Accrual taxation and duplicate salary additions: leave encashment, bonus, and perquisite valuation were adjusted to the employer-certified figure.

Income is taxable on accrual only when the right to receive it has crystallised in the relevant year; leave encashment paid after retirement was therefore not assessable on accrual basis for assessment year 1974-75. A bonus amount already included in salary could not be added again as a separate item, so the duplicate addition was deleted. Where the employer's certificate showed a lower perquisite value, the assessment was reduced to the excess only. Interest under section 139(8) was consequential.

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Issues: (i) whether leave encashment received after retirement could be brought to tax on accrual basis for the assessment year 1974-75; (ii) whether the addition of bonus resulted in a duplication of income; (iii) whether the perquisite value adopted exceeded the figure certified by the employer.

Issue (i): whether leave encashment received after retirement could be brought to tax on accrual basis for the assessment year 1974-75.

Analysis: The amount was paid after retirement, and there was no material to show that the leave salary had accrued on the date of retirement or resignation. The record also did not establish any pre-existing contractual right in respect of encashment beyond what the employer chose to /allow. In the absence of proof that the relevant resolution or entitlement had arisen during the accounting year, accrual taxation was not justified for the year in question.

Conclusion: In favour of the assessee. The leave encashment was not assessable on accrual basis in the assessment year 1974-75.

Issue (ii): whether the addition of bonus resulted in a duplication of income.

Analysis: The bonus amount had already been included in the salary income computed by the assessing authority. The separate addition therefore represented the same receipt being taxed twice.

Conclusion: In favour of the assessee. The addition for bonus was a duplicate inclusion and was deleted.

Issue (iii): whether the perquisite value adopted exceeded the figure certified by the employer.

Analysis: The employer's certificate showed a lower perquisite figure than the amount adopted for assessment. The higher figure was treated as an obvious mistake, leaving only the excess for adjustment.

Conclusion: Partly in favour of the assessee. The perquisite addition was reduced to the extent of the excess only.

Final Conclusion: The appeal succeeded on the principal claim relating to leave encashment and on the bonus addition, while the perquisite valuation was sustained only to the reduced extent; interest under section 139(8) was treated as consequential.

Ratio Decidendi: Income can be taxed on accrual only when the right to receive it has crystallised during the relevant year, and any addition already included in assessed salary cannot be again brought to tax as a separate item.

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