Income Tax - Definition - Law Dictionary Home Dictionary Definition income-tax

Definition :

Income-tax, a tax of so much in the pound of income, under five classifications, according as derived from (A) ownership of land or houses, etc., (B) occupation of land or houses, etc., (C) dividends from stocks or shares, (D) professional or trade earnings or profits, and any profit not included in the four previous classifications, and (E) official and other salaries. The Acts on this subject, dating from the Income-tax Act, 1842 (5 & 6 Vict. c. 35), which, to a great extent, repeats the phraseology of Addington's Act of 1806, are very numerous. Voluntary Easter gifts to an incumbent are assessable to income-tax, Cooper v. Blakinston, 1909 AC 104. See Chitty's Statutes, tit. 'Property Tax.'

The tax in 1842, and for many years afterwards, was 7d. in the pound; in 1855,, the year of the Crime an War, it rose to 1s. 4d., and in 1918 to 6s. The Finance Act, 1907 (7 Edw. 7, c. 13), for the first time differentiated (ss. 19 et seq.) between 'earned income' and income from other sources, and also laid down some stringent provisions with regard to making returns of income. For the present law, and the various abatements and exemptions, which have become extremely complicated, see the current Finance Acts, and consult the latest editions of Dowell or Konstam on Income Tax. See SUPER-TAX.

The term 'Income-tax' as employed in s. 2 of the Finance Act, 1964 includes surcharge as also the special and the additional surcharge whenever provided which are also surcharges within the meaning of Article 271 of the Constitution, Commissioner of Income Tax v. K. Srinivasan, AIR 1972 SC 491: (1972) 4 SCC 526. [Finance Act, (5 of 1964), s. 2(2)(c)(b)]