Deductions from gross residuary income.
59. (1) The deductions for the purposes of computation of income from residuary sources shall be the aggregate of-
(a) the amount of expenditure specified in sub-section (2), if—
(i) the expenditure (not being in the nature of capital expenditure) is laid out or expended, wholly and exclusively, for the purposes of making or earning the gross residuary income; and
(ii) it fulfills all other conditions, if any, specified therein; and
(b) the amount of deductions specified in sub-section (3) subject to the fulfilment of the conditions, if any, specified therein; and
(c) any amount received during the financial year as dividend from a controlled foreign company as referred to in clause (u) of sub-section (2) of section 58, to the extent such amount has been included in the total income of the assessee in any preceding financial year in accordance with the provisions of the said clause.
(2) The amount of expenditure referred to in clause (a) of sub-section (1) shall be the following, namely:—
(a) any reasonable sum paid by way of remuneration or commission for the purpose of realising the income referred to in clause (a) or clause (b) of sub-section (2) of section 58;
(b) the amount determined, so far as may be, in accordance with the provisions of clause (v) of sub-section (2) of section 35 in respect of the income of the nature referred to in clause (f) of sub-section (2) of section 58 ;
(c) the amount determined, so far as may be, in accordance with the provisions of clause (xxx) of sub-section (2) of section 35 in respect of income of the nature referred to in clause (e) of sub-section (2) of section 58;
(d) the amount determined, so far as may be, in accordance with the provisions of section 37 and subject to the provisions of sub-section (3) of section 34 in respect of income of the nature referred to in clause (f) of sub-section (2) of section 58.
(3) The amount of deduction referred to in clause (b) of sub-section (1) shall be the following, namely:—
(a) the amount equal to thirty-three and one-third per cent. of income or fifteen thousand rupees, whichever is less, in respect of family pension;
(b) the aggregate amount referred to in clause (h) or clause (i) or clause (j) of subsection (2) of section 58 to the extent the aggregate does not exceed fifty thousand rupees; and
(c) the repayment of advance or security deposit from long-term leasing in the financial year in which such advance or security deposit is re-paid.
(d) the amount included in income under clause (y) of sub-section (2) of section 58 in respect of an insurance policy where-
(i) the premium paid or payable for any of the years during the term of the policy does not exceed five per cent. of the capital sum assured; and
(ii) the amount is received only upon completion of original period of contract of the insurance;
(e) the amount included in income under clause (y) of sub-section (2) of section 58, if tax on distributed income in respect of the insurance policy has been paid by the insurer under section 110;
(f) The amount of premium paid upto the date of receipts or accruals referred to in clause (y) of sub-section (2) of section 58 in respect of an insurance policy, other than a policy referred to in clause (d) and clause (e) of this sub-section, as reduced by the amount of premium which has already been allowed as a deduction under this clause in any previous financial year, to the extent such amount has been included as receipts or accruals under clause (y) of sub-section (2) of section 56.
(4) In the case of the income referred to in clause (c) of sub-section (2) of section 58, the amount of deduction shall be a sum equal to fifty per cent. of such income and no deduction shall be allowed under any other clause of this section.
(5) The following amounts shall not be allowed as a deduction, namely:—
(a) any amount relating to personal expenses of the person;
(b) any amount of tax, interest or penalty paid under this Code or the Income-tax Act, 1961 or the Wealth Tax Act, 1957 as they stood before the commencement of this 43 of 1961 code; or 27 of 1957.
(c) 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 payment or aggregate of payments exceeds a sum of twenty thousand rupees; and
(iii) it has not been incurred in such cases and under such circumstances, as may be prescribed;
(6) In this chapter "capital sum assured" in relation to a life insurance policy means the minimum amount assured under the policy on happening of the insured event at any time during the term of the policy not taking into account—
(i) the value of any premium agreed to be returned; or
(ii) any benefit, by way of bonus or otherwise, over and above the sum assured, which is to be received or may be received by any person under the policy.
