Law:

Section:

Section 3 of the Income-tax Act, 1961 [Corresponding to section 2(11) of the Indian Income-tax Act, 1922] - Previous year - Whether where a business is newly set up in a financial year and accounts of business are made upto a date which falls after 31st of march next succeeding date of setting up of business and assessee exercises option of choosing as his previous year period beginning on date of setting up of new business and date of closing of business which fall after 31st of march next succeeding setting up of business, there will be no previous year for assessment year in which business was newly set up but it would be previous year for succeeding assessment year - Held, yes - Business carried on by a HUF was ceased to be carried on by it with effect from 16-7-1942 - After there was partition of coparcenary business on 15-7-1942 - Thereafter with effect from 16-7-1942 assessee-firm consisting of all members of family carried on aforesaid business - Assessee carried on its business upto a 12-3-1943 - It closed its account books on 4-7-1943 - Assessee filed its return in respect of income from 16-7-1942 to 4-7-1943 - Whether on application of section 2(11)(1)(c) of 1922 together with proviso thereto, assessee could exercise option of treating period from 16-7-1942 to 4-7-1943, as his previous year but it would not be previous year for assessment year 1943-44 and would be previous year for assessment year 1944-45 - Held, yes FACTS The business carried on by the HUF was ceased to be carried on by it with effect from 16-7-1942 after there was a partition of the coparcenary business on 15-7-1942. With effect from 16-7-1942, the said business was being carried on by assessee-firm consisting of all the members of the family. The assessee firm carried on business upto 12-3-1943 and closed its books of accounts on 4-7-1943. It filed its return of income in respect of its income from 16-7-1942 to 4-7-1943. The Tribunal held that the assessee having discontinued its business on 12-3-1943, had the option to elect the period from the date of the starting of the business 16-7-1942, to the date when the accounts were closed to profit; as its previous year under section…

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