Meaning of “Casual”

The meaning of casual 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 Supreme Court and Hon’ble High Court tried to explain the meaning of casual.

Meaning of casual defined by court

The phrase ‘casual‘ 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’ while delivering judgment in Rm. Ar. Ar. Rm. Ar. Ar. Ramanathan Chettiar vs. CIT [1967] 63 ITR 458 (SC) as under :

Meaning : The expression ‘casual‘ has not been defined in the act and must, therefore, be construed in its plain and ordinary sense. According to the shorter oxford english dictionary, the word ‘casual’ is defined to mean : ‘(i) subject to or produced by chance; accidental, fortuitous, (ii) coming at uncertain times; not to be calculated on, unsettled’. A receipt of interest which is foreseen and anticipated cannot be regarded as casual even if it is not likely to recur again.

2. Hon’ble Allahabad High Court explained the meaning of ‘casual’ while delivering judgment in B. Malick vs. CIT [1968] 67 ITR 616 (all.) as under :

Meaning : The word ‘casual’ may have several meanings. It may be something which comes in at uncertain times and something which cannot be relied upon or calculated to produce income or it may be something which is the result of chance, or the result of a fortuitous circumstance.

One test which has been laid down in some cases is whether the receipt is one which is foreseen, known and anticipated and provided for by agreement. If it is a result thereof, then it cannot be described as casual even if it is not likely to recur for a considerable time.

3. Hon’ble Calcutta High Court explained the meaning of ‘casual’ while delivering judgment in Asiatic oxygen Ltd. vs. CIT [1991] 189 ITR 483 (cal.) as under :

Meaning : The word ‘casual’ means ‘(1) subject to or produced by chance, accidental; fortuitous (2) coming at uncertain times; not to be calculated on, unsettled’. A receipt which is foreseen, known, anticipated and provided for by agreement cannot be regarded as casual even if it is not likely to recur even or at least for a considerable time.

4. Hon’ble Allahabad High Court explained the meaning of ‘casual’ while delivering judgment in CIT Vs. J.C. Wahal [1988] 170 ITR 635 (All.) as under :

Meaning : Casual’ means something which comes in at uncertain times and something which cannot be relied upon or calculated to produce income or it may be something which is the result of chance or the result of a fortuitous circumstance.

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

Updated up to Finance Act 2021