GENERAL COMMERCIAL CORPORATION LIMITED Vs. STATE

JUDGEMENT

(1.) UNDER the directions of this Court given on an application by the assessee under S. 66(2) of the Indian IT Act the Tribunal referred the following question to this Court : -

(2.) THE assessee firm, the General Commercial Corporation Ltd., took over the assets of a partnership in concern, styled General Commercial Corporation, treated those assets as the capital of the firm and commenced business on 7th April, 1947. The first set of accounts of the assessee firm was made up to 7th May, 1948, that is, for a period of 13 months from the commencement of the business. Whether the assessee firm wound up its business or not in 1948 is not clear, but the Tribunal found that on 7th May, 1948, the entire stock of goods of the assessee firm was taken over by the new firm styled the General Commercial Corporation (India) Limited. The ITO upheld the claim of the assessee firm that it was not liable to be assessed in the asst. year 1948 -49 on the ground that it had no "previous year" as defined by S. 2(II) of the IT Act. For the asst. year 1949 - 50, the ITO excluded the period from 7th April, 1947, to 7th May, 1947, and worked out the loss for the period from 7th May, 1947, to 7th May, 1948, for the purpose of assessment. The CIT exercised his powers under S. 33B of the Act and directed revision of the assessment for both the years. He held that the period from 7th April, 1947, to 31st March, 1948, should be treated as the accounting year, that is, "previous year", for the asst. year 1948 -49. On appeal, the Tribunal confirmed that order. It is the correctness of the order that has been canvassed under the question referred to this Court.

(3.) SECTION 2(11)(c) was amended by Act XXV of 1953 and the relevant portion of the amended S. 2 (11)(c) runs : -