Important Point
Where assessee got decree for mesne profit subject to quantification, amount received as mesne profit has to be taxed in the assessment year within which period actually the amount of mesne profit is quantified and not in earlier or later assess­ment years.

Order

The question which arises for consideration in this appeal is as to in which assessment year is the appellant liable to be assessed in respect of mesne profits which were awarded in his favour. Briefly stated the facts, as found by the Tribunal, are that the appellant had agreed to purchase a tile factory vide written agreement dated 22-5-1950. When the vendor did not convey the property, as promised, the appellant filed a suit for specific performance. This suit was ultimately decreed in appeal by this Court vide its judgment dated 22.4.1958. In terms of this decree the appellant was required to deposit Rs. 85,000 within 30 days of the decree and thereupon the title in the property was to be conveyed to the appellant. This Court also passed a decree declaring that the appellant was entitled to mesne profits against the respondent therein and in connection there­with the decree of this Court stated as follows:

“AND THIS COURT DOTH ACCOR­DINGLY DIRECT that the trial Court do hold an enquiry about the mesne profits, and such sums as may be found to be due on inquiry against the second and third respondents in res­pect of the mesne profits be deducted from the amount to be deposited in cash in the Court by the appellant aforesaid in accordance with clause (a) supra, and do direct the payment of the remaining amount, if any, to the third respondent who is the assignee of the second respondent pendente lite;”

2. It is not in dispute that the trial Court went into the matter and determined the quantum of mesne profits by its order dated 22.12.1962 relevant to the Assessment Year 1963-64. The amount of mesne profits which was determined at Rs. 57,093 was received by the appellant in the following accounting year relevant to the Assessment year 1964-65.

3. The Income Tax Officer assessed this sum of Rs. 57,093 in the appellant’s Assessment Year 1963-64. On appeal, the Assistant Commissioner, however, deleted this amount as in his opinion the same could be taxed only in the year 1964-65. On further appeal the Tribu­nal came to the conclusion that this sum was taxable only in the Assessment Year 1963-64. Thereupon, at the instance of the assessee, the Tribunal referred the following two questions of law to the High Court of Madras:

”1. Whether the mesne profits decreed by the Supreme Court accrued to the assessee earlier to the accounting year relevant to Assessment Year 1963-64?

2. Whether on the facts and in the circumstances of the case, the mesne profits received by the assessee is liable to be taxed in the Assessment Year 1964-65?”

4. The High Court, by its judgment under appeal, came to the conclusion that the mesne profits were rightly taxed in the Assessment Year 1963-64 and the same could not be taxed in the Assessment Year 1964-65. The aforesaid questions were answered accordingly.

5. It is contended by Shri Balakrishnan that the right to receive the mesne profits accrued to the appellant on 22.4.1958 when this Court decreed the suit of the appellant and held that he was entitled to receive the mesne profits. The learned counsel submits that as the right had accrued on that day, merely because the quantification of the same was postponed, it would not mean that the income accrued only at the time when the trial Court computed the amount of mesne profits.

6. Shri Ahuja, learned counsel for the respondent, however, submitted that with the passing of the decree by this Court the appellant only got an inchoate right and his right to receive the mesne profits got ascertained only when the trial Court had determined the amount on 22.12.1962.

7. In our opinion, the decision of the High Court does not call for any interference. It will be seen that under Order 20 Rule 12 of the Code of Civil Procedure when the court passes a decree for possession and mesne profits by clause (ba) it may pass a decree “for mesne profits or directing an enquiry as to such mesne profits”. In the present case, from the portion of the decree extracted h