Law: Excess Profits Tax Act, (XV of 1940)

Section: 2(1)(b)

Law: Income Tax Act, 1922

Section: 66(1)

Excess Profits Tax Act (XV of 1940), S. 2 (1) (b)­read with .S. 66 (1), Income Tax Act (XI of 1922)- Account­ing period"-Determination of-Within discretion of Excess Profits Tax Officer-Reference to High Court when competent­---Whether mere preparations for starting a business indicate com­mencement thereof. Where accounts of the business are not produced and the case is not covered by proviso to sub-clause (b) of section 2 (1), Excess Profits Tax Act, 1940, the Excess Profits Tax Officer has a discretion to determine the accounting period under the said sub-clause (b), which discretion ought to be exercised reasonably and on the basis of some tangible data. It is open to such an officer to decide in a particular case that the "accounting period" commenced with the commencement of business itself. The question of the commencement of the business, however, is not a question of law. Nevertheless, reference to High Court under section 66 (1), Income Tax Act is competent where the question is whether there is any material on record for a finding as to the commencement of business. In the present case the business of exploiting a State forest by felling and removing timber was, in the absence of other evidence as to commencement of business, taken to have commenced on the start of the actual felling operations as reported by the Forest Officer, the operations of acquiring the lease from the State authorities, of getting possession of the leased compartment etc. all being regarded as preparatory to the commencement of business. Western India Vegetable Products Ltd. v. Commissioner of income-tax, 26 I T R 151 ; Ghanshyam Das Gangadhar v. Commissioner of Income-tax, 19 I T R 349 and The Birmingham and District Cattle By-Products Co. Ltd. v. The Commissioners of Inland Revenue, 12 Tax Cases 92 ref. JUDGMENT AKHLAQUE HUSAIN, J.---The facts which have led to this reference by the Income-tax Appellate Tribunal are these. The assessee firm, Messrs. Mangat Ram Bishan Lal Kuthalia, Jhelum, carried on the business which, in its application to the Appellate Tribunal for referring the questions of law to this Court, is described as follows :- "The assessee's business consisted…

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