Commissioner of Income-Tax, Gujarat vs Ashokbhai Chimanbhai

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 817 of 1963

Decision Date: 20 October 1964

Coram: J.C. Shah, S.M. Sikri

In this matter the Commissioner of Income‑Tax for Gujarat instituted an appeal against Ashokbhai Chimanbhai. The judgment was delivered on 20 October 1964 by a bench of the Supreme Court of India composed of Justice J.C. Shah, Justice S.M. Sikri and Justice K. Subbarao. The case was reported in the 1965 volume of the All India Reporter at page 1343 and in the 1965 Supplementary Court Reporting series at page 758, and it was later cited in the 1968 Supreme Court law reports. The dispute concerned the application of sections 3 and 4 of the Income‑Tax Act of 1922 to the profits of a trading partnership, specifically the timing of accrual of those profits for tax purposes.

The respondent was a Hindu undivided family (HUF) whose manager was also a partner in a trading firm. Under the partnership agreement, the firm’s accounts were to be closed and adjusted on the last day of each calendar year, that is, on 31 December. By a deed of partition dated 12 November 1955, the HUF and its assets were divided, and it was declared that the manager would become exclusively entitled to the partnership’s profits from 1 January 1955 onward. In the assessment proceedings for the year 1955‑56, the previous year for the HUF having been the period from 27 October 1954 to 14 November 1955, the HUF argued that the share of partnership profits should be excluded from its taxable income on two grounds. First, the partition deed expressly transferred the profit entitlement to the former manager as of 1 January 1955. Second, because the partnership’s accounts were settled only at the end of the calendar year, the HUF had no interest in the profits that accrued to the former manager at the year‑end. The assessing officer rejected both arguments. On appeal, the Appellate Assistant Commissioner and the Appellate Tribunal held that since the partition took effect only on 12 November 1955, the profits should be apportioned between the HUF and the manager. The Gujarat High Court, on reference, disagreed with that view and accepted the HUF’s second contention, concluding that the HUF had no right to the profits at the relevant accrual date. The Commissioner then appealed the High Court’s decision to the Supreme Court.

The Supreme Court held that the profits in question accrued to the former manager only on 31 December 1955, even though they resulted from transactions throughout the entire calendar year. Because the partition deed had already divested the HUF of any interest in those profits as of that date, the HUF could not be held liable to tax on them. The Court explained that the gross receipts of a business contain both active and dormant profits or losses. While taxable profits are computed on the basis of the active portion, dormant profits cannot be treated as accrued profits for tax under sections 3 and 4 of the Income‑Tax Act, 1922. Accrual of profit, the Court noted, is determined by the method of accounting applied at the end of the accounting year or any shorter period prescribed by law, and a partner’s right to claim his share arises only when the contractual condition that creates that right has been fulfilled.

The Court explained that profit is deemed to accrue only at the close of the accounting period identified by law, and that such accrual does not occur unless a definite right to the profit has come into existence. In a partnership, where the partners have executed a covenant that requires accounts to be prepared at prescribed intervals, the entitlement of a partner to demand his share of profit arises only after the specific contingency described in the covenant has actually occurred. The Court referred to the authority in E D Sassoon & Co. Ltd. v. Commissioner of Income‑tax, Bombay City (1955) 1 S.C.R. 313, which had been adopted in earlier decisions. The judgments in In re The Spanish Prospecting Co. Ltd. [1911] 1 Ch. 92 and Bhogilal Laherchand v. Commissioner of Income‑tax, Bombay City 28 I.T.R. 919 were also mentioned as relevant precedents. Further explanations were drawn from Turner Morrison & Co. Ltd. v. Commissioner of Income‑tax, West Bengal [1953] S.C.R. 520 and Dulichand Laxminarayan v. Commissioner of Income‑tax, Nagpur [1956] S.C.R. 154, which clarified the principle that accrual of profit depends upon the existence of a vested right at the period’s end.

