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TMI Blog1976 (4) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1961, was extended by the Regulation to the Union Territory of Pondicherry and that came into force with effect from the first day of April, 1963, the income accruing or arising in the previous year ending March 31, 1963, in the Union Territory of Pondicherry became liable for assessment under the Income-tax Act, 1961. Thus, some of the income, which could be assessed under the French law, also became assessable under the Income-tax Act, by reason of the coincidence of the whole or a part of the calendar year 1962 with the previous year for the assessment year 1963-64. In some cases, the income of the calendar year 1962 had been assessed under the French law and some had not suffered the tax. The Regulation inserted section 294A conferring power on the Central Government, if it considered it necessary or expedient to do so, for avoiding any hardship or anomaly or removing any difficulty that may arise as a result of the application of the Income-tax Act to the Union Territory of Pondicherry, to make by general or special order, an exemption, reduction in rate or other modification in respect of the income-tax or super-tax in favour of any assessee or class of assessees or in rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount of the first-mentioned tax shall be the tax payable ; and (c) where the amount of tax computed at the Indian rate of tax exceeds the amount of tax computed at the French rate of tax, the excess shall be deducted from the first-mentioned tax and the balance shall be the tax payable." It may be seen that so far as the income of the year ending 31st December, 1962, which was the previous year for the French assessment year 1963 is concerned, it shall be assessed under the Income-tax Act, 1961, as provided under clause (2) of paragraph 4 if and only if such income had not already been Assessed under the French law. If such income of the previous year ending 31st December, 1962, had already been assessed under the French law, such income would not be covered by the provisions of paragraph 4(2). Similarly, the income for the period from January 1, 1963, to March 31, 1963, was also outside the provisions of paragraph 4. Paragraph 5 deals with the assessment of income of Any previous year relevant to the assessment year 1963-64 which does not fall within paragraph 4. Clause (2) of paragraph 2 states that all words and expressions used in the Concessions Order, which had not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to act under the proviso to paragraph 2(2). The assessees agreed for the assessment of the income concerned during the period of 15 months from January 1, 1963, to March 31, 1964, in the assessment year 1964-65. Accordingly, the Income-tax Officer completed the assessment for the assessment year 1964-65 taking the income earned during the period of 15 months from January 1, 1963, to March 31, 1964. While computing the tax payable, the Income-tax Officer gave a deduction of 60 per cent. of the tax as concession under paragraph 8 of the Concessions Order. But the concession from the additional surcharge on residual income was computed on the amount of additional surcharge after deducting the amount of compulsory deposit paid under the Compulsory Deposit (Income-tax Payers) Scheme, 1963. Both the assessees preferred appeals before the Appellate Assistant Commissioner and advanced the following three contentions : 1. The assessee's earlier consent to the assessment of 15 months' income would not disentile him to go on appeal, if the agreement should have been made contrary to the provisions of law. 2. In the case of salaried employees, who did not maintain any books of accounts, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in claiming the period of twelve months ended March 31, 1964, as the previous year for the assessment of his income from salary for the assessment year 1964-65 ? 2. Whether the Tribunal was fight in law in holding that the deduction of 60% of the tax to which an assessee is entitled under para. 8 of the Pondicherry (Taxation Concessions) Order, 1964, should be calculated from the gross additional surcharge on residual income before deducting the compulsory deposit paid under the Compulsory Deposit (Income-tax Payers) Scheme, 1963 ?" It was argued by the learned counsel for the revenue that the assessee had been assessed under the French law on the income from salary for the previous year 1962, and that, therefore, the assessee's previous year for any assessment under the Income-tax Act for income from that source cannot be any year other than the appropriate calendar year in relation to the concerned assessment year. It was further argued that, if any charge is to be made in this previous year, it could only be subject to such conditions as may be imposed by the Income-tax Officer as provided in the proviso to paragraph 2(2) of the Concessions Order. The condition imposed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt and all those circumstances which would influence the exercise of such an option. We are not persuaded to hold that the assessee was made fully aware of the implications when the Income-tax Officer held out the option. In fact, the assessees immediately filed appeals against the order of assessment. We, therefore, agree with the Tribunal, that the assessees were within their rights in claiming the financial year as the previous year for the assessment of the income from salary for the assessment year 1964-65. We, accordingly, answer the first question in the affirmative and against the revenue. As regards the second question, under paragraph 8 of the Concessions Order, the income of any previous year relevant to the assessment year 1964-65 shall be charged to tax at the Indian rate of tax, but a deduction shall be allowed from the tax so computed of an amount calculated at 60 per cent. thereof. The revenue wanted to make a deduction of 60 per cent. after deducting from the additional surcharge the compulsory deposit made by the assessee. The assessee's contention was that the deduction under paragraph 8 at 60 per dent. has to be made from tax including additional surcharge in ..... 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