CASES WHERE INCOME OF PREVIOUS YEAR IS ASSESSED IN THE SAME YEAR: As a normal rule, the income earned ear ned during any previous year (PY) is assessed or charged to tax in the immediately succeeding assessment year (AY).However, in the following circumstances the income is taxed in the same year in which it is earned. Therefore, the AY and the PY in these exceptional circumstances will be the same. These e xceptions have been provided to safeguard the collection of taxes so that assesses, who may not be tra ceable later on, are not allowed allowe d to escape the payment of taxes. The exceptions are as follows:
1. NON-RESIDENT SHIPPING BUSINESS U/S 172: A non-resident who is carrying on a shipping business and earns income from carrying passengers/livestock/goods from a port in India, will be charged income-tax before the ship is allowed to leave the Indian port. Therefore, before the ship leaves the Indian port, the master of the ship is under an obligation to furnish a return of the full amount earned on account of fare and freight (including the amount paid or payable by way of demurrage charge or handling charge or any other amount of similar nature) and pay the tax accordingly. In this case 7.5%of the amount of fare/freight/charge, etc, shall be deemed to be income of such assessee on which the income tax will be charged. Therefore, in this case the tax is charge able on the income in the same year in which it is earned.
2. ASSESSMENT OF PERSONS LEAVING INDIA U/S 174: When it appears to the Assessing Officer that any individual may leave India during the current AY or shortly after its e xpiry, with no present intention of returning to India, the total income of such individual, from the expiry of PY for that AY up to the probable date of his departure from India shall be chargeable to tax in the same AY. However, the total income of each completed PY or part of any P Y included in such period shall be chargeable to tax at the rate or rates in force in that AY, and separate assessments shall be made in respect of each completed PY or part of any PY. In this case, the Assessing Officer may estimate estim ate the income of such individual for such period, where it cannot be readily determined in the manner provided in the Act. For assessment of such income, the Assessing Officer may serve a notice upon such individual requiring him to furnish, within such time, not being less than 7 days, as m ay be specified in the notice, a r eturn in the same form and verified in the same manner as prescribed in section 142(1)(i). 142(1)(i).
3. ASSESSMENT OF ASSOCIATION PERSONS PERSONS (AOP) OR BODY OF OF INDIVIDUALS (BOI) OR ARTIFICIAL JURIDICIAL PERSON FORMED FOR A PARTICULAR EVENT OR PURPOSE U/S 174A: Where it appears to the Assessing officer that any AOP or BOI or an artificial juridical person formed or established or incorporated for a particular event or purpose is likely to be dissolved in the AY in which such AOP or BOI or artificial juridical person was formed or established or incorporated or immediately after such AY, the total income of such person or body or juridical person, for the period from the t he expiry of the PY for that AY up to the date of its dissolution, shall be chargeable to tax in that AY.
4. ASSESSMENT OF PERSON TRYING TO ALIENATE HIS ASSETS WITH A VIEW TO AVOID TAX U/S 175: If it appears to the Assessing Officer during any current year, that any person is likely to charge, sell, transfer, dispose of or otherwise part with any assets with a view to avoiding any payment of his tax liability, then the total income of such person for the period from the expiry of the PY for that AY till the date when the assessing officer commences proceedings, shall be chargeable to tax in the same AY. However, in this case also the rate of tax applicable shall be the rate given in Part III of Schedule I which are applicable for advance tax also. The proceedings in this case shall also be same as are applicable in
the case of a person leaving India except that the assessment in this case shall be till the date when the Assessing Officer commences proceedings under this section.
5. DISCONTINUED BUSINESS U/S 176: Where any business or profession is discontinued in any AY, the income of the period from the expiry of the PY for that AY up to the date of such discontinuance may, at the discretion of the Assessing Officer, be charge d to tax in that AY. For example, if a business is discontinued on 16-07-09 then the income for the period 1-04-09 to 16-07-09 may be assessed in the A Y 2009-10 itself. This tax will be charge d at the rates in force for advance tax payable during 2009-10. Any person discontinuing business or profession shall give to the Assessing Officer, a notice of such discontinuance within 15 days thereof.
