Q1)(A)PERSON SECTION 2 (31)

Term person is wide term in Income Tax act. The term person includes:
Individual
It means to a natural human being whether male or Female, Minor or
Major
Hindu Undivided Family
It is a relationship created due to operation of Hindu Law. The Manager
of HUF is called Karta, Karta is generally the senior most person
in the family and the members of HUF are called Coparceners.
Company- It is an artificial person registered under Indian Companies
Act 1956 or Companies Act 2013 or any other laws
FirmThe
entity
which
comes
into
existence
as
result of partnership agreement is called as firm. Partnership is defined
as a relation between two or more persons who have agreed to share
the profits of a business carried on by all of them or any of them acting
for
all.
The
owners
of
a
partnership
business are individually known as the partners and collectively as
a firm.
Association
of
Persons
(AOP)

When
persons
combine
together to carry on a joint activities and they do not constitute
partnership
firm,
they are assessable as an Association of Persons. Example Cooperative
housing society
Body
of
Individuals
(BOI)

The
body
of
individuals
has the same meaning of association of person only the difference
between
these
two is that AOP may have members who are non-individual where as
BOI
have
all
individual members. Example Club
Local Authority (LA) Municipality, Panchayat, Cantonment Board, etc.
are called Local Authority
Artificial Judicial Person (AJP) Statutory Corporations like university is
called as artificial judicial person

(B)ASSESSMENT YEAR AND PREVIOUS YEAR:

In Income Tax, AY means Assessment Year and FY means Financial
Year.Financial year starts from 1st April and ends on 31st March (wherein
there is income pertaining to the whole year or part of the year). Assessment
year is the year immediately following the financial year wherein the income
of the F.Y. is assessed.
(C)CAPITAL AND REVENUE EXPENDITURES & RECEIPTS
Revenue Expenditure relates to the operations of the business of an
accounting period or to the revenue earned during the period or the items of
expenditure, the benefit of which do not extend beyond that period. They
are debited to Profit & Loss A/c.
Capital Expenditure is incurred to contribute to the earning capacity
of a business over a period of more than one accounting period. Capital
Expenditure is shown in the Balance Sheet as an Asset and is transferred to
the Profit & Loss A/c on the basis of the benefit utilized in a particular year.
Revenue Receipts are those receipts which are obtained in the
normal course of business like from sale of goods, interest and commission
etc. They are credited to Profit & Loss A/c.
Capital Receipts are those receipts which are not of revenue in
nature like receipts on account of sale of machinery or loans and
contributions by owners.
The above principles are used to determine whether an expense or receipt is
of revenue or capital nature irrespective of the nature of the organisation.
1. Purchase of computers for office use: It is a capital expenditure because
the benefit from computers is to be derived for more than one year.
2. Benefits and expenses of a show: Both expenses incurred and income from
hosting a show are of revenue nature. This is so because hosting shows is a
part of the activities of the organisations.
3. Annual white washing & painting expenses to building: This is again a
revenue expendidture because this expenses is incurred every year to keep

the building in good condition and this does not increases the earning
capacity of the building in any way.
4. Donations for construction of building: This is a capital receipt because
this money cannot be used to meet day to day expenses of the organisation.
This money can be used only to construct a building (Asset).
5. Annual maintenance grant received from Government: This is a revenue
receipt because this grant is being received from Government to run day to
day activities of the organisation.
Q2(A) RESIDENTIAL STATUS OF AN INDIVIDUAL:
Basic Conditions:
1.The assessee should have stayed in India during the previous year (PY) for
182 days or more
OR
2.The assessee should have stayed in India during the PY for 60 days or more
and should have stayed in India during the four preceding PYs for 365 days
or more.
In the 2nd condition stated above, the 60 days shall be replaced by 182
days, in the following circumstances:
If the assessee, being an Indian Citizen, leaves India during the PY for
employment purposes
If the assessee, being an Indian Citizen or a person of Indian origin has
come back to India for a visit
If the assessee, being an Indian Citizen, leaves India in an Indian Ship
Any assessee satisfying any one of the Basic conditions shall be called as a
Resident
Any assessee not satisfying both of the Basic conditions shall be called as
Non-resident
Additional Conditions (To be applied for a Resident assessee only):
1.The assessee should have been a resident in India (satisfying any one of
the Basic conditions) in atleast 2 out of 10 preceding PYs
AND
3

2.The assessee should have stayed in India for 730 days or more during the
7 preceding PYs.
A Resident shall be called an Ordinarily Resident if he satisfies both the
additional conditions.
A Resident shall be called a Not Oridinarily Resident if he satisfies one or
none of the additional conditions.

(B)RESIDENTIAL STATUS OF A COMPANY

Company
Section 2(17) of the act defines company. The term company includes:
1.any Indian company
2.any corporate incorporated by or under the laws of country outside India
3.any institution, association or body which is or was assessable or was
assessed as a company for anyassessment year under the 1922 Act or under
the 1961 act ,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 board to be a company only for such assessment year or
assessment years
As per section 6(3), an Indian company is always resident in India. A foreign
company is resident in India only if, during the previous year, control and
management of its affairs is situated wholly in India. However, a foreign
company is treated as non-resident if, during the previous year, control and
management of its affairs is either wholly or partly situated out of India.

(C)RESIDENTIAL STATUS OF A HINDU UNDIVIDED FAMILY

As per section 6(2), a Hindu undivided family (like an individual) is
either resident in India or non-resident in India. A resident Hindu undivided
family is either ordinarily resident or not ordinarily resident.

HUF- Resident or Non-Resident A Hindu undivided family is said to be

resident in India if control and management of its affairs is wholly or partly
situated in India. A Hindu undivided family is non-resident in India if control
and management of its affairs is wholly situated outside India.

NAME: ANUSUYA YADAV

ROLL NO : 1530 7A 2005
SUBJECT : TAXATION