Section 59 of Income Tax: Profits Chargeable to Tax

Section 59 of income Tax Act 1961 is applicable while computing Income under head Proft and Gains of Business or profession specifying that when certain assets are sold, discarded, demolished, or destroyed and are subject to taxation under Income from other sources.

Update

• The Definition of “Sold” under section 32 has been amended on 1st April 1999. It now reads under Section 32 (9) (d) (iii) (2) as – “sold” includes a transfer by way of exchange or a compulsory acquisition under any law for the time being in force but does not include a transfer, in a scheme of amalgamation, of any asset by the amalgamating company to the amalgamated company where the amalgamated company is an Indian company.

Section 59 of Income tax Act 1961 (Bare Act)

(1) The provisions of sub-section (1) of section 41 shall apply, so far as may be, in computing the income of an assessee under section 56, as they apply in computing the income of an Assessee under the head “Profits and gains of business or profession”.

(2) When any buildings, machinery, plant or furniture to which clauses (ii) and (iii) of sub-section (2) of section 56 apply are sold, discarded, demolished or destroyed, the provisions of sub-section (2) of section 41 shall apply, so far as may be, in computing the income of an assessee under section 56 as they apply in computing the Income of an assessee under the head “Profits and gains of business or profession”.

Explanation: For the purpose of this section, the expression “sold” shall have the same meaning as in sub-section (1) of section 32.

Synopsis: Section 59

FAQs

Which profits are chargeable to tax under section 59?

Profits and gains when certain assets are sold, discarded, demolished, or destroyed and are subject to taxation under Income from other sources as per section 59 of Income Tax Act 1961.