Casual receipt exemption: a calculated profit-making claim is not casual income, even if the receipt is non-recurring.

A receipt may be non-recurring yet still fail the exemption for casual receipts unless it is also accidental or fortuitous. A sum arising from a calculated commercial venture, where the recipient knowingly assumes risk, acquires and enforces a legal claim, and pursues profit rather than relying on a mere voluntary payment, is not casual in nature. On that basis, the receipt discussed was held not to qualify as exempt income under section 4(3)(vii) of the Income-tax Act, 1922 because it stemmed from a deliberate profit-oriented transaction, not a chance or unforeseen benefit.

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Issues: Whether the sums received by the assessee were exempt as receipts of a casual and non-recurring nature under section 4(3)(vii) of the Income-tax Act, 1922.

Analysis: The receipt was accepted as non-recurring, but it had also to be shown to be casual. A casual receipt is one that is accidental or fortuitous, not anticipated or foreseen, and not dependent merely on the payer's whim or caprice. Here, the assessee knowingly entered into a venture by acquiring the claim at a price lower than the amount the company had indicated it might pay to settle the dispute. He assumed the risk of loss and pursued the transaction with an expectation of profit. The gain did not depend merely on a voluntary ex gratia payment, but on a calculated commercial-like arrangement in which the assessee held a legal claim capable of being enforced.

Conclusion: The receipt of Rs. 85,000 was not of a casual nature and was therefore not exempt under section 4(3)(vii).

Ratio Decidendi: A receipt is not casual where it arises from a calculated and risky transaction entered into with an expectation of profit, even if the exact amount was uncertain and the receipt was non-recurring.

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