Income of previous year is taxable in the immediately following Assessment year. Discuss exceptions to this rule.
As a general rule, the income earned in the previous year is taxed only in the assessment year but in the following cases, the income earned is taxed in the same year in which it is earned or received. Such exceptions to the general rule are given in Sections 172 and 174 to 176.
Income of Non-Residents from Shipping Business (Sec. 172):
Where a ship is owned or chartered by a non-resident and is used for carrying passengers, livestock, mail or goods shipped at a port in India, his income from such business shall be taxed in the year in which it is earned. For this purpose, 71/2% of the freight paid or payable to the non-resident, or any person, on his behalf, shall be deemed to be the income accruing in India and tax is payable on such income at the rate applicable to a foreign company.
Income of Persons leaving India (Sec. 174):
When it appears to the assessing officer that an individual may leave India during the cur¬rent financial year or shortly after its expiry, and that he has no present intention of returning to India, he shall assess the total income of such an individual for the period from the expiry of the previous year relevant to the assessment year to probable date of Ins departure from India, in the same year.
Association or bodies formed for short duration (Sec. 174A):
When an association of persons or body of individuals or an artificial juridical person formed, established or incorporated for a particular event or purpose and it appears to the Assessing Officer that such association or body of individual or artificial juridical person is likely to be dissolved in the same assessment year or shortly after that, the total income of such association/body/juridical person for the period from the expiry of the previous year to the date of dissolution shall be charge-able to tax in that assessment year.
Person trying to alienate his assets with a view to avoid tax (Sec. 175):
If, in the opinion of the Assessing Officer, an assessee is likely to transfer, charge, sell, dispose off or otherwise part with any of his assets with an intention to avoid his tax liability, the total income of such a person from the close of the relevant previous year to the date of initiating proceeding under this section shall be chargeable to tax in the same assessment year.
Income of a Discontinued Business or Profession (Sec. 176):
Where a business, profession or vocation has been discontinued or dissolved during the current financial year, the assessing officer may at his discretion assess the income of the period from 1-e expiry of the previous year relevant to the assessment year in which the business is discontinued or dissolved to the date of such discontinuance in the same assessment year.