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Judgment
Bharucha, J.—This reference under s. 256(1) of the I.T. Act, 1961, is made at the instance of the Revenue. It poses this question :
"Whether income assessable under the head ''Income from property'' is to be invariably computed with reference to the financial year ?"
The assessee-firm came into existence on April 1, 1961. It closed its accounts on June 30, 1961. The accounting period of the assessee for the assessment year 1962-63 was thus of only three months.
The assessee owned house property, the income from which was entered in the books of the business. In its return of income for the assessment year 1962-63, the assessee declared the income from the house property for the said three months. It then filed a revised return showing the house property income for the whole of the financial year 1961-62. Subsequently, the assessee reverted to its original stand.
The ITO accepted the position that the accounting period for the assessment year 1962-63 was of the said three months is so far as income other than house property income was concerned, but he "was of the opinion that property income has got to be assessed on the financial year basis..." He assigned no reason for his opinion.
The assessee preferred an appeal and the AAC allowed it. The Revenue took the matter to the Income Tax Appellate Tribunal. The Tribunal observed that no provision, either in the Act or the Rules, had been pointed out which required an assessee to declared income from property on the basis of the financial year and not according to its books. The relevant sections, namely, ss. 3, 22 and 23 of the Act, did not give that impression. No authority had been cited by the Revenue in support of the its proposition. The Tribunal dismissed the Revenue''s appeal.
Our attention was drawn by Mr. Jetly, learned counsel for the Revenue, to the provisions of s. 3. We have also looked into the provisions of ss. 22 and 23. These provisions of the Act do not require that income assessable under the head of income from property is to be invariably computed with reference to the financial year. No provision in the Rules is brought to our attention that so requires. No decision has been cited that so holds.
Accordingly, we answer the question in the negative and in favour of the assessee.
The Revenue shall pay to the assessee the costs of the reference.