts of Rs 1,00,000 from her father in law and of Rs 11,000 each from her
10 friends at the time of her marriage on 11.3.2024. Explain in the context of provisions
of the Act, whether the income derived during the year ended on 31.3.2023 shall be
subject to tax in A. Y. 2024-25. [MAY 2009]
Answer:
As per the provisions of section 56(2)(x), where any sum of money, the aggregate value of
which exceeds Rs 50,000, is received without consideration, by any person, in any previous
year from any person or persons, the whole of the aggregate value of such sum:
Provided that this clause shall not apply to any sum of money received on the occasion of the
marriage of the individual or from any relative.
Therefore, the gift of Rs 1,00,000 received from the father-in-law and Rs 11,000 from her 10
friends at the time of her marriage shall not be taxable in the hands of Chitra.
Question 5:
In July 2023 Mr. Parvez employed as Marketing Manager in a Pharma company,
received a Maruti car as gift from a distributor of the company. The value of the gifted
car is estimated at Y 2,00,000. Is the value of car taxable as income? If so, under what
head it is taxable?[MAY 2010]
Answer:
Section 56(2)(x) applies where any person receives, in any previous year, from any person or
persons, any property, other than immovable property, —
(A) without consideration, the stamp duty value of which exceeds Rs 50,000, the stamp duty
value of such property;
(B) for a consideration which is less than the AGGREGATE fair market value of the property
by an amount exceeding Rs 50,000, the aggregate fair market value of such property as exceeds
such consideration
In section 56(2)(x), car is not covered since:
“property” means—
(i) immovable property being land or building or both;

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(ii) shares and securities;

(iii) jewellery;
(iv) archaeological collections;
(v) drawings;
(vi) paintings;
(vii) sculptures;
(viii) any work of art; or
(ix) bullion.
In the given case, since there is no employer-employee relationship between Mr. Parvez, the
marketing manager and the distributor of the company, therefore, the gift shall not be taxable
as salary of Mr. Parvez. Further, in view of the above said provisions of section 56, the gift of
car does not fall within the ambit of section 56, and therefore, cannot be taxed in his hands as
income from other sources.
Question 6:
Mayur gifted amount of Rs 5,00,000 to the wife of his brother which was used by her for
the purchase of a house and simultaneously on the same day brother of Mayur gifted
shares owned by him in a foreign company worth Rs 5,00,000 to the minor son of Mayur.
What will be the impact of such transfers in the hands of both the transferors and the
transferees?[MAY 2011]
Answer:
As per section 56(2)(x), husband’s brother is relative. Father’s brother is also a relative.
In view of section 56(2)(x), in the present case, the gift of Rs 5,00,000 to the brother’s wife by
Mayur is exempt from tax, since the husband’s brother is relative within the definition of
relative as specified under section 56(2)(x).
When the brother of Mayur gifted shares of Rs 5,00,000 to son of Mayur, section 56(2)(x) is
not attracted in the hands of Mayur’s son since father’s brother falls in the definition of relative.
Furthermore, there will not be any tax implication in the hands of Mayur’s brother since the
gift of capital asset is not regarded as transfer as per section 47 of the Income Tax Act.
In the present case, there is an indirect transfer of assets by Mayur's brother to his wife i.e., Rs
5,00,000 without any consideration. The income from house property received by wife of
Mayur's brother shall be clubbed with the income of Mayur's brother under section 64.
Question 7:
Mr. X received the following gifts / amounts during the previous year 2023-24.
(i) Gift of bullion worth Rs 60,000 on his birthday from his friend.
(ii) Received a car from his cousin on payment of Rs 1 lakh fair market value of which
was Rs 4 lacs.
(iii) Received cash gift of Rs 18,000 each from three of his friends A, B & C on 24.09.2023.
(iv) Acquired an office building on 22-11-2023 from his friend Q for a consideration of Rs
10 lacs, stamp duty value of which is Rs 20 lacs.
(v) In respect of land of Mr. X acquired by Railways in the year 2012, he received the
following amount on 25-12-2023 as interest on enhanced compensation on the order of
the court.

