Section 2(9)
of the Income Tax Act 1961 refers to the assessment year.
ASSESMENT YEAR:
This is a
period of 12 months commencing from 1 st April and ending on 31 st March 2003.
Thus it is spread over to calendar years. The assessment year 2003-2004 means
and covers the period from 1 st April 2003 to 31 st 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 preceding the assessment year. This covers 12 months spread
over two calendar years commencing from 1 st April and ending on 31 st March.
The
previous year for the assessment year 2003-2004 is 2002- 2003, starting from 1
st April 2002 and ending on 31 st 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 31 st March. If one get a salaried job from 1 st Oct 2002, the previous
year for salary income starts from 1 st 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 (2003-04) 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:
1.An individual
2.A Hindu undivided family
3.A company
4.A firm
5.An association of person or a body of
individuals
6.A local authority
7.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 are broadly of three types:
1.Resident and Ordinarily resident
2.Resident but not Ordinarily Resident
3.Non-resident.
HEADS OF INCOME:
Income of
any kind will be included under anyone of following categories;
1.Salaries
3.Profits and gains from business or
profession.
4.Capital gains
5.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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