TMI Blog2000 (11) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... e capital gains arising from the transfer of capital assets by the assessee is not taxable in this year ?" The factual position as stated in the statement of case essentially is as follows : The assessment year involved is 1969-70. The assessee, a private limited company, amongst others was engaged in the generation and distribution of electricity in the Municipal town of Moga in Punjab. It had obtained a licence for that purpose on February 21, 1939, from the Government of Punjab by notification of that Government under the provisions of the Indian Electricity Act, 1910 (in short "the Electricity Act"). Licence was issued initially for a period of 15 years and was subject to renewal for certain period. The provisions of the Electricity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awarded by the arbitrator in the year under consideration. During the assessment proceedings, the assessee's plea was that no transfer took place in the year under consideration and that no capital gains arose in the year. The Income-tax Officer rejected the contention and held that the amount of compensation was determined in the assessment year in question by award of the arbitrator appointed by the Supreme Court and capital gains arose in that year. Accordingly, capital gains were computed at Rs. 2,91,581. The said amount was included in the assessment of the assessee's income. The matter was carried in appeal before the Appellate Assistant Commissioner (in short "the AAC"). It was urged before the Appellate Assistant Commissioner on be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he alternative it was pleaded that the purchase was completed within six months of the expiry of the period of licence even if no purchase money was paid in view of section 4 of the Punjab Act. On this ground also, it was submitted that the transfer of undertaking took place in 1949 and not in the year under consideration. The Revenue's stand was that the sale of undertaking took place when the decree was passed by the civil court and further P. C. Gulati's case [1972] 86 ITR 501 (Delhi), had application to the facts of the case, On a consideration of the rival submissions, the Tribunal held that the amount received by the assessee does not relate to the year under consideration and was not assessable In the year in question. On being move, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determined in accordance with settled or accepted principles. The words "arising" or "accruing" have received interpretation by a long chain of decisions. An important decision on the point is E. D. Sassoon and Co. Ltd. v. CIT [1954] 26 ITR 27 (SC), in which it was explained that the expression "accrue" describes the right to receive profit and that there must be a debt owed to the assessee by somebody. Unless and until there is created in favour of the assessee a debt due by somebody it cannot be said that he has acquired a right to receive the income or that income has accrued to him. It was, inter alia, observed as follows : "The basic conception is that he must have acquired a right to receive the income. There must be a debt owed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he meaning of the expression 'accrue" is "to fall as a natural growth or increment ; to come as an accession or advantage". The word "arise" is defined as "to spring up, to come into existence". The two words, i.e., "accrue and arise" do not mean actual receipt of profits or gains. Both these words are used in contradistinction to the word "receive". Thus, it is manifest that if an assessee acquires a right to receive the income, the income can be said to accrue to him though it may be received later on (see CIT v. Gowind Prasad Parbhu Nath [1988] 171 ITR 417 (All)). It can be said without hesitation that the words "accrue" or "arise" though not defined are certainly synonymous and are used in the sense of bringing in as a natural result. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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