Category of Person/Assessee

There are seven categories of assessees each of which constitute a separate tax entity.

1 INDIVIDUAL : It means only a natural person, i.e., a human being. It includes both males and females. 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 who is entitled to receive his income. In the case of deceased person, assessment would be made on the legal representative.

2. HUF : In Income-tax Act, 1961, Hindu undivided family (HUF) is treated as a separate entity for the purpose of assessment. It is included in the term ―person. As per section 2(31), 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, 1961. The expression is, however, defined under the Hindu Law as a family, which consists of all males lineally descended from a common ancestor and includes their wives and daughters.

3. Company : For I.tax Act, the term Company has a much meaning than that under the Companies Act. In I.tax 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 (d) any institution, association or body, whether incorporated or not and whether Indian or non Indian, which is declared by a general or special order of the CBDT to be a company for such assessment years as may be specified in the CBDT‘s order.

4. Local Authority : This term means a municipal committee, district board, body of port commissioners or other authority legally entitled to or entrusted by the Government with the control or management of a municipal or local fund.
Note: A local authority is taxable in respect of that part of its income which arises from any business carried on by it in so far as that income does not arise from the supply of a commodity or service within its own jurisdictional area. However, income arising from the supply of water and electricity even outside the local authority‘s own jurisdictional areas is exempt from tax.

5. Firm : The terms firm, partner and partnership have the same meanings as assigned to them in the Indian Partnership Act, 1932. In addition, the definitions also include the terms limited. liability partnership, a partner of limited liability partnership as they have been defined in the Limited Liability Partnership Act, 2008. However, for income-tax purposes a minor admitted to the benefits of an existing partnership would also be treated as partner.

6. Association of Persons (AOP) : When persons combine together for promotion of joint enterprise they are assessable as an AOP, when they do not in law constitute a partnership. In order to constitute an association ,persons must join for a common purpose or action and their object must be to produce income; it is not enough that the persons receive the income jointly. Co-heirs, co-legatees or co- donees joining together for a common purpose or action would be chargeable as an AOP. For e.g., Mr. Yash, AB & Co. (Firm) and X (P) Ltd. Join together to carry on construction activity otherwise than as a partnership firm, such an association will be recognized as an association of persons.

7. Body of Individual : Body of individuals refers to a conglomeration of individuals who carry on some activity with or without the object of producing income. It denotes the status of persons like executors or trustees who merely receive the income jointly and who may be assessable in like manner and to the same extent as the beneficiaries individually. Thus, co-executors or co-trustees are assessable as a BOI as their title and interest are indivisible. Income-tax shall not be payable by an assessee in respect of the receipt of share of income by him from BOI and on which the tax has already been paid by such BOI. For e.g., mutual trade associations, members club, etc.

8. Artificial Juridical Person : These entities which are not natural persons but are separate entities in the eyes of law. This is a residual category could cover all artificial persons with a juristic personality not falling under any other category of persons .For Example- Deities, Bar Council, Universities, which are some important examples of Artificial Juridical Persons.

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