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Relating to previous year r

2017-18 1,45,000
2018-19 1,75,000
2019-20 1,10,000
You are required to compute the income of Mr. X chargeable under the head “Income
from other sources” for the Assessment Year 2024-25 assuming that he has no other
income. [MAY 2012]
Answer:
Computation of “Income from Other Sources” of Mr. X for the Assessment Year 2024-25
Particulars
(i) Since bullion is included in the definition of “Property”, therefore, when 60,000
bullion is received without consideration, the same is taxable under
section 56(2) (x), as the aggregate fair market value of bullion exceeds Rs
50,000
(ii) Since car is not included in the definition of property in section 56(2)(x) Nil
therefore, the difference of Rs 3 lakh between fair market value and
purchase price of car is not taxable under section 56(2)(x)
(iii) Cash gift received from friends is taxable under section 56(2)(x), since its 54,000
aggregate value exceeds Rs 50,000 ( Rs 18,000 x 3)
(iv) Immovable property purchased for inadequate consideration is covered by 10,00,000
section 56(2)(x). Therefore, the difference of Rs 10 lakh between stamp
duty value and purchase price of building is taxable under section
56(2)(x).
(v) Interest received during the year on enhanced compensation is taxable
under section 145B in the year of receipt, irrespective of the method of
accounting followed by Mr. X. The interest is taxable under section 56(2)
(viii).
( Rs 1,45,000 + Rs 1,75,000 + Rs 1,10,000) Rs 4,30,000
Less: Deduction under section 57 @ 50% of Rs 4,30,000 Rs 2,15,000 2,15,000
Income from Other Sources 13,29,000
Question 8:
Discuss the taxability or otherwise of the following transactions under Section 56(2) of
the Income-tax Act:
(i) Bharat is the Karta of Bharat HUF. Sujata, daughter of Bharat is a member of the
HUF. She transferred a house property to the HUF without any consideration. The value
of house property for stamp duty purpose is Rs 10 lakhs.
(ii) JD Private Limited issued Rs 50,000 equity shares of face value of Rs 10 per share at a
premium of Rs 60 per share. The fair market value of the share as per prescribed rule is
Rs 50 per share.[MAY 2014]

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Answer:
i. Immovable property, being land or building or both, received without consideration by a
HUF from its relative is not taxable under section 56(2)(x).
Since Sujata is a member of Bharat HUF, she is a “relative” of the HUF, Therefore, if Bharat
HUF receives a house property from Sujata without consideration, the stamp duty value of such
property will not be chargeable to tax in the hands of the HUF, since such receipt from a
“relative” is excluded from the scope of section 56(2)(x).
ii. The provision of section 56(2)(viib) are attracted in this case since the shares of a closely
held company are issued at a premium (i.e., the issue price of Rs 70 per share exceeds the face
value of 10 per share). The consideration received by the company in excess of the fair market
value of the shares would be taxable under section 56(2)(viib).
Therefore, Rs 10,00,000 i.e., [( Rs 70 - Rs 50) x 50,000 shares] shall be the income chargeable
under the head “Income from other sources” in the hands of JD Private Limited.
Question 9:
From the following particulars, compute the gross total income of Mr. Z for the
Assessment Year 2024-25
(i) Mr. Y transferred his residential house to Mr. Z for Rs 10 lakh on 1.4.2023. The value
of the said house as per stamp valuation authority was Rs 18 lakhs. Mr. Z is a childhood
friend of Mr. Y.
(ii) Mr. Z received a car from his cousin on payment of Rs 2,50,000 fair market value of
which was Rs 4,00,000.
(iii) Land of Mr. Z was acquired by railways in 2011. On 15.12.2023, he received Rs
1,70,000 as interest on enhanced compensation on the order of the Court.
(iv) On a fixed deposit of Rs 10 lakhs, in a bank, Mr. Z received an interest of Rs 90,000.
He had also borrowed Rs 50 lakhs from the same bank, on security of the fixed deposit
and was liable to pay Rs50,000 by way of interest to the bank. He therefore, offered the
difference between the two amounts i.e. Rs 40,000 as “Income from Other Sources”.
[NOVEMBER 2014]
Answer:
Computation of Gross Total Income of Mr. Z for the Assessment Year 2023-24
Particulars Amount
(i) Income from Other Sources 8,00,000
Receipt of immovable property for inadequate consideration as
(ii) per the provisions of section 56(2)(x). The difference between the stamp Nil
duty value ( Rs 18 lakhs) and the actual consideration ( Rs 10 lakhs)
would be taxable.
Since car is not included in the definition of property Under
(iii) Section 56(2) (x), receipt of car for inadequate consideration would not 85,000
attract the provisions of Section 56(2)(x).
Interest on enhanced compensation amounting to Rs 1,70,000
(iv) would be taxable under section 56(2) (viii) in the year of receipt. 90,000
Deduction 50% is allowable under section 57(iv). Hence, the taxable
interest is Rs 85,000 (i.e. 7 1,70,000 - 7 85,000).

