Page 13 - DCOM508_CORPORATE_TAX_PLANNING

Corporate Tax Planning

Notes The definition is inclusive i.e. a person includes,

an individual,
a Hindu Undivided Family (HUF),
a company,
a fi rm,
an AOP or a BOI, whether incorporated or not,

a local authority, and

every artificial juridical person e.g., an idol or deity.
We may briefly consider some of the above seven categories of assessees each of which

constitute a separate unit of assessment.
(i) Individual: The term ‘individual’ means only a natural person, i.e., a human being.
It includes both males and females. It also includes a minor or a person of unsound
mind. But the assessment in such a case may be made under section 161(1) on
the guardian or manager of the minor or lunatic. In the case of deceased person,
assessment would be made on the legal representative.

(ii) HUF: Under the Income tax Act, a Hindu Undivided Family (HUF) is treated as a
separate entity for the purpose of assessment. It is included in the defi nition of the
term “person” under section 2(31). The levy of income tax is on “every person”.
Therefore, income tax is payable by a HUF. “Hindu undivided family” has not

been defined under the Income tax Act. The expression is however defi ned under
the Hindu Law as a family, which consists of all males lineally descended from a
common ancestor and includes their wives and unmarried daughters. The relation
of a HUF does not arise from a contract but arises from status.
A Hindu is born into a HUF. A male member continues to remain a member of the
family until there is a partition of the family. After the partition, he ceases to be a
member of one family. However, he becomes a member of another smaller family.
A female member ceases to be a member of the HUF in which she was born, when
she gets married. Thereafter, she becomes a member of the HUF of her husband.
Some members of the HUF are called coparceners. They are related to each other
and to the head of the family. HUF may contain many members, but members
within four degrees including the head of the family (kartha) are called coparceners.
A Hindu coparcenary includes those persons who acquire by birth an interest in the
joint coparcenary property. Only the coparceners have a right to partition. A Jain
undivided family would also be assessed as a HUF, as Jains are also governed by the
laws as Hindus.
(iii) Company [Section 2(17)]: For all purposes of the Act the term ‘Company’, has a much
wider connotation than that under the Companies Act. Under the Act, the expression
‘Company’ means:

(a) any Indian company as defined in section 2(26); or
(b) any body corporate incorporated by or under the laws of a country outside
India, i.e., any foreign company; or
(c) any institution, association or body which is assessable or was assessed as a
company for any assessment year under the Indian Income tax Act, 1922 or for
any assessment year commencing on or before 1.4.1970 under the present Act;
or

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