Chapter: 1.1 Common Definations

There are a number of terms commonly used while discussing the topic of the Income Tax. They have been defined in the Income Tax PITT Act. 1961 as under

Assessment Year: Assessment Year (AYE means the period of twelve months starting from 1st of April every year and ending on 31st of March of the next year. The income of a Previous Year or Financial Year (FEY of an assesses (tax payer) is taxed during the following A.Y. at the rates prescribed for such AY by the relevant Finance Act.

Previous Year: Income earned in a year is taxable in the next year. The year in which income is earned is known as Previous Year (PYLE and the next year, in which income is taxable, is known as A Y. In other words, it can be said that income earned during P. Y. 2005- 06

Financial Year 2005-06) is taxable in the following AY viz. 2006-07. AH tax payers are required to follow finance year is 1st April to 31st March as previous year (PYLE.

Assesses Sec. 2(7) Assesses means a person by whom Income tax or any other sum of money is payable under the act. It includes every person in respect of whom any proceedings under the act have been taken for the assessment of his income or the amount of refund due to him. It also includes a person who is assessable in respect of income or loss of another person or who is deemed to be an assesses or an assesses in default under any provisions of the Act.

Books or Books of Accounts: Section 2 (12A) has been inserted w.e.f. 1.6.2001. As per the new sub section, " books or books of accounts " include ledgers, day books, cash books, account book and other books, whether kept in the written form or as print - outs of data stored in a floppy disc, tape or any other form of electro - magnetic data storage device.