The matter before the Court arose on appeal in Civil Appeal No. 817 of 1963, challenging a judgment and order dated 17 April 1961 issued by the Gujarat High Court and reported in I.T.R. 21 of 1960. The appellant was represented by counsel, while the respondent, a Hindu undivided family comprising the manager Ashokbhai, his wife Shobhana, and their minor son Chirag, did not appear before the Court. The judgment was delivered by Justice Shah. Ashokbhai, acting as manager of the family, held a partnership interest in Messrs Amrit Chemicals, possessing a five‑annas share in each rupee of the firm’s profit and loss. It was undisputed that the beneficial interest in Ashokbhai’s share of the firm’s profits belonged to the undivided family. The family’s accounting year followed the Samvat calendar, running from the first day of Kartika to the thirtieth day of Ashwin, whereas the partnership’s accounting year adhered to the Gregorian calendar year. By a deed of partition dated 12 November 1955, the Hindu undivided family was disrupted and its property divided. Clause 4 of the deed identified joint family property and specified a partial partition, including a share in the partnership firm of Amrit Chemicals that comprised five annas out of sixteen annas per rupee, inclusive of goodwill, together with the associated profit‑and‑loss benefits and liabilities accruing from 1 January 1955, valued at approximately Rs. 70,001. Clause 8 further stated that the partnership had been in existence since 1 January 1946, with a deed of partnership dated 14 August 1946, which established the five‑annas share in the profit and loss of the firm as the entitlement of the First Part, namely Seth Ashokbhai Chimanbhai.

In the deed of partition, it was expressly stated that the share in the partnership firm Amrit Chemicals, which was described as five annas out of sixteen annas in the rupee including goodwill, would become the exclusive property of Seth Ashokbhai Chimanbhai, who was identified as the party of the First Part. The deed further declared that, from the date of the partition, all rights conferred by the partnership deed would be enjoyed by Seth Ashokbhai Chimanbhai alone, and any obligations arising under that partnership deed would be borne and discharged solely by him. The partnership’s profit‑and‑loss account for the period beginning 1 January 1955 had not yet been prepared at the time of the partition. The deed stipulated that, when such accounts were finally prepared, any profit or loss attributable to the five‑annas share would belong entirely to Seth Ashokbhai Chimanbhai, who would also be wholly responsible for that share of profit or loss.

During the assessment proceedings for the year 1955‑56, which corresponded to the previous year covering 27 October 1954 to 14 November 1955, the Hindu undivided family that was the assessee asserted that the portion of the profits of Messrs Amrit Chemicals accruing on or after 31 December 1955 should be treated as income of Ashokbhai in his personal capacity and therefore should not be included in the taxable income of the family. The assessee’s argument relied on two points: first, that the partition deed had declared the share to belong exclusively to Ashokbhai from 1 January 1955; and second, that because the partnership prepared its accounts only at the end of the calendar year, the family had no interest in the profit share that accrued at the close of 1955 to Ashokbhai individually. The Income‑Tax Officer, however, ordered that the amount of Rs 21,051 received by Ashokbhai as his five‑annas share of the firm’s profits be added to the total income of the assessee. On appeal, the Appellate Assistant Commissioner held that Ashokbhai ceased to represent the Hindu undivided family as of 12 November 1955, and consequently the profit share had to be divided between the family and Ashokbhai. This finding was affirmed by the Income‑Tax Appellate Tribunal, which then posed a specific question to the Gujarat High Court: whether, considering the facts, the five‑annas share of Amrit Chemicals’ income for the period 1 January 1955 to 31 December 1955 accrued to the assessee and could be taxed in its hands. The High Court concurred with the revenue’s view that Ashokbhai became the full owner of the five‑annas share only on 12 November 1955, not earlier, but it also accepted the alternative contention that no portion of the profit share that accrued to Ashokbhai on 31 December 1955 could be charged to the assessee, because the family had no interest in those profits at the moment of accrual, and consequently answered the question in the negative. The record further noted that Ashokbhai had represented the family in the firm until 12 November 1955, after which, by operation of the partition deed, he became the sole owner of the five‑annas share.

