1960 (10) TMI 96 - HC - Income Tax

Assessee's Choice of Previous Year, Tax Concessions, and Costs Awarded

Binodi Ram Balchand Versus Commissioner of Income-tax

The court held that the assessee could choose the financial year ending on March 31, 1950, as the 'previous year' for income from managing and selling ... - Issues Involved:1. Determination of the 'previous year' for the source of income from managing agency and selling agency and financing of Binod Mills Ltd., Ujjain.2. Accrual of selling agency commission attributable to sales made to parties in Part A States.3. Taxation of dividend income for the assessment year 1950-51 in light of paragraph 12 of the Part B States (Taxation Concessions) Order, 1950.Detailed Analysis:Issue 1: Determination of the 'Previous Year'The primary issue was whether the 'previous year' for the source of income from managing agency, selling agency, and financing of Binod Mills Ltd., Ujjain, for the assessment year 1950-51 should be the year ending March 31, 1950, or the year ending Diwali, 1949. The assessee claimed the financial year ending March 31, 1950, as the 'previous year,' while the taxing authorities and the Appellate Tribunal contended that the Diwali year ending October 21, 1949, should be the 'previous year.'The court held that the assessee had not been previously assessed in respect of the managing and selling agency commission within the meaning of 'has once been assessed' as used in the proviso to section 2(11)(i)(a). The managing and selling agency commission income included in the total world income for determining the rate of tax applicable to it in the assessment years before 1948 did not constitute an exercise of the option regarding the previous year. The court concluded that the assessee had the right to choose the financial year ending on March 31, 1950, as the 'previous year' for the managing and selling agency source of income.Issue 2: Accrual of Selling Agency CommissionThe second question was whether the selling agency commission attributable to sales made to parties in Part A States accrued in Part A States. This issue was not pressed by the learned counsel for the assessee, and therefore, the court did not express any opinion on this matter.Issue 3: Taxation of Dividend IncomeThe third issue concerned the taxation of dividend income for the assessment year 1950-51, considering paragraph 12 of the Part B States (Taxation Concessions) Order, 1950. The assessee argued that the net dividend income should be taxed with concessions, while the taxing authorities had subjected part of the dividend income to standard tax rates.The court referred to its opinion in Smt. Anup Prabha Bai Sethi v. Commissioner of Income-tax, where it was held that the tax payable on the entire dividend income included in the total income, after excluding the proportion of non-taxable dividend under paragraph 12, would be at the concessional rates under the Taxation Concessions Order, 1950. The court reiterated that the concession given by paragraph 12 was confined to income-tax and did not apply to super-tax. Therefore, the assessee was liable to pay super-tax at the concessional rates mentioned in the Taxation Concessions Order, 1950, on the entire dividend income.Conclusion:1. The 'previous year' for the managing and selling agency source of income is the financial year ending on March 31, 1950, as chosen by the assessee.2. No opinion was expressed on the accrual of selling agency commission attributable to sales made to parties in Part A States.3. The tax payable on the entire dividend income included in the total income, after excluding the proportion of non-taxable dividend under paragraph 12 of the Taxation Concessions Order, 1950, would be at the concessional rates under the said Order. The assessee is liable to pay super-tax at the concessional rates on the entire dividend income.The assessee was awarded the costs of the reference.