COMMISSIONER OF INCOME-TAX, MADHYA PRADESH vs LADY KANCHANBAI

The Supreme Court held that under Section 2(11)(i)(a) of the Income-tax Act, 1922, an assessee can choose a different 'previous year' for each separate source of income, profits, or gains. The Court affirmed the High Court's decision that the assessee was entitled to treat the year ending on March 31, 1950, as the 'previous year' relevant to the assessment year 1950-51 for income derived from business in Madhya Bharat. The ruling clarified that income from sources outside 'taxable territories' could be considered for determining the rate of tax but not for imposing tax itself.