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Issues Involved:
1. Determination of the "previous year" for assessment of income from salary for the assessment year 1964-65. 2. Calculation of the 60% tax concession under paragraph 8 of the Pondicherry (Taxation Concessions) Order, 1964, in relation to the compulsory deposit under the Compulsory Deposit (Income-tax Payers) Scheme, 1963. Issue-Wise Detailed Analysis: 1. Determination of the "previous year" for assessment of income from salary for the assessment year 1964-65: The assessees' income for the year ending December 31, 1962, had already been assessed under the French law for the French assessment year 1963. The Income-tax Officer offered the assessees an option to choose the "previous year" as either the calendar year 1963 or the 15-month period from January 1, 1963, to March 31, 1964. The assessees agreed to the latter option. However, the Appellate Assistant Commissioner and the Tribunal held that for salaried employees who did not maintain any accounts, the "previous year" should be the financial year ending March 31, 1964, as per section 3 of the Income-tax Act, 1961. The Tribunal emphasized that the application of the Concessions Order must not affect the substance of the Income-tax Act, which stipulates that the "previous year" for salaried employees without accounts is the financial year. The court agreed, stating that the Concessions Order could not override the substantive provisions of the Income-tax Act. Therefore, the assessees were entitled to claim the financial year as the "previous year" for the assessment year 1964-65. The first question was answered in the affirmative and against the revenue. 2. Calculation of the 60% tax concession under paragraph 8 of the Pondicherry (Taxation Concessions) Order, 1964, in relation to the compulsory deposit under the Compulsory Deposit (Income-tax Payers) Scheme, 1963: Paragraph 8 of the Concessions Order allows a 60% deduction from the tax computed at the Indian rate of tax. The revenue argued that this 60% deduction should be applied after deducting the compulsory deposit from the additional surcharge. However, the Tribunal and the court held that the 60% deduction should be applied to the gross additional surcharge before any deduction for the compulsory deposit. The court noted that the compulsory deposit adjustment comes under a separate enactment and is not part of the Income-tax Act. Thus, the concession should be applied to the gross additional surcharge, and the compulsory deposit should be deducted from the balance thereafter. The second question was also answered in the affirmative and against the revenue. Conclusion: The court affirmed the Tribunal's decisions on both issues, ruling in favor of the assessees. The assessees were entitled to use the financial year as the "previous year" for the assessment year 1964-65, and the 60% tax concession should be calculated on the gross additional surcharge before deducting the compulsory deposit. The assessee in T.C. No. 271 of 1970 was awarded costs, while no order as to costs was made in T.C. No. 270 of 1970.
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