In this matter, the Court observed that on 12 November 1955 Ashokbhai, by virtue of the deed of partition, became the sole owner of the five‑annas share in the partnership known as Messrs Amrit Chemicals. Consequently, the assessee’s beneficial interest in the firm’s profits ceased only at the moment the deed of partition was executed and not before that date. Both the Appellate Assistant Commissioner and the Income‑Tax Appellate Tribunal held that the profit share of the firm for the calendar year 1955 had to be divided between the assessee and Ashokbhai as an individual. The division was to be based on the proportion of the period from 1 January 1955 to 12 November 1955 compared with the whole of the year 1955, meaning that the assessee was entitled to a fraction of the profits that corresponded to that time‑span. In addition, the Revenue authorities maintained that the settlement of the accounts of Messrs Amrit Chemicals did not create a liability payable by any third person to Ashokbhai. An argument presented by the Revenue side assumed that, within the gross receipts arising from any trading transaction carried on by either an individual or a firm, there exists a dormant element of profit, and that this dormant element becomes immediately subject to tax. The argument further contended that taxation should not be postponed until the profits are actually ascertained after accounting for business outgoings at the end of the accounting year. This line of reasoning raised a fundamental question concerning the point in time at which profits accrue to the individual partners of a trading firm. Specifically, the question was whether profits in a trading venture carried on by a partnership accrue to the partners on a day‑to‑day basis or transaction‑by‑transaction basis, or only when the accounts are prepared and the right to receive the profits arises under the terms of the partnership deed. The Court noted that, under the provisions of the Income‑Tax Act, income becomes taxable when it accrues, arises, is received, or is deemed to accrue, arise, or be received. Accordingly, receipt alone is not the sole test for tax liability; income that has accrued or arisen is also subject to tax. While the Court considered it unnecessary to elaborate on the distinction between income “accruing” and “arising,” it acknowledged that the two terms are employed to differentiate them from the concept of “receipt.” Income is said to be received when it reaches the assessee; when the right to receive that income becomes vested in the assessee, it is said to have accrued or arisen. In supporting this view, the Court quoted Fletcher Moulton L.J., who observed in In re The Spanish Prospecting Co. Ltd. that the word “profit” possesses a well‑defined legal meaning that coincides with the ordinary conception of profit, although mercantile usage may sometimes assign different nuances. He further explained that profit implies a comparison between the state of a business at two specific dates, usually separated by a one‑year interval.

The Court explained that the essential meaning of “profit” was the amount of gain earned by a business during a financial year. That amount could be measured only by comparing the state of the business assets at the beginning of the year with the state of the assets at the end of the year. In the ordinary course of business, receipts are received day by day or transaction by transaction, and during that time a business may experience a dormant profit or a dormant loss. Even when a dormant profit or loss exists, the taxable profit of the business for the year is computed after taking that dormant figure into account. However, the Court stressed that such dormant profits could not be treated as the profits that are chargeable to tax under sections 3 and 4 of the Income‑Tax Act. The notion of accrual of business profits, the Court observed, required the use of the accounting method that is applied at the end of the accounting year or at any shorter period that the law may prescribe. When profits accrue directly to the assessee from the business, the question of whether they accrue “de die”, “in die” or at the close of the accounting year is of merely academic interest. The question becomes practically important, however, when the assessment of profits involves determining a person’s right to a share of those profits. Only a person who holds a legal right to receive the profits or income can be said to have those profits accrue to him; if no such right exists, the profits are not deemed to have accrued. The Court pointed out that this principle had been applied earlier by it in the case of E.D. Sassoon & Co. Ltd. v. The Commissioner of Income‑Tax, Bombay‑City.

The material facts relied upon by the Court were as follows: E.D. Sassoon & Co. Ltd., referred to as “Sassoons”, acted as the managing agents of a company that the Court identified as “the United Mills”. Under the managing‑agency agreement, Sassoons were entitled to receive a percentage of the United Mills’ annual net profits as remuneration. On 1 December 1943, Sassoons assigned their office as managing agents, together with all rights and benefits under the agreement, to Messrs. Agarwal & Co. The accounts for the managing‑agency commission payable for the calendar year 1943 were prepared in 1944, and the commission for the whole year was thereafter paid to Messrs. Agarwal & Co. During the assessment proceedings against Sassoons, the question arose whether the tax on the commission earned by the managing agency should be payable in full by Messrs. Agarwal & Co., in full by Sassoons, or be apportioned between the two parties. The Court, with Jagannadhadas J. dissenting, held that the entire liability to pay tax rested on Messrs. Agarwal & Co. The Court reasoned that the managing‑agency relationship was a single, indivisible entity, and that the remuneration or commission became due to the managing agents only upon the completion of a specified period of service. It was a condition of recovery of wages or salary that the service be fully performed before any payment became due. Accordingly, the remuneration to the managing agents constituted, in the Court’s view, “a debt” that arose only at the end of each such period, and the full amount of that debt was taxable in the hands of Messrs. Agarwal & Co.

