Income from Business with Problem and solution

1. COMPUTATION OF INCOME FROM BUSINESS
PRESENTED
BY
SELVA SHREE V

2. INCOME TAX
❑ It is a tax that
governments impose
on income generated
by businesses and
individuals within this
jurisdiction.
❑ By law, tax payers
must file an income
tax return annually to
determine their tax
obligations..

3. COMPUTATION OF INCOME
❑ The process of
determining the
different source of
income is called as
the computation
of income….

4. FORMAT
PARTICULARS AMOUNT(₹) AMOUNT(₹)
Net profit as per profit & loss a/c XXX
ADD:
Inadmissible expenses:(not allowed but debited to
profit & loss a/c)
XXX
Admissible income:(allowed but not credited to profit
& loss a/c)
XXX
Over valuation of opening stock XXX
Undervaluation of closing stock XXX
TOTAL XXX

5. LESS:
Admissible expenses:(allowed but not debited to
profit and loss a/c)
XXX
Inadmissible income:(not allowed but credited to
profit & loss a/c)
XXX
Admissible income:(allowed but not credited to
profit & loss a/c)
XXX
Undervaluation of opening stock XXX
Overvaluation of closing stock XXX
TOTAL XXX
INCOME FROM BUSINESS XXX

6. PROBLEMS
QUE :
The books of manufacturing concern disclose
the following information:
Profit & Loss a/c
To opening stock 338000 By sales 870000
provision for tax 22000 Closing stock 129000
mis.expenses 1680
depreciation 40000

7. Notes:
• Miscellaneous expenses includes:
I. penalty for violation of foreign exchange regulations Rs.1200.
II. expenses to defend an criminal case against managing directors Rs.3000
III. Donations to P.M drought relief fund Rs.2000.
IV. Wealth tax paid Rs.3000
V. Donations to Singh Rs.5000
• Bad Debts includes a sum of Rs. 500 for advance to suppliers of raw
materials with whom assessee had exclusive arrangement for purchase
of search materials.
• Miscellaneous income include refund of advance income tax Rs.400.
• Allowable depreciation Rs.36000
From the above particulars compute the business income of the concern.

8. Solution:
PARTICULARS AMOUNT( ₨) AMOUNT(₨)
Net profit as per profit and loss a/c 30500
Add: Inadmissible expenses:
Provision for taxation 22000
Miscellaneous expenses:
penalty for violation 1200
Expenses on criminal 3000
Donation to P.M drought 2000
Wealth tax 3000
Donations to Mr.Singh 5000
36200
Less: Admissible expenses
Depreciation 36000
(-) Inadmissible Income
Income tax 400
BUSINESS PROFIT 70300