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TMI Blog2008 (11) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... he initial assessment year for the purpose of deduction under section 80HH of the Income-tax Act in respect of this new industrial undertaking, therefore, was 1982-83. The assessee claimed that the ten assessment years would end with 1992-93 because there was a change of the previous year with regard to a particular assessment year, viz., 1991-92. However, the Assessing Officer, following Rockweld Electrodes India Ltd. v. CIT [1990] 185 ITR 62 (Mad), held that it that would apply to this case and held that what is important is "the natural sequence of ten assessment years", and did not accept the assessee's claim. The Commissioner of Income-tax (Appeals) confirmed this. The Tribunal, however, decided to allow the claim of the assessee and, therefore, the Department has filed the appeals on the following substantial questions of law: "1. Whether, in the facts and circumstances of the case, the Tribunal was right in holding that sales tax does not form part of total turnover for the purpose of calculation of deduction under section 80HHC ? 2. Whether, in the facts and in the circumstances of the case, the Tribunal was right in holding that the amount received out of local sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urities and the same may be distinguished. 6. The learned counsel for the assessee would however submit that there was no change in the stand of the assessee with regard to the interest received right from the beginning and even before the Assessing Officer, this had been treated as income accrued "but not due" and the learned counsel referred to the relevant page in the typed set of papers. Therefore, the learned counsel submitted that the previous order does not warrant interference especially because it has been decided in favour of the assessee in CIT v. Tamilnadu Mercantile Bank Ltd. [2007] 291 ITR 137 (Mad). 7. We have gone through the materials on record. The Assessing Officer had rejected the claim for exclusion of interest accrued. The Assessing Officer also dealt with the interest income on the principle of accrual and confirmed the assessment order. The Tribunal, however, rightly held, in our opinion, that the opinion of the Commissioner of Income-tax (Appeals) that once it has accrued, it should be included as income is not correct since the very term "accrued but not due" would show that the right to receive the interest had not arisen to the assessee and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... result, these appeals are dismissed answering the substantial question of law raised against the Revenue and in favour of the assessee. No costs." 9. Therefore, this question is decided against the Revenue and in favour of the assessee. Question of law No. 4: 10. Mrs. Pushya Sitaraman, learned senior standing counsel appearing on behalf of the Revenue referred to Rockweld Electrodes ( India ) Ltd. v. CIT [1990] 185 ITR 62 (Mad) where, paragraphs 11 and 20 read as follows (pages 66, 68): "11. The facts, therefore, remain that for the assessment year 1971-72 income for the period January 1, 1969, to May 31, 1970, was assessed, for the assessment year 1972-73 income from June 1, 1970, to May 31, 1971, was assessed and for the year 1973-74, the income which was brought to tax was of the previous year starting from June 1, 1971, and ending with May 31, 1972. Therefore, no assessment was made for the year 1970-71 due to change allowed in the previous year. That is because the last date of the changed previous year did not fall within the financial year preceding the assessment year 1970-71. So far as the present case is concerned, the initial assessment year is 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Though the learned counsel appearing for the petitioner would stress that the language of section 80HH differs from section 80J, and the judgments relied on by the learned counsel for the Revenue Mrs. Pushya Sitharaman, all related to cases arising out of section 80J and in section 80J, the words "immediately succeeding", are used, we really think that the basis on which the decisions were made did not turn on the usage of the words "immediately succeeding" but the construction of the words "assessment year". 13. The assessee commenced a new industrial undertaking for manufacture of vacuum cleaners during the previous year ending December 31, 1981, relevant to the assessment year 1982-83. The initial year for deduction under section 80HH in respect of the Revenue, i.e., was 1982-83. The assessee is allowed deduction for 10 assessment years. There was a change in the accounting year from December to June. Therefore, the assessment year 1985-86 covered the period from January 1, 1983, to June 30, 1984. There was no assessment for the assessment year 1984-85. So the assessee claimed his 10th year was 1992-93. According to the Revenue, the natural sequence of assessment years shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cular assessment year that fell within these spans of eight and four assessment years respectively is of no consequence to the calculation of the periods for which the aforesaid development rebate and deduction can be carried forward." 16. It was argued before the Supreme Court that under the provisions of section 4, the charge for the levy of income-tax was imposed on a person in respect to his previous year and if an assessee had no particular previous year, then, there was no assessment year which could be related to and since the assessee had no previous year relevant to the assessment year 1975-76, calculating the period of eight and four assessment years respectively for the carry forward of the aforesaid unabsorbed development rebate and deduction, the assessment year 1975-76 was not to be considered and these periods had to extend to the assessment year 1976-77. 17. Therefore, it is clear from the above that the period of 12 months commences from the first day of April every year, which is the assessment year as defined under section 2(9), and would not depend upon one or the other assessee and whether or not he had a previous year relevant to a particular assessmen ..... 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