Enforceable right to receive income determines accrual, and later governmental acceptance fixed the taxable year here.

Income accrues only when the assessee acquires a legally enforceable right to receive it, and not merely because a contract exists or the amount is later quantified. On the facts, the compensation of Rs. 2-6-0 per maund was not part of the original procurement agreement but arose only when the Government agreed in May 1955 to release the stocks on the assessee's private account against compensation. As the assessee had no vested right in 1954 and no pre-existing debt or contractual entitlement, the sum of Rs. 44,000 accrued in May 1955 and was assessable in assessment year 1956-57, not 1955-56.

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Issues: Whether the sum of Rs. 44,000 was income liable to be assessed in the assessment year 1956-57 or in the assessment year 1955-56.

Analysis: Income accrues only when the assessee acquires a legally enforceable right to receive it and a corresponding debt is created in his favour. A mere subsisting contract does not by itself create such a right to an additional payment unless the payment flows from the contractual entitlement or from an enforceable order. The compensation of Rs. 2-6-0 per maund was not a term of the original procurement agreement of 1954 but arose only when the Government, in May 1955, agreed to release the stocks on the assessee's private account against compensation. The assessee had no vested right to that amount in 1954, and the payment was not referable to any pre-existing debt or contractual entitlement under the original agreement.

Conclusion: The sum of Rs. 44,000 accrued only in May 1955 and was rightly assessed in the assessment year 1956-57; the contention that it belonged to the assessment year 1955-56 fails.

Ratio Decidendi: Income is taxable in the year in which the assessee first acquires an enforceable right to receive it, and not merely because the amount is later quantified or paid under a subsequent governmental decision.

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