Important definitions given by

income tax act

Assessment year
• The term assessment year is considered very
important in the study of income tax. The income tax
is imposed on the total income of an assessee during
assessment year related with previous year income.

• As per sec 2(9) of income tax act “assessment year

mean the period of twelve months commencing from
1st April of every year and end of 31st march of the next
year.
• Our assessment year is 2023-24
Previous year
• The year in which assessee earns income is
known as previous year.
• Previous year is a period of maximum 12 month
which will certainly end on 31 st march every
year(prior to assessment year.

• Our previous year is 2022-23.

Exception of general rule of previous year

1. Income of non residents from shipping business

(sec 172)
2. Income of person leaving India (sec 174)
3. Formation of AOP and BOI or an artificial person
to fulfill specific aim (sec 174A)
4. Assessment of person transferring property with a
view to avoid tax (sec 175)
5. Discontinued business or profession(sec176)
Person
As per income tax act 1961 sec 2(31) person includes-
1. An individual
2. A Hindu Undivided Family
3. A Company
4. A Firm
5. An AOP or BOI
6. A local authority (municipality)
7. Any artificial juridical person created by law
(ICAI, Bar Council , university)
ASSESSEE [SEC 2(7)]
• One who pay income tax or is liable to pay income tax on the income
earned by him in the previous year.

• One who is liable to pay any other mount such as interest and
penalty along with income tax.

• Every person in respect to whom any proceeding has been taken for
the assessment of his income.

• A person who is deemed to be an assessee.

• A person who is deemed to be an assessee in default.

Deemed Assessee
• A ‘deemed assessee’ is liable to pay income
tax on income or loss of another person. For
example legal representative, who inherits the
property on the death of a person , is deemed
assessee in respect of hiss assessment.
Assessee in Default
• Assessee in default is a person who has failed to
fulfill his statutory obligation as per the income
tax act such as not paid taxes to the government
or not file his income tax return.
Income
• The term Income has not been defined in the
income tax act1961. under sec 2(24) the term
income includes the following:-
• Profit and gains
• Dividend
• Salary
• Perquisites
• Commission
• Capital gain ,Casual income etc.
Gross total Income
• Income from salary • xxxxxxxxxx
• Income from house • xxxxxxxxxx
property
• Income from business • xxxxxxxxxxxx
and profession
• Income from capital • xxxxxxxxxx
gain
• Income from other • xxxxxxxxxxx
source
• xxxxxxxxxxx
• Gross total income
Total income
• Computation of total income deduction u/s 80C
to 80U will be deducted from gross total income.
It is also known as Net Taxable Income.
Casual Income
• Income received unexpectedly , all of a sudden or simply
because of luck which is of a non- recurring nature is
called casual income. Casual income is fully taxable.

• For example :- money found lying on road, winning from

lottery, horse race , crossword , puzzles, card games ,
betting, gambling etc.

• Income tax is charge @30 % on casual income.

• Casual loss cannot be set off against any income.
Tax planning
• Tax law and rules are followed.
• It is ethical.
• It is legal.
• It is beneficial for the individual , society and the
nation at large.
• It help in economic development.
• It is based on actual facts.
Tax avoidance
• Tax avoidance is legal.
• Tax laws and rules are followed in tax avoidance.
• It is unethical.
• It is harmful for the individual , society and the
nation.
• It lead to black economy.
• It is based on imaginary facts.
• In this advantage is taken of the loop holes in the
tax laws.
Tax evasion
• Tax laws and rules are not followed.
• It is unethical.
• It is a punishable crime.
• In this fraud is committed.
• It does not require any special qualification or
knowledge.
 a n k
T h
y o u