TMI Blog1969 (12) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that arises for decision is whether, under the circumstances of the case, having regard to section 2(11)(i)(a) of the Income-tax Act, 1922 (to be hereinafter referred to as the Act), the assessee is entitled to take the year ended on March 31, 1950, as the " previous year " relevant to the assessment year 1950-51 in respect of his sources of income arising outside the " taxable territories ". This question under section 66(1) of the Act was answered in favour of the assessee by the High Court of Madhya Pradesh. Aggrieved by that decision, the Commissioner of Income-tax, Madhya Pradesh, has brought this appeal. The assessee (the respondent) is a Hindu undivided family with its head-office at Indore and branches at several places. It d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 31, 1950, as the " previous year ". The Income-tax Officer as well as the Appellate Assistant Commissioner rejected the claim of the assessee that it could make such a choice. The Income-tax Officer assessed the assessee on the basis that the " previous year " in respect of the concerned sources ended on Diwali of 1949. That decision was affirmed by the Appellate Assistant Commissioner, but the Income-tax Appellate Tribunal reversed the finding of the Income-tax Officer and the Appellate Assistant Commissioner and agreed with the stand taken by the assessee. Thereafter, a reference was made to the High Court of Madhya Pradesh under section 66(1) of the Act at the instance of the Commissioner of Income-tax, but the High Court agreed with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of section 2(11)(i)(a), the twelve months ending on the 31st day of March next preceding the year for which the assessment is made is the " previous year ". Therefore, all that we have to see is whether the assessee's income, profits or gains in respect of the businesses in Madhya Bharat had been assessed previously. If they had not been previously assessed then the assessee's case comes within the first part of section 2(11)(i)(a). In that event his return was in accordance with law. Therefore, we have first to see what is meant by " source of income " in section 2(11)(i)(a) of the Act and then proceed to consider whether those sources of income had " once been assessed ". It is necessary to note that section 2(11)(i)(a) does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of Income-tax. It is true that for the purpose of finding out the total " world income " of the assessee, the income derived by the assessee from its businesses outside the taxable territories had been taken into consideration in the past. That was done only for the purpose of determining the rate at which the assessee's income should be assessed. No tax was imposed on the income from those businesses. In other words, the income derived by the assessee from the businesses carried on by it in territories outside the " taxable territories " were not brought to tax under the Act. The expression " that where in respect of a particular source of income, profits and gains " in the proviso to section 2(11)(i)(a) means the income from a pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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