1988 (1) TMI 68 - AT - Income Tax

Summary

Issues:
1. Whether the CIT(A) erred in allowing the claim of the assessee for a change in the accounting year related to the taxability of salary received.
2. Whether the assessee was entitled to have different previous years for different sources of income.
3. Whether the appellate tribunal should interfere with the order of the CIT(A) and dismiss the departmental appeal.

Detailed Analysis:
1. The departmental appeal before the Appellate Tribunal ITAT Bombay-C related to the assessment year 1980-81. The only ground raised was regarding the CIT(A) allowing the claim of the assessee for a change in the accounting year concerning the taxability of salary received. The assessee, an individual deriving income from salary, had filed a return of income for the assessment year, showing income from salary earned abroad. The ITO included the salary drawn abroad in the assessment, leading to the appeal. The CIT(A) directed the ITO to delete the salary drawn abroad from the assessment, based on the assessee's argument for a different previous year for different sources of income.

2. The assessee maintained that he was entitled to adopt different previous years for different sources of income. He argued based on various legal precedents, including a Supreme Court decision and a decision of the Punjab & Haryana High Court. The CIT(A) considered the matter extensively and found that the assessee was not an employee of a particular company from a certain date, being effectively a direct employee of a foreign company. The CIT(A) also referred to a decision of the Andhra Pradesh High Court, supporting the concept of different previous years for different sources of income. The CIT(A) directed the ITO to allow the change of the previous year to a calendar year for tax purposes.

3. The Appellate Tribunal considered the submissions from both sides and upheld the CIT(A)'s order. The Tribunal agreed that the sources of income for the assessee were different, even though they fell under the same head of income, which was salary. The Tribunal found that the assessee had the right to maintain separate accounts for different sources of income, as endorsed by legal provisions and court decisions. Therefore, the Tribunal concluded that there was no reason to interfere with the CIT(A)'s order, confirming the decision and dismissing the departmental appeal.