1987 (5) TMI 95 - AT - Income Tax

Summary

Issues:
1. Whether the assessee correctly declared income from Indian and Nigerian employers.
2. Whether the assessee maintained separate accounts for income from the Nigerian employer.
3. Whether the assessee could change the accounting year under section 3(1)(b) of the Income-tax Act.
4. Whether the assessee was entitled to claim tax benefits for T.D.S. on Nigerian income.

Detailed Analysis:
1. The appeal involved a complex issue where the assessee initially declared an income of Rs. 60,730, then revised it to Rs. 25,990, including salary from a Nigerian employer. The Income-tax Officer found discrepancies in the accounts and refused the assessee's change in accounting year, taxing the entire Nigerian salary of Rs. 74,662. The Tribunal noted the requirement to maintain detailed accounts for foreign income and the inability of the assessee to exercise the option under section 3(1)(b) due to lack of evidence regarding salary accounts from Nigeria.

2. The Commissioner of Income-tax (Appeals) disagreed with the Income-tax Officer, stating that maintaining separate accounts for each income source was not necessary. Citing legal precedents, the Commissioner held that the assessee's decision to follow a separate previous year for Nigerian income was valid. The Commissioner excluded the Nigerian salary and directed verification of T.D.S. certificates, leading to a second appeal by the revenue before the Tribunal.

3. Upon hearing both parties, the Tribunal observed that the assessee's case differed from previous decisions where accounts were maintained for foreign income. The Tribunal emphasized the requirement under section 3(1)(b) to maintain accounts up to a specific date within the financial year to change the accounting year. It was noted that the assessee did not keep required accounts and initially filed a return under section 139(4), which ordinarily cannot be revised. The Tribunal upheld the Income-tax Officer's decision, emphasizing the inability of the assessee to change the financial year and the incorrect claim of T.D.S. benefits for the Nigerian income.

4. The Tribunal partially allowed the appeal, setting aside the Commissioner of Income-tax (Appeals) order and restoring the Income-tax Officer's decision to tax the entire Nigerian salary. However, the Tribunal directed that the assessee be given the benefit of section 80RRA as per the Board's approval, despite the Nigerian income not being taxable in that year. The judgment concluded by treating the appeal as partly allowed for statistical purposes.