23 April 2009
A written promise offered as security for the performance of a particular act required in a legal action.
In a criminal case, an undertaking of bail is security for the appearance of the defendant. In the event the defendant fails to appear, the amount posted as bail is forfeited.
An undertaking with adequate security is a bond. The term is used in a general sense to refer to any type of promise or stipulation.
23 April 2009
I understand that the query is relating to undertaking within the meaning of Income Tax. So keeping in mind the undertaking as defined under Income Tax Act, my response is as following -
Undertaking” is defined in Explanation 1 to section 2(19AA) of the Act, as under:
“Any part of an undertaking, or a unit or division of an undertaking or a business activity taken as a whole, but does not include individual assets or liabilities or any combination thereof not constituting a business activity”.
Thus undertaking per se is a distinct capital asset separate from the assets forming the undertaking. An undertaking thus would neccesserily a business activity capable of separate identity comprising of land, building, plant and machinery, furniture, fixtures, spares, licenses, goodwill, trade mark, non compete and many such privileges and rights etc. and also the trained and experienced work force including executives and any combination of such asesets capable of constituting a business activity.
CAclubindia
