Disputed enhanced compensation does not accrue as income until it becomes determinate and payable; pending appeal keeps it contingent.

Enhanced compensation under an award does not accrue as income while the Government's appeal against the enhancement is pending. Accrual requires the amount to be determinate and payable; a disputed claim remains contingent where the assessee's right is still liable to reduction or disallowance in appeal. Receipt under a security bond did not change that character. The Calcutta HC held that the enhanced compensation therefore did not arise in the relevant previous year for assessment year 1956-57, and the issue was decided in favour of the assessee.

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Issues: Whether the enhanced compensation of Rs. 7,24,914 received by the assessee pursuant to an award, while the Government's appeal against the enhancement was pending, constituted income accruing or arising in the previous year relevant to the assessment year 1956-57.

Analysis: The enhanced amount was still under challenge in appeal when the relevant previous year ended. The Court held that, for accrual, the amount must be determinate and payable, and a mere claim to enhanced compensation does not amount to accrued income. The receipt under the security bond did not alter the character of the amount, because the assessee's right to the enhanced compensation was still unsettled and liable to be reduced or disallowed in appeal. The Court distinguished authorities dealing with statutory liabilities and interest accruing year by year, and held them inapplicable to the present compensation claim.

Conclusion: The enhanced compensation did not accrue or arise during the previous year relevant to assessment year 1956-57, and the question was answered in favour of the assessee and against the revenue.

Ratio Decidendi: A disputed enhanced compensation amount does not accrue as income until it becomes determinate and payable; a pending appeal against the enhancement keeps the claim contingent and prevents accrual.

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