D. K. JAIN ( 1 ) AT the instance of the revenue, the Income-tax Appellate Tribunal, Delhi Bench d (for short the Tribunal ) has referred, under Section 256 (1)ofthe Income-tax Act. 1961 (in short the act ), the following questions, arising out of its consolidated order in ITA Nos. 5422 and 5289/72-73. for our opinion: "1. Whether on the facts and in the circumstances of the case, the Tribunal was right in deleting the addition of Rs. 1,75,709 (Rs. 1,47, 109+ Rs. 3600. 00 +rs. 25,000. 00) maintained by the Appellate Assistant Commissioner for the assessment year 1967-68? 2. Whether on the facts and in the circumstances of the case the Tribunal was legally correct in entertaining the additional ground of the assessee before them in respect of Rs. 1868. 00 and Rs. 19,157. 00 representing profit under Section 41 (2) and capital gains respectively? 3. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the sums of Rs. 1868. 00 and Rs. 19157. 00 representing profit u/s 41 (2) and capital gains respectively should be deleted from the assessment?" ( 2 ) THE two references arise out of cross-appeals pertaining to the Assessment Year 1967-68 for which the relevant previous year ended on 30/06/1966. The assessee. was carrying on the business of manufacture and sale of sugar. It had a factory for the manufacture of sugar in Hamira in the then State of Kapurthala, which was shifted to Iqbalpur (U. P.) pursuant to the decision of the Central Government, contained in their letter dated 30/04/1954. The building and the structures at Hamira along with the land appurtenant thereto were requisitioned by the Dy. Commissioner, Kapurthala by his order dated 24/11/1954 under the PEPSU Requisitioning and Acquisition of Immovable Property Act, 1954 (for short the 1954 PEPSU Act ) and it was delivered to one M/s Jagatjit Distillery and Allied Industries Ltd. for the purpose of enabling them to set up a sugar factory. Later on the property was de-requisitioned in piece meal and its possession was delivered back to the assessee in February 1959. For the interregnum period of over four years no rent had been paid to the assessee either by the Central Government or by the said M/s Jagatjit Distillery and Allied Industries Ltd. , and the assessee asked for arbitration under the 1954 PEPSU Act. For the interregnum period of over four years no rent had been paid to the assessee either by the Central Government or by the said M/s Jagatjit Distillery and Allied Industries Ltd. , and the assessee asked for arbitration under the 1954 PEPSU Act. In response the Government appointed the District Judge, Kapurthala as the arbitrator to determine the compensation payable to the assessee. The assessee filed its claim amounting to Rs. 6,60,777. 56p. as compensation for user and occupation of its properties by the Government for the period from 1954 to 1959; removal of certain fittings and movable properties; cost for clearing the property and re-occupation etc. The arbitrator gave his award on 7/06/1962, awarding a compensation of Rs. 2,75,610. 00 to the assessee. The amount of Rs. 2. 75,610. 00 was assessed as assessee s income for the assessment year 1963- 64, on the ground that the assessee became entitled to the said amount when the award was made. On appeal, the Appellate Assistant Commissioner (in short the AAC) held that the compensation was finally determined in 1965 and therefore, could be considered for taxation only in the assessment year 1967-68. It is to be noted that on appeal by the Government against the arbitrator s award the compensation was reduced by the High Court to Rs. 2,31,601. 00 vide its judgment dated 24/11/1965. It is pertinent to note that during the pendency of the appeal before the High Court, on assessee s furnishing security in terms of an interim order passed by the High Court, the assessee received the said amount on 7/01/1964. The amount of Rs. 2,31,601. 00 finally determined by the High Court was accounted for by the assessee in its books of account for the period ending 30/06/1966. ( 3 ) IN its return for the Assessment year 1967-68, the assessee claimed that except for the two amounts, namely: (i) Rs. 1868. 00 and Rs. 19,157. 