Separate source of income may use a different previous year where accounts are duly made up, without separate books.

For a separate source of income, the assessee could adopt a different previous year if the accounts for that source were made up within the prescribed twelve-month period; a separate set of books was not required. Dividend income separately brought into the profit and loss account and balance-sheet up to 31 August 1953 therefore qualified for that accounting year, and it was not liable to be included in the 1953-54 assessment year. The objection that no option had been exercised was treated as a factual issue not open in reference.

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Issues: Whether dividend income from a separate source, accounted for in books made up to 31 August 1953, could be included in the assessee's total income for the assessment year 1953-54, and whether the assessee could exercise the option under the definition of "previous year" without maintaining a separate book of account for that source.

Analysis: The relevant provision allowed an assessee, in respect of any separate source of income, to adopt as the previous year the accounting year ending on a date other than 31 March if the accounts for that source had been made up within the specified twelve months. The findings recorded below showed that the dividend income had been separately brought into the profit and loss account and balance-sheet for the year ending 31 August 1953. The requirement was not the maintenance of a separate set of books for that source, but only that the income from the separate source should have been duly accounted for and the accounts made up to the relevant date. The plea that no option had been exercised was rejected as raising a factual matter not available in reference.

Conclusion: The assessee was entitled to adopt the accounting year ending 31 August 1953 as the previous year for the dividend income, and the income was not liable to be included in the assessment year 1953-54. The question was answered in the negative, in favour of the assessee.

Ratio Decidendi: For a separate source of income, the assessee may adopt a different previous year under section 2(11)(i)(a) of the Indian Income-tax Act, 1922 if the income from that source has been accounted for and the accounts have been made up to a qualifying date; a separate book of account is not necessary.

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