It was noted that remuneration or commission was payable to the managing agents only after the completion of a whole period of service and that no payment was due for any broken or incomplete periods. Referring to the observations of Fletcher Moulton L.J. in the Spanish Prospecting Co. Ltd. case, Justice Bhagwati remarked that it would be absurd to suggest that a company's profits could accrue on a day‑to‑day or even a month‑to‑month basis. He explained that the day‑to‑day operations of a company could not reliably indicate whether the company was making a profit or incurring a loss, and that the same limitation applied to the month‑to‑month picture. Consequently, if profit or loss had to be measured by comparing assets at two points in time, the most practical method was to make the comparison at yearly intervals. A one‑year period, he said, was a reasonable interval for this purpose. He further observed that in large business enterprises the results for a particular month might show a profit while another month might show a loss, and that the performance in the early part of the year could be opposite to that in the later part, thereby offsetting each other. Accordingly, he concluded that it was reasonable to determine profit or loss at the end of each financial year so that, after calculating the net profit for the year, the managing agents could receive their agreed percentage commission and the shareholders could be paid dividends out of the net profit.

Counsel for the Commissioner argued that the judgment in the case of E.D. Sassoon Co. Ltd. was based on the special nature of a managing agency agreement and was not intended to create a general rule that income accrues only after accounts are prepared. He contended that in sales transactions involving a trading venture, profits accrue to the trader from each individual transaction and are embedded in each transaction, meaning that the charge imposed by section 4(1)(a) of the Income‑Tax Act was not postponed until the settlement of accounts. On that basis, counsel submitted that the profits which were dormant or embedded in the transactions carried out by Messrs. Amrit Chemicals had accrued from transaction to transaction up to 12 November 1955, that these profits properly belonged to the assessee, and that they should be taxed in the assessee’s hands regardless of any later disposition of those profits. To support this position, counsel relied upon the decision of Turner Morrison & Co. Ltd. v. Commissioner of Income‑tax, West Bengal, a case decided by this Court. In that case, an Indian company received commission on sales of goods in India that had been received from a foreign company. The Indian company handled the cargo arriving at Calcutta, made the necessary disbursements, and after deducting its expenses including its commission, remitted the balance to the foreign principal. The Court held that the income, profits and gains derived from the sale of goods by the Indian company in British India were taxable under section 4(1)(a) as income, profits and gains received in the taxable territory on behalf of the foreign principal. The Court further observed that when the gross sale proceeds were received by the agents in India, they inevitably received whatever income, profits and gains were dormant, hidden, or otherwise embedded in those proceeds. The Court added that if, after taking accounts, it was found that there was no profit for the year, the question of receipt of income, profits and gains would not arise; but if there was profit, the proportionate part attributable to the agents would be subject to tax.

The Indian company handled the cargo that arrived at Calcutta and made disbursements in connection with it. It collected the proceeds and, after deducting expenses including its commission, remitted the balance to the foreign principal. This Court held that the income, profits and gains derived from the sale of goods by the Indian company in British India were taxable under Section 4(1)(a) as income, profits and gains received in the taxable territory by the company on behalf of the foreign principal. The Court further observed at pages 529‑530 that there can be no doubt that when the gross sale proceeds were received by the agents in India they necessarily received whatever income, profits and gains were lying dormant, hidden, or otherwise embedded in those proceeds. The Court explained that if, upon accounting, it is found that there was no profit during the year, then no question of receipt of income, profits and gains would arise. However, if income, profits and gains existed, then the proportionate portion attributable to the sale proceeds received by the agents in India constituted income, profits and gains received by them at the moment the gross sale proceeds were received in India. Accordingly, the provisions of Section 4(1)(a) were immediately attracted and the income, profits and gains so received became chargeable to tax under Section 3 of the Act. These observations were made in rejecting the argument advanced by counsel for the taxpayer, who claimed that the gross sale proceeds received in India contained no income at all. Counsel for the Indian company contended that the gross sale proceeds were merely credit entries in the account and that several amounts would later be debited, so that only any remaining credit balance could be considered stamped with the formal impression of income capable of being dealt with as such; therefore, income would be said to have been received only at that later stage. The Court explained that when gross sale proceeds are received, any embedded income becomes part of the ultimate calculation of total profits assessable to tax. The Court clarified that this does not imply that profits accrue to a trader on a day‑to‑day or transaction‑to‑transaction basis. The observation that Section 4(1) is immediately attracted to income, profits and gains embedded in the gross receipts does not lead to the inference that the Court intended to state that profits accrue to a taxpayer before the right to those profits has arisen. The Court further noted, citing E.D. Sassoon Co. Ltd.’s case, that profits do not accrue from day to day or even from month to month; rather, they must be ascertained by comparing assets at two distinct points in time. The Court also pointed out in that case that the test for ascertaining

