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Note On Unit 1

The document outlines key definitions and concepts related to income tax assessment in India, including the assessment process, assessment year, previous year, business, company, gross total income, and permanent account number (PAN). It explains that assessment determines tax payable, with the assessment year running from April 1 to March 31, and defines previous year as the year income is earned. Additionally, it details the definition of business and company as per the Income Tax Act, along with the components of gross total income.

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3 views3 pages

Note On Unit 1

The document outlines key definitions and concepts related to income tax assessment in India, including the assessment process, assessment year, previous year, business, company, gross total income, and permanent account number (PAN). It explains that assessment determines tax payable, with the assessment year running from April 1 to March 31, and defines previous year as the year income is earned. Additionally, it details the definition of business and company as per the Income Tax Act, along with the components of gross total income.

Uploaded by

dvwreerrferfe
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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4.

Assessment: Sec 2(8)

Assessment is the process of determining the tax payable by an assessee.


This is done in two stages i.e.
a] Assessing the taxable income or loss ,if any and
b] Finding out the tax payable by the assessee or refundable to the assessee.
Sec 2(8) defines assessment as “assessment includes reassessment.”
Apart from original assessment, the definition intends to include reassessment in certain cases
which are reopened as per Income Tax Act.
5. Assessment year: Sec. 2(9)
Assessment year means a period of 12 months commencing from 1st day of April every year
and end on 31st March next year. For example, the Assessment Year 2018-2019 commences
on 1stApril, 2018 and ends on 31st March, 2019.
The assessment year is the year during which the income of the previous year is assessed to
tax. The tax is charge for every assessment year on the total income of previous year
Assessment year is also called as a financial year.
6. Previous Year: Sec.3

Income earned in a year is taxable in the next year. The year in which income is earned is
known as previous year and the next year in which income is taxable is known as assessment
year.
e.g. Income earned by an individual during the previous year 2018-19 is taxable in the
immediately following assessment year 2019-20 at the rates applicable for the assessment year
2011-12. This rule is applicable in all cases.
Uniform Previous Year- From the assessment year 1989-90 onwards, all assessees are
required to follow financial year (i.e. April 1 to March 31) as previous year. This uniform
previous year has to be followed by all assessees and it is applicable to all sources of income.

Previous Year in the Case of Newly Set-up Business /Profession-

In the case of a newly set-up business/profession or in the case of a new source of income,
during the financial year, the previous year shall be determined as follows-
1. The first previous year shall commence on the date of setting up of the business /profession
(or, as the case may be, the date on which the source of income newly comes into existence)
and end on the immediately following March 31. Thus, in the case of a newly set-up
business/profession or new source of income, the first previous year is a period of 12 months
or less than 12 months. It can never exceed 12 months.
2. The second and subsequent P.Ys shall always be from April to March (i.e. 12 months).

7. Business: Sec 2(13)

As defined in sec 2(13) of the Income Tax Act, “Business includes any trade, commerce or
manufacture or any adventure or concern in the nature of trade, commerce or manufacture.”
It covers all types of occupations carried on by a person with a view to earn profit. Production
of goods from raw material, buying and selling of goods with the intention to make profit and
providing services to others are different form of businesses.

The profits earned there from are chargeable to tax under the head “Profit & Gains of Business
or Profession.” Any activity carried on with a view to earn profit is called as business. Even a
single transaction conducted during the year, with a view to earn profit is business.

8. Company: Sec 2(17)

Section 2(17) of Income Tax Act 1961 defines company as under.


Company means
1. Any Indian Company
2. Any body corporate incorporated by or under the law of a country outside India.
(Foreign company)
3. Any institution, association or body which is or was assessable or was assessed as a
company under Income Tax Act 1922 or the Income Tax Act 1961, for assessment year
1970-71 or before [Historical company]
4. Any institution, association or body which is declared by general or special order of
C.B.D.T. [Central Board of Direct Taxes] to be a company. [Temporary Company].

9. GROSS TOTAL INCOME Sec. 80(B)(5)

Gross Total Income is defined as the total income computed in accordance with provisions
of the Act but before making any deductions under chapter VI-A. Gross total income is the
aggregate of income from various sources under the following heads of income,

 Income from salaries


 Income from house property
 Income from profit/gains of business or profession
 Income from capital gains
 Income from other sources

10. Permanent Account Number (PAN)-u/s 139A.

A permanent account number is a ten-character alphanumeric identifier, issued in the form of


a laminated "PAN card", by the Indian Income Tax Department, to any "person" who applies
for it or to whom the department allots the number without an application.

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