Income Tax Act

Official PDF pages 406–410

SOURCE PDF PAGE 406
(2) Where no income-tax is chargeable on the total income of the association of
persons or body of individuals, the share of a member computed as provided in
section 309 shall be chargeable to tax as part of his total income.
(3) Where no income-tax is payable by an assessee under sub-section (1),—
( a )   if the association of persons or body of individuals is chargeable to tax
on its total income at the maximum marginal rate or any higher rate
under any of the provisions of this Act, the share of a member computed
as aforesaid shall not be included in his total income;
( b )   in any other case, the share of a member computed as aforesaid shall
form part of his total income.
Charge of tax where shares of members in association of persons or body of
individuals unknown, etc.
311.   (1) Where the individual shares of the members of an association of persons
or body of individuals in the whole or any part of the income of such
association or body are indeterminate or unknown, tax shall be charged on the total
income of such association or body at the maximum marginal rate, subject to the
provision of sub-section (2).
(2) In a case referred to in sub-section (1) where the total income of any member
of such association or body is chargeable to tax at a rate which is higher than the
maximum marginal rate, tax shall be charged on the total income of the such asso -
ciation or body at such higher rate.
(3) Where the individual shares of the members of an association of persons or body
of individuals in the whole or any part of the income of such association or body
are determinate or known, and—
( a )   where the total income of any member of such association or body for
the tax year (excluding his share from such association or body) exceeds
the maximum amount which is not chargeable to, tax shall be charged
on the total income of the association or body at the maximum marginal
rate;
( b )   where the total income of such association or body for the tax year
chargeable to tax at a rate which is higher than the maximum marginal
rate,—
( i )   tax shall be charged on that portion of the total income of associ -
ation or body which is relatable to the share of such member at
such higher rate; and
( ii )   the balance of the total income of such association or body shall
be taxed at the maximum marginal rate.
(4) For the purposes of this section, the individual shares of the members of an
association of persons or body of individuals in the whole or any part of the income
of such association or body shall be deemed to be indeterminate or unknown if
such shares (in relation to the whole or any part of such income) are indeterminate

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or unknown on the date of formation of such association or body or at any time
thereafter.
5. —Executors
Executor.
312.   (1) The income of the estate of a deceased person shall be chargeable to tax
in the hands of the executor as an individual, if there is only one executor, or
as an association of persons, if the executors are more than one.
(2) For the purposes of this Act, the executor shall be deemed to be resident or
non-resident according to the residential status of the deceased person for the tax
year in which his death took place.
(3) For the purposes of this section, “executor” includes an administrator or other
person administering the estate of a deceased person.
(4) The assessment of an executor under this section shall be made separately from
any assessment that may be made on him in respect of his own income.
(5) Separate assessments shall be made under this section on the total income of
each completed tax year or part thereof as is included in the period from the date
of the death to the date of complete distribution to the beneficiaries of the estate
according to their several interests.
(6) In computing the total income of any tax year under this section, any income
of the estate of that tax year distributed to, or applied to the benefit of, any specific
legatee of the estate during that tax year shall be excluded; but the income so ex -
cluded, shall be included in the total income of the tax year of such specific legatee.
(7) The provisions of section 305 shall, so far as may be, apply in the case of an
executor in respect of tax paid or payable by him, as they apply in the case of a
representative assessee.
6. —Succession to business or profession
Succession to business or profession otherwise than on death.
313.   (1) Where a person carrying on any business or profession (hereinafter
referred to as the predecessor) has been succeeded therein by any other person
(hereinafter referred to as the successor) who continues to carry on that business
or profession,—
( a )   the predecessor shall be assessed in respect of the income of the tax year
in which the succession took place up to the date of succession;
( b )   the successor shall be assessed in respect of the income of the tax year
after the date of succession.
(2) Irrespective of anything contained in sub-section (1), when the predecessor can -
not be found, the assessment of the income of the tax year in which the succession
took place up to the date of succession and of the tax year preceding that year shall
be made on the successor in like manner and to the same extent as it would have
been made on the predecessor, and all the provisions of this Act shall, so far as may
be, apply accordingly.

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(3) Irrespective of anything contained in sub-sections (1) and (2), where there is
succession, the assessment or reassessment or any other proceedings, made or
initiated on the predecessor during the course of pendency of such succession, shall
be deemed to have been made or initiated on the successor and all the provisions
of this Act shall, so far as may be, apply accordingly.
(4) When any sum payable under this section in respect of the income of such
business or profession assessed on the predecessor,—
( a )   for the tax year in which the succession took place up to the date of
succession; or
( b )   for the tax year preceding the year in which the succession took place,
cannot be recovered from him, the Assessing Officer shall record a finding to that
effect and the sum payable by the predecessor shall thereafter be payable by and
recoverable from the successor, and the successor shall be entitled to recover from
the predecessor any sum so paid.
(5) Without prejudice to the provisions of this section, where any business or
profession carried on by a Hindu undivided family is succeeded to, and simultane -
ously with the succession or after the succession there has been a partition of the
joint family property between the members or groups of members, the tax due in
respect of the income of the business or profession succeeded to, up to the date of
succession, shall be assessed and recovered in the manner provided in section 315.
(6) For the purposes of this section,—
( a )   “income” includes any gain accruing from the transfer, in any manner,
of the business or profession as a result of the succession; and
( b )   “pendency” means the period commencing from the date of filing of
application for such succession of business before the High Court or
tribunal or the date of admission of an application for corporate insol -
vency resolution by the Adjudicating Authority as defined in section 5(1)
of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), and ending
with the date on which the order of such High Court or tribunal or such
Adjudicating Authority, is received by the jurisdictional Principal Com -
missioner or the Commissioner.
Effect of order of tribunal or court in respect of business reorganisation.
314.   (1) Irrespective of anything to the contrary contained in section 263, if prior
to the date of order in respect of business reorganisation, any return of income
has been furnished under the provisions of the said section by an entity for any tax
year to which such order applies, the successor shall furnish, within six months
from the end of the month in which the order was issued, a modified return in such
form and manner, as may be prescribed, in accordance with and limited to the said
order.
(2) Where the assessment or reassessment proceedings for a tax year to which the
order in respect of the business reorganisation applies,—
( a )   have been completed on the date of furnishing of the modified return
as per the provisions of sub-section (1), the Assessing Officer shall pass
an order modifying the total income of the relevant tax year determined

