Updated upto A.Y. 2019-20
Income of the previous year of a person is charged to tax in the immediately following assessment year
The word ‘individual’ means a natural person, i.e. human being. “Individual” includes a minor or a person of unsound mind.
Male, Female, Young, Aged all are covered.
A Hindu Undivided Family (on which Hindu law applies) consists of all persons lineally descended from a common ancestor & includes their wives & unmarried daughters.
The HUF does not arise from a contract.
A male member continues to remain a member of the family until there is a partition of the family. After partition, he becomes a member of another smaller family.
upto marriage: member of the HUF in which she was born
after marriage: member of the HUF of her husband
Persons who acquire by birth an interest in the joint property.
- Only the coparceners have a right to partition.
- Members within 4 degrees including the head of the family are co-parceners.
School of Thought
There are two school of thoughts:
Prevail in West Bengal & Assam
Son acquires interest only after the death of his father.
Son cannot claim partition till his father is alive
Coparcenary interest does not change on every birth or death
Prevail over rest of India (other than West Bengal & Assam)
Son acquires interest as soon as he is born.
Son can claim partition at any time.
Coparcenary interest fluctuates on every birth or death
Partnership Firm includes limited liability partnership. Firm shall be assessed separately from its partners.
As per sec. 2(17), Company means:
any Indian company; or
any body corporate, incorporated under the laws of a foreign country; or
any institution, association or body which is or was assessable or was assessed as a company for any assessment year on or before April 1, 1970; or
any institution, association or body, whether incorporated or not and whether Indian or non-Indian, which is declared by general or special order of the Central Board of Direct Taxes to be a company.
Indian Company means:
- a company formed and registered under any law relating to companies formerly in force in any part of India other than the state of Jammu & Kashmir and the Union territories specified in third bullet;
- a company formed and registered under any law for the time being in force in the State of Jammu & Kashmir;
- a company formed and registered under any law for the time being in force in the Union territories of Dadar & Nagar Haveli, Goa, Daman & Diu and Pondicherry;
- a corporation established by or under a Central, State or Provincial Act;
- any institution, association or body which is declared by the Central Board of Direct Taxes (CBDT) to be a company u/s 2(17).
In the aforesaid cases, a company, corporation, institution, association or body will be treated as an Indian company only if its registered office or principal office, as the case may be, is in India.
Domestic Company means:
- An Indian Company; or
- Any other company, which in respect of its income liable to tax under the Act, has made prescribed arrangements for the declaration and payment of dividends (including dividend on preference share), payable out of such income, within India.
Foreign company means a company which is not a domestic company.
Company in which public are substantially interested
Following companies are said to be a company in which public are substantially interested:
- Government Company: A company owned by the Government or the RBI or in which not less than 40% of the shares are held (singly or jointly) by the Government or the RBI or a corporation owned by the RBI.
- A company u/s 8: A company, which is registered u/s 8 of the Companies Act, 2013 i.e. a company which is formed for the purpose of promoting commerce, art, science, religion, charity or any other useful object.
- Mutual benefit finance company: A company:
- which carries on (as its principal business) the business of acceptance of deposits from its members; and
- which is declared by the Central Government u/s 620A of the Companies Act, 1956, to be a Nidhi or a Mutual Benefit Society.
- Listed company: A company which is not a private company as defined in the Companies Act, 1956 and which satisfies any of the following conditions:
- The equity shares in the company as on the last day of the relevant previous year, have been listed in a recognized stock exchange in India; or
- Equity shares in the company carrying not less than 50% (40% in case of industrial companies) of the voting power have been allotted unconditionally to or acquired unconditionally by and should have been throughout the relevant previous year beneficially held by:
- a statutory corporation; and
- a company in which public are substantially interested or any wholly owned subsidiary of such company.
- Company in which shares are held by co-operative societies: A company whose equity shares carrying not less than 50% of the voting power have been allotted unconditionally to or acquired unconditionally by and were throughout the relevant previous year beneficially held by one or more co-operative societies.
- Company which is prescribed by CBDT: A company having no share capital and declared by order of the board to be a company in which the public are substantially interested.
Association of Persons (AOP)
- Group of person (whether individuals, HUF, companies, firms, etc.) who join together for common purpose(s) with intention to earn profit.
- There must be profit motive
- Any Person can be member of AOP i.e. HUF, Individual, Company etc.
Body of Individual (BOI)
- A group of individuals (individual only) who join together for common purpose(s) whether or not to earn income.
- Profit motive may or may not be there.
- Only Individual can be member of BOI
Co-heirs, co-donees joining together for a common purpose or action would be chargeable as an AOP.
BOI denotes the status of persons like executors or trustees who merely receive the income jointly and who may be assessable in like manner and to the same extent as the beneficiaries individually. Thus co-executors or co-trustees are assessable as a BOI as their title and interest are indivisible.
In case of income of AOP, the AOP alone shall be taxed and the members of the AOP cannot be taxed individually in respect of the income of the AOP
Local Authority means:
a municipal committee,
body of Port Commissioners,
Cantonment Board, or other authorities legally entitled to or entrusted by the Government with the control and management of a municipal or local fund.
A local authority is taxable only in respect of income arises from any business carried on by it. However, following business income of local authority is not taxable [Sec. 10(20)]:
Supply of a commodity or service within its own jurisdictional area.
Supply of water and electricity outside the local authority’s own jurisdictional areas
Artificial Juridical Person
This category could cover every artificial juridical person not falling under other heads.
An idol or deity would be assessable in the status of an artificial juridical person.