Assessment year means the period of twelve months starting from April 1 of every year and ending on March 31 of the year. The period of assessment year is fixed by statute. Income of previous year of an assessee is taxed during the following assessment year at the rates prescribed for such assessment year by the relevant Finance Act.
Assessee means a person by whom any tax or any other sum of money (i.e., penalty or interest) is payable under the Act.
Gross total income
Income of a person is computed under the heads of Salaries, Income from house property, Profits and gains of business or profession, Capital gains and Income from other sources. The aggregate income under these five heads is termed as "gross total income".
Total income of an assessee is gross total income as reduced by amount deductible under various sections.
Meaning of business includes any trade, commerce, manufacture, or any adventure or concern in the nature of trade, commerce or manufacture.
The expression "capital asset" means property of any kind held by an assessee, whether or not connected with his business or profession.
The expression "company" is defined to mean the following 1. any Indian company ; or 2.any body corporate incorporated under the laws of a foreign country ; or 3.any institution, association or a body which is assessed or was assessable / assessed as a company for any assessment year commencing on or before April 1, 1970 ; or 4.any institution, association or a 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.
Fair market value
Fair market value in relation to a capital asset means the price that the capital asset would ordinarily fetch on sale in the open market on the relevant date. Where, however, such price is not ascertainable, it may be determined in accordance with the prescribed rules.
Income under the head 'salary' comprises of remuneration in any form (including perquisites) received by an employee from employer. Thus, there should be contractual employer-employee relationship. The contract may be express, oral or implied. Salary is chargeable on due or receipt basis. Arrears of salary paid or allowed are includible if not charged to income tax for any earlier previous year. 'Salary' includes wages, dearness allowance, Bonus. gratuity, annuity or pension, advance of salary, Fees / Commissions perquisites/ profits received from employer in addition to salary, Leave encashment while in service, Employer's contribution to provident fund in excess of 12% of salary of employee, profit in lieu of salary.
Allowance is generally defined as fixed quantity of money or other substance given regularly in addition to salary for the purpose of meeting some particular requirement connected with the services rendered by the employee or as compensation for unusual conditions of that service. It is fixed, pre-determined and given irrespective of actual expenditure.
The term "perquisites" is defined as a gain or profit incidentally made from employment in addition to regular salary or wages, especially one of a kind expected or promised. Thus, the phrase "perquisites" signifies some benefit in addition to the amount that may be legally due by way of contract for services rendered.
Employees provident fund
Provident fund scheme is a retirement benefit scheme. Under this scheme, a stipulated sum is deducted from the salary of the employee as his contribution towards the fund. The employer also generally contributes simultaneously an equal amount out of its pocket to the fund. The contributions of employee and employer are invested in gilt-edged securities. Interest earned thereon is also credited to the provident fund account of employees.
Approved gratuity fund
It means a gratuity fund which has been and continues to be approved by the Commissioner of Income-tax in accordance with the rules. Tax treatment of contribution to and payment from the fund is employer’s contribution is exempt from tax and actual payment received by the employee is exempt from tax within the limits.
Depreciation means loss or decline in value which occurs gradually over useful life of a material thing, due to physical wear, tear and decay, and is generally limited to losses or decline in value which cannot be restored by current repairs and maintenance.