00 which could be brought to tax respectively under Section 41 (2) of the Act and by way of capital gains, the balance amount being capital receipt, was exempt from tax. However, the Income-tax Officer thought otherwise. While framing assessment for the relevant assessment year, he took the view that the entire amount of Rs. 2,31,3817- had been awarded to the assessee as arrears of rent for the Hamira properties requisitioned by the Government for about four years. However, the Income-tax Officer thought otherwise. While framing assessment for the relevant assessment year, he took the view that the entire amount of Rs. 2,31,3817- had been awarded to the assessee as arrears of rent for the Hamira properties requisitioned by the Government for about four years. ( 4 ) THE break-up of the compensation of the said amount, as given in the assessment order, was as under:he treated the entire amount as revenue receipt and brought it to tax accordingly. ( 5 ) THE assessee took the matter in appeal to the Appellate Assistant Commissioner (in short the aac ) The AAC took the View that the compensation paid for the use of requisitioned premises and for vacation and re-occupation of properties, amounting to Rs. 1,50,709. 00 was liable to tax as revenue receipt. He also held that it had been rightly assessed in the Assessment year in question as income had accrued, when the same was determined in terms of judgment of the High Court dated 24/11/1965. As regards the compensation for demolition of building and removal of articles, the AAC held that in the absence of precise details, it was difficult to agree with the assessee that the entire compensation of Rs. 80,972. 00 related to demolition of building and railway siding and was thus, a capital receipt. He, however, estimated the profit under Section 41 (2) of the Act at Rs. 25,000. 00 in respect of building, machinery, railway siding fittings etc. and thus, granted a relief of Rs. 55,972. 00 to the assessee. Being aggrieved by the order of AAC, both the assessee and the revenue took the matter in further appeals to the Tribunal. The Tribunal categorised the amounts received by the assessee as follows: I) rent or periodical payment for user of the properties by the Government; and (ii) compensation for damage and inconvenience caused to the assessee as a result of the requisition. ( 6 ) THE Tribunal took the view that the former was of revenue and the latter was of capital nature. It accordingly held that the amount of Rs. 1,47,109. 00 falling in Category (i) above was of revenue nature and, therefore, assessable to tax. As regards the sum of Rs. 80,972. 00 (Rs. 9,000. 00+ Rs. 46,997. 00+rs. 24,975. ( 6 ) THE Tribunal took the view that the former was of revenue and the latter was of capital nature. It accordingly held that the amount of Rs. 1,47,109. 00 falling in Category (i) above was of revenue nature and, therefore, assessable to tax. As regards the sum of Rs. 80,972. 00 (Rs. 9,000. 00+ Rs. 46,997. 00+rs. 24,975. 00) relating to compensation for demolition of building and removal of various articles, considered under category (ii) above, the Tribunal was of the view that since in respect of some of the items depreciation had been granted to the assessee in earlier years, out of the said amount the amounts of Rs. 46,997. 00 and Rs. 24. 975. 00 were assessable under Section 41 (2) of the Act. However, in view of its decision on the question of year of accrual of income, the Tribunal did not go deeper into this aspect. It merely referred to the admission of the assessee before the Income-tax Officer about the taxability of profit of Rs. 1,868. 00 under Section 41 (2) of the Act and a capital gain of Rs. 19,157. 00, which was estimated by the AAC at Rs. 25,000. 00 ( 7 ) REGARDING the year of accrual of the income, the Tribunal observed that in assessor s appeal pertaining to the Assessment Year 1963-64, it had decided that: (A) the right to compensation accrued in December 1954 relevant to Assessment Year 1956-57; (b) that even on the basis of award, the accrual will be in Assessment Year 1964-65 and not 1963-64 and (c) that there was no accrual in Assessment Year 1967-68. The Tribunal also observed that while coming to the said conclusion it had taken note of assessee s argument that taxability of any part of the receipt, if at all, could be considered only in the Assessment Year 1967-68. The Tribunal accordingly held that since the question of assessability of the amount of compensation in the Assessment Year 1967-68 had already been considered in its earlier order, it was not necessary to re-consider the issue afresh. Thus it was held that no part of the compensation accrued or arose in the year in question, viz. , Assessment Year 1967-68. Accordingly the Tribunal deleted the addition of Rs. 1,75,709. 00 sustained by the AAC. Thus it was held that no part of the compensation accrued or arose in the year in question, viz. , Assessment Year 1967-68. Accordingly the Tribunal deleted the addition of Rs. 1,75,709. 