Income – Tax Law -Important Definitions

Important Definitions

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 2013-14 which commences on April 1, 2013 and ends on March 31,
2014. 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 : section 3
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 to the general rule that previous year’s income is taxable during the assessment year
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
Person : Section 2(31)
The term “person” includes:
1. an individual;
2. a 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.
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”.
Assessment [Section 2(8)]
This is the procedure by which the income of an assessee is determined by the Assessing Officer.