![IMPORTANT DEFINITIONS
Assessment [Section 2(8)]
This is the procedure by which the income of an assessee is determined by the
Assessing Officer. The process of calculation of tax liability is known as Assessment.
It can be Self-Assessment or Re-Assessment.
Assessee : Section 2(7)
Every person in respect of whom, any proceeding under the act has been taken for the
assessment of his income or of the income of any other person in respect of which he is
assessable or of the loss sustained by him or by such other person or the amount of refund due
to him or to such other person may be called an assessee.
Deemed Assessee: A person who is deemed to be an assessee for some other person is
called “Deemed Assessee”.
Assessee In Default: When a person is responsible for doing any work under the Income
Tax Act and he fails to do it, he is called an “Assessee in default”.
Person : Section 2(31)
The term “person” includes:
1.An individual;
2. An Hindu undivided family;
3.A company;
4.A firm;
5.An association of persons or a body of individuals , whether incorporated or not;
6.A local authority; and
7. Every artificial juridical person not falling with in any of the preceding categories.
Assessment Year :Section 2(9)
“Assessment year” means the period starting from April 1 and ending on March 31 of
the next year. Eg: Assessment year 2016-17 which commences on April 1, 2016 and ends on
March 31, 2017. Income of previous year of an assessee is taxed during the assessment year at
the rates prescribed by the relevant Finance Act for tax rates.
Previous year : section3
Income earned in a particular 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. In other words, previous year is the financial year immediately proceeding
the assessment year. Exceptions 9 to the general rule that previous year’s income is taxable
during the assessment year](https://image.slidesharecdn.com/o6twc2m8rlgxjpzfli1c-income-tax-notes-240228101400-c0a42f2e/85/Income_Tax-Basic-Definition_-B-Com-students-docx-1-320.jpg)
![Additional Conditions:
(i) He has been resident in India in at least 2 out of 10 previous years [according to
basic condition noted above] immediately preceding the relevant previous year.
AND
(ii) He has been in India for a period of 730 days or more during 7 years immediately
preceeding the relevant previous year.
Resident
An individual is said to be resident in India if he satisfies any one of the basic conditions.
Resident And Ordinarily Resident
An individual is said to be resident and ordinarily resident in India if he satisfies any one
of the basic conditions and both of the additional conditions.
Resident But Not Ordinarily Resident Sec 6(6)
An individual is said to be resident but not ordinarily resident in India if he satisfies any
one of the basic conditions but not satisfies both of the additional conditions.
Non-Resident Sec 2(30)
An individual is a non-resident in India if he satisfies none of the basic conditions.](https://image.slidesharecdn.com/o6twc2m8rlgxjpzfli1c-income-tax-notes-240228101400-c0a42f2e/85/Income_Tax-Basic-Definition_-B-Com-students-docx-3-320.jpg)
Income_Tax- Basic Definition_ B.Com students docx
- 1. IMPORTANT DEFINITIONS Assessment [Section 2(8)] This is the procedure by which the income of an assessee is determined by the Assessing Officer. The process of calculation of tax liability is known as Assessment. It can be Self-Assessment or Re-Assessment. Assessee : Section 2(7) Every person in respect of whom, any proceeding under the act has been taken for the assessment of his income or of the income of any other person in respect of which he is assessable or of the loss sustained by him or by such other person or the amount of refund due to him or to such other person may be called an assessee. Deemed Assessee: A person who is deemed to be an assessee for some other person is called “Deemed Assessee”. Assessee In Default: When a person is responsible for doing any work under the Income Tax Act and he fails to do it, he is called an “Assessee in default”. Person : Section 2(31) The term “person” includes: 1.An individual; 2. An Hindu undivided family; 3.A company; 4.A firm; 5.An association of persons or a body of individuals , whether incorporated or not; 6.A local authority; and 7. Every artificial juridical person not falling with in any of the preceding categories. Assessment Year :Section 2(9) “Assessment year” means the period starting from April 1 and ending on March 31 of the next year. Eg: Assessment year 2016-17 which commences on April 1, 2016 and ends on March 31, 2017. Income of previous year of an assessee is taxed during the assessment year at the rates prescribed by the relevant Finance Act for tax rates. Previous year : section3 Income earned in a particular 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. In other words, previous year is the financial year immediately proceeding the assessment year. Exceptions 9 to the general rule that previous year’s income is taxable during the assessment year
- 2. In the following situations income of an assessee is liable to be assessed to tax in the same year in which he earns the income: a.Income of non-residents from shipping; b.Income of persons leaving India either permanently or for a long period of time; c.Income of bodies formed for short duration; d .Income of a person trying to alienate his assets with a view to avoiding payment of tax; e. Income of a discontinued business. Residential Status And Tax Incidence Tax incidence on an assessee depends on his residential status. The residential status of an assessee is determined with reference to his residence in India during the previous year. Therefore, the determination of the residential status of a person is very significant in order to find out his tax liability. Residence and citizenship are two different things. The incidence of tax has nothing to do with citizenship Residential Status of an Individual As per section 6, an individual may be (a) Resident and ordinarily resident in India, (b) Resident but not ordinarily resident in India, or (c) Non-resident in India. The following are the two sets of conditions for determining the residential status of an individual: Basic conditions : 1. He is in India in the previous year for a period of 182 days or more (or) 2. He is in India for a period of 60 days or more during the previous year and has been in India for a period of 365 days or more during 4 years immediately preceding the previous year. Note: In the following two cases, an individual needs to be present in India for a minimum of 182 days or more in order to become resident in India: (a) An Indian citizen who leaves India during the previous year for the purpose of taking employment outside India or an Indian citizen leaving India during the previous year as a member of the crew of an Indian ship. (b) An Indian citizen or a person of Indian origin who comes on visit to India during the previous year (a person is said to be of Indian origin if either he or any of his parents or any of his grandparents was born in undivided India).
- 3. Additional Conditions: (i) He has been resident in India in at least 2 out of 10 previous years [according to basic condition noted above] immediately preceding the relevant previous year. AND (ii) He has been in India for a period of 730 days or more during 7 years immediately preceeding the relevant previous year. Resident An individual is said to be resident in India if he satisfies any one of the basic conditions. Resident And Ordinarily Resident An individual is said to be resident and ordinarily resident in India if he satisfies any one of the basic conditions and both of the additional conditions. Resident But Not Ordinarily Resident Sec 6(6) An individual is said to be resident but not ordinarily resident in India if he satisfies any one of the basic conditions but not satisfies both of the additional conditions. Non-Resident Sec 2(30) An individual is a non-resident in India if he satisfies none of the basic conditions.