Hire purchase advances are not taxable income until the transaction is concluded and the receipt crystallises.

Amounts received under uncompleted hire purchase transactions did not constitute taxable income in the relevant assessment year because the assessee had no enforceable right to the money until the agreements were concluded. The receipt retained the character of a deposit or advance and acquired income character only on crystallisation in the later year, when it had already been brought to tax. It was therefore not assessable as income for the year in question.

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Issues: Whether the sum of Rs. 22,813 received in respect of uncompleted hire purchase transactions in the relevant assessment year was taxable as income for that year.

Analysis: The receipt arose from hire purchase transactions that had not been concluded during the accounting period. Until the agreements were completed, the assessee had no enforceable right over the amount and the advance could not be treated as income of that assessment year. The amount was to acquire the character of income only when the transaction was concluded, and it had already been brought to tax in the later assessment year when it crystallised.

Conclusion: The sum of Rs. 22,813 was a deposit or advance and was not assessable as income in the relevant assessment year; the assessee succeeded on this ground.

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