Lakshmatah, J.
1. In this reference under s. 256(1) of the I.T. Act, 1961, the question referred to us by the Income-tax Appellate Tribunal at the instance of the Commissioner of Income-tax is :
'Whether, on the facts and in the circumstances of the case, the salary income of the assessee as a judge of the Andhra Pradesh High Court could be included for the purpose of assessment of the year 1969-70 ?'
2. The facts necessitating the reference of the aforesaid question are as follows :
Facts : The assessee is an individual. He was practising as an advocate. For the legal profession he carried on, the assessee had been maintaining accounts for the financial year commencing form April 1, and ending by March 31, each year. He was appointed as a judge of the High Court of Andhra Pradesh with effect from August 21, 1968. Prior to becoming a judge, he was also receiving remuneration at Rs. 400 per month liquidator of Vijaya Commercial Bank Ltd. He was also getting a remuneration of Rs. 400 per month as editor of Indian Law Reports. Till the assessment year 1968-69, the remuneration received by the assessee as liquidator and also as editor was being assessed as salary income. In the assessment year 1969-70, the same was assessed under the head 'Profession'.
3. So far as the salary as a judge of the High Court was concerned, the assessee maintained separate accounts for that source, as a new source of income from salary had arisen from the date of his appointment as a judge with effect from August 21, 1968. The accounts in that direction were opened on August 21, 1968, and they were made up till July 31, 1969, So far as the salary as a judge of the High Court was concerned, the same was not returned while filing the return for the assessment year 1969-70, on the basis that in so far as that source was concerned, separate accounts were maintained and they were closed on July 31, 1969. According to the assess, the salary income as a judge of the High Court cannot be assessed for the assessment year 1969-70, but it can be assessed only for the assessment year 1970-71. The ITO accepted the assessee's claim and completed the assessment without including any part of the salary received by the assessee as a judge of the High Court, for the income-tax assessment year 1969-70.
4. Subsequently, the Addl. CIT by virtue of the powers conferred upon him under s. 263 of the I.T. Act, 1961 (referred to hereinafter merely as 'the Act'), passed an order holding that the assessee's income by way of salary as a judge of the High Court for the period August 21, 1968, to March 31, 1969, fell to be assessed for the income-tax assessment year 1969-70, under s. 3(1)(a) of the Act. The Commissioner was of the view that the choice of a previous year at the option of the assessee was not available to a person in respect of income from his salary. In that view of the matter, the Commissioner set aside the assessment made by the ITO and directed him to modify the assessment by including the income from salary for the period April 1, 1968, to March 31, 1969, in the income-tax assessment for the year 1969-70.
5. The assessee thereafter preferred an appeal before the Income-tax Appellate Tribunal, Hyderabad, contending, inter alia, that option was given to the assessee under s. 3(1)(b) of the Act to choose the previous year for a new source of income including from salary. As the accounts for a new source of income by way of salary as a judge of the High Court were opened on August 21, 1968, and made up to July 31, 1969, there was no previous year at all for the assessment year 1969-70. The Tribunal accepted that contention and held that the assessee was entitled to choose a separate previous year for the new source of income by way of salary as a judge of the High Court.
6. The Tribunal, however, held that neither the provisions of s. 3(1)(a) nor the provisions of s. 3(1)(b) of the Act would apply to the facts of the assessee's case. It was of the view that the cases not falling under cls. (a) and (b) of sub-s. (1) of s. 3, would necessarily fall under clause (c) and inasmuch as the Central Board of Direct Taxes did not determine as required under s. 3(1)(c) 'the previous year', the Tribunal held that the assessment as originally made by the ITO was in order and the Commissioner was in error in interfering with the assessment order, under s. 263 of the Act. The Tribunal, therefore, vacated the order of the Commission and restored the ITO's order.
7. It is under those circumstances that this reference is made to us by the Tribunal at the instance of the Addl. Commissioner, Andhra Pradesh, Hyderabad.
8. Sri P. Rama Rao, the learned counsel appearing for the revenue, supported the view taken by the Commissioner. Sri Anjaneyulu, the learned counsel appearing for the assessee, submitted that the view that the assessee's case was not governed under s. 3(1)(b) of the Act was erroneous in view of the fact that there cannot be a 'previous year' for any assessment year in respect of a new source of income unless the accounts maintained by the assessee have been made up to a date within the financial year preceding the assessment year and that in the present case the financial year preceding the assessment year 1969-70 was the period between April 1, 1968, and March 31, 1969, and inasmuch as the accounts of the assessee were opened on August 21, 1968, and made up only on July 31, 1969 (which fact was not disputed), the date of making up of the accounts fell on July 31, 1969, beyond the financial year preceding the income-tax assessment year 1969-70 and, therefore, there is no previous year at all for this new source of income for the income-tax assessment year 1969-70.
