2008 (11) TMI 188

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....d held that what is important is "the natural sequence of ten assessment years", and did not accept the assessee's claim. The Commissioner of Income-tax (Appeals) confirmed this. The Tribunal, however, decided to allow the claim of the assessee and, therefore, the Department has filed the appeals on the following substantial questions of law: "1. Whether, in the facts and circumstances of the case, the Tribunal was right in holding that sales tax does not form part of total turnover for the purpose of calculation of deduction under section 80HHC ? 2. Whether, in the facts and in the circumstances of the case, the Tribunal was right in holding that the amount received out of local sale does not form part of the total turnover, for the purpose of calculation of deduction under section 80HHC ? 3. Whether, in the facts and in the circumstances of the case, the Tribunal was right in holding that the interest accrued in the present assessment year is not assessable to tax for the assessee following the mercantile system of accounting ? 4. Whether for the assessment year 1992-93 the Tribunal is right in allowing the benefit under section 80HH for the 11th year when the section specifi....

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.... of the assessee in CIT v. Tamilnadu Mercantile Bank Ltd. [2007] 291 ITR 137 (Mad). 7. We have gone through the materials on record. The Assessing Officer had rejected the claim for exclusion of interest accrued. The Assessing Officer also dealt with the interest income on the principle of accrual and confirmed the assessment order. The Tribunal, however, rightly held, in our opinion, that the opinion of the Commissioner of Income-tax (Appeals) that once it has accrued, it should be included as income is not correct since the very term "accrued but not due" would show that the right to receive the interest had not arisen to the assessee and the interest was receivable only from the 1st of April of the next year. In fact, an identical issue came up before this court in Tamilnadu Mercantile Bank Ltd. [2007] 291 ITR 137 (Mad). In that case also, the assessee had adopted the mercantile system of accounting as in this case and it was contended before the Bench that "even under section 145 of the Act, the method of accounting on due basis is recognised. The assessee is following the mercantile system and so he is entitled to the benefit of section 145 of the Act." 8. The Division Bench....

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....971-72 income for the period January 1, 1969, to May 31, 1970, was assessed, for the assessment year 1972-73 income from June 1, 1970, to May 31, 1971, was assessed and for the year 1973-74, the income which was brought to tax was of the previous year starting from June 1, 1971, and ending with May 31, 1972. Therefore, no assessment was made for the year 1970-71 due to change allowed in the previous year. That is because the last date of the changed previous year did not fall within the financial year preceding the assessment year 1970-71. So far as the present case is concerned, the initial assessment year is 1968-69 and the four assessment years immediately succeeding the initial assessment years are 1969-70, 1970-71, 1971-72 and 1972-73. The relief contemplated under section 80J(2) came to an end with the assessment year 1972-73. Therefore, the assessment year 1973-74 falls outside the scope of section 80J(2) of the Act. Hence, the assessee is not entitled to the relief asked for under section 80J(2) in the assessment year 1973-741 The words 'immediately succeeding assessment years' appear in several other provisions such as section 72(3), etc. Under such circumstances, the Trib....

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....acuum cleaners during the previous year ending December 31, 1981, relevant to the assessment year 1982-83. The initial year for deduction under section 80HH in respect of the Revenue, i.e., was 1982-83. The assessee is allowed deduction for 10 assessment years. There was a change in the accounting year from December to June. Therefore, the assessment year 1985-86 covered the period from January 1, 1983, to June 30, 1984. There was no assessment for the assessment year 1984-85. So the assessee claimed his 10th year was 1992-93. According to the Revenue, the natural sequence of assessment years should be followed and if so, the 10th year was 1991-92. 14. In Kar Mobiles Ltd. v. CIT [1998] 229 ITR 701 (Ker), the court held thus (page 705): "The fact that the assessee had changed with effect from April 1, 1976, the previous year or the financial year to the year ending September 30, and the previous year for the assessment year 1978-79 was consequently from April 1, 1976, to September 30, 1977, and there was no previous year for the assessment year 1977-78 will not advance the case of the assessee for claiming relief under section 80J for the assessment year 1980-81 also. It was only ....