Unit 2 of Law of Taxation (syllabus: Module 2 — residential status, exemptions, deductions and rebate, clubbing, set-off and carry forward of losses, the five heads of income, computing total income and tax liability, mergers and acquisitions, and TDS, TCS and advance tax). Below: what the unit covers, the provisions it turns on, and the cases an examiner expects you to name.
What this unit covers
- How is the residential status of an individual determined, and why must it be settled first?
- When is a Hindu undivided family, firm or company resident in India?
- Why are the heads of income mutually exclusive, and what follows when two heads seem to fit?
- When is a payment chargeable as salary rather than under another head?
- When is an expenditure of a business revenue in nature rather than capital?
- How is a capital gain computed, and when is the gain long-term?
- In what order are losses set off and carried forward?
- When is the income of one person taxed in the hands of another?
Treat that list as a self-test: recite each topic's rule from memory before you open its cases.
Provisions
- Income-tax Act, 2025, s. Section 6 with section 5
- Income-tax Act, 2025, s. Section 6(9) to 6(12)
- Income-tax Act, 2025, s. Section 13
- Income-tax Act, 2025, s. Sections 15 to 19
- Income-tax Act, 2025, s. Section 34(1)
- Income-tax Act, 2025, s. Sections 67, 70, 72 and 2(22), 2(101)
- Income-tax Act, 2025, s. Chapter VII, sections 108 to 121
- Income-tax Act, 2025, s. Chapter V, sections 96 to 100
Leading cases
- V.V.R.N.M. Subbayya Chettiar v. C.I.T.
- East India Housing and Land Development Trust Ltd. v. C.I.T.
- Ram Pershad v. C.I.T.
- Empire Jute Co. Ltd. v. C.I.T.
- Philip John Plasket Thomas v. C.I.T.
Full case summaries
- V.V.R.N.M. Subbayya Chettiar v. C.I.T. (1951)
- East India Housing & Land Development Trust Ltd. v. C.I.T. (1961)
- Ram Pershad v. C.I.T. (1972)
- Empire Jute Co. Ltd. v. C.I.T. (1980)
- Philip John Plasket Thomas v. C.I.T. (1964)