Section 174A of ITA, 1961 : Section 174A: Assessment Of Association Of Persons Or Body Of Individuals Or Artificial Juridical Person Formed For A Particular Event Or Purpose

Explanation using Example

Imagine a group of individuals come together to organize a large music festival. They form an association for this specific event, which is not intended to be a permanent organization. The festival is held in March 2023, and the association plans to dissolve immediately after the event. The Income-tax Officer, aware that the association will not exist by the time regular assessments are done for the financial year 2023-2024, decides to assess the income of the association for the period from April 2022 (beginning of the previous year) to March 2023 (dissolution date) during the same financial year of the event, invoking Section 174A of the Income-tax Act, 1961. This ensures that the association's income is taxed before it dissolves.