9. For solving the problem raised on the basis of the rival contentions put forth on behalf of either side, it is necessary to examine the scheme of the Act.
10. Scheme of the Act. - The Income-tax Act, 1961, is enacted with a view to consolidate and amend the law relating to income-tax and super-tax. It is intended to be a self-contained code so dealing with all the matters it provides for exhaustively as not to have any need to have any recourse to other sources for ascertaining the intention of the framers of the Act excepting in a case where the language employed by the framers of the enactment is dubious or ambiguous. As observed by the Supreme Court of India in Ravulu Subba Rao v. CIT : [1956]30ITR163(SC) the I.T. Act being a consolidating and amending Act, the law is to be ascertained by interpreting the language used in the Act in its natural meaning uninfluenced by considerations derived from the previous state of the law.
11. Income-tax shall be charged for any assessment year in respect of the total income of the previous year or previous year of every person. Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with and subject to the provisions of the Act (See s. 4).
12. The expression 'previous year' is defined by s. 3 of the Act which, in so far as it is material, read as follows :
'3.`Previous year' defined. - (1) For the purpose 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
(c) in the case of any person or business or class of persons of business not falling within clause (a) or clause (b), such period as may be determined by the Board or by any authority authorised by the Board in this behalf; or.........
(3) Subject to the other provisions of this section, an assessee may have different previous years in respect of separate sources of his income..........'
13. The Act, by s. 15, enumerates the various heads of salaries characterising the same as income that shall be chargeable to income-tax.
14. Salaries of Judges of High Courts. - Article 221 of the Constitution of India provides for the salaries and allowances of judges of High Courts, clause (1) of which reads thus :
'(1) There shall be paid to the judges of each High Court such salaries as are specified in the Second Schedule.'
15. The Second Schedule appended to the Constitution provides by sub-clause (1) of clause 10 thereof that -
'There shall be paid to the judges of High Courts, in respect of time spent on actual service, salary at the following rates per mensem, that is to say, -.......
Any other judge - Rs. 3,500.'
16. Article 202 deals with annual financial statement which, in so far as it is material, reads thus :
'202. Annual financial statement. - (1) The Governor shall in respect of every financial year cause to be laid before the House or Houses of the Legislature of the State a statement of the estimated receipts and expenditure of the State for that year, in this Part referred to as the 'annual financial statement'.
(2) The estimates of expenditure embodied in the annual financial statement shall show separately -
(a) the sums required to meet expenditure described by this Constitution as expenditure charged upon the consolidated fund of the State; and......... (3) The following expenditure shall be expenditure charged on the consolidated fund of each State -......... (d) expenditure in respect of the salaries and allowance of judges of any High Court.........'
17. As per clause (1) of art. 203 of the Constitution dealing with procedure in Legislature with respect to estimates :
'So much of the estimates as relates to expenditure charged upon the consolidated fund of a State not be submitted to the vote of the Legislative Assembly............'
18. The first question, therefore, that arises for consideration is whether a judge of a High Court is entitled to have a 'different previous year' in respect of his salary treating it as a 'separate source of his income' within the meaning of that expression as occurring in sub-s. (3) of s. 3 of the Act, which, as we have already extracted, reads thus :
'Subject to the other provisions of this section, an assessee may have different previous years in respect of separate sources of his income.'
19. The assessee was appointed under art. 217 of the Constitution of India as a judge of the High Court of Andhra Pradesh with effect from August 21, 1968. He was paid such salary under art. 221 of the Constitution as specified in the Second Schedule appended thereto. The Source of income by way of salary is payable from the consolidated fund of the State. It is not out of place to observe that the concept of plurality of 'previous year' as applicable to an assessee is borne out both by the language employed in s. 3 of the Act as well as s. 4 which specifically refers to the expression 'total income of the previous year or previous years, as the case may be, of every person' for an assessment year. We are, therefore, of the opinion that the salary payable to the judge of a High Court under the Constitution of India from the consolidated fund of the State constitutes a 'separate source of income' within the meaning of that expression as occurring in sub-s. (3) of s. 3 of the Act and as such a judge of the High Court is entitled to have a 'different previous year' in respect of such source of income.
