Section 57

Deductions from income from other sources

n In respect of interest on the non-resident blocked account which are remitted to the assessees who are repatriates from Ceylon after deducting the foreign exchange entitlement certificate fee, the fee under the Ceylon Exchange Control Law is not a deductible expense under section 57(iii)—Circular: No. 156 [F. No. 173/96/72-IT(A-I)], dated 23-12-1974.

n The benefit of ad hoc deduction to Insurance agents of the Life Insurance Corporation having total commission (including first year commission, renewal commission and bonus commission) of less than Rs. 60,000 for the year, and not maintaining detailed accounts for the expenses incurred by them, may be allowed as follows :

     (i)   where separate figures of first year and renewal commission are available, 50 per cent of first year commission and 15 per cent of the renewal commission;

    (ii)   where separate figures as above are not available, 331/3 per cent of the gross commission.

In both the above cases, the ad hoc deduction will be subject to a ceiling limit of Rs. 20,000.

The “gross commission” in (ii) above will include first year as well as renewal commission but will exclude bonus commission.

The complete amount of bonus commission is taxable and will be taken into account for purpose of computing the total income, and no ad hoc deduction will be allowed from this amount.

The benefit of ad hoc deduction will not be available to agents who have earned total commission of more than Rs. 60,000 during the year. The admissibility of the expenditure claimed by such agents will be decided by the Assessing Officers as per the provisions of the Income-tax Act.

This will apply to assessment year 1993-94 and subsequent years—Circular : No. 648, dated 30-3-1993.

n An ad hoc deduction, at the rate of 50% of the gross receipts of commission should be given to the authorised agents of Unit Trust of India and the agents of the following securities :

(1) National Savings Certificates VIII Issue; (2) Social Security Certificates; (3) Post Office Time Deposit Accounts; (4) Post Office Recurring Deposit Accounts; (5) National Savings Scheme, 1987; (6) Post Office Monthly Income Account Scheme; (7) Kisan Vikas Patra; (8) Public Provident Fund Accounts; and (9) Deposit Scheme for Retiring Government Employees, 1989—Circular : No. 594, dated 27-2-1991.

n Benefit of ad hoc deduction for expenses @ 50% of the gross receipts of commission can be given to the agents of mutual funds which are notified by the Central Government for purposes of section 10(23D). The benefit of ad hoc deduction will only be available to agents not maintaining detailed accounts for the expenses incurred by them and having gross commission of less than Rs. 60,000 for the year, including gross commission as authorised agents of Unit Trust of India and agents of securities specified in Circular No. 594, above, as well as total commission from LIC as specified in Circular No. 648, above. The benefit of ad hoc deduction will not be available to agents who have earned gross commission as computed above of more than Rs. 60,000 from all the abovementioned sources but together during the year. The admissibility of expenditure claimed by such agents (with higher income) will be decided by the Assessing Officer as per the provisions of the Income-tax Act—Circular : No. 677, dated 28-1-1994.