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Interest of Rs 90,000 received on fixed deposit is income of Mr. Z.

The interest of 7 50,000 on loan taken by Mr. Z from the same bank on
security of the fixed deposit will not go to reduce the income by way of
interest on fixed deposit.
Gross Total Income 9,75,000
Question 10:
Discuss the liability of the following receipts, during the year ended 31 st March, 2023, in
the hands of Ms. Jyoti under the Income-tax Act, 1961:
(i) Gift of Rs 60,000 in cash from her father's sister on her birthday.
(ii) Acquired a vacant site from grandfather's younger brother. The stamp duty value of
the land was 73 lakhs but the consideration paid was Rs 2 lakhs.
(iii) Received a car from her friend on payment of Rs 2,50,000, the market value of which
was 73,00,000.
(iv) Interest on enhanced compensation on the order of court, from NHAI in respect of
her land which was compulsorily acquired, was received Rs 3,50,000 on 12.11.2023 which
includes interest of Rs 2,00,000 pertaining to previous year 2017-18.
(v) Received cash gift of Rs 15,000 each from three of her friends. [MAY 2016]
Answer:
(i) Gift of Rs 60,000 in cash received on her birthday would not be taxable in the hands of Ms.
Jyoti, since such sum is received from father’s sister who is a relative [as per section 56(2) (x)].
(ii) As per section 56(2) (x), where any immovable property is obtained for inadequate
consideration from a person (other than relative) and the difference between stamp duty value
of the property and the consideration exceeds Rs 50,000, then such difference is chargeable to
tax as income under the head 'Income from Other Sources".
In the present case, since the younger brother of grandfather is not a ’relative’ [as per section
56(2)(x)[, and the difference between the stamp duty value of land and consideration paid i.e.,
Rs 1,00,000 ( Rs 3,00,000 — Rs 2,00,000) exceeds ?
50,000, the difference of Rs 1,00,000 would be chargeable to tax in the hands of Ms. Jyoti under
section 56(2)(x) under the head "Income from Other Sources".
(iii) Since car is not included in the definition of property [as per section 56(2)(x)[, the
difference between fair market value and purchase price of car is not taxable in the hands of
Ms. Jyoti under section 56(2)(x)(c).
(iv) As per section 145A, interest received during the year on enhanced compensation shall be
deemed to be the income of the year in which such interest is received, irrespective of the
method of accounting followed by the assessee. Hence, the interest of Rs 3,50,000 (including
interest of Rs 2,00,000 pertaining to previous year 2017-18) received by Ms. Jyoti, is taxable
under section 56(2)(viii) in the previous year 2023-24 after allowing deduction @ 50% under
section 57.
Accordingly, Rs 1,75,000 ( Rs 3,50,000 — Rs 1,75,000) would be taxable in her hands under
the head "Income from Other Sources".
(v) Cash gifts of Rs 45,000 ( Rs 15,000 x 3) received from three of her friends is not taxable
under section 56(2)(x) in the hands of Ms. Jyoti, since its aggregate value does not exceed Rs
50,000.

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Question 11:
Discuss the tax implications under Section 56(2) in respect of each of the following
transactions:
a. Mr. Anaimudi received a painting by Raja Rain Verma worth Rs 65,000 from his
nephew by way of gift on his 25th wedding anniversary.
b. Dodabetta's son transferred shares of Pir Panjal Ltd. to Dodabetta HUF without any
consideration. The fair market value of the shares is Rs 3 lakhs.
c. ABC Private Ltd. purchased Rs 8,000 equity shares of Satarupas Private Ltd. at Rs 72
per share from Ms. Yamuna. The fair market value per share on the date of transaction
is Rs 90.[NOVEMBER 2016]
Answer:
Tax Implications under section 56(2)
(i) Under section 56(2)(x), where an individual received any property other than immovable
property without consideration, the aggregate fair market value of which exceeds Rs 50,000,
such value of property would be chargeable to tax under the head "Income from other sources".
As per Explanation to section 56(2) (x), paintings are included in the definition of 'property".
Therefore, Rs 65,000, being the fair market value of painting, would be taxable in the hands of
Mr. Anaimudi, since he received such painting without any consideration from his 'nephew',
who is not included in the definition of 'relative' as per Explanation to section 56(2)(x)
thereunder, and its fair market value exceeds Rs 50,000.
(ii) Any property received without consideration by a HUF from its relative is not taxable under
section 56(2)(x).
Since Dodabetta's son is a member of Dodabetta HUF, he is a "relative" of the HUF.
Therefore, if Dodabetta HUF receives any property (shares, in this case) from its member, i.e.,
Dodabetta's son, without consideration, then, the fair market value of such shares will not be
chargeable to tax in the hands of the HUF even though its fair market value exceeds Rs 50,000,
since such shares are received from a "relative’ by HUF.
(iii) As per section 56(2)(x), in this case, the difference of Rs 1,44,000 [i.e., ( Rs 90 - Rs 72) x
8,000] is taxable under section 56(2)(x), in the hands of ABC Private Ltd.

