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58. Gross residuary income
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58. Gross residuary income.—(1) The gross residuary income shall include all accruals, or receipts, in the nature of income, which do not form part of—
(a) income from special sources ; and
(b) income under any of the heads of income specified in items A to D of section 14.
(2) The gross residuary income shall, in particular and without prejudice to the generality of the provisions of sub-section (1), include the following, namely :—
(a) dividends, other than dividends in respect of which dividend distribution tax has been paid under section 109 ;
(b) interest, other than interest accrued to, or received by, financial institutions ;
(c) interest received on compensation or on enhanced compensation ;
(d) income from the activity of owning and maintaining horses for the purpose of horse race ;
(e) any amount received from employees as contributions to any fund set up for their welfare, if the income is not included under the head "Income from business" ;
(f) income from machinery, plant or furniture belonging to the person and let on hire, if the income is not included under the head "Income from business" ;
(g) any amount received under a keyman insurance policy including the sum allocated by way of bonus on such policy, if such income is not included under the heads "Income from employment" or "Income from business" ;
(h) the aggregate of any moneys and the value of any specified property, not being an immovable property, received for inadequate consideration or without consideration, by an individual or a Hindu undivided family ;
(i) the value of any specified property, being an immovable property received without consideration by an individual or a Hindu undivided family ;
(j) the value of any property being shares of a closely-held company received for inadequate consideration or without consideration, by a firm or a company ;
(k) the amount of voluntary contribution received by a person, other than an individual or a Hindu undivided family or a non-profit organisation, from any other person ;
(l) any amount received, or retained, on account of settlement or breach of any contract, if not included under the head "Income from business" ;
(m) any payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, if—
(i) the payment or aggregate of payments is in respect of any expenditure referred to in clause (a) of sub-section (1) of section 59 ;
(ii) the expenditure has been allowed as a deduction in any earlier financial year on the basis of the liability incurred thereon ;
(iii) the payment or aggregate of payments exceeds a sum of twenty thousand rupees ; and
(iv) it has not been incurred in such cases and under such circumstances, as may be prescribed ;
(n) any amount found credited in the books of the person maintained for the financial year, if—
(i) the person offers no explanation about the nature and source thereof ;
(ii) the person offers an explanation but fails to substantiate the explanation ; or
(iii) the explanation offered by him is, in the opinion of the Assessing Officer, not satisfactory ;
(o) the value of any investment made by the person in the financial year to the extent for which—
(i) the person offers no explanation about the nature and source of the investments ;
(ii) the person offers an explanation but fails to substantiate the explanation ; or
(iii) the explanation offered by him is, in the opinion of the Assessing Officer, not satisfactory ;
(p) the value of any money, bullion, jewellery or other valuable article owned by the person to the extent for which —
(i) the person offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article ;
(ii) the person offers an explanation but fails to substantiate the explanation ; or
(iii) the explanation offered by him is, in the opinion of the Assessing Officer, not satisfactory ;
(q) the amount of any expenditure incurred by the person in the financial year, if —
(i) the person offers no explanation about the source of such expenditure or part thereof ;
(ii) the person offers an explanation but fails to substantiate the explanation ; or
(iii) the explanation, if any, offered by him is, in the opinion of the Assessing Officer, not satisfactory ;
(r) any amount deemed to be the income under sub-section (5) of section 78 ;
(s) any consideration accrued, or received, in respect of transfer of any business asset, which is self-generated, if the consideration is not included under the head "Income from business" ;
(t) any amount accrued, or received, on account of the cessation, termination or forfeiture in respect of any agreement entered into by the person, if the amount is not included under the head "Income from business" ;
(u) any amount of attributable income of a controlled foreign company to a resident in accordance with the Twentieth Schedule ;
(v) any amount received, as advance, security deposit or otherwise, from the long-term leasing, or transfer of whole or part of, or any interest in, any investment asset ;
(w) amount of any benefit accrued to, or received by, the person, if the amount is not included under the head "Income from business" and if—
(i) it is by way of remission or cessation of any liability including statutory liability or in respect of any loss or expenditure ; and
(ii) such liability or loss or expenditure has been allowed as a deduction in any financial year ;
(x) any sum received as family pension ;
(y) any amount including bonus, if any, received or receivable under a life insurance policy from an insurer on maturity or otherwise.
