JUDGMENT

Page, C J - The question propounded is whether in the circumstances of this case the assessee is entitled for the par-poses of his income-tax assessment to claim a loss by revaluing lands taken over in the course of his money-lending business; and if so, whether the revaluation must be confined to land's taken over in the accounting year. The material section of the Income-tax Act, is Section 13, which runs as follows:

Income, profits and gains shall be computed for she purposes or Sections 10, 11 and 12, in accordance with the method of accounting regularly employed by the assessee:

Provided that, if no method of accounting has been regularly employed, or if the method employed is such that, in the opinion of the Income-tax Officer, the income, profits and gains cannot properly be deduced, therefrom, then the computation shall be made upon such basis and in such manner as the Income-tax Officer may determine.

2. Now, as I understand the law upon this subject the intention of the Legislature in enacting Section 13 was that for income-tax purposes the assessee should be entitled to make use of any method of accounting that he chooses to adopt, but (a) he must follow the selected method "regularly," and is not to be allowed to change his system of book keeping from year to year or so frequently as to prevent a fair estimate of his income, profits and gains de and in annum from being ascertained; (b) "if the method employed is such that in the opinion of the Income-tax Officer, the income, profits and gains cannot properly be deduced therefrom, then the computation shall be made upon such basis and in such manner as the Income-tax Officer may determine"; (c) what the officer is directed to compute is not the assesaee's receipts, but the assessee's income, and in dubio what the assessee himself chooses to treat as income may well be taken to be income and to arise when he so chooses to treat it"; although book entries purporting to relate to the receipt of income are not necessarily conclusive as to the quantum of the income to which they purport to refer, for the real income, profits and gains, that have accrued during each accounting year are in every case to be determined by the Income-tax Officer as a matter of fact, and (d) "what are chargeable to income-tax in respect of a business are the profits and gains of a year; and in assessing the amount of the profits and gains of a year account must necessarily be taken of all losses incurred, otherwise you would not arrive at the true profits and gains.

3. But the losses must be losses incurred in that year. You may not, when setting out to ascertain the profits and gains of one year deduct a loss which had in fact been incurred before the commencement of that year. If you did you would not arrive at the true profits and gains of the year. For the purpose of computing yearly profits and gains each year is a separate self-contained period of time, in regard to which profits earned or losses sustained before its commencement are irrelevant: Gresham Life Assurance Society, Ltd. v. Bishop (1902) A.C. 287, Standard Life Assurance Co. v. Allan (1902) 4 Tax Cas. 447, Commissioner of Taxes v. Melbourne Trust, Ltd. (1914) A.C. 1001, In re Aurangabad Mills, Ltd. 1921 Bom. 159, Venkatadri Appa Rao v. Parthasarathi Appa Rao 1922 P.C. 233, Commissioner of Income tax, Madras v. Chengalvaraya Chetti 1925 Mad. 1242, Commissioner of Income-tax, Madras v. Subramaniam Chettyar 1927 Mad. 841, Commissioner of Income-tax, Bombay v. Ahmedabad New Cotton Mills Co. Ltd. 1930 P.C. 56, Commissioner of Income-tax, Central Provinces and Berar v. S.M. Chitnavis 1932 P.C. 178, Raghunandan Prasad v. Commissioner of Income-tax, Bihar & Orissa 1933 P.C. 101, Commissioner of Income-tax, Bihar & Orissa v. Maharajadhiraj of Darbhanga 1933 P.C. 108, Sun Insurance Office v. Clark (1913) 6 Tax Cas. 50, J.P. Hall & Co. Ltd. v. Commissiners of Inland Revenue (1928) 12 Tax Cas. 382, Edward Collins & Sons, Ltd. v. Commi