HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Income-tax, Madhya Pradesh v. Lady Kanchanbai
Civil Appeal No. 19 of 1969
[1970] 3 SCR 323 ·
Indian Income-tax Act, 1922: sections 2(11)(i)(a) and 66(1) · Finance Act, 1950: extension of taxable territories discussed
Sources & disclosures includedDownload original judgment / order
2-judge bench · J. C. Shah, J. · K. S. Hegde, J.
Assessment years: 1950-51
01 · Facts of the case
The assessee was a Hindu undivided family headquartered at Indore with property and several business activities. Before AY 1950-51 it was assessed as a non-resident HUF. Income from businesses in the former Madhya Bharat State was outside taxable territories and entered only the world-income computation used to determine the rate; it was not itself taxed. After the Constitution and Finance Act, 1950 brought those areas within taxable territories, the Madhya Bharat income became taxable for AY 1950-51. Although the assessee had used a Diwali-closing account year in earlier returns, it chose the financial year ending 31 March 1950 as the previous year for those business sources. The officer and AAC rejected that choice, but the Tribunal and Madhya Pradesh High Court accepted it.
Source: SCR pp. 324-325 / PDF pp. 2-3
02 · Discussion by the Hon’ble Court
Section 2(11)(i)(a) operated by separate source, not by the assessee's income generally. Unless the option had already been exercised and the proviso applied, the default previous year was the twelve months ending on 31 March; an assessee could therefore have different previous years for separate sources. The Madhya Bharat businesses were practically identifiable separate sources. The proviso restricted a later variation only where the source had once been assessed. In context, assessed meant subjected to levy or imposition of tax, not merely included in a computation. Past use of the Madhya Bharat income to calculate world income and a rate did not impose tax on that source. Consequently, neither the source nor the assessee in respect of that source had been previously assessed within the proviso.
Source: SCR pp. 325-327 / PDF pp. 3-5
03 · Judicial decision
The Supreme Court agreed that the Madhya Bharat businesses had not previously been assessed to tax and that the assessee's financial-year return fell within the first part of section 2(11)(i)(a). It affirmed the High Court's answer for the assessee and dismissed Revenue's appeal with costs.
Source: SCR p. 327 / PDF p. 5
04 · Outcome / in whose favour
In favour of the assessee on the previous-year choice for the newly taxable sources. The judgment did not remove the Madhya Bharat income from AY 1950-51 taxation; it determined the relevant accounting period for computing that income.
Source: SCR p. 327 / PDF p. 5
05 · AKHB REVIEW POINT
AKHB analysis: when applying an archival accounting-period election, identify each separate source, the precise territorial and charging change, and whether that source was actually subjected to tax before the claimed election. Do not equate rate-purpose inclusion, information reporting or computational reference with a levy on the source. Also distinguish a first valid source-specific choice from a later variation requiring consent. Current accounting-period and residence provisions must be checked independently.
Source: AKHB analysis based on SCR pp. 325-327 / PDF pp. 3-5
Source & verification
Download original judgment / order · Open cited source rendition
Full 5-page SCR report read; editorial headnote on PDF pages 1-2 distinguished from the judicial opinion beginning on PDF page 2 and continuing through page 5.
- All five source pages were read; exact PDF bytes, SHA-256 hash and page count match catalogue asset 1970_3_323_327.
- The printed report verifies Civil Appeal No. 19 of 1969, the two-judge bench and the opinion by K. S. Hegde J.
- The citation year 1970 is the SCR report year; the decision date printed in the source is 16 December 1969.
- The source uses assessee for a Hindu undivided family despite the party name Lady Kanchanbai; no individual-status inference is added.
Statutory scope
The holding applies section 2(11)(i)(a) of the Indian Income-tax Act, 1922 during the Finance Act, 1950 expansion of taxable territories. It is not a present-law accounting-period election or residence rule; current statutory application requires independent verification.
Later treatment
Source checked 2026-10-10. Comprehensive later treatment and current statutory equivalence have not been verified; no current-law or citator clearance is represented.
Page references identify the supplied PDF; paragraph references identify the judgment unless stated otherwise.
Coverage, AI disclosure & professional disclaimer
Selected Supreme Court income-tax decisions and procedural orders checked against their identified sources. This collection is not exhaustive. The research catalogue has 2,569 indexed PDF assets, including alternate copies and incidental matches; that is not a count of unique or reviewed judgments. Historical and unreported coverage remains open.
AI-assisted research checked against the identified source. Extraction, interpretation or omission errors remain possible. Source review does not mean independent approval by a practising professional. Verify every material statement against the complete original judgment.
General research information only; not legal or tax advice, a certified judgment or a substitute for the full order. Applicability depends on facts, assessment year, statutory version and jurisdiction. Subsequent treatment is unverified unless a note expressly identifies the sources checked. Downloading does not create a professional engagement. Obtain case-specific advice before reliance.
The official 1961–2025 structural correspondence does not establish that a precedent applies under the new Act. Verify the enacted wording, commencement and transitional provisions separately.