The term 'Income
' in the Income Tax Act connotes a periodical monetary return ‘coming in' with some sort of regularity, or expected regularity, from definite sources. The Income Tax Act provides that for the purpose of charge of income tax and for computation of total income all income shall be classified under five sources of income
. Income of a person from each of these sources is calculated to find out the gross total income of the person. The total income from all the above heads of income is calculated in accordance with the provisions of the Act as they stand on the first day of April of any assessment year. Permissible deductions are reduced and then income-tax payable is calculated at the prescribed rates. If income of a person is derived from various heads, the person is entitled to claim deduction permissible under respective head whether or not computation under each head results in taxable income.
The definition of income under the Income Tax Act is inclusive in nature i.e. apart from the items listed in the definition, any receipt which satisfies the basic condition of being income is also to be treated as income and charged to income tax accordingly.