9911796707
|
Home
Issues:
1. Interpretation of section 3(1)(b) of the Income-tax Act, 1961 regarding the previous year for determining capital gains. Analysis: The judgment pertains to a reference made by the Income-tax Appellate Tribunal, Delhi Bench B, regarding the entitlement of an assessee to claim a specific previous year for determining income under the head 'Capital gains.' The assessee, a partner in a firm, disclosed income from the sale of jewellery and claimed the previous year ending on December 25, 1975, for capital gains computation. The Income-tax Officer disagreed, stating that permission from the Central Board of Direct Taxes was required under section 3(1)(c) of the Act to adopt a different previous year. The Appellate Assistant Commissioner and the Tribunal were involved in subsequent appeals. The Tribunal, analyzing section 3(1)(b) of the Act, held that the language of the provision allows the assessee to choose a previous year up to a date within the financial year preceding the assessment year. As the assessee maintained separate accounts for the sale of jewellery closed on December 25, 1975, the computation of capital gains until that date was deemed appropriate. The Tribunal emphasized that section 3(1)(c) would apply only if clauses (a) and (b) of sub-section (1) of section 3 are not applicable. The High Court, in its judgment, considered the requirements of section 3(1)(b) which permit an assessee to opt for a different previous year if certain conditions are met, such as making up accounts to a date within the financial year preceding the assessment year. Referring to the case law and statutory provisions, the Court affirmed the Tribunal's decision, stating that the assessee had the right to adopt a distinct previous year for each source of income. Consequently, the Court answered the reference question in the affirmative, favoring the assessee and rejecting the Revenue's contention. In conclusion, the High Court upheld the Tribunal's interpretation of section 3(1)(b) and affirmed the assessee's entitlement to choose a specific previous year for capital gains computation based on maintaining separate accounts. The judgment clarifies the flexibility provided to taxpayers in determining their previous year for income calculation under the Income-tax Act, 1961.
|
