TMI Blog1986 (3) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax, the relevant accounting year of the assessees ended on 30th June and the books of account of the assessees were maintained as from 1st of July to 30th June of the following year (hereinafter referred to as the " co-operative year "). The assessees, however, filed their returns under the Agricultural Income-tax Act on the basis of their previous year being the financial year, that is to say, on the basis of the accounting year being from 1st April to 31st March of the next year. The Agricultural Income-tax Officer, however, assessed the assessee on the basis of their previous year being the co-operative year. In the course of income-tax proceedings pertaining to the relevant period, the Income-tax Officer had disallowed expenses of Rs. 3,000 in each year out of the expenses incurred for the purposes of maintaining trucks, motor cars and guest house. The Income-tax Officer had disallowed this amount on the basis that these expenses were attributable to the personal use of these facilities. After disallowing these expenses, the Income-tax Officer held that the remaining expenses were common expenses for earning income from business (taxable under the Indian Income-tax Act) as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal was correct in law in holding that the expenses on guest houses, trucks and cars to the extent disallowed by the Income-tax Officer before fixing the common charge were admissible deductions under clause (b) of the proviso to section 9(1) of the Act ? Question No. 3 : Whether, on the facts and in the circumstances of these cases, the Tribunal was correct in law in holding that for -the purpose of assessments of the opponent, the previous years would be the years ending on 31st March and not the relevant accounting years of the opponent ending on 30th June ?" It is agreed between the parties that in view of the decision of this court in the case of Commr. of Agrl. LT. v. Phalton Sugar Works Ltd. [1980] 121 ITR 920, question No. I must be answered in the affirmative and in favour of the assessee. As far as question No. 2 is concerned, there were certain expenses which were disallowed by the Income-tax Officer in the income-tax assessment on the ground that the expenses were personal expenses. It is agreed between the parties that expenses which have been so held as personal expenses by the Income-tax Officer cannot be allowed as deductions for the purpose of computing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial year commencing from 1st of April. if, however, the accounts of the assessee are made up to a date other than the end of the financial year, then the assessee has the option of filing his returns on the basis of his previous year consisting of 12 months ending on such date. In the present case, for the assessment year 1962-63, the account books of the assessees were made up as on June 30, 196 1. The assessee, therefore, had the option of treating the year July 1, 1960, to June 30, 1961, as his previous year for the assessment year 1962-63 and, similarly, the period from July 1, 1961, to June 30, 1962, as his previous year for the assessment year 1963-64. It is the case of the applicants, that is to say, the Commissioner of Agricultural Income-tax, that the assessees had in fact exercised the option in favour of their previous year being considered as from the beginning of July till the end of June. Mr. Jetly, learned counsel for the applicants, in this connection drew our attention to the challans of advance tax for these years. It seems that there was a delay on the part of the assessees in filing their returns. They had, however, paid advance tax within the prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect. The condition precedent to exercising an option is that the accounts of the assessees should be made up to such other date. The assessees, in the present case, maintained their books of account as per the co-operative year. Therefore, they were entitled to exercise the option if they so desired. Maintenance of books of account on the basis of co-operative year, therefore, cannot be considered as equivalent to exercise of an option in favour of the co-operative year. It is a condition precedent for the exercise of the option. Secondly, exercising an option involves a positive act on the part of the assessee who must be aware of his right. He must then consciously opt for the other previous year. Merely mentioning the year as commencing from 1st of July on the challan for the payment of advance tax cannot be treated as an exercise of such an option. The statements which were filed for the purpose of payment of advance tax also cannot be treated as an act of the assessee exercising option in favour of a different previous year. The statements which were filed were based on the income-tax returns of the assessee. Since for the purpose of income-tax, the assessees have adopted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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