9911796707
TMI Blog1983 (12) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... publishes a Tamil daily newspaper known as " Nellai Murasu ". For the assessment year 1969-70, the assessee filed a return of income on July 1, 1969, showing the previous year as ending on June 30, 1968. In the profit and loss account accompanying the return, the assessee had shown for the year ended June 30, 1968, not only the income from the newspaper business, but also the profit on sale of lands of Rs. 51,307. The balance-sheet accompanying the return also showed the value of the fixed asset at Rs. 2,68,443. The schedule of fixed assets showed that as on July 1, 1967, there were lands of the value of Rs. 45,192.98 and the amount of Rs. 36,192.98 was shown as the value of the lands sold during the year. The value of the balance land was shown in the balance-sheet as Rs. 9,000 as on June 30, 1968. The lands of which the cost was Rs. 36,192.98 were sold on July 19, 1967, for Rs. 87,500. After deducting the cost of Rs. 36,192.98 from the sale price of 87,500, balance of Rs. 51,307 was shown as the profit on sale of lands. However, in the income adjustment statement, the assessee excluded the profit of 51,307 on the ground that it represented profit on sale of agricultural lands and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be assessed during the assessment year 1969-70, the Revenue has sought and obtained a reference on the, two questions set out above. The main question that arises for consideration before us is as to what is the previous year in which the transfer of the capital asset had taken place as contemplated by s. 45 of the Act. It is seen that the Tribunal has fixed the financial year with reference to the date of transfer, namely, July 19, 1967, and proceeding on the basis that the assessee has not exercised its option, held that the previous year during which the transfer took place is the financial year April 1, 1967, to March 31, 1968, and as the date of transfer, namely, July 19, 1967, has fallen outside the assessment year April 1, 1968, to March 31, 1969, it cannot be assessed during the assessment year in this case. The question is whether the said view taken by the Tribunal is correct. According to the Revenue, though the assessee is entitled to have different previous years in respect of different sources of income as provided for in s. 3(3) of the Act, the assessee in this case has exercised the option to have the same previous year both for its business and for capital ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also for its business income. Capital gains are taxed under s. 45 of the Act and that section reads as follows : " s. 45. (1) Any profits or gains arising from the transfer of a capital, asset effected in the previous year shall, save as otherwise provided in sections 53, 54, 54B, 54D and 54E, be chargeable to income-tax under the head 'Capital gains' and shall be deemed to be the income of the previous year in which the transfer took place." The section provides that income chargeable by way capital gains shall be deemed to be the income of the previous year in which the transfer took place. Therefore, for the purpose of bringing into charge capital gains under s. 45, one has to determine the previous year in which the transfer out of which capital gains arose took place. The term " previous year " has been defined in various ways in s. 3(1) of the Act with reference to various situations. But we are concerned in this case only with the definition provided in ss. 3(1)(a) and 3(1)(b) and the other clauses are not material for the purpose of our discussion. Section 3(1)(a) defines it previous year" as the financial year immediately preceding the assessment year and s. 3(1)(b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave occurred during the year ending June 30, 1968. The value of the balance of the land has also been shown in the balance-sheet as Rs. 9,000 as on June 30, 1968. Therefore, it is clear that the assessee has taken the previous year ending June 30, 1968, as the previous year during which the transaction of sale has taken place. From the conduct of the assessee in making up the accounts up to June 30, 1968, and disclosing the sale as having taken place during that year and the income by way of capital gains as having accrued during that year, it, can reasonably be said that the assessee has exercised its option available to it under s. 3(1)(b) of the Act and fixed the previous year ending on June 30, 1968, as the previous year for its income by way of capital gains also. The Tribunal has, however, held that the exercise of option under s. 3(1)(b) of the Act is not available to the assessee as the assessee has not made up its accounts to a date between July 19,1967, and March 31, 1968. We do not see how the Tribunal could say that the accounts should be made up to a date between July 19, 1967, and March 31, 1968, and as the assessee has not done so, the option under s. 3(1)(b) is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital gains as well. Learned counsel for the assessee would contend that though the assessee has disclosed the income by way of capital gains in the return filed for the period July 1, 1967, to June 30, 1968, the assessee having claimed exemption on the said income, it should be taken that it has not offered the income for assessment during the year July 1, 1967, to June 30, 1968. As already stated, in the return for the period from July 1, 1967, to June 30,1968, the income by way of capital gains has been disclosed and exemption has been sought for only on the ground that the profit arose out of the sale of agricultural lands and, therefore, it cannot be assessed as capital gains. The assessee did not exclude the income disclosed for the period from July 1, 1967, to June 30, 1968, on the ground that it is not includible during that period. Therefore, we are not in a position to accept the assessee's contention that the exclusion of the income sought for by the assessee from the return will have any relevancy on the question whether the assessee exercised the option or not. As a matter of fact, the subsequent conduct of the assessee both before the ITO as well as the AAC in puttin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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