TMI Blog1960 (5) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... ed firm which was carrying on dealings in iron and ore rolling mill. The assessee's previous year relevant to the assessment year 1945-46 was from the 31st January, 1944, to the 18th of January, 1945. The assessee under some orders of the Government of India had to cease production in the rolling mill on account of shortage of coal as a result of which the mill remained closed from the 16th August, 1944, to the 30th June, 1945. For this compulsory closure the Steel Rolling Mills Association of India on behalf of the assessee made representations to the Government of India for compensation. The Government agreed to pay the compensation, and this consent of the Government to pay the compensation was communicated to the assessee firm by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee that this sum of ₹ 25,978 was assessable in the proceedings for assessment for the year 1947-48. At the outset we may say that the second part of the question has been referred for our opinion wrongly in these proceedings and there is no reason why we should answer that part of the question. The appellate order of the Tribunal out of which this reference arose was made in proceedings for assessment for the assessment year 1945-46 and consequently the only question which could arise in the appeal before the Tribunal was whether this sum of ₹ 25,978 could be included in the assessment for the year 1945-46. If it was held that it could be included, that decision could be challenged by this reference and this court could be pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal, Lucknow, that the assessee maintained account books on the mercantile system. Learned counsel for the parties before us also admitted that the assessee was maintaining accounts on the mercantile system. Under the mercantile system, an amount becomes a receipt as soon as the right to receive an amount accrues to the person entitled to receive it. In this case, therefore, we have to see when the right to receive this compensation accrued to the assessee. It appears that the Tribunal has held that this amount of compensation is liable to be included in the assessment for the year 1945-46 on the basis that this amount accrued on the same date on which the order of the Government of India directing the closure of the rolling mill w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount of compensation was not determined, nor was the amount of compensation paid. It may possibly be held that the right to receive the compensation accrued and the amount of compensation became taxable income only when on the 28th December, 1945 the amount of compensation was communicated to the assessee. It may even possibly be held that the compensation became a receipt only when in fact the amount was received by the assessee in November, 1946. These are, however, various points on which we need express no opinion in the present case. So far as this case is concerned, the finding already arrived at by us that in no case can it be held that the right to this money accrued to the assessee earlier than the 26th April, 1945, is suffi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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