Law: Income-tax Act (IX of 1922)

Section:

Income tax Act (XI of 1922)-----   ---- S. 2 (11) (i)(a), proviso Previous year Option of assessee Assessee in native State assessed as non resident Foreign income taken into account to ascertain total world income Whether assessment Whether option exercised-Part B State Taxation concession Dividend from company in Part B State Taxable proportion Super tax Part B States (Taxation Concessions) Order, 1950, Paras. 4, 5, 6 & 12.   The assessee was a Hindu undivided family which had its head office at 1 and branches at other places which later formed part of Part B States. Prior to 1948, it was assessed to income tax as a non resident and for the purpose of ascertaining its total world income the Diwali year was taken as the previous year for its managing and selling agency commission from a company at U outside British India. In the first assessment year 1950 51, after the Income tax Act, 1922, was extended to the Part B States, the assessee claimed that in respect of the agency commission from the company its previous year was the one ending March 31, 1950, and not the Diwali year ending October 21, 1949. The Appellate Tribunal held that it was not open to the assessee to vary the previous year which had once been adopted before 1948. On a reference   Held, (i) that an assessee could not be said to have been assessed for the purposes of the proviso to section 2(11) (i) (a) of the Income tax Act, 1922, if his income from a source of income in a non taxable territory was included in the earlier account years only for the purpose of determining his total world income and the average rate of tax applicable to the total world income. Therefore, the assessee could not be said to have been previously assessed within the meaning of the expression "has once been assessed" as used in the proviso to section 2(11) (i) (a) merely because its managing and selling agency commission income was included in its total world income for determining the rate of tax applicable to it in the assessment years before 1948 ;   (ii) that under section 2(11) (i) (a) of the Income tax Act the exercise of option in the matter of selection of the previous year…