Law:

Section:

Section 3 of the Income-tax Act, 1961 - Previous year - Assessment years 1979-80 and 1980-81 - Assessee, a private limited company, entered into agreement to form a partnership firm - Assessee's accounting year was calendar year whereas said firm's accounting year was financial year - While computing total income for assessment years under reference, assessee had taken its share income obtained from said partnership firm for relevant calendar years - Tribunal held that it was only income relating to previous year ending 31st March, falling within calendar year, which was previous year under consideration of assessee, that should be brought to tax - Whether in view of decision of court in CIT v. Greenham Estates P. Ltd. [2002] 254 ITR 402Tribunal was not right in holding that notwithstanding previous year with reference to which firm was assessed being financial year, share income of assessee as a partner in firm was required to be assessed with reference to calendar year as "previous year", - Held, yes FACTS The assessee was a private limited company owning rubber plantation. The assessee formed a partnership firm which owned a small extent of tea and coffee plantation and was engaged in the business of manufacture of tea and coffee. The assessee's accounting year was the calendar year whereas the said partnership firm's accounting year was the financial year. While computing the total income for the assessment years under reference, the assessee had taken its share income obtained from the said partnership firm for the relevant calendar years. However, the Income-tax Officer included the share income provisionally subject to rectification on completion of the said firm's assessment. On appeal, the Commissioner (Appeals) upheld the action of the Income-tax Officer. On further appeal by the assessee, the Tribunal held that it was only the income relating to the previous year ending 31st March, falling within the calendar year, which was the previous year under consideration of the assessee, that should be brought to tax and directed the Income-tax Officer to recompute the income accordingly. On reference: HELD It is settled law that for the purpose of assessment…

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