Illustration - Taxability of Certain Receipts - N 13

State with brief reasoning whether the following receipts are chargeable to Income-Tax
or are exempt (if chargeable, the amount taxable is to be mentioned) for the Assessment
Year 2024- 2025. Computation is NOT required.

Nature of Receipts ₹

(i) Interest on Enhanced Compensation received in 12.03.2024 for 96,000

acquisition of Urban Land, of which 40% relates to the earlier year.

(ii) Rent Received for letting out Agricultural Land for a movie shooting 72,000

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Illustration - Sale of Capital Asset / Stock in Trade for inadequate consideration - RTP
Mr. Hari a Property Dealer, sold a building in the course of his business to his friend
Rajesh, who is a dealer of Automobile Spare Parts for ₹ 90 Lakhs, on 01.01.2024, when
the Stamp Duty Value was ₹ 150 Lakhs. The agreement was, however entered into on
01.07.2023, when the Stamp Duty Value was ₹ 140 Lakhs. Mr. Hari had received a down
payment of ₹ 15 Lakhs by cheque from Rajesh on the date of agreement. Discuss the
tax implications in the hands of Hari and Rajesh, assuming that Mr. Hari has purchased
the building for ₹ 75 lakhs on 12th July 2022.
Would your answer be different if Hari was a Share Broker instead of a Property Dealer?

Illustration - Transfer of shares for inadequate consideration

Mr. Bala transferred 400 shares of Raj (P) Ltd. to M/s. Kumar Co. (P) Ltd. on 10.10.2023
for ₹ 3,00,000 when the market price was ₹ 5,00,000. The indexed cost of acquisition of
shares for Mr. Bala was computed at ₹ 4,45,000. The transfer was not subjected to
securities transaction tax.
Determine the income chargeable to tax in the hands of Mr. Bala and M/s. Kumar
Co.(P)Ltd. because of the above said transaction.

Illustration - Taxability of Gifts - N 12

5mt. Laxmi reports the following transactions -
1. Received Cash Gifts on the occasion of her marriage on 18.07.2023 of ₹ 1,20,000. It
includes Gift of ₹ 20,000 received from non-relatives.
2. On 01.08.2023 being her birthday, she received a gift by means of cheque from her
mother's maternal uncle. The amount being ₹ 40,000.
3. On 01.12.2023, she acquired a vacant site from her friend for ₹ 1,05,000. The State
Stamp Valuation Authority fixed the value of site at ₹ 2,80,000 for stamp duty purpose.
4. She bought 100 Equity Shares of a Listed Company from another friend for ₹ 60,000.
The value of Share in the Stock Exchange on the date of purchase was ₹ 1,15,000.
Determine the amounts chargeable to tax in the hands of Smt. Laxmi for the
Assessment Year

Illustration - Taxability of Gifts - M 11

The following details have been furnished by Mrs. Hemali, pertaining to the year ended
31.03.2024:
1. Cash Gift of ₹ 51,000 received from her friend on the occasion of her "Shastiaptha
Poorthi", a wedding function celebrated on her husband completing 60 years of age.
This was also her 25th Wedding Anniversary.
2. On the above occasion, a diamond necklace of ₹ 2 Lakhs was gifted by her sister
from Dubai.
3. When she celebrated her daughter's wedding on 21.02.2024, her friend assigned in
Mrs. Hemali's favour a Fixed Deposit held by the said friend in a Scheduled Bank, the
value of the Fixed Deposit and the accrued interest on the said date was ₹ 51,000.
Compute the Income, if any, assessable as Income from Other Sources.

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Illustration - Income from Other Sources - M 18

Discuss the taxability of the following receipts in the hands of Mr. Sanjay Kamboj under
the Income Tax Act, 1961 for A.Y. 2024-2025:
(i) ₹ 51,000 received from his sister living in US.
(ii) Received a car from his friend on payment of ₹ 2,50,000, the FMV of which was ₹
5,50,000. Provisions of taxability or Non-taxability must be discussed.

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