COMMISSIONER OF INCOME TAX Vs. L VENKATAPATHY

JUDGEMENT

(1.) AT the instance of the revenue, the following common question has been referred to this court for its opinion by the IT Appellate Tribunal :

(2.) THE assessee with his three brothers owned lands in Uppilipalayam village in Coimbatore District. THE Government acquired some of these lands in three separate proceedings on the basis of three separate proceedings on the basis of three separate notifications u/s. 4(1) of the Land Acquisition Act issued on 17-4-1957, 20-1-1961 and 16-4-1969. THE compensation originally fixed was enhanced by courts and the assessee, as a result of the order passed by the courts, was entitled to receive interest on the enhanced compensation and the interest received on enhanced compensation was Rs. 33,000 for the asst. yr. 1969-70 and Rs. 15,799 for the asst. yr. 1970-71. Since the assessee has not maintained books of account and had actually received these amounts in the asst. yrs. 1969-70 and 1970-71 the ITO assessed these amounts on receipt basis for the asst. yrs. 1969-70 and 1970-71.

(3.) SECTION 13 of IT Act, 1922 corresponding to s. 145 of the 1961 Act camp up for consideration before the Supreme Court in Keshav Mills Ltd. v. CIT where the court held that is dealing with the method of accounting s. 13 an integral part of the computation of the total income by the assessee and, therefore, it is compulsory on the income-tax authorities as well when computing the total income to accept the mode of accounting regularly adopted by the assessee except in case where the proviso to s. 13 is applicable. The proviso to s. 13 corresponds to Sub-s. (2) of s. 145 of the 1961 Act. Therefore, where no method of accounting is regularly employed by the assessee the ITO can proceed to compute the income on any basis of accounting the chooses. In Whiteworth Park Coal Co. Ltd. v. IRC (1960) 40 ITR 517 (HL) a distinction has been made, as already stated, between a trader and a non-trader with reference to the method of accounting and how the computation has to be made with reference to the income of a non-trader as could be seen from the following passages :