COMMISSIONER OF INCOME TAX Vs. UNITED CONSTRUCTIONS

JUDGEMENT

(1.) THE Tribunal has referred the following question for our decision, viz.:

(2.) THE assessee filed a return for the asst. year 1943 -44 for which the corresponding accounting year is the year ended on 31st March, 1943. It may be stated that the assessee -firm undertook a contract for the construction of an aerodrome at Madhurpudi, near Rajahmundry, during the second world war, the work having been started in October, 1942, and completed in December, 1943. The accounts of the firm were closed for the whole period from 1st Oct., 1942, to 31st Dec., 1943. The ITO issued a notice under S. 22(2) on 19th Feb., 1944, calling for a return of income for the asst. year 1943 -44. In reply, the assessee stated that the work was started in October, 1942, and completed in December, 1943, and the accounts were under completion. The ITO closed the assessment proceedings as "no assessment" on 30th March, 1944, with the remark that the work was completed in 1943 and the income relating to the contract work was assessable in 1944 -45.

(3.) FOR the asst. year 1944 -45, the ITO issued another notice under S. 22(2), in response to which the assessee filed a return covering the whole period from 1st Oct., 1942, to 31st Dec., 1943, and declaring a loss of Rs. 15,302. One of the partners, Sri G. V. Rao, wrote to the ITO on 26th June, 1945, that, because the income or loss was for a single contract, he wanted the result of the whole contract to be included in one assessment. Accordingly, the ITO completed the assessment for the entire period from 1st Oct., 1942, to 31st Dec., 1943, and fixed the income at one lakh of rupees.