JUDGMENT

BHARGAVA, J. - The question referred for our opinion is :

"Whether on the facts and in the circumstances of the case the sum of Rs. 72,637 is liable to be assessed in the assessment year 1946-47 ?"

On some date falling within the previous year 1st April, 1945, to 31st March, 1946, the assessee entered into a contract to supply fruits and bullock carts for transport purposes to the military department. The supply had to be made at Chheoki and at Kanpur. The Kanpur trading account showed a loss of Rs. 13,164 on supplies of Rs. 1,84,583. Thereafter, under the terms of the agreement, the assessee submitted a petition to the military department for a review, whereupon the military authorities, on the 6th of November, 1947, sanctioned the payment of an additional sum of Rs. 72,637. This sum was actually paid to the assessee on the 17th of February, 1948 and the 24th of February, 1948. The question arose whether this sum of Rs. 72,637 could be included in the assessment of the income of the assessee for the previous year relevant to the assessment year 1946-47. The Income Tax Officer, the Appellate Assistant Commissioner and the Tribunal concurrently held that this sum of money must be included in the assessment of the income for the assessment year 1946-47 because this sum was received by virtue of the agreement which had been entered into during the relevant previous year and the work under contract had also been carried out during the relevant previous year. The clause of the agreement, which was relied upon for arriving at this finding, reads as follows :

"28. No enhancement of rates will be considered in the case of contracts concluded for periods of 3 or 6 months. In the case of annual contracts, revision of rates, i.e., increase or decrease, will be provided for, but no revision will be considered or allowed within six months of the commencement of the contract.

Rates for annual contracts will be subject to review, according to the rise or fall of market rates by referees appointed by the Government Reviewing Tribunal for contracts, to consist of the Deputy Commissioner or his representative, the CRIASC or his representative and another military officer. Three members will constitute a quorum. The contractor will attend to present his case, but will not be a member of the Tribunal. The final recommendation in all cases reviewed shall rest with the officer sanctioning the contract."

The facts mentioned above clearly lead to the inference that, in the first instance, the assessee was paid for the fruits and bullock carts supplied for transport purposes to the military department at the rate mentioned in the agreement itself. The payment at that rate resulted in a loss of Rs. 13,164. For this reason, the assessee presented a petition to the military department for a review under the clause of the contract quoted above. The date of presentation of that petition is not known but the military department made an order on the 6th of November, 1947, sanctioning additional payment. The additional payments were actually made on the 17th of February, 1948, and the 24th of February, 1948. It would thus appear that, under the terms of the contract entitling the assessee to receive payment, the payments received were such that the assessee incurred a loss of Rs. 13,164 and it was only subsequently that the assessee presented a petition for review when the additional sum was allowed and the transaction resulted in a profit. In the appellate order of the Tribunal and in the statement of the case it has been said that this extra amount was sanctioned by the military authorities when the assessee preferred a claim "for enhancement of rates" but the actual facts do not bear out the view that the application presented was in the nature of a claim. When actually dealing with this point, the Tribunal also mentioned this circumstance by stating that the assessee had submitted a "petition" to the military department for a "review". A petition for r