Law:

Section:

Section 3 of the Income-tax Act, 1961 (Corresponding to section 2(11) of the Indian Income-tax Act, 1922) - Previous year - Assessment year 1954-55 - Whether for entitling an assessee to exercise an option under section 2(11)(i)(a) of 1922 Act, in respect of any separate source of income, it is not necessary for him to have either a separate book of account in respect of income from separate source or even to have a separate part of book confined to income from that source - Held, yes - Dividend received by assessee was declared by company on 29-10-1952 - Relevant accounts relating to dividend income existed in assessee's books of account for accounting period ending 31-8-1953, and said income had been brought into profit and loss account, and balance-sheet filed by assessee for assessment year 1954-55 - Whether assessee having exercised option, Department had to assess dividend income in income relating to assessment year 1954-55, for which year assessee had returned income - Held, yes FACTS The assessee-company, showed in their books of account relating to the assessment year 1954-55 having previous year ending on 31-8-1953, income on account of dividend declared by the concerned company at its general meeting held on 29-10-1952. In the income-tax return filed by the assessee for the assessment year 1954-55, this item of income was included. At the time of assessment, the ITO excluded this item on the ground that it had accrued from other sources, and, therefore, was assessable for the assessment year 1953-54, relevant to previous year ending 31-8-1952. The AAC accepted assessee's appeal. The finding of the AAC was confirmed by the Tribunal. On reference, it was contended for the Department, that the assessee was not entitled to exercise the option given to him by section 2(11)(i)(a) of the Act of 1922 unless he maintained separate books of account for the separate source of income in respect of which he wanted to exercise the option, and since separate accounts in respect of dividend income were lacking, the question referred must be answered against the assessee. HELD For entitling an assessee to exercise an option under section 2(11)(i )(a), in respect of…

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