Accrual of subsidy income fails where entitlement remains disputed and the right to receive is not yet enforceable.

Subsidy payable under a government scheme does not accrue as income unless the assessee's right to receive it becomes enforceable. Where the Government disputed liability, rejected the claim, and the entitlement remained pending final adjudication, a mere claim or submission of bills did not create accrued income. The right to receive was not absolute in the relevant year, so the subsidy was not taxable as accrued income for that year.

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Issues: Whether the subsidy claimed for running cattle relief wadas accrued as income in the relevant previous year when the Government disputed liability to pay and the claim remained pending for final adjudication.

Analysis: The subsidy under the Government scheme was payable only on fulfilment of prescribed conditions. The assessee's claim was not accepted by the Government, liability was expressly denied, and the dispute was pending final adjudication. On these facts, the right to receive the subsidy had not become absolute in the relevant year. A mere claim or submission of bills did not, by itself, create accrued income where the very entitlement to the subsidy was in dispute. Income can be said to accrue only when the right to receive becomes enforceable and the dispute is finally resolved or settled.

Conclusion: The subsidy amount did not accrue as income in the relevant year while the dispute remained unresolved; the issue is decided in favour of the assessee for the year in question.

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