Law: Income Tax Act, 1961

Section: 3,255

(a) Income-tax---Previous year---Company---Surtax---Chance in previous year---Rejection of change on the ground that surtax liability would be affected---Rejection permissible ---Matter remanded to find out if in fact surtax liability would be adversely affected---Indian Income Tax Act, 1961, S. 3---Indian Companies (Profits) Surtax Act, 1964. (b) Income-tax--- ----Appeal to Appellate Tribunal---Powers of Tribunal---Rejection of application for change in previous year on the ground that liability for surtax would be adversely affected---Rejection upheld by Tribunal---Tribunal should not have entered a finding on its own that there would be such adverse effect---Calculation of surtax liability had to be made---Tribunal should remand matter to Assessing Officer--Indian Income Tax Act, 1961, S.255. While considering a request for consent to change the previous year the assessing authority should not act arbitrarily. The power should be exercised in a judicial manner. The Statement of Objects and Reasons attached to the Bill introducing the Companies (Profits) Surtax Act shows that it is the income of the assessee-company that is brought to tax under this enactment. Surtax is levied on chargeable profits of the previous year or years which have to be computed taking into consideration the total income of the assessee under the Income Tax Act, 1961. Therefore, it is very clear that the assessment of tax liability -under the Companies (Profits) Surtax Act, 1964, is integrally connected with the provisions of the Income Tax Act, 1961, regarding computation of total income. The term "previous year" is not defined under the Companies (Profits) Surtax Act, 1964, but section 2(9) of that Act provides that all other words and expressions used in that Act but not defined under it shall have the meaning as per the definition of the term under the Income-tax Act. Therefore, the definition of previous year under section 3 of the Income-tax Act has to be applied for the purpose of the Companies (Profits) Surtax Act, 1.964, also. If due to the change in the previous year, the surtax liability of the assessee is reduced, it will be a case where the Revenue is adversely affected.…

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