COMMISSIONER OF INCOME-TAX Vs. RAVINDER KUMAR

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Chandigarh, has referred the following two questions for the opinion of this court, the first being at the instance of the Revenue and the second at the instance of the assessee. "1. Whether, on the facts and in the circumstances of the case, the Tribunal erred in law in holding that the assessee had a right in law to exercise an option for adoption of a particular previous year in respect of the agricultural income which was brought within the tax net for the first time during the assessment year 1974-75 ?

(2.) WHETHER the Tribunal, in the context of the relevant provisions of law relied upon by the assessee to show that the agricultural income for the period from September 8, 1972 to September 7, 1973, was not includible in the total income of the assessee, erred in law in holding that the interpretation of the expressions 'in the previous year' and 'during the previous year' was not material ?" 2. The assessee is a partner in various firms and is also having agricultural income. He was maintaining books of account for his agricultural income as well. Agricultural income is not subjected to income-tax. However, by the Finance Act of 1973, which came into force with effect from April 1, 1973, agricultural income had to be taken notice of for imposition of rate of tax. For the purposes of taxation, the previous year in the case of the assessee ended on September 7, each year, that is, his income for 12 months prior to September 8 had to be taken into account for assessing the income of each year. However, the assessee made a deviation for the first time and closed the agricultural books of account on March 31, 1973, instead of doing so on September 7, 1973. He again started books from April 1, 1973, and closed them on September 7,1973.

(3.) DURING the assessment proceedings relating to the assessment year 1974-75, the assessee's claim was that his agricultural income of Rs. 6,880 for the period April 1, 1973, to September 7, 1973, had to be taken notice of for rate purposes as he has opted to do so under Section 3 (1) (d) (ii) of the Income-tax Act, 1961, (for short "the Act" ). For the period September 8, 1972, to March 31, 1973, the assessee returned an agricultural income of Rs. 11,825 but the Income-tax Officer did not agree with the assessee and included agricultural income for the entire previous year from September 8, 1972, to September 7, 1973, amounting to Rs. 18,705, in the total income of the assessee for rate purposes. The Appellate Assistant Commissioner confirmed the order of the Income-tax Officer but, on appeal to the Tribunal, the assessee's view-point was accepted. The Tribunal considered the agricultural income to be from a new business and allowed him to have the option of the previous year and obviously this was done by applying the provisions of Section 3 (1) (d) (ii) of the Act.