TMI Blog1980 (10) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... e circumstances of the case, the profit of Rs. 24,000 accrued in the assessment year 1962-63 and not in the years 1944 to 1947 ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal has correctly held that (a) the receipt of Rs. 24,000 is chargeable to tax under section 28 of the Income-tax Act, 1961, on the footing that the same cloth business is still continued by the assessee ; and (b) as a corollary the amount was taxable in the A.Y. 1962-63, on mercantile system of accounting which was followed for the cloth business when carried on in proprietary capacity and not on cash basis in the assessment year 1963-64, when the amount was received and credited in the assessee's capital account ? " The material facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 30,000 was passed by the district judge in favour of the assessee on 20th June, 1961. However, a compromise was arrived at between the assessee and the Nazarali Mills, and a sum of Rs. 24,000 was received by the assessee on 10th September, 1962, in full and final settlement of the decretal amount. The compromise was recorded by the First Additional District Judge, Ujjain, on 15th September, 1962, and the execution case was dismissed. On behalf of the assessee, two contentions were raised before the ITO. It was urged that the receipt of Rs. 24,000 pertained to a period from 1944 to 1947 when there was no income-tax in force at Ujjain and that the nature of the receipt was that of a capital receipt. It was also contended that the busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in cloth under the name and style of M/s. Surendra Narendra and was assessed as a proprietor of that business till 23rd October, 1957, and that since that date the assessee had entered into a partnership agreement with his son to carry on the same business under the name and style of M/s. Surendra Narendra. In view of these facts, the AAC held that the business of cloth carried on by the assessee in the past was continued by him during the assessment year in question. In this view of the matter, the AAC dismissed the appeal preferred by the assessee. On further appeal, it was contended before the Tribunal that for taxing the profits and gains of a business under s. 28 of the Act, a business must be in existence and carried on by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee was a partner, during the assessment year 1962-63. It was urged that the Tribunal bad not applied its mind to this aspect of the question, and a finding be, therefore, called by directing the Tribunal to send a supplementary statement of case. It was further contended that the Tribunal erred in holding that the income of Rs. 24,000 had accrued to the assessee in the assessment year 1962-63. In reply, Shri Bagadiya, learned counsel for the department, contended that the Tribunal had found that the assessee was maintaining the accounts on mercantile basis and that the right to receive the amount of compensation had accrued to the assessee in the assessment year 1962-63, when the decree was passed in his favour. It was further conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on: that is the decision in E. D. Sassoon and Co. Ltd. v. CIT [1954] 26 ITR 27, 50 (SC). In that decision, this court accepted the definition given to the words 'accrue' and 'arise' by Mukerji J. in Rogers Pyatt Shellac Co. v. Secretary of State for India [1925] 1 ITC 363, 371 (Cal) [FB], which is as follows: `... both the words are used in contradistinction to the word 'receive' and indicate a right to receive. They represent a stage anterior to the point of time when the income becomes receivable and connote a character of the income which is more or less inchoate.' Under this definition accepted by this court, an income accrues or arises when the assessee acquires a right to receive the same. It is commonplace that there are two prin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentary statement of case giving its finding on the question as to whether the business of dyeing cloth was being carried on by the assessee during the assessment year 1962-63, we do not consider it necessary to give any such direction in the circumstances of this case. The only question urged before the Tribunal in this behalf was that the cloth business, in respect of which the amount of compensation was received by the assessee from Nazarali Mills, was not carried on by the assessee during the previous year relevant to the assessment year 1962-63. The Tribunal found that the business in cloth was carried on in the previous year by the firm of which the assessee was a partner. The question as to whether the compensation received by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
