Meaning of “Accrue/arise”

Case Name : Seth madan lal modi Vs. CIT

Citation : [2003] 126 taxman 129/261 ITR 49 (delhi)

Court : Delhi high court

Section : 5

Meaning : Dealing with the scope of total income, section 5 provides that the total income of a person, who is resident, includes all income from whatever source derived and becomes chargeable to tax either when it ‘is received’ or is deemed to be received in india by him or when it ‘accrues’ or ‘arises’ or is deemed to accrue or arise to him in india during the previous year. In other words, receipt of income is not the sole test of taxability. Under this section, the charge is both on receipt and accrual basis. The expressions ‘is received’, ‘accrues’ or ‘arises’ as appearing in the section are three distinct terms but are not defined.

Income is said to be received when it actually reaches the assessee’s hands; but short of receipt, when the right to receive the income becomes vested in the assessee, it is said to accrue or arise.

Case Name : CIT  Vs. Jai hind travels (p.) Ltd. 

Citation : [2000] 108 Taxman 242/243 ITR 451 (ker.)

Court : Kerala high court

Section : 5

Meaning : Accrue’ means to increase, to augment to be added as increase, to arise or spring as a natural growth or result.
‘Accrues’, ‘arises’ and ‘is received’ are three distinct terms and so far as receiving of income is concerned, there can be no difficulty as it conveys a clear and definite meaning. The words ‘accrue’ and ‘arise’ also are not defined in the act. The three expressions ‘accrues’, ‘arises’ and ‘is received’ having been used in section 5 of the act, strictly speaking, ‘accrue’ should not be taken as synonymous with ‘arise’ but in the distinct sense of growing up by way of addition or increase or as an accession or advantage, while the word ‘arises’ means comes into existence or notice or presents itself.

The words ‘accrue’ or ‘arise’, though not defined in the act, are certainly synonymous and are used in the sense of bringing in as a natural result. Strictly speaking, the word ‘accrue’ is not synonymous with ‘arise’, the former connoting the idea of growth or accumulation and the latter of the growth or accumulation with a tangible shape so as to be receivable. There is a distinction in the dictionary meaning of these words, but throughout the act they seem to denote the same idea or ideas very similar and the difference only lies in this that one is more appropriate when applied to a particular case.

Case Name : Morvi industries ltd. Vs. CIT

Citation :[1971] 82 ITR 835 (sc)

Court : Supreme court

Section :5

Meaning : The dictionary meaning of the word ‘accrue’ is ‘to come as an accession, increment, or produce; to fall to one by way of advantage : to fall due’. The income can, thus, be said to accrue when it becomes due.

Case Name : Seth pushalal mansinghka (p.) Ltd. Vs. CIT

Citation : [1967] 66 ITR 159 (sc)

Court : Supreme court

Section : 5

Meaning : The meaning of the word ‘accrue’ is ‘to fall as a natural growth or increment; to come as an accession or advantage’. The word ‘arise’ is defined as ‘to spring up, to come into existence’. The words ‘accrue’ and ‘arise’ do not mean actual receipt of the profits or gains. Both these words are used in contradistinction to the word ‘receive’ and indicate a right to receive.

Case Name : CIT Vs. Ashokbhai chimanbhai

Citation : [1965] 56 ITR  42 (sc)

Court : Supreme court

Section : 5

Meaning : The words ‘accrue’ and ‘arise’ are used to contradistinct the word ‘receive’. Income is said to be received when it reaches the assessee; when the right to receive the income becomes vested in the assessee, it is said to accrue or arise.

 

Case Name : CIT Vs. A. Gajapathy naidu

Citation : [1964] 53 ITR 114 (sc)

Court : Supreme court

Section : 5

Meaning : The meaning of the word ‘accrue’ or ‘arise’ in section 4(1)(b)(i) of the 1922 act, cannot be extended so as to take in amounts received in a later year though the receipt was not on the basis of a right accrued in the earlier year.

Case Name : CIT Vs. Govind prasad prabhu nath

Citation : [1987] 35 taxman 513

Court : Allahabad high court

Section : 5

Meaning : According to the oxford english dictionary, the meaning of the word ‘accrue’ is ‘to fall as a natural growth or increment; to come as an accession or advantage’. The word ‘arise’ is defined as ‘to spring up, to come into existence’. The words ‘accrue’ and ‘arise’ do not mean actual receipt of the profits or gains. Both these words are used in contradistinction to the word ‘receive’ and indicate a right to receive.