Gross Total Income, Person , Assessment Year , Previous Year, Assesse

1. BASIC CONCEPTS

2. ASSESSEE [SEC 2(7)]
 “Assesse” means-
 a person by whom any tax or any other sum of money (i.e., penalty or interest)
is payable under this Act (irrespective of the fact whether any proceeding
under the Act has been taken against him or not);
 every person in respect of whom any proceeding under this Act has been taken
(whether or not he is liable for any tax, interest or penalty) for the assessment
of his income or loss or the amount of refund due to him;
 a person who is assessable in respect of income or loss of another person;
 every person who is deemed to be an assesse under any provision of this Act;
 a person who is deemed to be an ‘assesse in default’ under any provision of
this Act. E.g. A person, who was liable to deduct tax but has failed to do so,
shall be treated as an ‘assesse in default’

3. PERSON [SEC. 2 (31)]
The term person includes the following:
 (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; &
 (vii) every artificial juridical person not falling within any
of the preceding categories.

4. ILLUSTRATION
Determine the status of the following:
 (a) BBMP Local authority
 (b) Corporation Bank Ltd. Company
 (c) Mr. Amit Individual
 (d) ABC Ltd. Company
 (e) A joint family of Mr Rao,his spouse
and their sons HUF
 (f) Chennai University Artificial juridical person
 (g) X Y and Z form a group , ae Lawyers BOI
 (h) Sole proprietorship business Individual
 (i) Partnership Business Firm
 (j) Ladies Association Association of Persons

5.  Reliance Industries Limited. [ company. ]
 Punjab National Bank. [ company. ]
 Madras University. [ Artificial Juridical person]
 Calcutta Municipal Corporation. [ Local Authority]
 A partnership firm with A, B and C partners. [ Firm]
 Kalyani Publishers Ltd. [ Company]
 Reserve Bank of India. [ Artificial Judicial Person]
 Life Insurance Corporation of India. [ Company]
 A Village Panchayat [ Local Authority]
 Cricket Association [ Association of Person - AOP ]

6. ASSESSMENT YEAR (A.Y.) [SEC. 2(9)]
 Assessment year means the period of 12 months commencing on the 1st
day of April every year.
 It is the year in which income earned in the previous year is charged to tax.
E.g., A.Y.2019-20 is a year, which commences on April 1, 2019 and ends
on March 31, 2020.
 Income of an assesse earned in the previous year 2018-2019 is assessed in
the A.Y. 2019-20.
 It is the period of 12 months starting from 1st April.
 It falls immediately after the Previous Year.
 Income of a previous year is assessed and taxable in the immediately
following Assessment Year

7. PREVIOUS YEAR [SEC 3]
 Previous Year means the financial year immediately preceding
the Assessment Year.
 Income earned in a year is assessed to tax in the following year.
 The year in which income is earned is known as Previous Year
and the following year in which income is assessed to tax is
known as Assessment Year.
 It is mandatory for all assesse to follow financial year (from 1st
April to 31st March) as previous year for Income-Tax purpose.
 Example If the Assessment year is 2020-21, then the Previous
Year relevant to Assessment Year 2020-21 is 2019-20

8. FINANCIALYEAR
According to sec. 2(21) of the General Clauses
Act, 1897, a Financial Year means the year
commencing on the 1st day of April.
 Hence, it is a period of 12 months starting from
1st April and ending on 31st March of the
following year.

9. INCOME UNDER THE INCOME TAX ACT
 REGULAR VERSES IRREGULAR
 DEFINITE VERSES UNKNOWN SOURCES
 RECEIPT VERSES ACCRUAL
 LEGAL VERSES ILLEGAL
 DISPUTED VERSES UNDISPUTED TITLE
 TEMPORARY INCOME VERSES PERMANENT
 DISCLOSED VERSES UNDISCLOSED
 CASUAL INCOMES

10. What do you mean by Gross Total Income?
 As the name suggests Gross Total Income is the aggregate of all the income
earned by you during a specified period. According to Section 14 of the
Income Tax Act 1961, the income of a person or an assesse can be categorized
under these five heads,
 Income from Salaries
 Income from House Property
 Profits and Gains of Business and Profession
 Capital Gains
 Income from Other Sources
While calculating gross total income one must sum up all of their income without reducing the
amount for any tax saving investments made under Section 80C to 80U under Income Tax Act
1961.

11. COMPUTATION OF TOTAL INCOME
 Income From Salary xx
 Add: Income Under the Head House Property xx
 Add: Profits and Gains of Business and Profession xx
 Add: capital gains xx
 Add: Income from Other Sources xx
 Gross Total Income xxx
 Less: Deductions under Section 80C to 80U xx
 Total Income xxx