Previous year for salary income and gross-tax basis for concession were both confirmed under the tax scheme.

For salary income where no accounts are maintained, the previous year remains the financial year under the Income-tax Act, and a concessional order cannot alter that statutory accounting rule; the assessee was therefore entitled to treat the year ending 31 March 1964 as the relevant previous year. The 60% deduction under the Pondicherry Taxation Concessions Order had to be computed on the gross tax first, because the compulsory deposit arose under a separate scheme and only thereafter affected the net liability; the concession was accordingly applied before the compulsory deposit adjustment.

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Issues: (i) Whether, for assessment year 1964-65, a salaried assessee who maintained no accounts could claim the twelve months ending 31 March 1964 as the previous year for income from salary; (ii) Whether the 60% deduction under paragraph 8 of the Pondicherry (Taxation Concessions) Order, 1964, had to be computed on the gross additional surcharge before deducting the compulsory deposit.

Issue (i): Whether, for assessment year 1964-65, a salaried assessee who maintained no accounts could claim the twelve months ending 31 March 1964 as the previous year for income from salary.

Analysis: The scheme of the Income-tax Act treated the previous year for salary income, where no accounts were kept, as the financial year. The Concessions Order had to be read consistently with that statutory scheme and could not alter the substantive rule governing the previous year. The proviso to paragraph 2(2) did not authorise the Income-tax Officer to fasten a longer accounting period on the assessee for the later assessment year, and consent obtained in those circumstances did not validate a departure from the Act.

Conclusion: The assessee was entitled to claim the financial year ending 31 March 1964 as the previous year, and the answer was in favour of the assessee.

Issue (ii): Whether the 60% deduction under paragraph 8 of the Pondicherry (Taxation Concessions) Order, 1964, had to be computed on the gross additional surcharge before deducting the compulsory deposit.

Analysis: Paragraph 8 required the tax to be determined at the Indian rate and then reduced by 60% of the tax so computed. The compulsory deposit arose under a separate scheme and did not form part of the computation under the Income-tax Act or the Concessions Order. The statutory concession therefore had to be applied first on the gross tax and only thereafter could the compulsory deposit adjustment be made.

Conclusion: The 60% deduction had to be calculated before deducting the compulsory deposit, and the answer was in favour of the assessee.

Final Conclusion: Both referred questions were answered against the revenue, and the assessments had to proceed on the basis that the financial year was the relevant previous year for salary income and that the concession was to be applied on the gross tax computation.

Ratio Decidendi: A concessional order cannot override the substantive charging and accounting scheme of the Income-tax Act, and a tax concession must be computed according to its own terms before any adjustment under a separate enactment is made.

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