Refund taxation under section 10(2A) requires proof of a prior deduction; conjecture cannot establish taxable income.

Section 10(2A) applies only where the refunded expenditure had earlier been allowed as a deduction in computing taxable income. For a refund of money paid under protest, the Revenue must prove from the earlier assessment records that the same amount was actually deducted and allowed; assumptions, probabilities, or conjecture are insufficient. As no evidence of a prior allowance was produced, and the surrounding circumstances did not establish an earlier deduction, the statutory precondition failed. The refunded sum therefore could not be brought to tax as business income under that provision.

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Issues: Whether the sum of Rs. 21,107 refunded to the assessee could be brought to tax under section 10(2A) of the Indian Income-tax Act, 1922 on the footing that an allowance or deduction in respect of the same expenditure had been made in an earlier assessment year.

Analysis: The provision applies only where the expenditure refunded had already been allowed as a deduction in computing profits or gains in an earlier year. In a case of refund of money actually paid under protest, the initial burden lies on the Revenue to show that such amount had in fact been deducted in a prior assessment. No evidence from the earlier assessment records was produced, and the inference drawn by the Tribunal rested only on probabilities and conjecture. The surrounding circumstances did not establish that the assessee had claimed, or that the department had allowed, any earlier deduction of the disputed amount.

Conclusion: The precondition for invoking section 10(2A) was not satisfied, so the refunded sum was not taxable as business income under that provision.

Ratio Decidendi: A refund can be taxed under section 10(2A) only if the Revenue proves that the corresponding expenditure had previously been allowed as a deduction in computing income; mere assumptions or probabilities are insufficient.

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