TAMIL NADU NATIONAL LAW UNIVERSITY
(A University established under the Tamil Nadu Act No. 9 of 2012)
Dindigul Main Road, Navalurkuttapattu
Tiruchirappalli 620 027
Tamil Nadu, India
B.A. LL.B. (H) / B.COM. LL.B. (H)
COURSE SYLLABUS
LAW OF DIRECT TAXATION
Course Objectives
● To gain expert knowledge of the provisions of direct tax laws under the Income Tax Act.
● To acquire the ability to apply the knowledge of the provisions of laws to various
situations in actual practice.
Learning Outcomes
By the end of the course students should be able to:
● Calculate the Income tax due in any given assessment year for any person; to file returns
for the same.
● Give feasible legal solutions to clients on any problems on direct tax; to be able to
suggest concrete steps to be taken to navigate the tax authorities in India
● Offer advice on tax-planning taking into account legal risks given the current field of
direct taxes in India.
Teaching Methods
This course will primarily be lecture-based. However, some classes will use ICT to teach students
practical skills such as e-filling and navigating the CBDT website.
Introduction, Constitutional Provisions & Basic Concepts of Income
MODULE 1
Under Income Tax Act, 1961
General understanding of Income Tax Law, A glance at the early practices of taxation, Concept
of Tax, and Allocation of taxing powers to union and state, Distribution of Legislative Powers
with special reference to Taxing Powers, legislative competence for taxation, residuary powers of
the union, Benefits of direct taxation, scheme of taxation, important definitions, concept of
previous year and assessment year, Tax v Fee (difference in concepts), application of quid pro
quo theory. Income Tax Law- Definitions: Income, Total Income, Agriculture income, Assessee,
Person, Assessment year, Previous Year, Capital Asset, Tax, Charge of Income Tax (Section 4),
agriculture income and its tax treatment, persons who are entitled to claim exemption , rationale
for exemption from tax etc. ( section 21(A) and 10(1), Provisions relating to concept and scope
of total income (section 5), residence in India in context of HUF, Individuals and Companies
(section 6), concept of place of effective management (POEM), its critical analysis and adverse
implications, and concept of notional income deemed to accrue or arise or received in India
under provisions of Section 7, 8, 9.
(This chapter would introduce the various important and relevant provisions of the Income Tax Act 1961 which
are frequently encountered in income tax and would also deal with various articles under the Indian Constitution
which enables the Central Government to enact income tax laws and amendments made every year to income tax
laws and their interpretations. Also other basic concepts such as charging provisions, scope of total income and
concept of residents under income tax would be dealt in detail)
Heads of Income MODULE 2
I. Income from salary (Sections 15-17)
(a) Salaries – Chargeability.
(b) Meaning of Salary;
(c) Perquisites;
(This would include definition of salary which includes perquisites and profit in lieu of salary and
the corresponding deductions under this head of income.
II. Income from House Property (Sections 22 to 27) –
(a) Ingredients of section 22 -
(b) Annual Value how to be determined –
(c) Deductions under section 24 –
(d) Deemed owner
(This head deals with basis of charge, annual value, computation of net annual value, deduction
and loss from housing property)
III. Profits and Gains of Business and Profession (Sections 28 to 44) –
(a)
Applicability
(b)
Deductions
Business Expenditure – Allowability
(c)
(d)
Tests of distinctions between Business expenditure and Capital expenditure [section
37(1)].
(Here the meaning of business or profession, deduction under this head of income vis-à-vis capital expenditure and
revenue expenditure would be dealt).
IV. Capital gains (Sections 45-55)
(a) Definition of capital assets [section 2(14)];
(b) Short term capital assets [section 2(42A)];
(c) Short term capital gains [section 2(42B)];
(d) Long term capital assets and Long term capital gain [section 2(29A) and 2(29B)];
1. Meaning of ‘Transfer’[section 2(47)];
2. Computation (section 45);
3. Transactions not amounting to transfer (sections 46 and 47);
4. Mode of computation (section 48);
(Heads of income will be discussed in detail. Income pertaining to salary, income from house property, income from
profession, business income and income from other sources will be broad topics of discussion. Allowable deduction
from various heads of income and particularly concept of revenue expenditure and capital expenditure in detail.
Concept of capital assets, what constitutes capital assets and their taxability, Difference between long term and
short term capital gains , what is excluded from capital assets, transfer of capital asset and resultant tax liability
would be broadly discussed.)
Clubbing of Income, Set Off, Carry Forward and Set Off of Losses MODULE 3
Concept of clubbing of income, what are the circumstances under which income can be clubbed
for assessment so as to claim exemption, persons who are entitled for benefits, Tax exemption
for losses, how it is calculated and what exemptions are allowed (section 70-74A), Deductions to
be made in computing Total Income (Section 80A-80GGC).
Administration and Procedure & Withholding Tax (Tax Deduction at
MODULE 4
Source)
(a) Best Judgment Assessment;
(b) Income Escaping Assessment.
This chapter will deal procedural aspects such as filing of returns of income (ROI), assessment
and reassessment, revisional powers of the commissioners, rectification of mistakes of orders,
appeals to Income Tax Appellate Tribunal (ITAT), High Court and Supreme Court Powers of
Income Tax Authorities. Provisions relating to search and seizure, powers of the revenue
officials and circumstances under which search and seizure can be done (Sections 132, 132A,
132B), tax deduction at source on various types of income like salaries, interest, dividends,
professional services, etc. would be discussed. Also, the consequences for failure to withhold
taxes would be briefly dealt.
Taxation of International Transactions MODULE 5
(a) Non-Resident and Foreign Companies.
(Provisions relating to taxation of foreign companies will be broad topic of discussion. Double taxation,
Tax Residency Certificate, Judicial Anti Avoidance Rules, Transfer Pricing and other issues related to
taxation of Trans National Companies operating in India will be discussed. Issues related to tax evasion
by MNC’s and Indian Legal response, recent and global trends).
(b) GAAR (General Anti Avoidance Rules, scope and implication of GAAR, the pros and cons of
introducing GAAR, Is India prepared for GAAR and whether control check is required on the tax
administration)
(c) Introduction to Transfer Pricing.
(Here the basic concepts of transfer pricing including the meaning of associated enterprise, international transaction,
arm length price etc. would be discussed).
Suggested Readings:
1. Direct Taxes Law Lexicon (Taxmann 2015).
2. Parthasarathi Shome, Taxation: Principles and Applications – A Compendium (3rd edn., Lexis
Nexis 2014).
3. T.N. Manoharan, Direct Tax Laws (Snowwhite Publications 2016).
4. K Chaturvedi and S.M. Pithisaria, Income Tax Law (Lexis Nexis)
5. Vinod K Singhania and Kapil Singhania, Direct Taxes: Law and Practice (61st edn., Taxmann
2019).
6. Ravi Gupta and Girish Ahuja, Fundamentals of Taxation (Bharat Publications)
7. V.P. Gaur and D.B. Narang, Income Tax: Law and Practice (Kalyani Publishers).
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