Unrealised decretal amount is not taxable income where books show only a receivable, not actual receipt.

An unrealised decretal amount entered in the books was held not to constitute taxable income under the Income-tax Act, 1922, because "income" was construed in its ordinary sense as money actually received, and the words "accruing or arising" were treated as referring to territorial nexus rather than enlarging that meaning. The account entries were also accepted as a method of ascertaining the family's financial position, not as evidence that the decretal amount had been received for tax purposes. On those facts, the revenue could not tax the unrealisd amount.

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Issues: (i) Whether an unrealised decretal amount entered in the assessee's books was taxable income under the Income-tax Act, 1922. (ii) Whether the assessee's method of maintaining accounts was only for ascertaining the family's financial position and not for treating the decretal amount as received income.

Issue (i): Whether an unrealised decretal amount entered in the assessee's books was taxable income under the Income-tax Act, 1922.

Analysis: The statutory words "accruing or arising" were treated as referring to the territorial nexus of income and not as enlarging the ordinary content of "income". The term "income" was construed in its ordinary sense as what actually comes in or is received. The definition of total income and the computation provision did not require inclusion of a decretal amount that had not in fact been realised.

Conclusion: The unrealised decretal amount was not taxable income.

Issue (ii): Whether the assessee's method of maintaining accounts was only for ascertaining the family's financial position and not for treating the decretal amount as received income.

Analysis: The books showed the decretal amount as a receivable entry, but no part of it was actually realised during the year. On the facts, the account system was accepted as a means of determining the family's financial position and not as evidence that the amount had been received for tax purposes.

Conclusion: The assessee's account system was correctly understood as being maintained for ascertaining the family's financial state.

Final Conclusion: The reference was answered in favour of the assessee, and the Department's attempt to tax the unrealisd decretal amount failed.

Ratio Decidendi: Income, unless otherwise clearly expanded by the statute, means money or benefit actually received, and a mere unrealised decree entered in the books does not constitute taxable income.

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