Duty drawback income is taxable on receipt, not accrual, where the statute fixes the timing of recognition.

Duty drawback income is taxed in the previous year of receipt under section 145B(3) read with section 2(24)(xviii), and this specific timing rule overrides an assessee's accrual-based claim for the same item. The amount is to be recognized when actually received, not merely when sanctioned or accrued. On the stated facts, taxation on an accrual basis was not justified, and the income was taxable only in the year of receipt.

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Issues: Whether duty drawback income was taxable in the year of receipt under section 145B(3) of the Income-tax Act, 1961, or could be brought to tax on accrual basis.

Analysis: The statutory scheme specifically deems income covered by section 2(24)(xviii) to be taxable in the previous year in which it is received, if it has not already been taxed in an earlier year. The provision governs the timing of taxation for duty drawback and overrides the assessee's accrual-based objection for this item. On the facts, the amount was to be recognized when received and not merely on sanction or accrual.

Conclusion: The addition on accrual basis was not justified, and the duty drawback income was taxable only in the year of receipt, in favour of the assessee.

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