Page 121 - DCOM301_INCOME_TAX_LAWS_I

Income Tax Laws – I

Notes As per section 10(CC), the amount of tax actually paid by an employer, at his option, on
non-monetary perquisites on behalf of an employee, is not taxable in the hands of the
employee. Such tax paid by the employer shall not be treated as an allowable expenditure
in the hands of the employer under section 40.
The term ‘charitable purpose’ has been defined in this Act in a wider sense than what is
commonly understood. According to Section 2(15) of the Act, it includes relief of the poor,
education, medical relief, preservation of environment (including watersheds, forests and
wildlife) and preservation of monuments or places or objects of artistic or historic interest
and advancement of any other object of general public utility not involving the carrying
on of any activity for profit.
The income of a trust by way of voluntary contributions would also be treated for all
purposes as income deemed to have been derived by the trust from property held by it
under trust except, however, in case where the voluntary contribution is received with a
specific direction that it shall form part of the corpus of the trust. As a result, voluntary
contribution received by a trust should also be applied for charitable purposes before the
end of the accounting year or within 3 months following so that income-tax exemption
could be availed of. However, voluntary contributions could be accumulated for future
obligation for charitable purposes in the same manner as specified earlier.
‘Political party’ means an association or body of individual citizens of India registered
with the Election Commission of India as a political party and includes a political party
deemed to be registered with that Election Commission of India. Political parties are
liable to pay tax on their income and they are assessed as ‘An association of persons’.

4.10 Keywords

AOP: It is an entity or a unit of assessment which is includes two or more persons who join for
a common purpose with a view to earn an income.

Basic operation: These agricultural operations include tilling of the land, sowing of seeds,
planting or an operation of a similar kind such as digging pits in the soil to plant a sapling etc.
Deduction: It is a reduction of a taxpayer’s total income that decreases the amount of money used
in calculating the tax due.
Electoral Trust: It is a trust so approved by the Board in accordance with the scheme made in this
regard by the Central Government.

Exemption: It refers to a personal allowance or specific monetary exemption which may be
claimed by an individual to reduce taxable income under some systems.
Hindu Undivided Family (HUF): It is a legal term related to the Hindu Marriage Act.

Keyman insurance policy: It means a life insurance policy taken by a person on the life of
another person who is or was the employee of the first-mentioned person or is or was connected
in any manner whatsoever with the business of the first-mentioned person.
Leave travel concession: It is defined as the cost of travel granted to employees to travel anywhere
in India, while on leave from work.
Political party: It is an association or body of individual citizens of India registered with the
Election Commission of India as a political party and includes a political party deemed to be
registered with that Election Commission of India.
Receipt: The receipt of income refers to the first occasion when the recipient gets the money
under his control.

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