Accrual of partnership income for distributable profits includes amounts vested by year-end, even if quantified later.

For section 23A of the Indian Income-tax Act, 1922, distributable profits are computed by including income that has accrued by the close of the relevant previous year, even where the exact amount is determined later. The scheme of section 2(11) recognises that different sources of income may have different previous years, and those periods must be read together in computing total income. On that basis, a partner's share from a separate source was held to accrue when the partnership accounting period closed, so it was properly brought into assessable and distributable profits for the assessment year in question. The order under section 23A was therefore valid in favour of Revenue.

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Issues: Whether, for the purpose of section 23A of the Indian Income-tax Act, 1922, the assessee's share of partnership profits accruing from a separate source of income and ending with the partnership accounting period on 31 March 1951 was includible in the assessable income and distributable profits for the assessment year 1951-52.

Analysis: The scheme of section 2(11) recognises that an assessee may have different previous years in respect of different sources of income, and the income from those sources is to be brought together in computing total income. Section 23A must therefore be construed in the context of section 2(11), so that the expression "previous year" may cover more than one accounting period where the company carries on distinct businesses with separate accounting cycles. The assessee's right to the partnership share arose on the close of the partnership accounting period, and the fact that the amount was ascertained later did not prevent accrual. Income may accrue when the right to receive it becomes vested, even if valuation is postponed.

Conclusion: The partnership income of Rs. 70,895 was rightly included in the assessable and distributable profits for assessment year 1951-52, and the order under section 23A was valid, in favour of Revenue.

Ratio Decidendi: For the purpose of section 23A of the Indian Income-tax Act, 1922, distributable profits include income from all relevant sources that has accrued by the close of the applicable previous year, and accrual is not postponed merely because the exact amount is quantified later.

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