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2018 (4) TMI 1828 - AT - Income TaxEffective date of settlement agreement - determination of what is the taxable "previous year" - HELD THAT:- We are unable to concur with Commissioner of Income-tax (DR) objection that the effective date of settlement agreement is not January 1, 1984. As in the case of CIT v. Patiala Sales Corporation Pvt. Ltd.[1970 (1) TMI 9 - PUNJAB AND HARYANA HIGH COURT] has held that the option given by the statutory provisions of section 3(1)(b) is to the assessee and not to the Department and once such an option is exercised the Department has no alternative but to assess the income in accordance with the option so exercised. AR has highlighted the facts of the case from the computation of income filed by the assessee. In the computation/s for the assessment years 1981-82 to 1984-85, the assessee has categorically mentioned its accounting year/previous year as ending with the calendar year. It is only with effect from the assessment year 1985-86 that the assessee has shifted to financial year being its previous year. Undisputedly, for the twelve month period relevant to assessment year 1984-85 the assessee has drawn up its accounts as year ending December 31, 1983 Assessee has validly, exercised its option as envisaged in section 3(1)(b) of the Act. We, therefore, find considerable merit in the additional ground of appeal and the same is, therefore, allowed. AO is accordingly directed to assess the taxable total income of the assessee for the assessment year 1984-85 with taking the "previous year" as on January 1, 1983 to December 31, 1983 and considering the effective date of settlement agreement as January 1, 1984. Assessing Officer is given the liberty to take necessary remedial steps as per law for assessment of compensation flowing to the assessee under the settlement agreement in the appropriate assessment year - entire issues raised before us by both the parties will also have to be necessarily re- examined afresh by the Assessing Officer. Accordingly, all the issues raised by both the parties are also restored to the file of the Assessing Officer to be decided afresh in terms of our observations after giving due opportunity to the assessee.
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