Accrual of compensation income depends on an enforceable right to receive it, not merely a disputed claim.

Compensation for requisitioned property accrues as income only when the assessee has an enforceable and admitted right to receive it; where the right itself remains in genuine dispute, no accrual arises until that dispute is resolved. The court distinguished a challenge limited to the quantum of compensation from one attacking liability to pay compensation at all, because accrual under the Income-tax Act depends on the existence of a debt due in favour of the assessee. As the record did not clearly show the scope of the State's appeal, the matter was remitted for fresh determination on whether the appeal concerned only quantification or the underlying right to compensation.

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Issues: Whether the compensation received for requisitioned property accrued as income in the assessment year 1967-68 and whether the matter should be remitted for fresh consideration in the light of the nature of the State's appeal.

Analysis: The controlling question was whether the State Government's challenge went only to the quantification of compensation or extended to the very liability to pay compensation. Under the charging scheme of section 5 of the Income-tax Act, 1961, income is taxable on receipt or accrual, and accrual arises only when the assessee acquires an enforceable right to receive the amount, creating a debt due in its favour. Section 8(2) of the PEPSU Requisitioning and Acquisition of Immovable Property Act, 1954 contemplated recurring compensation for requisitioned property, but the court distinguished between a case where only the amount is disputed and a case where the right to compensation itself is in controversy. As the appeal memo was not before the court and the record did not clearly establish the scope of the State's challenge, the issue could not be finally resolved on the existing material.

Conclusion: The matter was remitted to the Tribunal to determine afresh whether the State's appeal disputed the right to compensation itself or only its quantification. The other referred questions were not answered.

Ratio Decidendi: Compensation for requisitioned property accrues as income only when the assessee's right to receive it is admitted and not in real dispute; if the right itself is contested in appeal, no accrual occurs until that dispute is resolved.

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