00 sustained by the AAC. The Tribunal also rejected the plea of the revenue that the assessee having itself declared in its return Rs. 1868. 00 and Rs. 19,157. 00 as profit u/s 41 (2) and capital gains respectively, it should not be permitted now to urge as an additional ground before the Tribunal that the amounts are not assessable to tax. Observing that the assessability of the entire amount of compensation was the issue all along, and the same being a question of law, the Tribunal permitted the assessee to raise the said ground. The Tribunal finally deleted the said two amounts also from the assessment for the relevant assessment year on the ground that no part of income had accrued in this year. ( 8 ) AS noticed above, on the motion of the revenue, the afore-noted questions have been referred for our opinion. ( 9 ) WE have heard Mr. R. D. Jolly, learned counsel for the revenue and Mr. S. N. Kumar. learned counsel for the assessee at considerable length. ( 10 ) IT is submitted by Mr. Jolly that the amount of compensation in question is taxable in the Assessment Year 1967-68 because: (i) the right to receive compensation got finally adjudicated only when the High Court delivered its judgment on 24/11/1965; (ii) having argued in its appeal for the Assessment Year 1963-64 that the amounts were assessable in the Assessment Year 1967-68. It is not open to the assessee to now urge that these are not assessable in this year and (iii) even the assessee had accounted for these amounts in its books of account for the Assessment Year in question. In support of the first proposition, reliance is placed on a decision of the Supreme Court in C. l. T. Vs. Hindustan Housing and Land Development Trust Ltd. , (1986) 161 ITR 524. On the other hand Mr. In support of the first proposition, reliance is placed on a decision of the Supreme Court in C. l. T. Vs. Hindustan Housing and Land Development Trust Ltd. , (1986) 161 ITR 524. On the other hand Mr. Kumar has contended that the right to receive compensation must be deemed to have accrued under Section 8 of the 1954 PEPSU Act immediately on the requisition of assessee s properties in the year 1954 and, therefore, it was assessable to tax from year to year on accrual basis and not in the year when the High Court had rendered its verdict. ( 11 ) THUS, the main question for consideration is as to in which assessment year the assessee is liable to be assessed in respect of the amount of compensation received by it. Before we take up the issue, we deem it necessary to take note of the decision of this Court in assessee s reference in respect of Assessment Year 1963- 64. The decision is reported as Mahalaxmi Sugar Mills Co. Ltd Vs. C. 1. 1. (1986) 157 ITR 68. 3. Therein it was, inter alia, observed that: (i) the Tribunal had failed to examine the question in the light of Section 8 of the 1954 PEPSU Act, which showed that a recurring payment, equal to the amount of rent, was to be made after the requisitioned property had been taken on lease for the period of requisition: (ii) the Tribunal did not examine as to whether the income could also be said to accrue only after it was quantified and if that was so then it could be said to have occrued only after 7/01/1964 (beyond Assessment Year 1963-64), when the assessee received payment under interim orders of the High Court; (iii) the Tribunal may not be right when it reached the conclusion that the compensation accrued to the assessee in the Assessment year 1965-66 and (iv) in the instant case, a liability to pay compensation on the part of the Government and correspondingly of the assessee to receive, had accrued immediately on taking over the possession of the requisitioned property. The Court finally answered the question, namely, as to whether any part of compensation of Rs. 2,75,610. The Court finally answered the question, namely, as to whether any part of compensation of Rs. 2,75,610. 