RAJAGOPALAN, J.

Under the directions of this Court given on an application by the assessee under Section 66(2) of the Indian Income-tax Act the Appellate Tribunal referred the following question to this Court :-

"Whether in the circumstances of this case, the previous years as determined by the Tribunal for the assessment years 1948-49 and 1949-50 are correct."

The assessee firm, the General Commercial Corporation Ltd., took over the assets of a partnership in concern, styled General Commercial Corporation, treated those assets as the capital of the firm and commenced business on 7th April, 1947. The first set of accounts of the assessee firm was made up to 7th May, 1948, that is, for a period of 13 months from the commencement of the business. Whether the assessee firm wound up its business or not in 1948 is not clear, but the Tribunal found that on 7th May, 1948, the entire stock of goods of the assessee firm was taken over by the new firm styled the General Commercial Corporation (India) Limited. The Income-tax Officer upheld the claim of the assessee firm that it was not liable to be assessed in the assessment year 1948-49 on the ground that it had no "previous year" as defined by Section 2(II) of the Income-tax Act. For the assessment year 1949-50, the Income-tax Act. For the assessment year 1949-50, the Income-tax Officer excluded the period from 7th April, 1947, to 7th May, 1947, and worked out the loss for the period from 7th May, 1947, to 7th May, 1948, for the purpose of assessment. The Commissioner of Income-tax exercised his powers under Section 33B of the Act and directed revision of the assessment for both the years. He held that the period from 7th April, 1947, to 31st March, 1948, should be treated as the accounting year, that is, "previous year", for the assessment year 1948-49. On appeal, the Appellate Tribunal confirmed that order. It is the correctness of the order that has been canvassed under the question referred to this Court.The contention of the assessee was that for the Assessment year 1949-50, the firm should be assessed on the previous year, that is from 8th May, 1947, to 8th May, 1948, under Section 2(11)(a) of the Act, and that, as the assessee was entitled to the benefit of the proviso to Section 2(11) (c) the assessee was not liable to be taxed in the assessment year 1948-49.

Section 2(11)(a) as it stood in the relevant assessment years ran :-

"'previous year' means in respect of any separate source of income, profits and gains - (a) the twelve months ending on the 31st day of March next preceding the year for which the assessment is to be made, or, if the accounts of the assessee have been made up to a date within the said twelve months in respect of a year ending on any date other than the said 31st day of March, then at the option of the assessee, the year ending on the day to which his accounts have been made up."

(Note : Proviso omitted).

The relevant portion of Section 2(11)(c) ran :-

"Where a business, profession or vocation has been newly set up in the financial year preceding the year for which assessment is to be made, the period from the date of the setting up of the business, profession or vocation to the 31st day of March next following............. or, if the accounts of the assessee are made up to some other date than the 31st day of March.............. then at the option of the assessee the period from the date of the setting up of the business, profession or vocation to such other date :

Provided that when such other date does not fall between the setting up of the business, profession or vocation and the next following 31st day of March, it shall be deemed that there is no previous year." *

Section 2(11)(c) was amended by Act XXV of 1953 and the relevant portion of the amended Section 2(11)(c) runs :-

"Where a business, profession or vocation has been newly set up in the financial year preceding the year for which assessment is to be made, the period from the date of the s