LexESTHURI ASWATHIAH versus COMMISSIONER OF INCOME-TAX, MYSORE
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
. '
A
B
c
D
E
F
G
H
..
ESTHURI ASWATHIAH
v.
COMMISSIONER OF INCOME-TAX, MYSORE
•
[K. SUBBA RAO, M. HIDAYATULLAH AND R.S. BACHAWAT, JJ.j
Income-tax Act (11 ?f. 192,2). s, 2(11)-Length of previoU3 year-ft
should be only 12 calendar months--Previous year of 21 months-Rate a/
tax applicable.
Up to the assessment year lsl51-S2, the appellant adopted the yea•
ending on 30th June as the previous ·year applicable to him. For the
.... essment year, 1952-53, the assessee filed a return for 21 months com-
mencing on !st July 1950 and ending-on 31st March, 1952 and r~uested
the Income-tax Officer to accord his ,Sanction to the change of the previous
year from an year ending on 30th Jorie to an year ending on 31st March.
The Income-tax Officer sanctioned the· change on condition that the total'
income in the period of 21. month$ .en.diµg on 31st March 1952 would be
asseosed to tax at the rate applicable to the total income in the sitld 21
months. Tue Appellate Assistant Coqunissioner and the Appellate Tribunal
on appeal, and the High Court, on a reference, confirmed the order.
In appeal to this Court it was contended that: (i) the scheme of
Act and.particularly ss. 2(11) and 3.show that tl;tere cannot be a prevrous
year consisting of more than 12 il)\)nths; (ii) the Income-tax Officer had
no power to direct under the proviso to cl. (l)(a) of s. (2)(11) that the'
previous year should consist of 2t months; (iii) the Income-tax Officer
ohould have granted the. s.anction on condition that the asseMCc shall have
2 previoiµ, years, one consisting of a period of nine months from !st July
1950 µp to 31st March 1951 and the other of a period of 12 months from
1st April 1951 to 31st March 1952; and (iv)
the Income-tax Officer
should have accorded sanction to the change on the basis that the income
for 21 months should be assessed at the rate applicable to the income of
the last period of 12 months.
HELD: (i) A combined reading of the several clauses of s. 2(11} ·
shows that the length of a previous year need not nocessarily be 12·
calendar months. Under .s .. 2( 11 )(i)(b), · the previous
year is such .
period as may be determined by the Central Board of Revenue or such· f
authority as the Board may authorise in this behalf, and the period so,
determined.may be more or less than 12 months. [362 H-363 A)
(ii) The Income-tax Officer may refuse .to give his consent to a change·
of the previous year, but if he gives his ·consent, he has ample power to
impose the condition that the full period from the end of the "prev:ous
year" for the preceding year's assessment to the end of the new account-
ing year should be taken as the previous year for the current assessn:ient
year. The condition properly safeguards the interests of the Revenue
because, if he had sanctioned the change on the footing that the previous
year would only be the period of 12 months from 1st April 1951 to 31st
March 1952 the income of the preceding 9 months from !st July 1950 to
3 lst March 1951 would have escaped taxation. [363 D-F]
{iii) There cannot be two p'tevious yea~s in respec~ of the same assess .. _
ment year and stich a concept of two previous years is repugnant to s. 3.
Section · 25 ( I) does not contemplate ~assessments in the same assessment
IOSup. Cl/66-10
360
SUPREME COURT REPORTS
fl %6] 3 S.C.R.
year in respect of two previous years. It only contemplates the usual
aaeament in respect of the income of the previous year and a special and
separate assessment in the same assessment year in· respect of the income
of the broken period between the end of the previous year and the date or
discontinuance of the business. (363 H-364 C]
~iv) The lncome-ta.x Officer ~as no power to vary the rate on which
the m<:ome of the previous year IS to be assessed. The condition imposed
by the Jncome-tax Officer, that the income of the previous year of 21
months would be assessed at the rate applicable to the income for 21
months is redunda.nt, because, once the length of the previous year is
found lo be a penod of 21 months, the income of the entire period of
21 months, must be considered to, be the income of the previous year
relevant for the asseosment year.
1952-53, and the. entire income lllQlt
be 83SeSSed at the rate specified in the relevant Finance Act, and at no
other rate. [364 D-G]
QYIL APPl;!.LATE JURISDICDON : Civil Appeal No. 402 of 1965·
Appeal from the order dated June 4, 1962 of the MysExcerpt shown. Read the full judgment & AI analysis in Lexace.