BALASUBRAHMANYAN J.

Two controversies arise in these, references under the I. T. Act, 1961. One is whether mesne profits decreed by a court of law can be held to be taxable income in the hands of the decree holder ? The other question is about the relevant year in which mesne profits are to be charged to income-tax ?

The decree holder, in this case, is an income-tax assessee. He obtained a decree for mesne profits against one Kochu Vareed in the following circumstances. The assessee agreed to purchase a tile factory for Rs. 90, 003 and paid an advance of Rs. 5, 003 to the vendor under a written agreement dated May 22, 1950. The vendor, however, did not convey the property as promised, but in breach of the agreement, sold it to a third party by name Kochu Vareed and put him in possession. The assessee then sued his vendor for specific performance. Kochu Vareed impleaded himself in the suit and contested the assessee's claim. The trial court decreed specific performance. Kochu Vareed, however, appealed against the decree. The Kerala High Court allowed his appeal. The assessee took the matter in further appeal to the Supreme Court. By judgment dated April 22, 1958, the Supre