In determining whether profits have accrued or arisen, the Court examined whether the person entitled to the profits possessed a right to claim them. The Court noted that the decision in E. D. Sassoon Co. Ltd. (1) 11955] 1 S.C.R. 313 concerned a managing‑agency arrangement and observed that, because a managing agency constitutes “a service contract one and indivisible” which is performed only when the whole contract is completed, no right to remuneration can arise before that completion. The underlying principle therefore is that profits do not accrue unless a right to those profits has come into existence. Applying that principle to a partnership, the Court explained that when a partnership deed binds the partners to prepare accounts at prescribed intervals, a partner’s right to demand his share of profit does not arise until the contingency specified either by law or by the partnership deed has occurred. In the present matter, clause 11 of the partnership agreement required that the firm’s accounts be settled annually, and the accounts for the calendar year 1955 could not be settled before 31 December 1955. Accordingly, by virtue of the deed Ashokbhai was entitled to receive his share of profit only at the time the accounts were finally adjusted. Until that date he possessed no enforceable right to demand adjustment of the accounts, unless the other partners expressly agreed to such adjustment. The Court observed that if the profits were deemed to arise on the settlement of accounts on 31 December 1955, then Ashokbhai alone became the owner of those profits and the assessee had no right to them. Although the profits originated from transactions that occurred throughout the whole year 1955, the Court stressed that because profits do not arise on a day‑to‑day or transaction‑to‑transaction basis, the ownership of the profits must be determined by the person who held title on the day the profits actually arose. Consequently, if the assessee did not acquire any right to the share of profits that Ashokbhai received, the tax authorities could not contend that the profits should still be apportioned between the assessee and Ashokbhai for taxation purposes. In its judgment, the Court held that income becomes taxable on the accrual basis only when the taxpayer’s right to that income has accrued or arisen. Where an agreement provides that profits become receivable only upon the occurrence of a specified contingency, the fact that the underlying transactions took place before that contingency does not cause the receipt to be payable to persons other than those who are entitled to receive it on the actual date of receipt or entitlement. Counsel for the Commissioner argued that, under Indian law, a partnership is not a distinct legal entity separate from its members, and that notwithstanding popular perceptions, …

In the present matter, the learned counsel for the Commissioner argued that, as a matter of established law, a partnership is not recognised as a separate legal entity but merely represents an association of individual persons, the firm name being only a collective designation for those individuals who have agreed to carry on business together. Consequently, when income is earned by the firm in relation to any particular transaction, that income must be regarded as having accrued simultaneously to each of the individual partners, and the point of accrual cannot be deferred until the partners later prepare their accounts. The counsel relied upon observations made by this Court in Dulichand Laxminarayan v. Commissioner of Income‑tax, Nagpur (1). In the decision of Dulichand (2) the Court held that a deed evidencing a partnership composed of an individual, a joint Hindu family and three firms could not be registered under section 26‑A of the Income‑Tax Act. However, the Court clarified that this principle does not imply that whenever a partnership receives gross receipts from its business, the profit or loss embodied in those receipts automatically transfers to the individual partners in their respective shares at the moment the receipts are received. Ordinarily, for profit to be said to accrue or arise, there must exist a right, either under a statute or a contractual arrangement between the taxpayer and another party, which entitles the taxpayer to demand those profits. The Court referred to the decision in Bhogilal Laherchand v. Commissioner of Income‑tax Bombay City (2), which had been relied upon by the High Court. In the Bhogilal case, a partnership deed provided that a father conducted business together with his sons, two of whom were minors admitted to the benefits of the partnership. One minor son, Arvind, attained majority on 22 August 1950, and a new partnership deed was executed on 28 August 1950. The deed required that accounts be prepared and profit or loss be determined on the Diwali day of each Samvat year. Arvind died on 31 August 1950, and his share of the profit as determined on that date was sought to be added to his father’s income under section 16(3) of the Income‑Tax Act, 1922, on the basis that the amount constituted income of a minor child of the assessee arising from the child’s admission to the partnership. The Court observed that, because Arvind had agreed to continue as a partner after reaching majority and because the partnership stipulated that profit or loss would be ascertained only on the Diwali day of each year, it was impossible to determine whether any profit or loss had been made on any date prior to the Diwali of that year. Moreover, since Arvind’s right to receive his share of profit arose only upon his death, that share could not be treated as income that had arisen directly or indirectly to Arvind during his minority for the purpose of inclusion under section 16(3) in his father’s assessment.

