9911796707
TMI Blog1986 (9) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for the Revenue. We, therefore, proceed to deal with the second question which was the one argued at length before us. The assessee is a registered firm. The assessee owned a generator which was acquired on October 25, 1970. This generator was sold for an amount of Rs. 6,00,000 to one M/s. Janakiram Mills Ltd. There was controversy in the first instance as to the date of sale. According to the assessee, the sale was on November 28, 1972, whereas according to the Revenue, it was in March, 1973. Whatever that be, it was agreed before the Tribunal that the sale took place on March 3, 1973, which was the finding arrived at by the Income-tax Officer in the order of assessment. An amount of Rs. 5,15,440 was computed as the capital gain arising out of the sale of the generator. In the return which the assessee filed for purposes of the prior assessment year 1973-74, this amount was included as " capital gains." The assessee had income assessable in its hands as profits and gains of business. This had also been returned for the purposes of assessment for the year 1973-74. This income pertained to the calendar year 1972. The Income-tax Officer completed the assessment for the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble in the assessment year 1974-75. The assessee took up the matter in appeal before the Appellate Assistant Commissioner. However, the appeal was not successful on this point. The matter was taken up in second appeal before the Appellate Tribunal. Before the Tribunal, the assessee sought leave to raise an additional ground which read as follows : " The assessment of the sum of Rs. 5,15,440 as short-term capital gains in the year 1974-75 ought to have been cancelled on the ground that the 'previous year' in respect of capital gains being the financial year, the transaction would not fall within the year ending March 31, 1974, even assuming without conceding that the transaction was finalised on March 3, 1973, the petitioner having opted for the financial year as the previous year for capital gains." This was the only ground urged at the hearing of the appeal. The argument was that the previous year for the assessment of capital gains was the financial year and since the sale took place in March, 1973, the capital gain was properly assessable in the assessment year 1973-74. The Revenue contested the assessee's right to raise this additional ground before the Tribunal. The Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for 1974-75 clearly negatived the exercise of any option, for the calendar year as the previous year, in respect of the capital gain. He drew our attention to the decisions of the Privy Council in CIT v. Chunilal B. Mehta [1938] 6 ITR 521 and of the Bombay High Court in Mrs. Kusumben D. Mahadevia v. CIT [1963] 47 ITR 214, wherein it had been pointed, out that " sources " and " heads of income are used in one and the same sense in the Income-tax Act. It is now an accepted fact that the sale took place on March 3, 1973 and not in November, 1972. As per the scheme of section 3(1)(a) and (b) of the Act, the financial year immediately preceding the assessment year is normally the previous year for purposes of assessment in respect of the cases falling under these two sub-clauses. However, an assessee is given the option in certain cases to opt for a different period or periods. The assessee is also given the liberty of having different previous years in respect of separate sources of his income. Therefore, the previous year for purposes of assessment will be different from the financial year only if the assessee opts therefor. Exercise of option by the assessee is imperative before an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, right in concluding that the financial year was the previous year for the capital gains and that the income was properly assessable in 1973-74. In this view of the matter, the decision of the Gujarat High Court, relied on by counsel for the Revenue, in CIT v. Kirit Kumar Amit Bhat (ITR No. 109 of 1974), a brief review of which is given at page 4 of section 1 of 1977 Taxation, does not arise for consideration. This would have been sufficient to dispose of the reference. However, and in deference to the elaborate arguments addressed before us by counsel for the Revenue that there cannot be different previous years for different " heads " of income, we are adverting to that aspect of the matter and dealing with it here. Section 3(1) of the Act defines "previous year ". Sub-section (3) of the section provides that subject to the other provisions of the section, an assessee may have different previous years in respect of separate " sources " of his income. Section 14 classifies the different heads of income for the purpose of charge of income-tax and the computation of total income. The effect of this section is to classify profits and gains under different heads, according to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gument of counsel for the Revenue that section 3(3) precludes an assessee from having different previous years in regard to different "heads" of income. This view of ours is fortified by the decision of the Privy Council in CIT v. Chunilal B. Mehta [1938] 6 ITR 521, where it was observed that the list of heads (in section 6 of the 1922 Act), was a list of " sources ". The same view was reiterated by the High Court of Bombay in the decision in Kusumben D. Mahadevia v. CIT [1963] 47 ITR 214 in the following terms at page 221: " It thus appears that in the Act, the expression 'source' and the expression 'heads of income' are used in one and the same sense and it means property, movable or immovable, belonging to an assessee or the activity of an assessee that yields or brings income to him, within the meaning of the Act. " We may mention that the decision of the Andhra Pradesh High Court in Addl. CIT v. Ramachandra Rao [1981] 127 ITR 414 also lends support to our view. Incidentally, it was argued by counsel for the Revenue that there was likelihood of part of the receipts from the transaction (which led to the derivation of the capital gain) being assessed by virtue of section 41( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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