Real income principle prevents tax on truck hire charges where a prospective resolution stopped further accrual.

Hire charges from trucks were treated as not having accrued as taxable income for the relevant period because the company's resolution was construed as operating prospectively from the time it was passed. On that construction, accrual for April 1958 had not yet arisen when the resolution took effect, and later accruals were effectively prevented. The alleged collusion was found to lack factual foundation, and the absence of a fresh agreement did not negate the modification of the prior arrangement. The real income principle was applied: tax cannot be levied on income that has not actually accrued in substance, even if book entries might suggest otherwise.

---

---

Issues: Whether the hire charges from the trucks accrued as taxable income for the relevant assessment year notwithstanding the resolution of the company, and whether the impugned rejection of the revisions could be sustained.

Analysis: The resolution was construed as operating prospectively from the time it was passed and not merely for the earlier accounting period. On that construction, the accrual for the month of April 1958 had not yet arisen when the resolution took effect, so the subsequent accruals were effectively forestalled. The finding of collusion was held to be unsupported by any factual foundation, and the absence of a fresh agreement was not treated as defeating the modification of the earlier arrangement. The principle of real income was applied: where income does not in fact result, there can be no tax merely because of a notional or book-entry basis, although mere absence of an entry would not by itself exclude tax if income had otherwise accrued.

Conclusion: The hire charges did not accrue as taxable income for the relevant period, and the impugned orders rejecting the assessees' revisions could not stand.

Ratio Decidendi: Tax is leviable only on income that has actually accrued or arisen in substance, and a valid prospective alteration of the underlying arrangement can prevent accrual for later periods.

---