1962 (3) TMI 6 - SUPREME COURT

Whether the two sums of ₹ 1,36,903 and ₹ 2,00,625 are income of the 'previous year' ended March 31, 1948 ?

Whether they represent an item of expenditure permissible under the provisions of section 10(2)(xv) of the Indian Income-tax Act, 1922, in computing the assessee's income of that 'previous year' from its managing agency business ?

Held that:- A mere book-keeping entry cannot be income, unless income has actually resulted, and in the present case, by the change of the terms the income which accrued and was received consisted of the lesser amounts and not the larger. This was not a gift by the assessee-firm to the managed companies. The reduction was a part of the agreement entered into by the assessee-firm to secure a long-term managing agency arrangement for the two companies which it had floated.

Thus the High Court was right in coming to the conclusion that on the facts of this case the larger income neither accrued nor was received by the assessee-firm. Appeal dismissed.