(a) Mrs. Y (59 years) receives ₹ 7,90,000 as basic pay and ₹ 1,18,000 as bonus during the previous year 2023 – 24. Besides, she…

(a) Taxable income of Mrs. Y for AY 2024‑25 (regular regime) and Gross Qualifying Amount under Section 80C

"Regular tax regime" is read as the old (normal) regime, since the question asks for the Section 80C deduction, which is not available under the default regime of Section 115BAC. The taxable income is obtained by first building the gross salary income under Section 17 (including the perquisites under Section 17(2)), adding the house‑property income to reach the Gross Total Income (GTI), and then deducting the Section 80C amount, which is the lesser of the Gross Qualifying Amount (GQA) and ₹1,50,000. The commission is 4% of the ₹90,00,000 turnover, i.e. ₹3,60,000. The recognised provident fund (RPF) base is basic pay plus DA plus commission (₹7,90,000 + ₹52,000 + ₹3,60,000 = ₹12,02,000); the employer's statutory 12% is ₹1,44,240, so the excess of the ₹2,24,240 actually contributed, namely ₹80,000, is taxable. The interest credited of ₹40,000 at 10% implies a fund balance of ₹4,00,000; the exempt interest at 9.5% is ₹38,000, leaving ₹2,000 taxable. Child education allowance received is (₹450 + ₹80) × 12 = ₹6,360, against an exemption of the lower of the allowance and ₹100 per child per month (₹1,200 for the daughter + ₹960 for the son = ₹2,160), so ₹4,200 is taxable. For the 1800 cc car, where the employer bears all running and maintenance costs, the perquisite is a flat ₹2,400 per month irrespective of the extent of personal use, i.e. ₹2,400 × 12 = ₹28,800. The driver, provided from 1 November 2023 (five months), is valued at ₹900 per month, i.e. ₹4,500. Total perquisite is therefore ₹33,300.

Computation of total income (₹)

• Basic pay: 7,90,000
• Bonus: 1,18,000
• Dearness allowance: 52,000
• Commission (4% of 90,00,000): 3,60,000
• Employer's RPF contribution in excess of 12% of salary: 80,000
• RPF interest in excess of 9.5%: 2,000
• Child education allowance, taxable part: 4,200
• Perquisite (car 28,800 + driver 4,500): 33,300
• Gross salary: 14,39,500
• Less: standard deduction u/s 16(ia): 50,000
• Income from salary: 13,89,500
• Income from house property: 1,65,000
• Gross Total Income: 15,54,500

For Section 80C, the eligible items are: own RPF ₹3,36,360; life insurance on self capped at 10% of the ₹80,000 sum assured, i.e. ₹8,000; NSC ₹11,000; life insurance on the son ₹4,000; housing‑loan principal ₹21,000; and tuition fees for two children ₹1,10,000. The premium on the mother is excluded because Section 80C covers only self, spouse and children (a child need not be dependent). The GQA is therefore ₹4,90,360, but the deduction is restricted to ₹1,50,000.

Conclusion: Taxable income = ₹15,54,500 − ₹1,50,000 = ₹14,04,500, and the Gross Qualifying Amount under Section 80C is ₹4,90,360 (deduction allowed ₹1,50,000).

(b) Conditions for additional depreciation under Section 32(1)(iia)

Additional depreciation is a one‑time incentive under Section 32(1)(iia) of the Income Tax Act, 1961, intended to encourage the adoption of new plant and machinery and the modernisation of industry; it permits an extra 20% depreciation on the actual cost of a new asset over and above the normal written‑down value (WDV) depreciation. The conditions that must be satisfied are: (i) the plant or machinery must be new, meaning it has not been used by any other person; (ii) it must be owned by the assessee who claims the depreciation; (iii) it must be installed and put to use during the relevant previous year; (iv) the assessee must be engaged in the manufacture or production of any article or thing, or in the generation, transmission or distribution of power, and the asset must be used in that business; (v) the incentive does not extend to ships, aircraft, office appliances or road‑transport vehicles; and (vi) where the asset is put to use for less than 180 days in the year of acquisition, additional depreciation is restricted to 10% of the actual cost in that year, and the balance 10% is allowed in the next year. It is also not allowed on second-hand machinery, machinery installed in an office or residential accommodation (including a guest house), or machinery whose whole cost is allowed as a deduction in one year, and it is not available to assessees opting for the concessional regimes under Sections 115BAA, 115BAB or 115BAC.