(3) The amount referred to in clause (h) or clause (i) of sub-section (2) shall not include any amount received—
(a) from any relative ;
(b) on the occasion of the marriage of the individual ;
(c) under a will or by way of inheritance ;
(d) in contemplation of death of the payer ;
(e) from any local authority ; or
(f) from any non-profit organisation.
(4) In this section,—
(a) "relative" shall not include any person referred to in sub-clause (g) of clause (214) of section 314 ;
(b) "specified property" means—
(i) immovable property being land or building or both ;
(ii) shares and securities ;
(iii) jewellery ;
(iv) bullion ;
(v) archeological collections ;
(vi) drawings ;
(vii) paintings ;
(viii) sculptures ; or
(ix) any work of art ;
(c) value of any property referred to in clause (h) or clause (i) or clause (j) of sub-section (2), as the case may be, shall be—
(i) the stamp duty value in the case of an immovable property as reduced by the amount of consideration, if any, paid by the person ; and
(ii) the fair market value in the case of any other property as reduced by the amount of consideration, if any, paid by the person.
(5) The provisions of clause (j) of sub-section (2) shall not apply to any property received by way of a transaction not regarded as a transfer under clause (f) or clause (g) or clause (h) or clause (l) or clause (m) of sub-section (1) of section 47.
Clause 58 deals with scope of gross residuary income. It provides that the gross residuary income shall include all accruals or receipts in the nature of income, which do not form part of income from special sources and income under any of the heads specified in items A to D of section 14. In addition to such income, gross residuary income shall, inter alia, include—
(a) dividends (other than dividends in respect of which dividend distribution tax has been paid under clause 109) ;
(b) interest (other than interest accrued to or received by financial institutions) ;
(c) interest received on compensation or on enhanced compensation ;
(d) income from the activity of owning and maintaining horses for the purpose of horse race ;
(e) any amount received from employees as contributions to any fund set up for their welfare, if not included under the head "Income from business" ;
(f) income from machinery, plant or furniture belonging to the person and let on hire, if not included under the head "Income from business" ;
(g) any amount received under a Keyman insurance policy (including the sum allocated by way of bonus on such policy) if not included under the heads "Income from employment" or "Income from business" ;
(h) the aggregate of any moneys and the value of any specified property, other than immovable property, received for inadequate consideration or without consideration by an individual or a Hindu undivided family ;
(i) the value of any immovable property received without consideration by an individual or a Hindu undivided family ;
(j) the value of any investment made by the person in the financial year to the extent for which he offers no explanation about the nature and source of the investments or offers an explanation but fails to substantiate it or such explanation offered by him is not satisfactory in the opinion of the Assessing Officer ;
(k) the value of any money, bullion, jewellery or other valuable article owned by the person to the extent for which he offers no explanation about the nature and source of acquisition of the same or offers an explanation but fails to substantiate it or such explanation is not satisfactory in the opinion of the Assessing Officer ;
(l) the amount of any expenditure incurred by the person in the financial year, if he offers no explanation about the source of such expenditure or offers an explanation but fails to substantiate it or such explanation is not satisfactory in the opinion of the Assessing Officer ;
(m) any amount of income of a controlled foreign company attributable to a resident in accordance with the Twentieth Schedule ;
(n) any amount received as advance, security deposit or otherwise from the long-term leasing or transfer of whole or part of or any interest in any investment asset ;
(o) any sum received as family pension.
The said clause provides that the value of any property referred to in (h) or (i) above shall be the stamp duty value in the case of an immovable property as reduced by the amount of consideration, if any, paid by the person and the fair market value in the case of any other property as reduced by the amount of consideration, if any, paid by the person.
The said clause further provides that the amount referred to in (h) above shall not include any amount received—
(a) from any relative ;
(b) on the occasion of the marriage of the individual ;
(c) under a will or by way of inheritance ;
(d) in contemplation of death of the payer ;
(e) from any local authority ; or
(f) from any non-profit organisation.
Further, "relative" and "specified property" have been defined in the said clause.
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