GOVINDAN NAIR C.J. - The question referred to us for the assessment year 1965-66 by the Tribunal, Madras Bench, reads as follows :
'Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in setting aside the assessment made by the ITO for the assessment year 1965-66, and directing the ITO to redo the same after giving an opportunity to the assessee to exercise the option as provided under s. 3(1)(b) of the I.T. Act, 1961 ?'
The Tribunal has now found, and that finding must stand, that the newly set up business of the assessee commenced on April 29, 1963. It is also not disputed that the assessee chose the accounting period ending with June 30, 1964, which is a date falling within the financial year relating to the assessment year 1965-66, since the financial year from April 1, 1964, to March 31, 1965. The terms of cl. (b) of sub-s. (1) of s. 3 are, therefore, attracted and the assessee could have exercised his option when assessment proceedings commenced. Apparently, the assessee did not do so either before the assessing authority or the AAC or even before the Tribunal in specific terms. The controversy centered on the date of commencement of the business, the assessee contending that it was on December 31, 1963, and the revenue contending that it was earlier. As mentioned already, this controversy has now been settled by the Tribunals finding that the business commenced on April 29, 1963.
The Tribunal, after having determined the date of commencement of the business, proceeded to observe that the assessee would have a right to exercise his option under s. 3(1)(b) of the I.T. Act, 1961, and that, if he did exercise his option, the assessing authority, the ITO, would make a fresh assessment on the basis of that option. The question that we have read apparently challenges this permission that has been granted by the Tribunal to the assessee.
Our attention was drawn to sub-s. (4) of s. 3 and it was contended that, in view of that sub-section, the assessee cannot exercise his option, since there is an earlier assessment year involved on the finding that the business commenced on April 29, 1963. But the terms of sub-s. (4) of s. 3 are not attracted to this case, for, the assessee has not exercised any option for the year 1964-65, and he has also not been assessed for the year 1964-65, and sub-s. (4) does not, therefore, come into play at all.
Then, a larger contention was raised that for a newly set up business as in the present case, it is only cl. (e) of sub-s. (1) of s. 3 that would apply. But even the terms of cl. (e) has a limited application. It is not a provision dealing with all cases of business that have been newly set up. An interpretation making it all comprehensive so as to wipe out cl. (b) of sub-s. (1) of s. 3 in the case of newly set up business cannot, therefore, be given. The two must be allowed to co-exist and, therefore, when cl. (e) is not attracted cl. (b) can apply. In this case, cl. (c) is also not attracted, nor cls. (f) and (g) or for that matter cl. (d). The only two clauses that can, therefore, apply are cls. (a) and (b). Since the assessee has got the right of option, that right can be exercised even at a late stage in the assessment proceedings. We think that even before the Tribunal the assessee can ask for the option to be exercised under cl. (b) of sub-s. (1) of s. 3, if the case would not fall under any other clause. We, therefore, find no error in the Tribunal having permitted him to do so aid he so desires. We answer the question referred to us in the affirmative, that is, in favour of the assessee and against the revenue. The assessee has not appeared before us. We, therefore, direct the parties to bear their respective costs.
A copy of this judgment under the signature of the Register and the seal of this court will be forwarded to the Tribunal.