Charge of income- tax 1
Where any Central Act enacts that income- tax shall be charged for any assessment year at any rate or rates, income- tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions including provisions for the levy of additional income- tax of, this Act in respect of the total income of the previous year of every person Provided that where by virtue of any provision of this Act income- tax is to be charged in respect of the income of a period other than the previous year, income- tax shall be charged accordingly.
In respect of income chargeable under sub- section 1 , income- tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act. 1. Substituted for subject to the provisions of, this Act by the Direct Tax Laws Amendment Act, 1987, w. e. f. 1- 4- 1989. This amendment was consequent to the insertion of Chapter XIV- B comprising of section 158B , but after the withdrawal of the chapter, without even coming into effect, this amendment too needs to be undone. 3. The words or previous years, as the case may be, omitted by the Direct Tax Laws Amendment Act, 1987, w. e. f. 1- 4- 1989. liability arising from contracts as well as torts. it would be incorrect to assume that the share of an assessee in a form consists only of income yielding assets. It equally comprises of risk and liability of paying debts on behalf of the firm. An assessee cannot, under the Hindu law make a declaration whereby the joint family would have to bear the risk and liability of the business and such a declaration should be ignored altogether. 6 Where payment is made to compensate for the loss of the use of any goods in which the assessee does not carry on any business or the payment is a just equivalent of the cost incurred by the assessee, but excess accrues due to fortuitous circumstances or is a windfall, then ccrual may be a receipt, but it would not be income arising from business, and, therefore, not taxable under the Act. 7 In the hands of an assessee, who maintains his accounts on the mercantile system, sales tax collected but not paid to the Sales Tax Department pending adjudication of dispute over his liability to pay sales tax, is a revenue receipt of the year in which it is collected. 8 Where a company goes into liquidation and the liquidator distributes the assets of the company among the shareholders, what each shareholder gets is in lieu of his shareholding. That is the worth, the value and the price of his shareholding. A shareholder participates in the distribution of the assets of a company on its liquidation by virtue of and because of his shareholding. It is true that a liquidator does not sell the shares. It is equally true that there is no transfer of shares by the shareholder to the liquidator or to any other person. That is not really necessary. So long as money is received in lieu of shares, there is a receipt and where an assessee is a dealer in shares, any surplus amount received by him constitutes his income. The money received by the assessee in lieu of its shareholding partakes of the same character in which he held the shares. If he held the shares as stock- in- trade, the money received by it represents his income i. e. a revenue receipt in its hands. If it held them by way of investment, the money it receives represents a capital receipt by it.
The words or previous years, as the case may be, omitted by the Direct Tax Laws Amendment Act, 1987, w. e. f. 1- 4- 1989.