Income Tax: Person

Person includes:

  1. an Individual;
  2. a Hindu Undivided Family (HUF) ;
  3. a Company;
  4. a Firm
  5. an association of persons or a body of individuals, whether incorporated or not;
  6. a local authority; and
  7. Every artificial juridical person not falling within any of the preceding sub-clauses.
  8. Association of Persons or Body of Individuals or a Local authority or Artificial Juridical Persons shall be deemed to be a person whether or not, such persons are formed or established or incorporated with the object of deriving profits or gains or income.

The word person is a very wide term and embraces in itself the following :

  1. INDIVIDUAL: It refers to a natural human being whether male or female, minor or major.
  2. Hindu Undivided Family. It is a relationship created due to operation of Hindu Law. The manager of HUF is called “Karta” and its members are called ‘Coparceners’.
  3. COMPANY: It is an artificial person registered under Indian Companies Act 1956 or any other law.
  4. FIRM: It is an entity which comes into existence as a result of partnership agreement between persons to share profits of the business carried on by all or any one of them. Though, a partnership firm does not have a separate legal entity, yet it has been regarded as a separate entity under Income Tax Act. Under Income Tax Act, 1961, a partnership firm can be of the following two types
    1. a firm which fulfil the conditions prescribed u/s 184.
    2. A firm which does not fulfil the conditions prescribed u/s 184.

It is important to note that for Income Tax purposes, a limited liability partnership (LLP) constituted under the LLP Act, 2008 is also treated as a firm.

  1. Association of Persons or Body of Individuals: Co-operative societies, MARKFED, NAFED etc. are the examples of such persons. When persons combine togather to carry on a joint enterprise and they do not constitute partnership under the ambit of law, they are assessable as an association of persons. Receiving income jointly is not the only feature of an association of persons. There must be common purpose, and common action to achieve common purpose i.e. to earn income. An AOP. can have firms, companies, associations and individuals as its members.

A body of individuals (BOl) cannot have non-individuals as its members. Only natural human beings can be members of a body of individuals.

Whether a particular group is AOP. or BOl. is a question of fact to be decided in each case separately.

  1. Local Authority: Municipality, Panchayat, Cantonment Board, Port Trust etc. are called local authorities.
  2. Artificial Juridical Person. A public corporation established under special Act of legislature and a body having juristic personality of its own are known to be Artificial Juridical Persons. Universities are an important example of this category.

Example : 
Determine the status of following persons :

  1. Reliance Industries Limited. [ company]
  2. Punjab National Bank. [ company]
  3. Madras University. [ Artificial Juridical person]
  4. Calcutta Municipal Corporation. [ Local Authority]
  5. A partnership firm with A, B and C partners. [ Firm]
  6. A Brahmin Parivar consisting of Mr. A, his brother B, Mrs. A and B. [ H.U.F.]
  7. Kalyani Publishers Ltd. [ Company]
  8. Reserve Bank of India. [ Artifitial Judicial Person]
  9. Life Insurance Corporation of India. [ Company]
  10. Narendra Modi, Prime Minister of India. [ Individual]
  11. A Village Panchyat. [ Local Authority]
  12. Markfed, Housefed. [ Association of Person – AOP ]

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