Home Case Index All Cases Income Tax Income Tax + SC Income Tax - 1987 (3) TMI SC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
1987 (3) TMI 109 - SC - Income TaxDistinction between " accounting period " and " chargeable accounting period " Held that:- the period of assessment in the Act is an " accounting period " in the same way as the " previous year " is the period of assessment for the purpose of income-tax. Though profit in composite transaction could be apportioned as between manufacture and sale in the same accounting year, such an apportionment is not permissible when one part of the transaction, i.e., manufacture, falls in one chargeable accounting period and another part of the transaction, i.e., the trading operations, falls in another accounting period. Then, set off of deficiency in profits under section 7 of the Act is permitted but a necessary precondition was that profit must be made in the accounting period to which the deficiency relates. The profit attributed on apportionment was outside the scope of section 7 of the Act. It must be remembered that the it excess profit " under the Act is profit determined under the Income-tax Act subject to prescribed adjustments. If the income-tax assessment discloses nil profits, no separate profit can be determined independently under the Act. It is a general principle, in the computation of the annual profits of a trade or business under the Income-tax Acts, that those elements of profit or gain, and those only, enter into the computation which are earned or ascertained in the year to which the enquiry refers ; and in like manner, only those elements of loss or expense enter into the computation which are suffered or incurred during that year. The same principle, in our opinion, would be applicable to the facts of this case. Appeal allowed.
|