Mitter, J. - (1.) This is an appeal from an order dated June 23, 1965, vacating an earlier order dated December 17, 1959, staying a suit under Sec. 34 of the Indian Arbitration Act.
(2.) The facts are as follows: The Plaintiff -Respondent filed a suit in this Court on July 30, 1959, for payment of moneys due in respect of certain excavation works done by him for the Defendant -Appellant under a written contract dated February 11, 1956. There was some dispute between the parties with regard to the quantity of the work stated before, that the subsequent agreement had altered the rate of commission in such a way as to make the income which really accrued to the Assessee different from what had been entered in the books of account. This was not a case of gift by the Assessee to the managed companies of a portion of income which had already accrued, but an agreement to receive a lesser remuneration than what had been agreed upon. The Assessee had, in fact, received only the lesser mount in spite of entries in the account books and this lesser amount in was taxable. According to their Lordships of the Supreme him income -tax is a levy on income. Though the Income -Tax. Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of income or its receipt, yet the substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in book keeping, an entry is made about 'hypothetical income' which does not materialise. Where income has, in fact, been received and is subsequently given up in such circumstances that it remains the income of the recipient, even though given up, the tax may be payable. Where, however, the income can be said not to have resulted at all, there is obviously neither accrual nor receipt of income, even though an entry to that effect might, in certain circumstances, have been made in the books of account.
(3.) Mr. Meyer has relied upon the decision of the Supreme Court and has invited our attention to the observation by that Court, as follows: If income does not result at all, there cannot be a tax, even though in book keeping, an entry is made on 'hypothetical income' which does not materialise.;