Discretionary and Specific Trusts Introduction A discretionary trust gives trustees absolute discretion over distributing income or capital among beneficiaries. A specific trust has pre-determined beneficiaries with fixed shares in income and corpus. While both are taxed in a representative capacity, discretionary trusts are taxed under Section 164, and specific trusts under Section 161. Types of Trusts Oral… Read More »
Company in Liquidation Introduction When a company undergoes liquidation, a liquidator is appointed to oversee the sale of assets and settlement of liabilities. This provision ensures that the government’s tax dues are not evaded during the liquidation process. Duties of the Liquidator Notification to Assessing Officer: o The liquidator must inform the Assessing Officer within… Read More »
Assessment of Discontinued Business or Profession Introduction If a business or profession is discontinued during the year, the tax officer can tax the income earned from the start of that year up to the date of discontinuance in the same year itself. Income Taxable in the Previous Year Itself Normally, the income of a previous… Read More »
Assessment of Persons Likely to Transfer Property to Avoid Tax Introduction If the Assessing Officer believes that a person may sell, transfer, or dispose of assets to evade tax liabilities, the total income of that person can be taxed before the transfer occurs. This ensures tax recovery before assets are beyond reach. Income Taxable in… Read More »
Assessment of AOP, BOI, or AJP Formed for a Short Duration Introduction If the Assessing Officer believes that an Association of Persons (AOP), Body of Individuals (BOI), or Artificial Juridical Person (AJP) is likely to dissolve within the current assessment year or shortly thereafter, tax on its total income can be levied before dissolution. This… Read More »
Assessment of Persons Leaving India Introduction If the Assessing Officer believes that an individual is likely to leave India during the current assessment year or shortly thereafter without intending to return, the officer can tax the individual’s total income before departure. This ensures tax collection before the person becomes untraceable. Income Taxable in the Previous… Read More »
Modified Return Introduction When a business undergoes reorganisation (such as amalgamation, merger, or demerger), the successor entity must file a modified return for the period between the effective date of the business reorganisation and the date of issuance of the final order by the competent authority. What is Modified Return? A Modified Return is a… Read More »
Succession to Business Otherwise Than on Death Introduction When a person carrying on a business or profession is succeeded by another, two separate tax assessments are made for the year of succession: On the predecessor– For income earned up to the date of succession. On the successor– For income earned from the date of succession… Read More »
Taxation of Executors Introduction An executor is a person appointed by a testator to administer the estate of a deceased individual and distribute it among beneficiaries. The income from the estate is taxable in the hands of the executor until the estate is fully distributed. Who is an Executor? An executor is appointed by the… Read More »
Representative Assessee Introduction A representative assessee is liable for tax on income received or entitled to be received on behalf of another person. The Income-tax Act deems a representative assessee as an assessee for tax purposes. Categories of Representative Assessee Agent of a Non-Resident: o An agent of a non-resident is a person in India… Read More »