Law: Income Tax Act, 1961

Section: 256(1),2(45),5

Income-tax--- ----Income---Charge of tax---Income must have accrued or be deemed to have accrued or be received---Mere claim for compensation---No income accrues or is received---Amount claimed is not assessable---Indian Income Tax Act, 1961, Ss.2 (45), 4 & 5. Sections 2(45), 4 and 5 of the Income Tax Act, 1961, make it clear that in order to be assessable, income must be received or deemed to be received or must have accrued or arisen or deemed to have accrued or arisen. This section refers to ascertained amount, which can be received or deemed to be received or accrued or deemed to be accrued. If the amount itself is not determined and only a claim has been made, it cannot be said to have arisen: Held, that in the instant case the Tribunal had found that the assessee had claimed compensation for closure of liquor shops on certain days by the Government. If the claims were accepted, the assessee was prepared to- pay tax thereon. In these circumstances, the Tribunal held that the entire mount claimed could not be brought to tax. The Tribunal was justified in its conclusion and in deleting the sum of Rs.9,90,000 from the income of the assessee. CIT v. Hindustan Housing and Land Development Trust Ltd. (1986) 161 ITR 524 (SC) ref. JUDGMENT V.K. SINGHAL, J.---The Income-tax Appellate Tribunal has referred the following question of law arising out of its order dated July 28, 1986, in respect of assessment year 1981-82 under section 256(1) of the Income Tax Act, 1961: "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in upholding the decision of the Commissioner of Income-tax (Appeals) deleting the sum of Rs.9,90,000 from the income of the assessee?" The brief facts of the case are that the Income-tax Officer during the course of assessment proceedings found that as per the order of the Government, liquor shop of the assessee was required to be closed on Fridays and, accordingly, the shop remained closed on August 29, September 5, September 12, and September 19, 1980. The assessee worked out the licence fee at Rs.1,84,000 and calculated profit at Rs.18,400 and thereby, claimed loss of Rs.2,02,400 from the…

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