26. Basis for computing statutory income

Save as provided in this section, the income of any person for each year of assessment from each source of his income (referred to as statutory income) shall be the full amount of the income from each such source during the year preceding the year of assessment, notwithstanding that he may have ceased to possess any such source or that any such source may have ceased to produce income.

Where the Collector is satisfied that any person usually makes up the accounts of a trade, business, profession, vocation or employment carried on or exercised by him to some day other than that immediately preceding any year of assessment, he may direct that the statutory income from that source be computed on the amount of the gains or profits of the year ending on that day in the year preceding the year of assessment. Where, however, the statutory income of any person from a trade, business, profession, vocation or employment has been computed by reference to an account made up to a certain day, and such person fails to make up an account to the corresponding day in the year following, the statutory income from that source both of the year of assessment in which such failure occurs and of the 2 years of assessment following, shall be computed on such basis as the Collector in his discretion thinks fit.