INCOME SECTION 2(24)
The definition of income as per the Income-tax Act, 1961 begins with the words “Income includes”.
Therefore, it is an inclusive definition and not an exhaustive one. Such a definition does not
confine the scope of income but leaves room for more inclusions within the ambit of the term.
Section 2(24) of the Act gives a statutory definition of income. At present, the following items of receipts are specifically included in income :—
(i) Profits and gains.
(ii) Dividends.
(iii) Voluntary contributions received by a trust/institution created wholly or partly for charitable or
religious purposes or by an association or institution referred to in section 10(21) or section
(23C)(iiiad)/(iiiae)/(iv)/(v)/(vi)/(via) or an electoral trust.
Research association approved under section 35(1)(ii) 10(21)
Universities and other educational institutions 10(23C)(iiiad)/(vi)
Hospitals and other medical institutions 10(23C) (iiiae)/(via)
Notified funds or institutions established for charitable purposes 10(23C)(iv)
Notified trusts or institutions established wholly for public religious 10(23C)(v)
purposes or wholly for public religious and charitable purposes
Electoral trust 13B
(iv) The value of any perquisite or profit in lieu of salary taxable under section 17.
(v) Any special allowance or benefit other than the perquisite included above, 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.
(vi) Any allowance granted to the assessee 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.
(vii) 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.
(viii) The value of any benefit or perquisite, whether convertible into money or not, which is
obtained by any representative assessee mentioned under section 160(1)(iii) and (iv), or by
any beneficiary or any amount paid by the representative assessee for the benefit of the
beneficiary which the beneficiary would have ordinarily been required to pay.
(ix) Deemed profits chargeable to tax under section 41 or section 59.
(x) Profits and gains of business or profession chargeable to tax under section 28.
(xi) Any capital gains chargeable under section 45.The profits and gains of any insurance business carried on by Mutual Insurance Company or
by a cooperative society, computed in accordance with Section 44 or any surplus taken to be
such profits and gains by virtue of the provisions contained in the first Schedule to the Act.
(xiii) The profits and gains of any business of banking (including providing credit facilities) carried
on by a co-operative society with its members.
(xiv) Any winnings from lotteries, cross-word puzzles, races including horse races, card games
and other games of any sort or from gambling, or betting of any form or nature whatsoever.
For this purpose,
(a) “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;
(b) “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.
(xv) Any sum received by the assessee from his employees as contributions to any provident fund
(PF) or superannuation fund or Employees State Insurance Fund (ESI) or any other fund for
the welfare of such employees.
(xvi) Any sum received under a Keyman insurance policy including the sum allocated by way of
bonus on such policy will constitute income.
“Keyman insurance policy” means a life insurance policy taken by a person on the life of
another person where the latter is or was an employee or is or was connected in any manner
whatsoever with the former’s business.
(xvii) Any sum referred to clause (va) of section 28. Thus, any sum, whether received or
receivable in cash or kind, under an agreement for not carrying out any activity in relation to
any business or profession; or not sharing any know-how, patent, copy right, trade-mark,
licence, franchise, or any other business or commercial right of a similar nature, or
information or technique likely to assist in the manufacture or processing of goods or
provision of services, shall be chargeable to income tax under the head “profits and gains of
business or profession”.
(xviii)Any consideration received for issue of shares as exceeds the fair market value of the
shares[section 56(2)(viib)].[For details, refer to Chapter 8 “Income from Other Sources”]
(xix) Any sum of money received as advance, if such sum is forfeited consequent to failure of
negotiation for transfer of a capital asset [section 56(2)(ix)].[For details, refer to Chapter 8
“Income from Other Sources”]
(xx) Any sum of money or value of property received without consideration or for inadequate
consideration by any person [section 56(2)(x)].
The definition of income as per the Income-tax Act, 1961 begins with the words “Income includes”.
Therefore, it is an inclusive definition and not an exhaustive one. Such a definition does not
confine the scope of income but leaves room for more inclusions within the ambit of the term.
Section 2(24) of the Act gives a statutory definition of income. At present, the following items of receipts are specifically included in income :—
(i) Profits and gains.
(ii) Dividends.
(iii) Voluntary contributions received by a trust/institution created wholly or partly for charitable or
religious purposes or by an association or institution referred to in section 10(21) or section
(23C)(iiiad)/(iiiae)/(iv)/(v)/(vi)/(via) or an electoral trust.
Research association approved under section 35(1)(ii) 10(21)
Universities and other educational institutions 10(23C)(iiiad)/(vi)
Hospitals and other medical institutions 10(23C) (iiiae)/(via)
Notified funds or institutions established for charitable purposes 10(23C)(iv)
Notified trusts or institutions established wholly for public religious 10(23C)(v)
purposes or wholly for public religious and charitable purposes
Electoral trust 13B
(iv) The value of any perquisite or profit in lieu of salary taxable under section 17.
(v) Any special allowance or benefit other than the perquisite included above, 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.
(vi) Any allowance granted to the assessee 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.
(vii) 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.
(viii) The value of any benefit or perquisite, whether convertible into money or not, which is
obtained by any representative assessee mentioned under section 160(1)(iii) and (iv), or by
any beneficiary or any amount paid by the representative assessee for the benefit of the
beneficiary which the beneficiary would have ordinarily been required to pay.
(ix) Deemed profits chargeable to tax under section 41 or section 59.
(x) Profits and gains of business or profession chargeable to tax under section 28.
(xi) Any capital gains chargeable under section 45.The profits and gains of any insurance business carried on by Mutual Insurance Company or
by a cooperative society, computed in accordance with Section 44 or any surplus taken to be
such profits and gains by virtue of the provisions contained in the first Schedule to the Act.
(xiii) The profits and gains of any business of banking (including providing credit facilities) carried
on by a co-operative society with its members.
(xiv) Any winnings from lotteries, cross-word puzzles, races including horse races, card games
and other games of any sort or from gambling, or betting of any form or nature whatsoever.
For this purpose,
(a) “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;
(b) “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.
(xv) Any sum received by the assessee from his employees as contributions to any provident fund
(PF) or superannuation fund or Employees State Insurance Fund (ESI) or any other fund for
the welfare of such employees.
(xvi) Any sum received under a Keyman insurance policy including the sum allocated by way of
bonus on such policy will constitute income.
“Keyman insurance policy” means a life insurance policy taken by a person on the life of
another person where the latter is or was an employee or is or was connected in any manner
whatsoever with the former’s business.
(xvii) Any sum referred to clause (va) of section 28. Thus, any sum, whether received or
receivable in cash or kind, under an agreement for not carrying out any activity in relation to
any business or profession; or not sharing any know-how, patent, copy right, trade-mark,
licence, franchise, or any other business or commercial right of a similar nature, or
information or technique likely to assist in the manufacture or processing of goods or
provision of services, shall be chargeable to income tax under the head “profits and gains of
business or profession”.
(xviii)Any consideration received for issue of shares as exceeds the fair market value of the
shares[section 56(2)(viib)].[For details, refer to Chapter 8 “Income from Other Sources”]
(xix) Any sum of money received as advance, if such sum is forfeited consequent to failure of
negotiation for transfer of a capital asset [section 56(2)(ix)].[For details, refer to Chapter 8
“Income from Other Sources”]
(xx) Any sum of money or value of property received without consideration or for inadequate
consideration by any person [section 56(2)(x)].
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