Income tax II Flashcards
Revocable transfer
A revocable transfer is transfer which contain a provision to retransfer the whole or any part of the income or the asset or the transferor has the right to reassume power over the whole or part of such income or asset
Cross transfer
In case of cross transfers, the income from the assets transferred would be included in the hands of the deemed transferor if the transferors are closely connected as to form a single transaction for the other transfer
Capital gain account scheme
It is a deposit scheme to keep the capital gain in order to avail the exemption. If the assessee cannot utilize the capital gain for acquisition of new house on or before the due date of filing the return of income, he must deposit it in the capital Gain Account Scheme.
Who is treated as an assessing officer
Director general, chief commissioner, director, commissioner, additional director, additional
commissioner, joint commissioner, joint director, who are vested with the jurisdiction by virtue of directions or orders issued by CBDT. They are to perform all or any powers of Assessing
officer.
Belated return
A return submitted after the due date but before the end of the relevant assessment year or before completion of assessment whichever is earlier is called belated return.
Assessment
Assessment means determination of total income and computation of tax payable for the previous year.
Assessment may be four types:
Self assessment, Assessment on the basis of return, Regular assessment by assessing Officer and, Re assessment.
Consequences of best judgment assessment
a. The assessee becomes liable to penalties u/s 271.
b. The assessee becomes liable to prosecution u/s 276.
c. The assessee is prevented from bringing record of new facts before appellate authority.
PAYE
Advance payment of tax is also called Pay as You Earn (PAYE). It means that the assessee has to pay the tax simultaneously along with the earning of his income.
Tax Evasion
It is an illegal method of reducing tax liability. Tax evasion may be done either showing expenses which are not incurred or by concealing income. Tax evasion makes a person liable to penalty
Tax avoidance
Tax avoidance is an art of reducing tax without breaking the law. It is a method of reducing tax by availing certain loopholes in the law. It is a method which technically satisfies the requirement
Defective return
A return shall be regarded as defective in the following cases:
a. The annexure, statement and columns in the return of income have not been duly filled in.
b. The return is not accompanied by a statement showing computation tax payable. c. The return is not accompanied by the audit report in required cases. The return is not accompanied by proof of tax, if any.
Revised return
If any person having furnished a return under sec. 139 (1) or according to a notice issued under sec.142 (1), discovers any omission or he may furnish a revised return at any time before the expiry of one year from the end the relevant assessment year or before the completion of the assessment, whichever is earlier.
Tax planning
It is the planning of income, income tax and investment in such a way to minimize total income tax. The Income Tax Act provided various provisions in the Act for saving and investment to reduce the total income.
Indexation
Indexation is the process of estimating the present value of an asset based on Cost of Inflation Index (CII). This is provided for adjusting the increase in the value of the asset due to inflation.
Relinquishment
Relinquishment means giving up or surrender of a right in favour of another person.
For Example,
The right shares can be transferred in favour of another person for a consideration.
