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TMI Blog1954 (5) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... neral Commercial Corporation, treated those assets as the capital of the firm and commenced business on 7th April, 1947. The first set of accounts of the assessee firm was made up to 7th May, 1948, that is, for a period of 13 months from the commencement of the business. Whether the assessee firm wound up its business or not in 1948 is not clear, but the Tribunal found that on 7th May, 1948, the entire stock of goods of the assessee firm was taken over by the new firm styled the General Commercial Corporation (India) Limited. The Income Tax Officer upheld the claim of the assessee firm that it was not liable to be assessed in the assessment year 1948-49 on the ground that it had no "previous year" as defined by Section 2(II) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elve months in respect of a year ending on any date other than the said 31st day of March, then at the option of the assessee, the year ending on the day to which his accounts have been made up." (Note : Proviso omitted). The relevant portion of Section 2(11)(c) ran :- "Where a business, profession or vocation has been newly set up in the financial year preceding the year for which assessment is to be made, the period from the date of the setting up of the business, profession or vocation to the 31st day of March next following............. or, if the accounts of the assessee are made up to some other date than the 31st day of March.............. then at the option of the assessee the period from the date of the setting up of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proper construction of Section 2(11)(c), as it stood before the amendment in 1953, the assessee could not claim the benefit of the latter part of Section 2(11)(c) or the proviso to that part, as the assessee had made his accounts not for a period of a year but for a period of 13 months. While the principle of construction of the provisions of a fiscal statute is that any ambiguity in the language of the section should be resolved in favour of the taxpayer and not the State, it is not permissible for a Court to create an ambiguity by interpretation as a preliminary to the grant of relief to the taxpayer to which he would not otherwise be entitled. As Mr. Rama Rao Sahib contended, any construction of Section 2(11)(c) and the proviso thereto, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not apply, as the business was set up before and not in the financial year (1946-47) preceding the assessment year. Therefore, clause (a) will apply to 31st March, 1947, with the result that profits from 1st July, 1945, (when the business started) to 1st April, 1946, will escape assessment. Proviso to clause (a) would not help as till then he had never been assessed. It is therefore necessary to link up the option under clause (c) with the option under clause (a). The option under clause (c) should be exercisable within 12 months of setting up the business. To give effect to these suggestions, the following amendments are recommended :- (i) in the proviso to clause (a) of Section 2(11), after the words income, profits and gains, insert th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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