Section 318 — Assessment of association of persons or body of individuals or artificial juridical person formed for a particular event or purpose. Successor to s.174A of the 1961 Act.
Section 318 is in Chapter XVII — Special Provisions Relating to Certain Persons, which runs from section 302 to section 355.
Sub-section (1) overrides section 4 and lets the Assessing Officer, where it appears to him that an association of persons, body of individuals or artificial juridical person formed, established or incorporated for a particular event or purpose in a tax year is likely to be dissolved in that year or immediately after it, charge its total income for the period from the first day of that tax year to the date of dissolution in that same tax year. Sub-section (2) applies section 317(2) to (6) — the machinery for persons leaving India — so far as may be to proceedings against such a person.
An entity created for a one-off event may be wound up before the normal assessment for that year could be made, so the section brings the charge forward to the current year rather than waiting for the ordinary assessment cycle. Borrowing the leaving-India machinery saves re-enacting the procedural steps for an accelerated assessment.
An event-specific body cannot assume it will be assessed only in the following year: if the Assessing Officer forms the view that dissolution is likely in the same year or immediately afterwards, the income from the start of the tax year to dissolution is charged in the current year. The procedure, including notice and the timing of the demand, comes from section 317(2) to (6), so read those sub-sections together with this one. The trigger is the officer's view of likely dissolution, not the fact of dissolution having occurred.
An association of persons is formed in a tax year to stage a single exhibition, and by the time the Assessing Officer looks at it the event is over and the association is on the point of being wound up. Rather than wait for the ordinary assessment for that year, sub-section (1) lets him charge its total income for the period from the first day of that tax year to the date of dissolution within that same tax year, overriding section 4. He does not have to wait for the dissolution to happen either — 'likely to be dissolved' in the same year or immediately after is enough. The steps he then follows are not in this section: sub-section (2) imports section 317(2) to (6), the machinery written for persons leaving India.
In an accelerated assessment made on a one-off association of persons, body of individuals or artificial juridical person before the ordinary cycle would reach it, with the notice and procedural steps taken from section 317 — the same machinery used against a person leaving India.
the total income of such association or body or juridical person for the period beginning from the first day of that tax year up to the date of its dissolution shall be chargeable to tax in that tax year
See the full 1961 to 2025 concordance.