Previous year election for separate income sources turns on prior taxation, not mere rate computation or world-income inclusion.

Section 2(11)(i)(a) of the Income-tax Act, 1922 permits a different previous year for separate sources of income only where the relevant accounts were made up within the statutory period and that source had not already been assessed. In the proviso, "once been assessed" means the particular source must previously have been brought to tax under the Act; mere inclusion of the income for world-income or rate-computation purposes is insufficient. As the Madhya Bharat businesses had only been considered for rate purposes and had not earlier been taxed under the Act, the assessee could adopt the financial year ending 31 March 1950 as the previous year for those sources, and the Revenue's challenge failed.

---

---

Issues: Whether, for income from separate sources outside the taxable territories, the assessee could opt for the financial year ending on 31 March 1950 as the previous year under section 2(11)(i)(a) of the Income-tax Act, 1922, and what is the meaning of the expressions "assessed" and "once been assessed" in the proviso to that provision.

Analysis: Section 2(11)(i)(a) permits the assessee to choose a different previous year only where the accounts have been made up to a date within the relevant twelve months and the source of income has not already been assessed. The provision speaks of separate sources of income, so a different previous year may apply to distinct sources. The words "assessed" and "assessee" are context-dependent, but in the proviso the expression "once been assessed" means that the particular source of income must have been brought to tax under the Act. Income merely taken into account for computing world income or for rate purposes, without tax being levied on that source, is not enough. The assessee's businesses in Madhya Bharat had been considered earlier only for rate purposes and were not previously taxed under the Act.

Conclusion: The assessee was entitled to adopt the financial year ending on 31 March 1950 as the previous year for the relevant sources, and the Revenue's challenge failed.

Final Conclusion: The appeal was dismissed because the proviso to section 2(11)(i)(a) was not attracted where the relevant source had not earlier been brought to tax, even though it had been considered in computing world income.

Ratio Decidendi: In the proviso to section 2(11)(i)(a) of the Income-tax Act, 1922, a source of income is "once been assessed" only when that source has been subjected to tax under the Act, not when it has merely been taken into account for rate computation or world income.

---