TMI Blog1993 (10) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... ear immediately preceding the assessment year under consideration. Up to assessment year 1988-89, on the other hand, the assessees could have previous years according to their own choice viz., some assessees were having financial years as their previous year, whereas some others were having calendar year, year ending on Diwali, year ending on Rama Navami or Rath Yatra, etc. It was also possible for the assessee to have different previous years for different sources of income up to assessment year 1988-89. The amended provisions of section 3 however laid down that in the transitional year, the previous years in respect of all the sources of income should compulsorily be extended up to 31th March, 1989 and as a result if the different previous years for the different sources of income happened to have varying lengths, the assessee would have a comprehensive previous year for all the sources which would correspond to the one having the maximum length of time. In other words, the Act provided that for assessment year 1989-90, if an assessee were to have a number of previous years in respect of his different sources of income say having the span of 12 months, 15 months, 16 months, 20 mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular source having the maximum length of time. In doing so, in some cases where it was not possible for the Assessing Officer to get an idea of the income of the assessee during the fractional period prior to the period of 12 months ending on 31-3-1989, he added back proportional amounts on the basis of the income actually computed for the above-mentioned period of 12 months or for the immediately preceding previous year. In other words, if the ultimate previous year considered by the Assessing Officer is for a period of 21 months and for some sources, the assessee has disclosed income, for a period of 12 months only ending on 31-3-1989 and it was not possible for the Assessing Officer to get an exact idea about the income for the earlier 9 months, he added back an estimated figure on proportionate basis in respect of the said 9 months as computed from the total income of the immediately preceding previous year or of the concerned period of 12 months. 5. All the assessees are objecting to this procedure. The learned counsels for the assessees have strongly argued before us that although section 3 speaks about a common previous year corresponding to the sources having the maximum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration without making any enhancement thereto. The amended section 3 defines the 'previous year' of the assessee for assessment year 1989-90 to be the one corresponding to the sources having the maximum span of time and this previous year would apply to all the different sources of income of the assessee. It may be that the assessee might have disclosed income in respect of some of the sources for a period of 12 months or so on the ground that the income of the earlier period had already been subjected to tax in assessment year 1988-89. That however, does not mean that the income for the said earlier year is not required to be taken into consideration while computing the total income of the assessee for this transitional year. It is clear from the language of section 3 as well as of the first paragraph of clause (6) of the 10th Schedule that the total income of the assessee from the different sources for the entire previous year is required to be taken into consideration irrespective of whether some portion of such total income did suffer tax in some earlier year or not. The Act has provided for a compensation factor by way of reducing the total income computed in this manner by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or so, (a period lesser than the overall previous year considered) is to be added to the total income of such sources which correspond to the maximum period covered by the overall previous year. The effect of applying the factor of 12 divided by the number of months comprised in the previous year would further reduce the total income considered by the assessee from sources for a period of 12 months only. Let us take, for example, the case of an assessee having three different sources of income for which the individual previous year for assessment year 1989-90 should have been 12 months each. If the income of the assessee from each of these three sources be Rs. 10,000 and if the assessee be having a total income of Rs. 1,000 only from another source for which the previous year is 21 months, the net effect as per the contention of the assessee's would be that, that total income of the assessee for the entire period of 21 months would be Rs. 31,000, which will be required to be adjusted by the factor of 12 divided by 21. Thus, the adjusted total income would come down to around Rs. 17,000 only, a ridiculously low figure even in comparison with the actual total income of the assessee f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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