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in such assessment or reassessment, in accordance with such order in
respect of business reorganisation and taking into account the modified
return so furnished;
( b )   are pending on the date of furnishing of the modified return as per
sub-section (1), the Assessing Officer shall pass an order assessing or
reassessing the total income of the relevant tax year as per the order
in respect of the business reorganisation and taking into account the
modified return so furnished.
(3) Subject to any other provisions of this section, in an assessment or reassessment
made in respect of a tax year under this section, all other provisions of this Act shall
apply and the tax shall be chargeable at the rate or rates as applicable to such tax year.
(4) For the purposes of this section,—
( a )   “business reorganisation” means the reorganisation of business involving
the amalgamation or demerger or merger of business of one or more
persons;
( b )   “order in respect of business reorganisation” means an order of a High
Court or tribunal or an Adjudicating Authority as defined in section 5(1)
of the Insolvency and Bankruptcy Code, 2016 (31 of 2016); and
( c )   “successor” means all resulting companies in a business reorganisation,
whether or not the company was in existence prior to such business
reorganisation.
7.   — Partition
Assessment after partition of Hindu undivided family.
315.   (1) A Hindu family, hitherto assessed as undivided, shall be deemed for the
purposes of this Act to continue to be a Hindu undivided family, except where
and in so far as a finding of partition has been given under this section in respect
of the Hindu undivided family.
(2) Where, at the time of making an assessment under section 270 or section 271, it
is claimed by or on behalf of any member of a Hindu family assessed as undivided
that a partition, whether total or partial, has taken place among the members of
such family, the Assessing Officer shall make an inquiry thereinto after giving notice
of the inquiry to all the members of the family.
(3) On the completion of the inquiry, the Assessing Officer shall record a finding as
to whether there has been a total or partial partition of the joint family property,
and, if there has been such a partition, the date on which it has taken place.
(4) Where a finding of total or partial partition has been recorded by the Assessing
Officer under this section, and the partition took place during the tax year,—
( a )   the total income of the joint family in respect of the period up to the date
of partition shall be assessed as if no partition had taken place; and
( b )   each member or group of members shall, in addition to any tax for which
he or it may be separately liable and irrespective of anything contained

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against Schedule III (Table: Sl. No. 1), be jointly and severally liable for
the tax on the income so assessed.
(5) Where a finding of total or partial partition has been recorded by the Assessing
Officer under this section, and the partition took place after the expiry of the tax
year, the total income of the tax year of the joint family shall be assessed as if no
partition had taken place, and the provisions of sub-section (4)( b ), shall so far as
may be, apply to the case.
(6) Irrespective of anything contained in this section, if the Assessing Officer finds
after completion of the assessment of a Hindu undivided family that the family has
already effected a partition, whether total or partial, the Assessing Officer shall pro -
ceed to recover the tax from every person who was a member of the family before
the partition, and every such person shall be jointly and severally liable for the tax
on the income so assessed.
(7) The provisions of this section shall, so far as may be, apply in relation to the levy
and collection of any penalty, interest, fine or other sum in respect of any period up
to the date of the partition, whether total or partial, of a Hindu undivided family as
they apply in relation to the levy and collection of tax in respect of any such period.
(8) Irrespective of anything contained in the foregoing provisions of this section,
where a partial partition has taken place after the 31st December, 1978, among the
members of a Hindu undivided family hitherto assessed as undivided,—
( a )   a claim that such partial partition has taken place shall not be inquired into
under sub-section (2) and no finding shall be recorded under sub-section
(3) that such partial partition had taken place and any finding recorded
under sub-section (3) to that effect at any time, shall be   null   and   void ;
( b )   such family shall continue to be liable to be assessed under this Act as
if no such partial partition had taken place; and
( c )   each member or group of members of such family immediately before
such partial partition and the family shall be jointly and severally liable
for any tax, penalty, interest, fine or other sum payable under this Act by
the family in respect of any period, whether before or after such partial
partition.
(9) For the purposes of this section, the several liability of any member or group
of members thereunder shall be computed according to the portion of the joint
family property allotted to him or it at the partition, whether total or partial and
the provisions of this Act shall apply accordingly.
(10) For the purposes of this section,—
( a )   “partition” means,—
( i )   where the property admits of a physical division, a physical divi -
sion of the property, but a physical division of the income without
a physical division of the property producing the income shall not
be deemed to be a partition; or