In Brief
The appellant owned a property rented to the Government of India. In 1994, the government enhanced the monthly rent (with retrospective effect from 1987) and the appellant accepted the terms. The Income Tax Department issued a notice in 1994 under Section 148 of the Income Tax Act seeking to reopen the assessment for the year 1989-1990 to include the enhanced rent. The Supreme Court held that income accrues only when a right to receive it vests in the assessee. Since the right to receive the enhanced rent arose only in 1994 (when the enhancement was formally made and accepted), it did not accrue in 1989-1990. Therefore, the notice was without jurisdiction and was set aside. The appeal was allowed.
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