The Nursery Business
The budget has made nursery incomes exempt from tax. Such incomes encompass saplings or seedlings grown in a nursery. Thus even such saplings grown otherwise then by resorting to basic operations on the land such as in pots etc. would stand to benefit exemption.
However, where a part of the activity of a nursery involves purchases and sales of the plants then profits arising from such trading would nonetheless be assessable to tax. Sudisha Farm Nursery vs. Income-tax Officer (88ITD638) Del.
Charity made taxable
The Special Bench of Delhi ITAT in Samaj Kalyan Parishad Vs. Income-tax Officer (2007) 291ITR AT 1 held that if the profits of the business carried on by the trust feed the charitable objects then it can be said that the activity carried on by the trust is not guided solely by a profit motive and the assessee would be entitled to exemption under section 11.
This decision and all earlier decision which held likewise have been shown door by the FM in his maiden amendment in charity definition in the Income tax Act. Henceforth any profitable activity would be taxed no matter such profits are applied for charity purpose by an institution run for general public charitable purpose.
Preliminary expenses deduction
Currently preliminary expenses are deductible in five successive previous years. Such deduction is available only in case of industrial undertakings.
The bill proposes to allow similar relief to all undertakings including non-industrial undertakings.
At last this year budget has made a provision for fair treatment to a transaction of reverse mortgage by exempting the loan or instalment thereof received by an individual.
R & D Benefit
The Finance Bill provides for a weighted deduction upto 125% of the sum paid to a company registered in India and