As a normal rule, the income earned during any previous year is assessed in the immediately succeeding assessment year. However, in the following circumstances the income is taxed in the same year in which it is earned. Therefore, the assessment year and the previous year in these exceptional circumstances will be same. These exceptions have been provided to safeguard the collection of taxes so that assesses who may not be traceable later on, are not allowed to escape the payment of taxes. The exceptions are as follows:
- Shipping business of non-residents[Section 172]: A non-resident who is carrying on a shipping business and earns income from carrying passengers/ livestock/goods from a port in India. will be charged income tax before the ship is allowed to leave the Indian port. Therefore, before the ship leaves the Indian port, the master of the ship is under an obligation to furnish a return of the full amount earned on account of fare and freight (including the amount paid or payable by way of demur rage charge or handling charge or any other amount of similar nature) and pay the tax accordingly. In this case 7.5% of the amount of fare/freight/charge, etc. shall be deemed to be income in the same year in which it is earned.
- Assessment of persons leaving india [Section 174]: When it appears to the Assessing Officer that any individual may leave India during the current assessment year or shortly after its expiry, and such individual has no present intention of returning to india, the total income of such individual, from the expiry of previous year for that assessment year up to the probable date of his departure from india shall be chargeable to tax in the same assessment year. Example 1.- R wishes to migrate to USA permanently and plans to leave India on 15.11.2012. He submitted his return for assessment year 2012-13 on 31.7.2012 the assessment of which is still pending In this case the Assessing Officer will make two assessments(a) regular assessment for previous year income of 2011-12 at the rates applicable for assessment year 2012-13(b) assessment of income of the period 1.4.2012 to 15.11.2012 and tax should be levied on such income in the assessment year 2012-13 itself but at the rates of advance tax for financial year 2012-13[a.y. 2013-14] given in part 3 of First Schedule of Finance Act,2012.
- Assessment of association of persons or body of individuals or artificial juridical person formed for a particular event or purpose [Section 174A]: Where it appears to the Assessing Officer that any association of persons or a body of individuals or an artificial juridical person formed or established or incorporated for a particular event or purpose is likely to be dissolved in the assessment year in which such association of persons or body of individuals or an artificial juridical person was formed or established or incorporated or immediately after such assessment year. the total income of such person or body or juridical person. for the period from the expiry of the previous year for that assessment year up to the date of its dissolution. shall be chargeable to tax in that assessment year. E.g. if AOP which is formed in the previous year 2012-13 is going to be dissolved on 16.6.2013 then the income of the period 1.4.2013 to 16.6.2013 shall be charged to income tax in the assessment year 2013-14 itself although its assessment year should have been assessment year 2014-15.
- Assessment of persons likely to transfer property to avoid tax[Section 175]: If it appears to the Assessing Officer during any current assessment year, that any person is likely to charge, sell, transfer, dispose of or otherwise part with any of his assets with a view to avoiding any payment of his tax liability, then the total income of such person for the period from the expiry of the previous year for that assessment year (i.e. from 1st april of that assessment year) till the date when the assessing officer commences proceedings, shall be the rate given in part 3 of Schedule 1 which are applicable for advance tax also.
- Discontinued business [Section 176]: Where any business or profession is discontinued in any assessment year, the income of the period from expiry of the previous year for that assessment year up to the date of such discontinuance may, at the discretion of the assessing officer, he charged to tax in that assessment year. For example, if a business is discontinued on 16.7.2012 then the income for the period 1.4.2012 to 16.7.2012 may be assessed in the assessment year 2012-13 itself. The tax will be charged at the rates in force for advance tax payable during financial year 2012-13 [i.e. rates given in part 3 of the first Schedule]. Any person discontinuing any business or profession shall give to Assessing Officer notice of such discontinuance within 15 days thereof.