00 was assessable in the Assessment Year 1963-64 as follows: "we cannot accept the argument advanced on behalf of the Department that a right accrued in favour of the assessee to receive compensation on the making of the award and if the compensation or part thereof represented income, such income accrued on 7/06/1962, that the pendency of the appeal against the award did not postpone the right and, consequently, the accrual. This may be so in a case where the property is acquired when the amount of compensation is quantified and not in a case where the Property is requisitioned, as in the instant case. The compensation was also assessed in the assessment Year 1967-68 and the appeal before the Tribunal was pending in respect, of the assessment Year 1967-68, when the present reference arose. We do not know the fate of that appeal. Thus, it would appear to us that the amount of compensation awarded is certainly not assessable in the assessment year 1963-64 and, therefore, we restrict our answer to the question referred to us and would not say in which particular year this amount has to be assessed. " ( 12 ) THE aforenoted observations and the final opinion recorded in that case would show that the question was considered by the Court primarily on the basis of Section 8 (2) of the 1954 PEPSU Act, which undoubtedly provides that the amount of compensation payable for use and occupation of the requisitioned property is a recurring payment in respect of the period of requisition. Evidently, while holding that pendency of appeal against the award did not postpone the right and consequently the accrual, the Court did not go deeper into the question as to whether in its appeal the State had challenged its very liability to pay compensation or only the quantus of compensation awarded or both. We feel that this is a vital aspect which would have an important bearing on the answer to the question as to when the income by way of compensation can be said to have been received or accrued or arisen to the assessee in terms of Section 5 of the Act. We feel that this is a vital aspect which would have an important bearing on the answer to the question as to when the income by way of compensation can be said to have been received or accrued or arisen to the assessee in terms of Section 5 of the Act. Total income, according to Section dealing with its scope, includes all income from whatever source derived which is "received" or which "accrues" or "arise", or when by fiction it is deemed to accrue, arise, or is deemed to be received, under the Section, the charge is on receipt or accrual basis. The expression "is received" "accrues" or "arises" as appearing in the said Section, are three distinct terms but are not defined. ( 13 ) IN CIT. Gujarat Vs. Ashokbhai Chimanbhai (1965) 56 ITR 42, the Supreme Court observed that the words "accrue" and "arise" are used to contradistinguish the word "receive" Income is said to be received when it actually reaches the assessee s hands, but on receipt, when the right to receive the income becomes vested in the assessee, it is said to accrue or arise. Therefore, mere receipt of income is not the only test of chargeability to tax (see Keshav Mills Ltd. Vs. CIT, Bombay (1953) 23 ITR 280) If income accrues or arises, it may become liable to tax. It is, therefore, manifest that if an assessee acquires a right to receive income, the income can be said to accrue to him, though it may be received later on. ( 14 ) THE question as to the point at which income could be said to "accrue" or arise to an assessee for the purpose of the Indian Income-tax Act, 1922 came up for consideration in E. D. Sassoon and Company Ltd and Ors. Vs. CIT, Bombay City (1954) 26 ITR 27. In the majority judgment it was explained that the words "arising" or "accruing" described a right to receive profits and that there must be a debt owed by somebody. It was observed that it cannot be said that an assessoe has acquired a right to receive the income or that income has accrued to him unless and until there is created in favour of the assessee a debt due by somebody. ( 15 ) ON the connotation of the word "debt" in Kesoram Industries and Cotton Mills Ltd. Vs. It was observed that it cannot be said that an assessoe has acquired a right to receive the income or that income has accrued to him unless and until there is created in favour of the assessee a debt due by somebody. ( 15 ) ON the connotation of the word "debt" in Kesoram Industries and Cotton Mills Ltd. Vs. C. W. T. (1966) 59 ITR 767 the Apex Court observed as follows: "a debt is a present obligation to pay an ascertainable sum of money, whether the amount is payable in present [ or in future; debitum in praesenti, solvendum in future. But a sum payable upon a contingency does not become a debt until the said. contingency has happened. 