Law: Income-tax Act (XI of 1922)

Section: 4(1),2(15),3,13,4,10

  Income-tax Act (XI of 1922), S. 13-Method of account ing-"Cash system""Mercantile system"-Methods explained.   Income-tax Act (XI of 1922), S. 4(1) read with Ss. 2(15), 3 & 13-Words "accrue", "arise", "income", "received" occurring in S. 4 (1)-Meaning-Liability to tax: (y) when income is received, (ii) when income is deemed to have been received and (iii) when income accrues or arises Income "deemed to be received" covered by "statutory receipt"-Profits not "deemed to be received" merely by reason of entry in accounts under mercantile system Income "accrues" only when assessee acquires a right to receive it.   Colquhoun v. Brooks (1889) 14 A C 493; Commissioner of Income-tax v. Bombay Trust Corporation 4 T C 312 P C; Kosher Narain Singh v. Commissioner of Income-tax (1947) I T R 311, 319 (F C) and Halsbury's Laws of England, para. 189 ref.   Income-tax Act (XI of 1922), Ss. 4 & 10 Income accrued or arisen to assessee in a previous year" has to be included in his "total income" for that year and not in year of his choice - Managing agency commission-Managed company crediting commission to accounts of managing company (assessee) in particular charge year-Income; held, "accrued" or "arose" to assessee in that year' notwithstanding such income not yet actually received by assessee.   The old principle that for income-tax purposes "receive ability" without "receipt" is nothing, has no application to the cases under the Income-tax Act, 1922 because section 4 expressly provides to bring to charge not only the income which has been actually received or deemed to have been received but also the income which has accrued or arisen.   What has in fact "accrued" or "arisen" as an- income to an assessee in a previous year has to be included in his total income for that year and not in the year in which he chooses to include it for the purposes of his assessment.   Where the managing commission was duly credited to the account of the agents in the…