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Issues Involved:
1. Assessability of Rs. 12,447 to income-tax. 2. Correct assessment year for the sum of Rs. 12,447. Issue-wise Detailed Analysis: 1. Assessability of Rs. 12,447 to Income-Tax: The primary issue was whether the sum of Rs. 12,447 received by the assessee was assessable to income-tax. The assessee contended that the receipt was of a casual nature and should not be taxed. However, the court found that the payment, though an act of grace by the Government, was directly related to the assessee's business. The Government Order (G.O.) increased the rate for the supply of bread, and the excess amount was paid to the assessee. Since the assessee was engaged in the same business during the year of account, the receipt was considered a trade receipt and liable to tax. The court referenced the Supreme Court's observations in Sassoon & Co. Ltd. v. Commissioner of Income-tax, which clarified that income can accrue to an assessee without actual receipt if there is a right to receive it. Therefore, the sum of Rs. 12,447 was assessable to income-tax. 2. Correct Assessment Year for the Sum of Rs. 12,447: The second issue was whether the sum was rightly assessed in the assessment year 1951-52. The assessee maintained accounts on a mercantile basis, where income is recognized when the right to receive it arises, not necessarily when it is received. The court noted that the right to the additional amount arose from a G.O. issued long after the original transaction in 1948-49. The G.O. was ex gratia and not based on any pre-existing right. Thus, the amount could not have been included in the accounts for the year 1948-49, as those accounts had been closed. The court examined whether the accounts for 1948-49 could be reopened to include the receipt. It referenced several cases, including Commissioners of Inland Revenue v. Newcastle Breweries Ltd. and Severne (H.M. Inspector of Taxes) v. Dadswell, which established that accounts could be reopened if the subsequent receipt was analogous to a trade debt. The court concluded that the payment, though ex gratia, was intended to compensate for the loss incurred in 1948-49 and was analogous to a trade debt. Therefore, the accounts for 1948-49 should be reopened, and the amount should be credited in that year. The court rejected the Department's contention that the principle of reopening accounts only applied where something was outstanding at the year-end. It also dismissed the argument that the Department had the option to include the amount in the year of receipt, as this would change the accounting basis from mercantile to cash. Conclusion: The court answered the first question affirmatively, holding that the amount was assessable to income-tax. However, it concluded that the amount should be assessed in the year 1948-49, not 1951-52. Therefore, the second question was answered in the negative, favoring the assessee. Since the assessee succeeded on one of the two questions, there was no order as to costs. Reference answered accordingly.
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