Temporary requisition compensation treated as revenue income, with cash basis accounting fixing taxability in the year of receipt.

Compensation for temporary requisition of vacant land was treated as revenue income because requisition does not transfer title; it only suspends user, and the payment was for deprivation of use rather than for destruction of a capital asset or source of income. On those facts, the receipt was not a capital receipt or casual windfall and was correctly assessed under the head "Other sources." The Tribunal's finding that the assessee accounted for this receipt on cash basis was supported by the books and conduct, so the amount was chargeable in the relevant assessment year on receipt.

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Issues: (i) Whether compensation received for requisition of vacant land was a revenue receipt assessable as income under the head "Other sources"; (ii) Whether the sum of Rs. 91,062 was taxable in the assessment year 1962-63 on the footing that the assessee had adopted cash basis in relation to this receipt.

Issue (i): Whether compensation received for requisition of vacant land was a revenue receipt assessable as income under the head "Other sources".

Analysis: The compensation arose from temporary requisition, not permanent acquisition. Requisition leaves title with the owner and only suspends or restricts user for the period of occupation. The land was treated as a trading asset, and the payment represented compensation for deprivation of its use during the requisition period rather than consideration for loss of capital or destruction of the source of income. The nature of the receipt depended on the character of the right affected and the reason for payment. On the facts found, the amount was not a capital receipt and was not a casual or non-recurring windfall.

Conclusion: The receipt was taxable as revenue income and was rightly brought under the head "Other sources", in favour of Revenue.

Issue (ii): Whether the sum of Rs. 91,062 was taxable in the assessment year 1962-63 on the footing that the assessee had adopted cash basis in relation to this receipt.

Analysis: The Tribunal relied on the assessee's conduct and the book entries showing recording of the amount only on receipt, and held that the assessee followed cash basis for this source of income. That finding was supported by evidence and was not perverse. Once the receipt was treated as received during the previous year, the amount became chargeable in the assessment year 1962-63.

Conclusion: The finding that the receipt was assessable in assessment year 1962-63 was upheld, in favour of Revenue.

Final Conclusion: The reference was answered against the assessee on both substantive questions and the compensation amount remained taxable in the year of receipt under the Act.

Ratio Decidendi: Compensation for temporary requisition of property, where title remains with the owner and the payment is for loss of user rather than destruction or sterilisation of a capital asset, is revenue income; its assessability follows the accounting basis found on the evidence.

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