20. It is not out of place to refer in this connection to that part of the order passed by the Appellate Tribunal dated of March 18, 1974, dealing with this aspect of the matter, albeit in a different context :
'We may also mention here that it is not the case of the revenue that in respect of the salary as judge of the High Court, the assessee cannot choose his previous year. To our mind, there is also no doubt that in respect of salary income of the assessee as judge of the High Court, he can choose a different previous year as the salary forms a different source as far as the assessee is concerned. The Additional Commissioner of Income-tax has also not stated in his order that the assessee cannot choose a separate previous year in so far as the income of salary as judge of the High Court is concerned.'
21. It is in the background of the aforesaid facts and circumstances of the case that the question referred to us shall have to be examined which involves the interpretation of s. 3(1)(b) of the Act. As has already been extracted, it provides that for the purpose of the Act, 'previous year' means - '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' and under s. 4 of the Act, income-tax shall have to be charged for the assessment year in respect of the total income of the previous year of every assessee.
22. In the present case, the financial year preceding the assessment year 1969-70 was the period between April 1, 1968, and March 31, 1969. That the assessee was appointed as judge on August 21, 1968, and that he opened the accounts on August 21, 1968, and made up the accounts as on July 31, 1969, as found by the lower Tribunal, are not in dispute. Since the date of making up of the accounts on July 31, 1969, fell beyond the financial year preceding the income-tax assessment year 1969-70, there is no corresponding previous year for this new source of income for the income-tax assessment year 1969-70,
23. The previous year arises, so far the facts of the present are concerned, for the first time for the assessment year 1970-71. The financial year preceding the same year 1970-71 was the period between April 1, 1969, and March 31, 1970. As has already been noticed, the accounts for a new source of income have been made up by the assessee as on July 31, 1969. That date falls within the financial year preceding the income-tax assessment year 1970-71. Therefore, the previous year for this new source of income for the income-tax assessment is the income-tax assessment year 1970-71 and not the assessment year 1969-70.
24. We agree with the contention put forth by Sri Anjaneyulu on behalf of the assessee, that the provisions of s. 3(1)(b) of the I.T. Act are applicable to the facts of the assessee's case inasmuch as the accounts maintained by the assessee were made up to a date falling beyond the financial year preceding the assessment year 1969-70.
25. It may also be noticed in this connection that the Tribunal seemed to be of the view that the crucial date that has to be taken into account in the context of applying s. 3(1)(b) if the commencement of the accrual of income rather than the making up of the accounts by the assessee. Section 3(1)(b) of the Act is quite clear when it provides for the making up of the accounts by the assessee. It does not refer the factum of commencement of accrual of income as adverted to the by the Tribunal. What is material, therefore, is, that the crucial date is not the commencement of a new source of income in the financial year preceding the assessment year in the context of s. 3(1)(b) but the making up of accounts by the assessee.
26. We, therefore, hold that the provisions of s. 3(1)(b) of the Act are applicable to the facts of the assessee's case.
27. It is not out of place to refer to what has been brought to our notice during the course of arguments by the learned counsel for the assessee that the error committed by the Tribunal was set right by itself while dealing with the appeal for the subsequent income-tax assessment year 1970-71. A copy of the order passed by the Tribunal for the income-tax assessment year 1970-71 in I.T.A. No. 1853 (Hyd)/75-76 dated July 22, 1977, was filed during the course of arguments before us, where the assessee's contention that s. 3(1)(b) of the income-tax Act, was applicable was accepted and upheld by the Tribunal while disposing of the appeal for the income-tax assessment year 1970-71, which is characterised by the learned counsel appearing for the assessee, as a correct of view of the matter and we agree with that characterisation.
28. Even otherwise, the learned counsel for the assessee submitted, with-out prejudice to his submissions made in the context of the applicability of s. 3(1)(b) of the Act, that s. 3(1)(c) is applicable to the facts of the case as opined by the Tribunal and inasmuch as the Central Board of Direct Taxes did not determine any previous year for the assessee's new source of income from salary, the Tribunal was right in holding that the Commissioner should not have interfered with the ITO's order for 1969-70. We find some force in that contention though we do not propose to rest our conclusion on that basis. We, therefore, hold, on the facts and circumstances of the case, that the salary income of the assessee as a judge of the High Court of Andhra Pradesh should not be included for the purpose of assessment for the year 1969-70 and our answer to the reference is clearly in the negative. No costs.