Section 2 of the Income-tax Act, 1961, serves as the
foundation of the Act by providing legal definitions of crucial terms such as
“assessee,” “income,” “person,” and more. These definitions ensure clarity and
consistency in the interpretation and application of various provisions
throughout the Act. Understanding Section 2 is essential for taxpayers, professionals,
and authorities to correctly assess tax obligations and legal compliance. This
section lays down over 100 definitions that form the backbone of the Indian
taxation system.
In this
Part we will learn Definitions of:
(1) Advance tax
(1A) agricultural income
(1B) amalgamation
(1C) Additional Commissioner
(1D) Additional Director
2. Definitions.—in this Act, unless the context otherwise
requires,—
1[(1) “advance tax” means the
advance tax payable in accordance with the provisions of Chapter XVII-C;]
2[(1A)] “agricultural income”
means—
3[(a) any
rent or revenue derived from land which is situated in India and is used for
agricultural purposes;]
(b) Any income derived from such
land by—
(i) Agriculture;
or
(ii) the performance by a
cultivator or receiver of rent-in-kind of any process ordinarily employed by a
cultivator or receiver of rent-in-kind to render the produce raised or received
by him fit to be taken to market; or
(iii) the sale by a cultivator
or receiver of rent-in-kind of the produce raised or received by him, in
respect of which no process has been performed other than a process of the
nature described in paragraph (ii) of this sub-clause ;
(c) any income derived from any
building owned and occupied by the receiver of the rent or revenue of any such
land, or occupied by the cultivator or the receiver of rent-in-kind, of any
land with respect to which, or the produce of which, any process mentioned in
paragraphs (ii) and (iii) of sub-clause (b) is carried on:
4 [Provided
that—
(i)
the building is on or in the immediate vicinity of
the land, and is a building which the receiver of the rent or revenue or the
cultivator, or the receiver of rent-in-kind, by reason of his connection with
the land, requires as a dwelling house, or as a store-house, or other out
building, and
(ii)
the land is either assessed to land revenue in
India or is subject to a local rate assessed and collected by officers of the
Government as such or where the land is not so assessed to land revenue or
subject to a local rate, it is not situated—
(A)
in any area which is comprised within the
jurisdiction of a municipality (whether known as a municipality, municipal
corporation, notified area committee, town area committee, town committee or by
any other name) or a cantonment board and which has a population of not less
than ten thousand 5***; or
6[(B) in
any area within the distance, measured aerially,—
(I)
not being more than two kilometres, from the
local limits of any municipality or cantonment board referred to in item (A)
and which has a population of more than ten thousand but not exceeding one
lakh; or
(II)
not being more than six kilometres, from the
local limits of any municipality or cantonment board referred to in item (A)
and which has a population of more than one lakh but not exceeding ten lakh; or
(III)
not being more than eight kilometres, from the
local limits of any municipality or cantonment board referred to in item (A)
and which has a population of more than ten lakh.]
7 [Explanation
8[1.]—For the removal of doubts, it is hereby declared that revenue
derived from land shall not include and shall be deemed never to have included
any income arising from the transfer of any land referred to in item (a) or
item (b) of sub-clause (iii) of clause (14) of this section.]
9
[Explanation 2.—For the removal of doubts, it is hereby declared that income
derived from any building or land referred to in sub-clause (c) arising from
the use of such building or land for any purpose (including letting for
residential purpose or for the purpose of any business or profession) other
than agriculture falling under sub-clause (a) or sub-clause (b) shall not be
agricultural income.]
10
[Explanation 3.—For the purposes of this clause, any income derived from
saplings or seedlings grown in a nursery shall be deemed to be agricultural
income.]
11
[Explanation 4.—For the purposes of clause (ii) of the proviso to sub-clause
(c), “population” means the population according to the last preceding census
of which the relevant figures have been published before the first day of the
previous year;]
12 [13[(1B)]
“amalgamation”, in relation to companies, means the merger of one or more
companies with another company or the merger of two or more companies to form
one company (the company or companies which so merge being referred to as the
amalgamating company or companies and the company with which they merge or
which is formed as a result of the merger, as the amalgamated company) in such
a manner that—
(i)
all the property of the amalgamating company or
companies immediately before the amalgamation becomes the property of the
amalgamated company by virtue of the amalgamation;
(ii)
all the liabilities of the amalgamating company
or companies immediately before the amalgamation become the liabilities of the
amalgamated company by virtue of the amalgamation;
(iii)
shareholders holding not less than 14[three-fourths]
in value of the shares in the amalgamating company or companies (other than
shares already held therein immediately before the amalgamation by, or by a
nominee for, the amalgamated company or its subsidiary) become shareholders of
the amalgamated company by virtue of the amalgamation,
Otherwise than as a result of
the acquisition of the property of one company by another company pursuant to
the purchase of such property by the other company or as a result of the
distribution of such property to the other company after the winding up of the
first-mentioned company;]
15[(1C)
“Additional Commissioner” means a person appointed to be an Additional
Commissioner of Income-tax under sub-section (1) of section 117;
(1D)
“Additional Director” means a person appointed to be an Additional Director of
Income-tax under sub-section (1) of section 117;]
 |
*Subject
to verification and confirmation by the Department.
1.
Ins. by Act 4 of 1988, s. 3 (w.e.f. 1-4-1989).
2. Clause
(1) renumbered as clause (1A), ibid., s.
3. 3
(w.e.f. 1-4-1989). 3. Subs. by Act 42 of 1970, s. 2, for sub-clause (a) (w.e.f.
1-4-1962).
4. Subs. by
s. 2, ibid., for the proviso (w.e.f. 1-4-1962).
5. Certain
words omitted by Act 17 of 2013, s. 3 (w.e.f. 1-4-2014).
6. Subs. by
s. 3, ibid., for item (B) (w.e.f. 1-4-2014).
7.
Ins. by Act 13 of 1989, s. 3 (w.e.f. 1-4-1970).
8. 4.
Explanation renumbered as Explanation 1 thereof by Act 10 of 2000, s. 3 (w.e.f.
1-4-2001).
9. 5. Ins.
by s. 3, ibid. (w.e.f. 1-4-2001).
10. Ins. by
Act 18 of 2008, s. 3 (w.e.f. 1-4-2009).
11. Ins. by
Act 17 of 2013, s. 3 (w.e.f. 1-4-2014).
12. Ins. by
Act 20 of 1967, s. 4 (w.e.f. 1-4-1967).
13. Clause
(1A) renumbered as clause (1B) thereof by Act 4 of 1988, s. 3 (w.e.f.
1-4-1989).
14. Subs. by
Act 27 of 1999, s. 3, for “nine-tenth” (w.e.f. 1-4-2000).
15. Ins. by
Act 22 of 2007, s. 3 (w.e.f. 1-6-1994).
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