16. Thus a mere claim to income without enforceable right thereto cannot be regarded as accrued income for the purpose of the Act. The question of accrual of. income, to the assessee in a particular year on compulsory acquisition of land was considered by the Apex Court in Hindustan Housing and Land Development case (supra), in that case certain lands belonging to the assessee company were first requisitioned and then compulsorily acquired by the State Government. On an appeal preferred by the assessee company, the arbitrator made an award directing compensation to be paid for requisition and acquisition. The arbitrator s award was challenged by the State Government before the High Court. Pending the appeal, the State Government deposited the amount in the Court which the assessee company was permitted to withdraw on furnishing a security bond for refunding the amount in the event of the appear preferred by the State Government being decided in its favour. It was found by the Tribunal that the entire amount was in dispute in the appeal filed by the State Government; that the dispute was "real and substantial": and that the assessee was permitted to withdraw the amount deposited by the State Government. subject to furnishing a security bond for refunding the amount in the event of the appeal being allowed On these facts, the Supreme Court found that there was no absolute right to receive the enhanced amount at that stage and if the appeal was allowed in its entirety, the right to payment of the enhanced compensation would have fallen altogether. subject to furnishing a security bond for refunding the amount in the event of the appeal being allowed On these facts, the Supreme Court found that there was no absolute right to receive the enhanced amount at that stage and if the appeal was allowed in its entirety, the right to payment of the enhanced compensation would have fallen altogether. Reiterating the principles laid down in F. D. Sanssoon s case (supra) the Apex Court held that unless and until thereis a debt created in favour of an assessee, due by somebody, it cannot be said that he has acquired a right to receive the income. Thus, in the said case, the Apex Court has drawn a clear distinction between the cases where the right to receive payment itself was in dispute and it was not a question of merely quantifying the amount to be received and the cases where right to receive the payment was admitted and only the quantification of the amount payable was left to be determined in accordance with the settled or accepted principles. In other words, in the former case, when the right to receive compensation is in dispute, there is no "debt" created in favour of the assessee while in the latter case, when the right to receive is admitted, a "debt" is created immediately on requisition or acquisition, as the case may be. ( 17 ) IN the light of the aforenoted principle of law laid down in Hindustan Housing and Land Development case (supra), as we have observed above, what has to be examined in the present case is as to whether it was the right of the assessee to receive the amount of compensation which was in dispute in the State Government s appeal. If it was so, it cannot be said that he had acquired a right to receive the income or that income had accrued to it, and the amount held to be revenue receipt by the Tribunal will be taxable in the assessment Year 1967-68. On the contrary, if the appeal was only on the question of mere quantification of the amount to be received by the assessee the income had accrued in terms of Section 8 (2) of the 1954 PEPSU Act. On the contrary, if the appeal was only on the question of mere quantification of the amount to be received by the assessee the income had accrued in terms of Section 8 (2) of the 1954 PEPSU Act. We notice that although, in the statement of case there is no clear indication in this behalf, but in its order pertaining to the assessment year 1963-64, forming part of the paper book, the Tribunal has recorded the contention of counsel for the assessee that the appeal of the State included "the outright denial of any liability to pay compensation at all to the assessee" As the appeal memo, filed by the State, is not before us we have no means to verify the correctness of otherwise of the said averment of the counsel. In the absence of this vital information we find it difficult to the answer the question formulated by us above in the correct perspective. Under the circumstances, we feel that the best course would be to remit the matter back to the Tribunal to consider the aforenoted issue afresh in the light of the principle of law laid down by the Apex Court in Hindustan Housing and Land Development case (supra) and our observations made above. Since we are remitting the matter back to the Tribunal on the main issue, we do not deem it necessary to answer the other two questions referred by the Tribunal. ( 18 ) THE references are answered accordingly. No costs.