CAF-2 · Chapter 10 · Question 14 of 15
In computing income under the head "Income from Other Sources", which of the following rules applies to the deduction of expenditures?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) C) Expenditures paid for earning Income from Other Sources are allowed as deductions on a 'paid basis'.
Explanation
In computing "Income from Other Sources", any expenditure paid for earning this income (other than capital expenditure) is allowed as a deduction. Because the basis of chargeability is 'receipt basis', the basis for the allowability of deductions is strictly 'paid basis'.
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