Question

Directions: The following question consists of two statements, one labelled as Assertion (A) and the other labelled as Reason (R). You are to examine these two statements carefully and decide if the Assertion (A) and the Reason (R) are individually true and if so, whether the Reason (R) is a correct explanation of the Assertion (A). Assertion (A): Income-tax is levied on the total income of a person for the previous year. Reason (R): Income earned during the previous year is assessed to tax in the immediately succeeding assessment year under the Income-tax Act, 1961.

• A. Both (A) and (R) are true, but (R) is not the correct explanation of (A).
• B. (A) is false, but (R) is true.
• C. (A) is true, but (R) is false.
• D. Both (A) and (R) are true and (R) is the correct explanation of (A).

Hint:

Previous Year = The Year of Earning. Assessment Year = The Year of Taxing. This relationship is the bedrock of India's taxation system!

Answer 1

The Correct Option is D

Step 1: Read both statements.
Assertion (A) says income-tax is levied on the total income of a person for the previous year. Reason (R) says income earned in the previous year is taxed in the immediately following assessment year under the Income-tax Act, 1961. We must judge if both are true and if R explains A.

Step 2: Check Assertion (A).
The Act charges tax on the total income earned in the previous year, which is the year in which the income is actually earned. So Assertion (A) is true.

Step 3: Check Reason (R).
The Act follows a system where the income of the previous year is assessed and taxed in the next year, called the assessment year. So Reason (R) is also true.

Step 4: See if R explains A.
The previous year income becomes the base for tax precisely because the Act says the assessment happens in the following year. So R gives the reason why A is true. R correctly explains A.

Step 5: Remove the wrong options.
Saying R does not explain A (option 1) is wrong, saying A is false (option 2) is wrong, and saying R is false (option 3) is wrong, because both are true and connected.

Step 6: State the answer.
So both (A) and (R) are true and (R) is the correct explanation of (A). \[ \boxed{\text{Both (A) and (R) are true and (R) is the correct explanation of (A).}} \]