JUDGMENT
MRS. K.K. Usha, J.
1. A reference at the instance of the assessee arises from the order of the Income-tax Appellate Tribunal, Cochin Bench, is I. T. A. No. 768/Coch. of 1982. The assessment year is 1978-79. The following question is referred for the opinion of this court :
” Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the share income from Kadamane Estate Company, for the year ended on March 31, 1978, was includible in the assessment of the applicant for the assessment year 1978-79 though the previous year of the firm ended on March 31, 1978, and that of the applicant ended on December 31, 1977, instead of the share income from Kadamane Estate Company, for the year ended March 31, 1977 ?”
2. The assessee is a private limited company which is a partner in a registered firm, Kadamane Estates Co. The partnership which owns tea plantations closed its accounts on March 31, each year. The previous year followed by the asses see-company for its business ended on December 31, each year. According to the assessee, for the purpose of accounting the income from the partnership business the previous year should be taken as the previous year followed by the assessee and not the previous year followed by the firm. The above claim was rejected by the Income-tax Officer. Appeals filed by the assessee were rejected both by the first appellate authority as well as the Tribunal.
3. It is contended by learned counsel for the assessee before us that the assessing authority as well as the appellate authority has committed a mistake in rejecting the claim put forward by the assessee. He relied on a decision of the High Court of Andhra Pradesh in CIT v. R. Y. Singara Mudaliar [1988] 172 ITR 608. Learned counsel appearing on behalf of the Revenue brought to our notice a decision of this court in CIT v. M. S. Sheik Rowther [1962] 46 ITR 259, and also the decisions of the Bombay and Calcutta High Courts, CIT v. McKenzies Ltd. [1980] 121 ITR 458, and Biswanath Goenka v. CIT [1991] 189 ITR 687. He contended that by applying Section 3(1)((f) of the Income-tax Act, 1961, the income from the partnership business can be assessed in the hands of the assessee only in the year 1978-79.
4. The relevant provisions as contained in Section 3 of the Income-tax Act, 1961, read as follows :
“3. ‘Previous year’ defined. –
(1) For the purposes of this Act, ‘previous year’ means –
(a) the financial year immediately preceding the assessment year ; or
(b) if the accounts of the assessee have been made up to a date within the said financial year, then, at the option of the assessee, the twelve months ending “on such date ; or …
(f) where ‘the assessee is a partner in a firm and the firm has been assessed as such, then, in respect of the assessee’s share in the income of the firm, the period determined as the previous year for the assessment of the income of the firm.”
5. On going through the provisions contained under Section 3 as above we are inclined to accept the contention taken by the Revenue that Clause (f) of Sub-section (1) of Section 3 is the relevant provision applicable in this case. In CFT v. M. S. Sheik Rowther [1962] 46 ITR 259, this court considered a case coming under the Indian Income-tax Act, 1922. Section 2(11)(ii) of the 1922 Act contained a provision in pari materia with Clause (f) of Sub-section (1) of Section 3 of the Income-tax Act, 1961. In that case the assessee was a partner in a firm which closed its accounts on April 30, 1958. The assessee had other sources of income also and had been following the period April 1, to the following March 31 as the period of his ‘previous year”. Therefore, for the assessment year 1958-59, his accounting period ended on March 31, 1958. This court held that it is clear from Section 2(11)(ii) of the Indian Income-tax Act, 1922, that in respect of the share of the income of a partner of the firm, if the firm has been assessed as such, the period determined for the assessment of the income of the firm shall be taken to be the period for the assessment of the partner in respect of his share of the income from the firm. After noting that the period for which the firm was assessed ended on April 30, 1958, and, therefore, the partner, assessee, will also have to be assessed in respect of his share of income from the above partnership for the period ending on April 30, 1958, this court took the view that the income from the partnership is assessable in the hands of the assessee in the assessment year 1959-60. In coming to the above conclusion, this court took the view that nothing in Section 2(11)(ii) indicates that the assessment should be in the year 1958-59. The assessment in the year 1958-59 must be in relation to the income during the period of 12 months which ended on or before March 31, 1958. As mentioned earlier, the period ended in the case of the firm after March 31, 1958.
6. In the facts of the present case the period ended on March 31, 1978, and not on a day beyond March 31, 1978. Therefore, the income from the partnership has necessarily to be assessed in the year 1978-79 itself. The principle laid down by this court in CIT v. M. S. Sheik Rowther [1962] 46 ITR 259 has been understood in the same manner by the High Court of Calcutta in Biswanath Goenka v. CIT [1991] 189 ITR 687, and also by the High Court of Bombay in CIT v. McKenzies Ltd. [1980] 121 ITR 458.
7. We do not find that the Andhra Pradesh High Court had considered the real effect of Clause (f) of Section 3(1) as it was considered by the High Court of Bombay or Calcutta, nor was there a consideration of the decision of this court in CIT v. M. S. Sheik Rowther [1962] 46 ITR 259.
8. In the light of the above discussion, we are of the view that the income of the assessee from the partnership was correctly assessed in the year 1978-79. We therefore answer the question referred in the affirmative, in favour of the Revenue against the assessee.
9. A copy of this judgment under the seal of the High Court and the signature of the Registrar will be forwarded to the Income-tax Appellate-Tribunal, Cochin Bench.