Basic Rules of Deductions under Section 80C to 80U [Sections 80A/80AB/80AC]

Basic Rules of Deductions under Section 80C to 80U

The following Essential & Basic Rules have to be kept in mind while calculating Deductions under Section 80C to 80U :

1. Deductions cannot exceed Gross Total Income [Section 80A(2)]:

The aggregate amount of deductions under sections 80C to 80U. i.e., under Chapter VI-A shall not, in any case, exceed the “Gross Total Income” (exclusive of long-term capital gains, short-term capital gain covered under section 111A, winnings of lotteries, crossword, puzzles, etc. and income referred to in sections 115A to 115AD and 115D) of the assessee. Therefore, the total income after deductions will either be positive or nil. It cannot be negative due to deductions. If the “Gross total income” is negative or nil, no deduction can be permitted under this Chapter.

2. Deduction not allowed to members if allowed to AOP/BOI [Section 80A(3)]:

If a deduction is allowed under the above sections to the AOP or BOI then deductions for the same payment/income will not be allowed to the members of the AOP/BOI. [Section
80A(3)].

3. Double Deduction Not Allowed and Deduction cannot exceed the Profit of the particular Undertaking or Unit or Enterprise, etc. [Section 80A(4)]:

Notwithstanding anything to the contrary contained in section 10AA or in any provisions of this Chapter under the heading “C.—Deductions in respect of certain incomes” (i.e., deductions under sections 80-IA to 80RRB), where, in the case of an assessee, any amount of profits and gains of an undertaking or unit or enterprise or eligible business is claimed and allowed as a deduction under any of those provisions for any assessment year, deduction in respect of, and to the extent of, such profits and gains shall not be allowed under any other provisions of this Act for such assessment year and shall in no case exceed the profits and gains of such undertaking or unit or enterprise or eligible business, as the case may be.

4. Deduction allowed only when it is claimed by the assessee [Section 80A(5)]:

Where the assessee fails to make a claim in his return of income for any deduction under section 10AA or under any provision of this Chapter under the heading “C.—Deductions in respect of certain incomes” (i.e., sections 80-IA to 80RRB), no deduction shall be allowed to him thereunder.

5. Profit or gain to be recomputed if inter unit or inter business transfer is not at market value [Section 80A(6)]

6. Assessee’s duty to place relevant material:

If an assessee approaches a statutory authority for obtaining a concession under the taxing statute, he should in fairness place all the material before the said authority and be also in a position to satisfy the said authority that he was entitled to obtain the concession.

7. Deduction to be allowed in respect of net income included in Gross Total Income [Section 80-AB]:

Where any deduction is required to be made or allowed under any section in respect of any income then for the purpose of computing the deduction under that section, the net income computed in accordance with the provisions of the Income-tax Act (before making any deduction under this chapter, i.e., Chapter VIA) shall alone be regarded as the income received by the assessee and which is included in his Gross Total Income. [Section 80AB].

8. Benefits of certain deductions not to be allowed in cases where return is not filed within the specified time limit [Section 80AC]:

Where in computing the total income of an assessee of any previous year relevant to the assessment year commencing on or after 1.4.2018, any deduction is admissible under any provision of this Chapter under the heading “C.—Deductions in respect of certain incomes” (i.e., sections 80-IA to 80RRB), then such deduction shall not be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under section 139(1).