Section 41 Deemed Income

Certain amount/benefit receieved are deemed to be PGBP income under this section

Lets study these one by one

Amount Received in Case of Remission/Cessation of loss/expenditure/trading liability Section 41 (1)

(Bad Debts etc Recovered)

If a person has claimed any deduction for loss/expenditure/trading liability

and later

Some amount or benefit received by way of remission/cessation there of

Then that amount or benefit will be deemed to be PGBP income

Amt Received by Successor:-

It doesn’t matter if received by assessee or successor

Even if amount/benefit received by successor of business, still amount will be taxable.

Here

Successor means

• In case of Amalgamation:  Amalgamated Company
• Demerger: Resulting Company
• One firm succeeded by Seond firm: The Second firm
• One person succeeded by Seond person: The Second Person

Bad debts Recovered Section 41(4)

 If a person has claimed any deduction for bad debts or provison for bad debts

and later

Some amount is recovered regarding it,

Then

Amt received

Less

(Bad debts-Deduction Claimed earlier)

  Will be treated as PGBP Income

Section 41(4A)

Amount Withdrawn from Certain Reserves

Amt transferred to specific reserve by Certain Finance Companies, later withdrawn , would be taxable as PGBP

Refer Section 36(1)(viii )

Section 41(2)

Sale of Assets by Power Generation Unit which follows SLM method

(Refer Depreciation Notes)

Section 41(3)

Sale of Capital Assets Used for Scientific Research.

Sales Price

Less

Deduction Claimed-Dedcution Allowed

is taxable as PGBP.

Note:

This is only when Asset is used exclusively for Scientific Research

If not sold but used for normal business, then it becomes part of block at 0 value and this section not applicable.

It doesn’t matter if received by assessee or successor

Even if amount/benefit received by successor of business, still deduction available.

Here

Successor means

• In case of Amalgamation:- Amalgamated Co
• Demerger:- Resulting Company
• One firm succeeded by Seond firm:- The Second firm
• One person succeeded by Seond person:- The Second Person