Meaning of “Casual and non-recurring”

The meaning of casual and non-recurring under section 10(3) of the Income Tax Act is not defined in the act itself. But we can take guidance from decisions by various high courts. Here are excerpts of courts orders in which the Hon’ble High Court tried to explain the meaning of casual and non-recurring.

Meaning of casual and non-recurring defined by court

The phrase ‘casual and non-recurring’ used in section 10(3) of the Income Tax Act came up before various high courts as detailed under :

1. Hon’ble supreme court explained the meaning of ‘casual and non-recurring’ while delivering judgment in Universal radiators Vs. CIT [1993] 68 taxman 45 (SC) as under :

Meaning :  Casual’, according to dictionary, means ‘accidental or irregular’. Non-recurring is one which is not likely to occur again in a year.

2. Hon’ble allahabad high court explained the meaning of ‘casual and non-recurring’ while delivering judgment in Wg. Cdr. K.P.K. Ghose Vs. CIT [2004] 140 taxman 437/268 ITR 260 (All.) as under :

Meaning : The words ‘casual and non-recurring’ have not been defined in the act and they must, therefore, receive their plain and ordinary meaning. In the oxford universal dictionary, the word ‘casual’ has been defined as ‘(i) subject to or produced by chance; accidental, fortuitous; (ii) coming at uncertain times, not to be calculated on, unsettled…’ In the context of the statute, ‘unsettled’ seems to be the latest meaning to be applied in such cases.

3. Hon’ble ITAT-Delhi explained the meaning of ‘casual and non-recurring’ while delivering judgment in Gynendra bansal Vs. Asstt. CIT [2003] 86 ITD 421 (Delhi – Trib.) as under :

Meaning : The words ‘casual and non-recurring’ have not been defined in the act but the ordinary dictionary meaning says that they are subject to be produced by chance, accidental or fortuitous or coming at uncertain time or not to be calculated or unsettled.

In this article, you can get guidance from high courts on the meaning of casual and non-recurring under section 10(3) of the Income Tax Act.

Updated up to Finance Act 2021