TMI Blog1960 (10) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... peculation, dividends, managing agency commissions, etc. Prior to the assessment year 1950-51, which is the assessment year in question, the family was assessed in the status of a non-resident Hindu undivided family. The income which accrued to or was received by the assessee in the former Indian States and which was not brought into the taxable territories as defined before April 1, 1950, was not subject to any tax under the Income-tax Act. That income was, how ever, included in the assessee's total world income for the purpose of determining the rate applicable to the taxable income. After the merger of Indian States and inauguration of the Indian Republic the definition of taxable territories was amended so as to make the whole of India excluding Jammu and Kashmir and Pepsu Union taxable territories with respect to any period after March 31, 1950. The result of the amendment was that for the assessment year 1950-51 an assessee, who was a resident of Madhya Bharat, a Part B State, in the relevant previous year was deemed to have been a resident in the taxable territories prior to April 1, 1950, and such an assessee as a resident became taxable in respect of his income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w Delhi. Under the scheme of the Income-tax Act, income-tax is charged in respect of the total income of the previous year of an assessee. Previous year has been defined in section 2(11) which, so far as is material here, reads as follows: 'Previous year' means-- (i) in respect of any separate source of income, profits and gains-- (a) the twelve months ending on the 31st day of March next preceding the year for which the assessment is to be made, or, if the accounts of the assessee have been made up to a date within the said twelve months in respect of a year ending on any date other than the said 31 day of March, then, at the option of the assessee, the year ending on the date to which his accounts have been so made up: Provided that where in respect of a particular source of income, profits and gains an assessee has once been assessed, or where in respect of a business, profession or vocation newly set up an assessee has exercised the option under sub-clause (c), he shall not, in respect of that source or, as the case may be, business, profession or vocation, exercise the option given by this sub-clause so as to vary the meaning of the expressio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the department is that even before April 1, 1950, the assessee was assessed in respect of income, profits and gains from sources in non-taxable territories and that being so the assessee was not entitled under the proviso to clause (a) of section 2(11)(i) to vary the previous year adopted by it, namely, the Diwali year and claim that it should be assessed on the basis of the financial year as the previous year. The argument of the learned Advocate-General that the expression an assessee has once been assessed used in the proviso to clause (a) has a wide connotation and means computation of the total world income in the case of non-residents and that, therefore, though the income of the assessee from non-taxable territories was not included in its total income or total taxable income, yet it was assessed on this income inasmuch as it was included in its total world income for determining the rate of tax applicable to it. On the other hand, it was contended on behalf of the assessee that the computation of its income from sources in non-taxable territories before the definition of taxable territories was amended in 1950 was not an assessment in itself; that assessment in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular source of income, profits and gains the amount of tax payable has been determined. Consistent with the scheme of the charging Provisions of the Act, the only sensible construction that can be given to the expression where...an assessee has once been assessed in respect of a particular source of income, profits and gains is where the income, profits and gains of a particular source has been computed in the manner laid down in the Act and included in the total income. In other Words, the expression has once been assessed is used in the Proviso as referring to the computation of income for its inclusion in the total income. In our judgment, section 23(1) of the Act throws considerable light on the meaning of the expression has once been assessed as used in the Proviso to section 2(11)(i)(a). That Provision says that if the Income-tax Officer is satisfied that a return made under section 22 is correct and complete, he shall assess the total income of the assessee, and shall determine the sum payable by him on the basis of such return. The assessment is on the total income, and there cannot be an assessment in respect of a particular source of income, profits and gains ..... X X X X Extracts X X X X X X X X Extracts X X X X
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