BLOG on Income Tax Management for - AY 2022-23 & 2023-24

ASSESSMENT - Direct Taxes

1-Assessment of an 'Individual'

An individual means a natural person i.e. human being. Individual includes a male, female, minor child and a lunatic or an idiot. Assessment of an Individual are discussed with various implications.

2- Assessment of 'Hindu Undivided Family (HUF)'

Important Points towards Assessment of HUF, steps for Computation of Income-Tax of HUF, Partition of HUF, Tax on Income of HUF [Section 115BAC(1)].

3. Assessment of 'Firm'

Salient Features of the Assessment of a Firm with Essential conditions prescribed under Section 184 of the Income-tax Act, 1961. Deduction Allowable on account of Remuneration and Interest to the Partners of the Firm (including Limited Liability Partnership-LLP) and Set Off and Carry Forward of Losses of Firms. Computation of Total Income of Firm (including Limited Liability Partnership).

4. Assessment of Limited Liability Partnership (LLP)

Taxation of Limited Liability Partnership (LLP), Signing of Income-Tax Return of LLP, Recovery of Tax of LLP, Carry Forward and Set-Off of Losses in Case of Limited Liability Partnership (LLP), Alternate Minimum Tax (AMT) applicable to LLP.

5. Assessment of Association of Persons (AOP) / Body of Individual (BOI)

The income of AOP or BOI shall be computed under the heads of income by applying the normal provisions of the Income-tax Act. The business income of AOP / BOI shall be computed after allowing all expenses referred to in sections 28 to 44D.

6. Alternate Minimum Tax (AMT) on all Persons other than Companies [Section 115JC to 115JF Chapter XII-BA]

AMT which was hitherto applicable to LLP only. has been made applicable to all assessees other than a company. (1) 'Alternate Minimum Tax (AMT)" means the amount of tax computed on adjusted total income,— (i) in case of an assessee being a unit referred to in sub-section (4) of section 115JC, at a rate of 9% .; (ii) in any other case, at a rate of 18.5% . [Section 115JF(b)]

ASSESSMENT OF TRUST- Direct Taxes

7. Exemption Under Section 11 to 13 in case of Public Trusts for Charitable or Religious Purposes

The income derived from a property held under charitable or religious trusts is exempt from tax under section 11 subject to the fulfillment of certain conditions. However, any profit or gain of a business carried on by such trust shall not be exempt unless the business is incidental to the attainment of the objectives of the trust/institution and separate books of account are maintained by such trust! institutions in respect of such business. The word Trust as used in the context of sections 11 to 13 of the Income-tax Act, includes in addition to the trust "any other legal obligation".

8. Accumulation of Income in excess of 15% of the income earned [Section 11(2) and Rule 17] by Public Trusts

As already mentioned, assessee is allowed to accumulate upto 15% of the income earned during the year for application for charitable or religious purposes in India in future. If the assessee wants to accumulate or set apart the income in addition to 15% of the income, he can do so if certain conditions are satisfied. In this case, the amount accumulated in excess of 15% shall be deemed to have been applied for charitable or religious purposes in India during the previous year itself.

9. Points for Consideration towards Assessment of Public Trusts for Charitable and Religious Purpose

Voluntary Contribution Received by the Trust, Taxation of certain Anonymous Donations Received by the Trust [Section 115BBC], Exemption U/s 11(1) not to be allowed, Treatment of Capital Gains in case of Charitable Trusts, Treatment of 'Donation in Kind' Received by the Trusts, Treatment of Business Income of a Trust.

10. Modes of Deposit / Investment available to Public Trusts as per Section 11(5)

Section 11(5) specifies the following modes of Deposit / investment available to Public Trust :

11. Conditions for Applicability of Sections 11 and 12 in case of Public Trusts for Charitable and Religious purposes

Registration of Trust [Sections 12A(1)], Accounts of the Trust must be Audited by the Chartered Accountant, Return of income to be furnished before the due date,

12. Procedure for Registration of a Trust or Institution made under Section 12AA

Steps to be taken by the Principal Commissioner or Commissioner, Order granting or refusing registration should be passed within 6 months, Commissioner empowered to Cancel Registration of Charitable and Religious Trusts U/s 12AA.

13. Exemption of Income U/s 11 in case of Charitable or Religious Trust / Institution does not Apply in certain Cases [Section 13]

The following incomes of charitable or religious trusts/institutions shall not be eligible for exemption under sections 11 and 12.

14. When an Income or Property of a Trust or Institution is deemed to have been used or applied for the benefit of a Person referred to in Section 13(3) [Section 13(2)]

The income or the property of the trust or institution or any part of such income or property is to be deemed to have been used or applied for the benefit of a person referred to in section 13(3) in the following cases:

15. Income of certain Funds of National Importance, Educational Institutions and Medical Institutions is Exempt from Tax [Section 10(23C) and Rule 2C and 2CA]

Any income received by any person on behalf of the following is exempt from tax with Conditions for Claiming Exemption. Also Additional Conditions for Claiming Exemption are described here.

16. Levy of Tax where the Charitable Institution ceases to exist or converts into a Non- Charitable Organization [Chapter XIIEB containing Sections 115TD to 115TF]

Tax on Accreted Income of Trust or Institution [Section 115TD], Interest payable for Non-payment of Tax by Trust or Institution [Section 115TE], When Trust or Institution is deemed to be Assessed in Default [Section 115TF].

17. Return of Income of Charitable Trust and Institution [Section 139(4A)]

Every person who is in receipt of the following income for which he is taxable, must file a Return of Income, in such income (computed before allowing any exemption under section 11 and 12) exceeds the maximum amount not chargeable to tax :

ASSESSMENT - Direct Taxes

1-Assessment of an 'Individual'

2- Assessment of 'Hindu Undivided Family (HUF)'

3. Assessment of 'Firm'

4. Assessment of Limited Liability Partnership (LLP)

5. Assessment of Association of Persons (AOP) / Body of Individual (BOI)

6. Alternate Minimum Tax (AMT) on all Persons other than Companies [Section 115JC to 115JF Chapter XII-BA]

ASSESSMENT OF TRUST- Direct Taxes

7. Exemption Under Section 11 to 13 in case of Public Trusts for Charitable or Religious Purposes

8. Accumulation of Income in excess of 15% of the income earned [Section 11(2) and Rule 17] by Public Trusts

9. Points for Consideration towards Assessment of Public Trusts for Charitable and Religious Purpose

10. Modes of Deposit / Investment available to Public Trusts as per Section 11(5)

11. Conditions for Applicability of Sections 11 and 12 in case of Public Trusts for Charitable and Religious purposes

12. Procedure for Registration of a Trust or Institution made under Section 12AA

13. Exemption of Income U/s 11 in case of Charitable or Religious Trust / Institution does not Apply in certain Cases [Section 13]

14. When an Income or Property of a Trust or Institution is deemed to have been used or applied for the benefit of a Person referred to in Section 13(3) [Section 13(2)]

15. Income of certain Funds of National Importance, Educational Institutions and Medical Institutions is Exempt from Tax [Section 10(23C) and Rule 2C and 2CA]

16. Levy of Tax where the Charitable Institution ceases to exist or converts into a Non- Charitable Organization [Chapter XIIEB containing Sections 115TD to 115TF]

17. Return of Income of Charitable Trust and Institution [Section 139(4A)]

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