Q.1. What is assessment year ?
Ans. As per section 2(9) of Income tax Act, 1963 the year in which income of an assessee and his tax liability is assessed for the year in which income of assessee become taxable known as assessment year. In other words the year in which income of assessee become taxable known as assessment year. In other words the year which immediately succeeding the relevent previous year known as assessment year.
Q.2. What is Previous year ?
Ans. As per section 3, the year in which assessee eams his income and which from 1st of April and ending on 31st March of next year known as Previous year. This is a Uniform previous year for all the assessee and for all sources of income. In other words the year which is immediately preceding the assessment year known as previous year. In the case of a business or profession newly set up or a source of income newly coming into existence, and shall end on 31st March next i.e. with the end of the said financial year.
Q.3. What is Uniform Previous Year ?
Ans. With effect from Assessment year 1989-90. All assessees are required to follow the finance year as a previous year. A calendar year cannot be taken as previous year.
Q.4. What includes in person ?
Ans. Under section 2(31) the term “person” includes the following:
2. Hindu undivided family
3. Partnership firm
5. Association of person or Body of individuals
6. Local authority
7. Artificial Juridical person, if not Covered above
Explanation – An association of persons or body of individuals or a local authority or an artificial juridical person shall be deemed to be a person, whether or not such person or body or authority or juridical person was formed or established or incorporated with the object or deriving income, profit or gains.
Q.5. Who is assessee ?
Ans. A person who is liable to pay amount of tax or by other sum of money is payable under this act and Includes.
(i) Every person in respect of whom any proceeding under this act has been taken for the assessment of his income or of the income of any other person respect of which he is assessable or other loss sustained by him or by such other person.
(ii) Every person who is deemed to be an assessee under any provision of this Act.
(iii) Every person who is deemed to be assessee in default under any provision of this act.
Note: A person deemed to be an assessee included legal representative of a deceased, agent of a non-resident guardian of minor or manager of a lunatic or infant trustees and administrations etc.
Q.6. How to decide residential status of Individual ?
Ans. Basic Conditions.
Individual must be in India for the period of at least of 182 days or more in current previous year. Individual must be in India for the period of at least of 60 days or more in current previous year and 365 days in four preceding previous year which are
immediately preceding previous year which are immediately preceding the relevant previous year.
1. He has been in India for a period of 730 days in seven preceding previous year which are Immediately preceding the relevant previous year.
2. He has been resident in India at least 2 year out of 10 preceding year which are immediately Preceding the relevant previous year.
|Ordinarily resident:||A person who satisfy one of the Basic condition and Both
of additional condition.
|Not ordinarily resident:||A person who satisfy one of the Basic condition and one of
none of A.C.
|Non Resident India:||A person who doesn’t satisfy any Basic condition whether
satisfy additional condition or not.
Note: - However the basis condition of 60 days shall be substituted by 182 days for
(a) The Indian Citizen who leaves India during the previous year for employment outside Indian or as a member of the crew of an Indian ship.
(b) The foreign Citizen who has an status of Indian origin if comes to India during the
current previous year.
Q.7. How to decide Residential status of HUF?
1. Resident and ordinarily resident in India: - If Karta or manager of resident HUF satisfy both of additional conditions and control and management of the affairs is wholly or party situated in India during the relevant previous year.
2. Resident but not ordinarily in India: - If Karta or Manager of resident HUF does not satisfy both the additional conditions but control and management or the affairs is wholly or partly situated in India during the relevant previous year.
3. Non-Resident Indian: - If control and Management of its affairs is wholly situated
outside India during relevant Previous year.
Q.8. How to decide Residential status of Firm and AOP and every other Person ?
1. Resident in India: - If control and management of affairs is wholly or partly situated in India during the relevant previous year.
2. Non-Resident Indian: - If control and management of affairs is wholly situated outside India.
Q.9. How to decide Residential status of Company ?
1. If Company registered in India then always be treated as ordinarily resident.
2. If company registered outside India.
(a) Ordinarily Resident: - If management and control of its affairs situated wholly in India.
(b) Non-Resident India: - If M & C of its affairs situated wholly or partly outside India.
Q.11. How to decide tax liability or Incidence of Tax ?
Ans. Section 5
In order to understand the tax liability or incidence of tax, one must understand the meaning of “Indian income” and “Foreign income”.
There are following three treated as Indian Income: -
1. If income received in India during the previous year and at the same time it accrues in India during the previous year. (deemed to be accrued also consider for this purpose).
2. If income received in India during the previous year but it accrues outside India (deemed to be received also consider).
3. If income is received outside India during the previous year but it accrues in India during the previous year (deemed to be accrues also consider).
If the following tow conditions are satisfied then such income is foreign income: -
1. Income is not received in India (deemed to be received is also consider)
2. Income does not accrues in India (deemed to accrues also consider).