“Income from Other Sources” is one of the heads of income chargeable to tax under the Income-tax Act, 1961. Any income that is not covered in the other four heads of income is taxable under income from other sources, because of this, it is known as residuary head of income. All the incomes excluded from salary, capital gains, house property or business & profession are included in Income from other Sources, except those which are exempt under the Income Tax Act. The basic idea of taxation of income from other sources is as indicated by its name.
Section 56 of the Income-tax Act,1961 (the ‘Act’) corresponds to section 12 of the 1922 Act is covered under the heading ‘F’- Income from Other Sources in the ‘Chapter IV-Computation of Total Income’ of the Income Tax Act, 1961. The said section is a residuary section which deals with the which are generally not taxable under the other heads of the Income. The language of the earlier section 12(1) was stated as- the tax shall be payable under the head “Income from other sources” in respect of income, profits and gains of every kind which may be included in his total income (if not included under any of the preceding heads).
Instead, sub-section (1) of section 56 provides that Income of every kind which is not to be excluded from the total income under this Act shall be chargeable to income-tax under the head “Income from other sources”, if it is not chargeable to income-tax under any of heads specified in section 14, items A to E. Subsequently, section 56 has been continuously amended from time to time by incorporating various anti abuse provisions as came to the notice of law makers from time to time. The broad intention behind the earlier section 12(1) and the present section 56 seems to be that the intention of the government is to plug the loopholes in the Act, by artificially deeming a particular receipt to be income to be taxed under section 56 of the Act.
The most important purpose of this book is to give a bird’s eye view of taxation of income which is not covered in the other four heads of income in Income Tax Act at present. This is expected to serve as a background to understand the subsequent chapters. The book has been divided into several Chapters. Chapter-1 presents Introduction of Income from other sources. Chapter-2 concerns with Income exempt from tax. Chapter-3 deals with incomes which are taxable under the head “Income from other Sources”.
The next Chapters of this book deal with various provisions of income-tax law relating to taxation of Income under the head “Income from other sources” as residuary head of income.
I am not inserting bare sections here to increase the size of book, it is written keeping in mind to provide less, solid and crux content about the matter. It includes gist of case laws on relevant sections. Incomes which are taxable under the head ‘Income from Other Sources. Although, every effort has been made to support every information given in the book with the relevant sections and the rules of law, however, the book should not be construed as an exhaustive statement of law. The relevant provisions of the Income Tax Act and the Income Tax Rules, may be referred to, if necessary. Though every care has been taken to provide authentic information yet the authors/publisher are not legally or morally responsible for any loss or damage that may arise to any person from an inadvertent error or omission in the book.
I would like to place on record a special note of gratitude to Shri Ashok Kumar Manchanda, IRS, (1976- Batch) who has been the guiding force and a constant source of inspiration in my life. I also express my thanks to Commercial Law Publishers (India) Pvt. Ltd. who reposed confidence in me and published this book. They have done a good job in making this book attractive, acceptable and useful. In a work of this magnitude on a volatile subject there will always be scope for further improvements and embellishments. This would be possible only with the feedback from the readers. We welcome your constructive suggestions and comments for making it more useful to the different segments of the society. It is hoped that as in the past this book will also prove to be very useful for the taxpayers and receive widespread patronage.
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