Pooja Nahar

The word company is derived from the Latin word ‘com’ i.e. with or together and ‘panis’ i.e. bread. Originally it refers to an association of persons or merchant men discussing matters and taking food together.
However, as per companies Act, 2013 company which is formed and incorporated under the Companies Act, 2013 or any of the previous company laws.

According to Lord Justice Hanay, “company as “an artificial person created by law with a perpetual succession and a common seal”.

Features or Characteristics of a Company :-

• Incorporated Association: A company comes into existence through the operation of law.
• Perpetual Existence: company has its own existence doesn’t depend on its members, it will be continues in existence despite the death, insolvency or change of members.
• Separate Legal Entity: company has its own separate legal entity and is not affected by changes in its membership.
• Common Seal: Company cannot sign the documents. Therefore common seal is affixed on all documents by the person authorize to do so and puts his signature, but now, the use of common seal has been made optional.
• Limited Liability: The liability of shareholders of a company is limited to the extent he has agreed to pay to the company.
• Not a citizen: A company is not a citizen as a natural person because it is created by law.
• Transferability of Shares: shares are transferable by its members except in case of a private limited company, which may have certain restrictions on such transferability.
• Maintenance of Books: A limited company is required by law to maintain books of account.
• Periodic Audit: A company has to get its accounts periodically audited through the chartered accountants.
• Right of Access to Information: The shareholders of a company have right to inspect its books of account and to seek information.

Contingent Assets :- a possible asset arises from past events and their existence will be confirmed by occurrence or nonoccurrence of one or more uncertain future events. For example, a claim that an enterprise is pursuing through legal process, where the outcome is uncertain, is a contingent asset.

Contingent Liabilities :- a possible obligation arising from past events and may arise in future depending on the occurrence or non-occurrence of one or more uncertain future events.

capital expenditure -expenditure incur to increase revenue earning capacity of a business over more than one accounting period, the benefits arising out of capital expenditure last for more than one accounting period. Example- acquisition of tangible or intangible fixed assets.

Revenue expense is incurred to generate revenue for a particular accounting period, revenue expenses expire in the same accounting period. Example- cost of goods sold, salaries, rent, etc.

CAPITAL AND REVENUE RECEIPTS:-

Capital Receipts : receipts which are not revenue in nature are capital receipts e.g. receipts from sale of fixed assets or investments, secured or unsecured loans, owners’ contributions etc.

Revenue Receipts : receipts which are obtained in course of normal business activities are revenue receipts e.g. receipts from sale of goods or services, interest income etc.

As per sec. 13A of Income Tax Act, 1961 means a political party registered under section 29A of the Representative of the People Act, 1951.

Political Parties Income :- 1. House Property 2. Capital gains 3. Other resources 4. Voluntary contribution. It is exempt under section 13A.

Conditions :-

1. maintenance of Books of account & other documents.
2. record of voluntary contribution in excess of Rs. 20000 (change as per Finance Act(report to E.C)).
3. audit of books of account.
4. limit of cash donation upto Rs. 2000 (change as per Finance Act).
5. donation >Rs. 2000 through A/c payee cheque/bank draft/bank ECS/bank A/c/electronic modes.
6. return of income within due date under section 139 (4B).

Assessment means determination/computation of total income and tax liablity.

Discontinued business :- complete cessation of business. ex. firm’s dissolution(discontinued).

another example: Suppose Mr. Ram has business contains 3 units i.e. X,Y & Z. Out of these 3 units, one unit X is giving loss. Therefore ram has decided to drop the business of unit X, this is not called discontinuance of business. on the other hand, in case of joint family’s business if there is division/partition. This is case of discontinuance.

In case of Professions:– ABC firm having 3 partners i.e. A, B & C. Merely suspend practice is not called discontinuance as partners may remain in profession. It is largely depends upon the state of mind- an advocate discontinue his profession when he is appointed as judge, although aftre retirement he may resume his practice.