IMPORTANT DEFINITIONS
In order to understand the provisions of the Act, one must have a thorough knowledge of the
meanings of certain key terms like ‘person’, ‘assessee’, ‘income’, etc. To understand the meanings
of these terms we have to first check whether they are defined in the Act.
Terms defined in the Act: Section 2 gives definitions of the various terms and expressions used
therein. If a particular definition is given in the Act itself, we have to be guided by that definition.
Terms not defined under the Act: If a particular definition is not given in the Act, reference can
be made to the General Clauses Act or dictionaries.
Students should note this point carefully because certain terms like “dividend”, “transfer”, etc. have
been given a wider meaning in the Income-tax Act than they are commonly understood.
Some of the important terms defined under section 2 are given below:
(1) Assessee [Section 2(7)]
“Assessee” means a person by whom any tax or any other sum of money is payable under this
Act. In addition, it includes –
• Every person in respect of whom any proceeding under this Act has been taken for the
assessment of
-his income; or
-assessment o fringe benefits; or
- the income of any other person in respect of which he is assessable; or
- the loss sustained by him or by such other person; or
the amount of refund due to him or by such other person.
• Every person who is deemed to be an assessee under any provision of this Act;
• Every person who is deemed to be an assessee-in-default under any provision of this Act.
(2) Assessment [Section 2(8)]
This is the procedure by which the income of an assessee is determined by the Assessing Officer.
It may be by way of a normal assessment or by way of reassessment of an income previously
assessed.
(3) Person [Section 2(31)]
The definition of ‘assessee’ leads us to the definition of ‘person’ as the former is closely connected
with the latter. The term ‘person’ is important from another point of view also viz., the charge of
income-tax is on every ‘person’.
The definition is inclusive i.e. a person includes,
(i) an individual,
(ii) a Hindu Undivided Family (HUF),
(iii) a company,
(iv) a firm,
(v) an Association of persons (AOP) or a body of individuals (BOI), whether incorporated or not,
(vi) a local authority, and
(vii) every artificial juridical person e.g., an idol or deity.
In order to understand the provisions of the Act, one must have a thorough knowledge of the
meanings of certain key terms like ‘person’, ‘assessee’, ‘income’, etc. To understand the meanings
of these terms we have to first check whether they are defined in the Act.
Terms defined in the Act: Section 2 gives definitions of the various terms and expressions used
therein. If a particular definition is given in the Act itself, we have to be guided by that definition.
Terms not defined under the Act: If a particular definition is not given in the Act, reference can
be made to the General Clauses Act or dictionaries.
Students should note this point carefully because certain terms like “dividend”, “transfer”, etc. have
been given a wider meaning in the Income-tax Act than they are commonly understood.
Some of the important terms defined under section 2 are given below:
(1) Assessee [Section 2(7)]
“Assessee” means a person by whom any tax or any other sum of money is payable under this
Act. In addition, it includes –
• Every person in respect of whom any proceeding under this Act has been taken for the
assessment of
-his income; or
-assessment o fringe benefits; or
- the income of any other person in respect of which he is assessable; or
- the loss sustained by him or by such other person; or
the amount of refund due to him or by such other person.
• Every person who is deemed to be an assessee under any provision of this Act;
• Every person who is deemed to be an assessee-in-default under any provision of this Act.
(2) Assessment [Section 2(8)]
This is the procedure by which the income of an assessee is determined by the Assessing Officer.
It may be by way of a normal assessment or by way of reassessment of an income previously
assessed.
(3) Person [Section 2(31)]
The definition of ‘assessee’ leads us to the definition of ‘person’ as the former is closely connected
with the latter. The term ‘person’ is important from another point of view also viz., the charge of
income-tax is on every ‘person’.
The definition is inclusive i.e. a person includes,
(i) an individual,
(ii) a Hindu Undivided Family (HUF),
(iii) a company,
(iv) a firm,
(v) an Association of persons (AOP) or a body of individuals (BOI), whether incorporated or not,
(vi) a local authority, and
(vii) every artificial juridical person e.g., an idol or deity.
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