Section 2(9) of the Income Tax Act 1961 refers to the
assessment year.
ASSESSMENT
YEAR:
This is a period of 12 months commencing from 1st April
and ending on 31st March 2003. Thus it is spread over to calendar years. The
assessment year 2003-2004 means and covers the period from 1st April 2003 to 31st
March 2004.The importance of the assessment year is that which law is to be applied for computation of Income; allied procedural matters and the rates to
be applied will be as per laws in force as on first day of the relevant
assessment year. During the assessment year the income returns filed for the
previous year will be assessed by the department.
PREVIOUS
YEAR:
Section 2(34) of the Income tax act 1961 defines the
previous year. It is a financial year immediately proceeding the assessment
year. This covers 12 months spread over two calendar years commencing from 1st
April and ending on 31st March.
The previous year for the assessment year 2003-2004 is 2002-
2003, starting from 1st April 2002 and ending on 31st March 2003. But it need
not necessarily cover 12 months in case income earned for the first time from
any source; but always ends as on 31st March. If one get a salaried job from 1st
Oct 2002, the previous year for salary income starts from 1st October 2002 and
ends on 31st March 2003.
Often, the assessment year and previous years are
confusing. Simply note that your income of this financial year (2003-2004) will
be assessed and taxed by the department during next financial year(2004-2005),which is called assessment year.
PERSON:
- The word person has a wide meaning under income tax act which is defined under section 2(31) it includes:
- An individual
- A Hindu undivided family
- A company
- A firm
- An association of person or a body of individuals
- A local authority
- Every other artificial judicial person (Trust, deity)
RESIDENTIAL
STATUS:
Residential Status determines the scope of taxable
income. The status has to be determined as per the procedure prescribed in
section 6 of the income tax act. Residential Status is broadly of three types:
- Resident and Ordinarily resident
- Resident but not Ordinarily Resident
- Non-resident.
HEADS
OF INCOME:
Income of any kind will be included under anyone of
following categories;
- Salaries
- Income from House Property
- Profits and gains from business or profession.
- Capital gains
- Income from other sources.
This classification is very important, since an income to
be included under a particular head cannot be included under another head.
Rents received from house should be included under income from house property
but not under income from other sources.
Income from house and capital gains are relevant in case
of house property. Section 22-27 deal with income house property and section
45-55A deal with capital gains.
For more details,
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