IMPORTANT DEFINITIONS
Under section 2 and 3
of the income tax act, 1961, definitions of important terms used on the act are:
1. Assessment
year:
Assessment
year means the period of twelve months commencing on the first day of April every
year and ending on 31st March of the next year. An assessee is
liable to pay tax on the income of the previous year during the next/ following
year. For example, during the assessment year 2020-2021, tax shall be paid for
the previous year 2019-2020.
2. Previous
year
·
Previous year means the financial
year immediately preceding the assessment year. Financial year begins on 1st April
and ends on 31st March.
·
In the case of newly set-up
business or profession or any other new source of income during the financial
year, the previous year will begin from the date of setting up of the new
business or profession or from the date of existence of new source of income
and end with the financial year. In this case, the 1st previous year
may be of less than 12 months.
·
In other words, the year in which
the income is earned is known as previous year the next year in which this
income is taxable id know as assessment year. Income tax is charged on the total
income of the previous year at the rates prescribed by the relevant financial
act for the assessment year.
3. Person:
“Person”
includes the following:
·
An individual means a person a
natural person or a human being, who may be male, female, minor child or a lunatic.
·
A Hindu undivided family means a
Hindu family which consists of all persons lineally descended from a common ancestral including their wives and unmarried daughters.
· A company may be defined as an artificial person created by law with perpetual succession, a common seal and shares carrying limited liability.
·
a firm means a partnership firm; which is
defined under the partnership act.
·
an association of person or body of
individuals whether incorporated or not,
·
a local authority
·
Every artificial juridical person,
not falling within any of the preceding sub clauses.
4. Assessee
Under
income tax act, an assessee means a person:
ü Who
is liable to pay any tax; or
ü Who
is liable to pay any other sum of money under this act; or
ü In
respect of whom any proceeding under this act has been taken for the assessment
of his income or assessment of fringe benefits; or
ü In
respect of whom any proceeding under this act has been taken for assessment of
the income of any other person in respect of which he is assessable; or
ü In
respect of whom any proceeding under this act has been taken for the amount of
refund due to him or to such other person; or
ü Who
is deemed to be an assessee under any provision of this act; or
ü Who
is deemed to be an assessee in default under any provision of this act
Deemed
assessee
A
person, who is deemed to be an assessee for some other person, is called
“Deemed Assessee”. For example, after the death of a person, his legal
representative will be treated as an assessee for that income of the deceased
on which tax has not been paid by the deceased before his death; a person representing a foreigner or a minor or a lunatic is treated as a n assessee
for the income of such foreigner or minor or lunatic.
Assessee
in default
When
a person is responsible for doing any work under the act and he is called an
“assessee in default”. For example, if a person while making any payment to
another person, is liable to deduct income tax thereon at source, does not
deduct income tax there from, or having deducted it, does not deposit it in the
government treasury, he will be treated as an assessee in default for that
income tax.
Initiation
of proceeding
The
proceeding must be initiated under the provisions of the act. If an enquiry
letter is sent by the department to a person without reference to a specific
section of the act, it is no proceeding under the act and the person cannot be
said to be an assessee for income tax purposes.
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