09-16-2010, 07:17 PM
Dear Fawad,
At the outset, I appreciate your query; Since after a long time there has a technical query been arisen by a member in Tax Forum, so i am bound to appreciate the same.
Undoubtedly, There is a Contradiction in between the two said sections, however, if it is assumed that the transaction has been taken place between resident individuals, then section 24 should be applied and any gain / royalty will be treated as "income from other source" and the same should be clubbed with total income to arrive at the taxable income. In such a case, the rate to be applied depends on the proportion of individual's Salary income and business income.
However, if the principle activity of the resident individual is to deal in the business of royalty, then section 54 will be applicable, and the income earned though royalty will be treated as business income and accordingly rate for business individuals will be applicable.
Let me know if confusion still exists.
Best Regards,
Faisal.
At the outset, I appreciate your query; Since after a long time there has a technical query been arisen by a member in Tax Forum, so i am bound to appreciate the same.
Undoubtedly, There is a Contradiction in between the two said sections, however, if it is assumed that the transaction has been taken place between resident individuals, then section 24 should be applied and any gain / royalty will be treated as "income from other source" and the same should be clubbed with total income to arrive at the taxable income. In such a case, the rate to be applied depends on the proportion of individual's Salary income and business income.
However, if the principle activity of the resident individual is to deal in the business of royalty, then section 54 will be applicable, and the income earned though royalty will be treated as business income and accordingly rate for business individuals will be applicable.
Let me know if confusion still exists.
Best Regards,
Faisal.
