AIBE Prep › Papers › AIBE XVIII — December 2023 › Q.10
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Q.10
Taxation Law Medium Act + Section Given
Bare Act Income Tax Act, 1961 · Section 3

Which of the following would be the first previous year in case of a business or profession newly set up on 31st March, 2020 as per the Income Tax Act, 1961?

A Start from 1st April 2019, end 31 March 2020
✓ Start from 31st March 2020, end 31st March 2020 Answer
C Start from 1st April 2020, end 31st December 2020
D Start from 1st January 2020, end 31st March 2020
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Explanation & Strategy

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Since the business was set up on the last day of the financial year (31 March 2020), the first previous year is just that single day — 31 March 2020 to 31 March 2020.

  1. 1 Pick up IT Act.
  2. 2 Go to Section 3 — 'Previous year' definition.
  3. 3 Read the proviso: for business newly set up, previous year = date of setup to end of that financial year.
  4. 4 Setup date: 31 March 2020. Financial year ends: 31 March 2020. So previous year = just one day (31 March 2020).
The text reads: Section 3: For business newly set up, the previous year shall be the period beginning with the date of setting up and ending with the financial year.
At a Glance
Subject Taxation Law
Difficulty Medium
Act Income Tax Act, 1961
Section Section 3
Answer (B) Act + Section Given
Paper AIBE XVIII — December 2023
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📖 Open Book — Reading Mode Income Tax Act, 1961