1. Do the provisions of section 44ADA apply to an actor, who is acting only in TV serials? What if he is acting only in web serials, available only on Netflix or Amazon Prime? Would it make any difference if he has acted in a small role in one film during an earlier year, where he earned a small fraction of his total earnings?

    Ans: S.44ADA applies to a resident assessee who is engaged in a profession. The term “profession” has been defined in s.44A. The profession of film artist (actor, etc) is notified under s.44A for the purpose. The notification is not that of an actor, but of an actor who is a film artist. Since the person in this case is an actor, but does not act in films, but in serials broadcast on TV or on the web, he does not qualify as carrying on a profession.

  2. Mr A has booked a flat on allotment letter in 2012. The project is not completed. Now the builder is offering another flat under- construction on surrender of original allotment letter. Can Mr. A claim benefit of long term gains and investment in new flat?

    Ans. The right to obtain a house under the allotment letter is a capital asset, which is a long term capital asset, since such right was acquired in 2012. This is however not a residential house, but the right to obtain a residential house. Therefore, Mr A can claim benefit of exemption under s. 54F, and not s. 54.

  3. Sitting fees and Commission are earned by a Non Executive Director, on which the Company has deducted tax @10% u/s194J. Should this be taxed as income from other sources or as business income? The company is a Public Ltd. Co. and the amount is large, about ₹ 85

    lakh. If it is business income, then whether presumptive tax is applicable?

    Ans. Directorship is not a profession as defined in s.44A. The issue of whether the director is carrying on a business or not depends upon various factors – whether he is engaged in acting as a director in any other companies, whether he carries on any other activity, the time he spends on his role as a director and in the other activities, etc. Based on these tests, if he is regarded as engaged in a business, then the provisions of s. 44AD would apply, and he would have to offer to tax 8% of his gross receipts or the actual income that he has earned, whichever is higher.

  4. Mr and Mrs B have obtained a divorce. Under the consent terms filed before the Family Court, and under the terms of the divorce as decreed by the Family Court, Mr A has transferred one house to Mrs A, and has paid her a lump sum amount of ₹ 1 crore. Such amounts were received by Mrs A after the decree of divorce. Are such amounts taxable?

    Ans. As held by the Bombay High Court in the case of Princess Maheshwari Devi v. CIT 147 ITR 258, lumpsum alimony received on divorce is a capital receipt, which is not taxable. Though such amounts would not be regarded as having been received from a relative, since the receipt was after the divorce, the provisions of section 56(2)(x) would not apply to such amounts, since the assets and money is being received in consideration of agreeing to divorce, and cannot be said to have been received without any consideration.


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