BENNETT COLEMAN AND COMPANY LIMITED Vs. ALLAHIRI ITO

JUDGEMENT

(1.) THE petitioners, Bennett Coleman & Co. Ltd., are publishers of newspapers and periodicals. Their previous year for the purposes of the IT Act, 1961, was the period of 12 months ending on the preceding 31st December. On 25th February, 1976, the petitioners wrote to the CIT, with copies to the IAC and their ITO, asking for approval to their request contained in the said letter to change the previous year to July/June and to prepare accounts for the period of 18 months from 1st January, 1976. The letter stated that the Government's annual newsprint policy covered the period April to March and was usually announced in May. It, therefore, became unrealistic for the petitioners to work on the budget and review the performance for business decisions and action for almost five months in their accounting year. By changing the accounting year to July/June, this difficulty would be overcome and it would facilitate decision making. On 28th February, 1976, the budget proposals were announced and contained some reliefs to newspapers.

(2.) ON 3rd April, 1976, the petitioners wrote to their ITO modifying the request made in their letter dated 25th February, 1976, and asked for approval of the change of the previous year to end on 30th April. In other words, they requested that the period of 16 months, namely, 1st January, 1975, to 30th April, 1976, be accepted as the previous year for 1977 78 income tax assessment, after the 1975 76 assessment, the previous year of which ended on 3lst December, 1974. On 15th April, 1976, the ITO addressed a communication to the petitioners stating that the petitioners' request for change of the previous year from January/December to May/April was allowed subject to the following conditions:

(3.) ON 26th May, 1976, the Finance Bill received assent. It incorporated the relief to newspapers. On 24th January, 1977, the CIT, Bombay City VI, addressed to the petitioners a notice under s. 263 of the Act. The notice stated that the ITO's order dated 15th April, 1976, giving approval to the change in the previous year was erroneous and prejudicial to the interests of the Revenue. At the time when the order was made the Finance Bill had been introduced but its provisions had not been considered. The petitioners' income from 1St January, 1975, to 31st December, 1975, which would have been liable to tax for the asst. year 1976 77, would now be liable to be taxed for the asst. year 1977 78 as per the provisions of the Finance Act, 1976. Thus, the petitioners' income for the period 1st January, 1975, to 31st December, 1976, would bear no surcharge if a deposit of the equivalent amount was made with the Industrial Development Bank of India and the petitioners would be entitled to pay less surtax. The notice stated : "In view of this, the ITO should not have given approval to the change of previous year without safeguarding the interests of Revenue.