Definition of Person under Income Tax Act

Abhilash CU, M.Com, FCA, ACS

The term Person under Income Tax Act has wide meaning and interpretation than the normal meaning of person. The definition of person has a vide implication that “assesse “under the act is defined as a “person” by whom income tax or super tax or any other sum of money is payable under the act. So in order to be declared an assesse under the Income Tax Act, the assesse must be a “Person” as defined under the Income Tax Act of 1961.The term “Person” has been defined under Sec2(31) of the Income Tax Act of 1961. The definition of “Person” is as follows.

 "Person" includes—

1. An individual,
2. A Hindu Undivided Family,
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;

The definition is inclusive and not exhaustive i.e. any other Person can also be included under the definition of Person under Income Tax Act.

Individual refers to a natural human being whether male or female or transgender, minor or major.

A Hindu undivided family (HUF) is a relationship created due to operation of Hindu Law. The head of the HUF is Karta and the members are called Coparceners. Many state governments have abolished the status of HUF and they are prevalent in some states of the country only. The Karta is having two assessments i.e. One his individual assessment and the second in the capacity of Karta of HUF.

A Company is a company incorporated under Companies Act 2013 or any earlier acts.

A firm is an entity which comes into existence by virtue of a partnership agreement between persons to share profits or business carried on by all or any of them. LLP is also include in the definition of Firm

Association of Persons (AOP) are persons who combine together to form a joint enterprise but does not constitute a partnership. There must a common purpose and a common action to achieve the common purpose for which the AOP is constituted. AOP can have individuals, firms, companies or Associations as its members. Body of Individuals as against AOP can have only individuals as members and non-individuals cannot be members.

A local authority Comprises of Corporation, Municipality, Panchayat, Cantonment board etc.

An Artificial Juridical person is a body having juridical personality of its own and a public corporation established under Special Act of Legislature. Artificial juridical person is an entity other than a natural person created/recognized/accredited by law and also recognized as a legal entity having distinct identity, legal personality and duties and rights. Eg: Universities, Lord Tirupathi Balaji, and Sabarimala Ayyappa etc. Any other body which does not fall under other 6 categories of person satisfying the above requirements can also be classified as an artificial juridical person.