Detailed example. A manufacturing company purchases a new CNC machine for ₹50,00,000 and puts it to use on 1 October 2023, so it is used for six months (183 days, i.e. not less than 180 days) and is owned, new and installed. The additional depreciation is 20% of ₹50,00,000 = ₹10,00,000, claimed in full in that year. Normal WDV depreciation is computed separately on the actual cost of ₹50,00,000; at a 15% rate this gives 15% × ₹50,00,000 = ₹7,50,000. The total depreciation charge for the year is therefore ₹10,00,000 + ₹7,50,000 = ₹17,50,000, which is deducted from the business income and materially lowers the tax outgo while improving cash flow. Had the machine been used for only four months (under 180 days), the additional depreciation would have been only 10%, i.e. ₹5,00,000, in that year, with the remaining ₹5,00,000 claimed in the next year.

Conclusion: Additional depreciation is thus a conditional, front‑loaded relief that rewards the acquisition and early use of new, owned, business‑used plant and machinery, subject to the 180‑day rule and the listed exclusions.

(c) Audit checklist for non‑profit organisations and its contrast with business audit

The audit of a non‑profit making organisation (NPO) differs in purpose from a commercial audit because the entity exists to fulfil a charitable or social mission rather than to maximise profit; the auditor's central question is therefore whether the funds were applied to the objects for which they were received, not whether a true and fair profit was earned. A smooth and effective NPO audit should follow a structured checklist across several dimensions. First, the governing instrument and registrations: the auditor verifies the trust deed or memorandum of association and confirms compliance with its provisions, and checks the validity of the 12AB (income‑tax exemption) and 80G (donor‑deduction) registrations, since loss of either has direct tax consequences. Second, fund accounting and donor utilisation: the audit must distinguish restricted (earmarked) funds from unrestricted funds and trace that money received for a specific project was actually spent on that project, with supporting vouchers. Third, statutory and regulatory compliance: for NPOs receiving foreign contributions, compliance with the Foreign Contribution (Regulation) Act is examined, and it is ensured that at least 85% of the income is applied to charitable purposes as required by law, with any accumulation properly justified. Fourth, internal controls and documentation: the auditor reviews the bank reconciliations, the custody of securities, the authorisation of payments and the completeness of the records of donors and beneficiaries. Fifth, reporting: a trust or institution whose income before exemption exceeds the basic exemption limit must get its accounts audited and file the audit report in Form 10B or 10BB, and the auditor checks that anonymous donations, corpus donations and accumulations under Section 11(2) are correctly treated.

These points contrast sharply with the audit of a modern business organisation. In a business audit the objective is the true and fair view of profit and the going‑concern assumption, equity is examined as shareholders' funds, and performance is judged by return on investment and profit margins under commercial accounting standards. In an NPO audit, by contrast, the focus is on the application of funds and adherence to the trust deed, the balance sheet presents various funds and reserves held for specific causes rather than shareholder equity, and performance is measured by the impact of social programmes and the efficiency of fund utilisation, guided by the ICAI guidance notes on non‑profit entities rather than purely commercial standards.

Conclusion: An NPO audit is therefore a purpose‑driven, compliance‑heavy exercise centred on the correct application of restricted funds and statutory registrations, whereas a business audit is a profit‑ and equity‑centred exercise; a competent auditor must shift from a value‑creation mindset to a fund‑utilisation and accountability mindset when auditing a non‑profit.