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CA Intermediate · Taxation · Basic Concepts

Karan Traders Pvt Ltd, an Indian company, receives a gift of Rs 5,00,000 from its shareholder. For tax year 2026-27 which of the following best reflects the status of the company under the Income-tax Act, 2025 as a 'person' and 'assessee'?

A company is a person under the Act's definition, and it is an assessee because tax or another sum is payable by it. Being an assessee does not depend on having income above any exemption limit, and persons are not limited to individuals.

  1. AA company is a person, and it is an assessee because tax or other sum is payable by it under the ActCorrect
  2. BA company is a person but cannot be an assessee, as only individuals are assessees
  3. CA company is an assessee only if it has income exceeding the basic exemption limit
  4. DA company is not a person, as a person must be a natural individual

Explanation

The definition of person includes an individual, HUF, company, firm, AOP/BOI, local authority and every artificial juridical person. An assessee is a person by whom any tax or other sum is payable under the Act. A company is therefore both. There is no basic exemption threshold test for being an assessee.

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