Special areas of income from business under Section 46 | ITA-2023

Special areas of income from business under Section 46

 

Special areas of income from business under Section 46 | Bangladesh Income Tax Act -2023:

As per section-46(ITA-2023),

Special areas of income from business. — 

(1) Without prejudice to the provisions of section 45, the provisions of this section shall, in special cases, apply to the computation of income from business.

(2) If any asset used in the business of the assessee for which the income is being computed is sold in any income year, the income from such sale proceeds shall be as follows, namely: —

 

Serial No.	Sales Proceeds	Amount of Income
(1)	(2)	(3)
1.	If the sale proceeds exceed the acquisition cost of the asset	The amount equal to A-B shall be deemed as income of the concerned assessee for that income year, classifiable under the head Capital Gain'.   The amount equal to that of B-C shall be deemed to be income of the concerned assessee for that income year, classifiable under the head
2.	If the sale proceeds do not exceed the acquisition cost of the asset, but exceeds the written-down value	The amount equal to A-C shall be deemed as income under the head 'income from business' of the concerned assessee in the said income year.

(3) Where any amount received as insurance, salvage or compensation in any income year in respect of any asset which has been used by the assessee for business purposes is discarded, demolished or destroyed and the amount of such moneys exceed the written down value of the asset, the amount of income in such case shall be as follows, namely:

 

Serial No.	[Sale Proceeds]	Amount of Income
(1)	(2)	(3)
1.	If the amount from insurance, salvage or compensation exceeds the acquisition value of the asset	The amount equal to A-B shall be deemed as income of the concerned assessee for that income year under the head 'Capital gains'; The amount equal to B-C shall be deemed as income of the concerned assessee for that income year under the head 'Income from Business'.
2.	If the amount from insurance, salvage, or compensation  amount does not exceed the acquisition value of the asset, but exceeds the written-down value	Where A>C, the amount equal to A-C shall be deemed as income of the concerned assessee for the income year under the head 'Income from business'. Where A<C, the amount equal to C-A shall be allowed as expenditure under section 49 in the computation of 'Income from business' of the concerned assesses in the said income year.

(4) As per column (2) of the table in sub-sections (2) and (3), if the difference between the proceeds of sale or, as the case may be, the amount received for insurance, salvage or compensation against the asset and the written down value is negative, the amount shall be deemed to have been spent under the head ‘income from business’ and shall be included under the allowable general deduction.

(5) In the table of sub-sections (2) and (3)—

A= Amounts received for insurance, salvage or compensation against assets 2[or sale proceeds],,

B= Acquisition value of assets, and

C= The calculated written-down value of the asset after allowing

Depreciation under the Third Schedule.

(6) Where during any income year any assessee, being an exporter, transfers the whole or any part of the export quota allocated in his favor by the Government to any other person, the proportionate export value of such transferred quota shall be deemed to be income classifiable under the head ‘Income from business’ of the assessee in that income year.

(8) If, in computing income under this Chapter for any income year, any trading liability has been accounted for by the assesses is taken into account and—

(a) In any subsequent income year, the assessee receives any benefit in respect of the trading liability, the value of that benefit shall be deemed to be income from business of the assessee in the income year in which the benefit is received;

(b) If the trading liability or any part thereof remains unpaid within 3 (three) years after the end of the income year in which the said trading liability has been accounted for, then the said unpaid trading liability shall be classified as Income from Business of the assessee in the income year following the end of the said 3 (three) years:

Provided that if any such trading liability, which has been treated as income, is paid in any subsequent year, such amount so paid shall be deducted in computing the income of the assessee in the income year in which the payment was made.

(9) If in any income year a loss, bad debt or any expense is allowed in computing income under this Chapter and if in any subsequent income year, the assesses receives any benefit in respect of such deducted loss, bad debt or expense, the value of that benefit shall be classified as income from business of the assesses in the income year in which the benefit is received.

(10) In the case of filing of return under section 180, any deficiency in the initial capital shown at any time within 5 (five) years after the year in which the return is filed shall be treated as income from business.

(11) In computing the income of a 2[finance company], interest or profit income on loans classified as bad debts or doubtful debts by Bangladesh Bank shall be classified as income from business 1[finance company] in the income year in which it is credited in profit and loss account or in the income year in which it is actually received, whichever is earlier between the two.

(12) For the purposes of this section,—

 

(a) The business in which the asset is used before the sale shall be deemed to have been carried on by the assessee in the income year to which the sale of the asset relates;

 

(b) If an asset is exported or transferred outside Bangladesh after being used in the assessor’s business, the date of such export or transfer shall be deemed to be the date of sale of the asset and the purchase price of the asset shall be deemed to be its sale proceeds.

Frequently Asked question(FAQs):

1. What are special areas of income from business under Section 46?

Special areas of income from business under Section 46 refer to specific income categories treated differently for taxation under the Bangladesh Income Tax Act 2023.

2. Why is Section 46 important for business taxation in Bangladesh?

Section 46 ensures proper classification of business income, helping taxpayers apply correct tax rules and avoid penalties.

3. Which types of income are included in special business income areas?

It includes income from incentives, subsidies, special contracts, or government-approved sectors with unique tax treatment.

4. How is tax calculated on special business income under Section 46?

Tax is calculated based on specific provisions outlined in the law, which may differ from standard business income rules.

5. Are there any exemptions under Section 46 of the Income Tax Act 2023?

Yes, certain incomes may qualify for exemptions or reduced tax rates depending on government policies and sector-specific benefits.

6. Who should be concerned about Section 46 in Bangladesh?

Business owners, tax professionals, and companies operating in special sectors should understand Section 46 for accurate tax compliance.