The Court observed that the income could not be said to arise during the minor’s minority so as to make it liable to be included under section 16(3) in the assessment of the father. Chief Justice Chagla, delivering the judgment of the Court, referred to the case of E. D. Sassoon Co. Ltd. (see citation 3) and stated that although income may accrue or arise to an assessee before actual receipt, income cannot be said to accrue or arise until the assessee acquires a right to receive it. He added that unless a debt is created in favour of the assessee by some other person, it cannot be said that a right to receive the income has been acquired. In support of this view, the learned Chief Justice quoted a passage from the judgment of Bhagwati J. in the E. D. Sassoon Co. Ltd. case (see citation 1), which explained that “income may accrue to an assessee without the actual receipt of the same. If the assessee acquires a right to receive the income, the income can be said to have accrued to him though it may be received later on its being ascertained. The basic conception is that he must have acquired a right to receive the income. There must be a debt owed to him by somebody. There must be, as is otherwise expressed, debitum in praesenti, solvendum in futuro… Unless and until there is created in favour of the assessee a debt due by somebody it cannot be said that he has acquired a right to receive the income or that income has accrued to him.” Counsel for the Commissioner argued that between the partners collectively and an individual partner there can be no debtor‑creditor relationship, and therefore the principle set out by this Court in the E. D. Sassoon Co. Ltd. case (see citation 1) should not apply where a partner receives his share of the firm’s profits on the settlement of the partnership accounts. The Court, however, reiterated that the principle from E. D. Sassoon Co. Ltd. is that income accrues or arises when a right to it comes into existence, and not before. The Court held that if this ratio is correct, as it considered it to be, the contention that a partnership is merely a collective name for partners, implying that a partner cannot be a creditor of the partnership, does not have any practical effect. The Court further noted that the position in Bhogilal’s case (see citation 2) was substantially the same as in the present matter. When Arvind attained the age of majority and chose to continue as a partner, he became entitled to all the rights and obligations of a partner because he was admitted to the benefits of the partnership, including the right to receive his share of profits as computed at the end of the year in accordance with the partnership deed. Upon Arvind’s death, the partnership was dissolved and the accounts were required to be settled on 31 August 1950. Nevertheless, the earliest date on which Arvind’s estate became entitled to a share of the profits was after he had attained majority, and therefore the income could not be treated as arising during his minority for the purposes of section 16(3).

In this case the Court observed that the share of profits became payable to the individual only after he had attained the age of majority. Because the right to the profits arose after majority, the income did not arise directly or indirectly in favour of a minor child, and consequently Section 16(3) of the Income‑tax Act could not be invoked. The Court further noted that in Bhogilal’s case(1), the firm earned income in Samvat year 2006 and the partner Arvind reached majority before the close of that year. The Revenue authorities sought to apportion Arvind’s share of that income and to hold the father liable for the portion of the income that was alleged to correspond to the period during which Arvind was a minor. The authorities’ claim was rejected, and the entire share of Arvind in the profits was held not taxable under Section 16(3), the share being treated as part of the father’s income (1) [1955] 1 S.C.R. 313; (2) (1955) 281 T.R. 919.

Turning to the present matter, the Court found that on the date when Ashokbhai acquired the right to receive a share of the partnership profits there was no longer any subsisting joint family, and his share of the profits was not received by him on behalf of the assessee. Moreover, there was no assignment of profits that had already accrued to the assessee. The profits accrued directly to Ashokbhai and, because of the deed of partition, the assessee had no interest in those profits at the time they accrued. Accordingly the Revenue authorities could not contend that profits which, under the instrument of partition, did not accrue or arise to Ashokbhai as representing the Hindu undivided family, should for purposes of taxation be deemed to belong to the assessee. The High Court therefore correctly answered the question in the negative. As a result the appeal failed and was dismissed. Appeal dismissed. (1) (1955) 28 I.T.R. 919.