COMMISSIONER OF INCOME TAX Vs. RAMALAKSHMI REDDY M

JUDGEMENT

(1.) IN this reference made by the INcome-tax Appellate Tribunal, Madras, at the instance of the Commissioner of INcome-tax, Madras, under s. 256(1) of the I.T. Act, 1961, the following question of law had been referred for our opinion :

(2.) THE Tribunal, in their stated case, have given us a vivid account of the circumstances in which the receipt in question came about. THE assessee in the case is Mrs. Ramalakshmi Reddy. She was the owner of a nine-ground plot of land in Kodambakkam, Madras. She applied to the Corporation of Madras for approval of her plan to construct a residential building in her plot. With the plan sanctioned, she started construction work. Almost the first thing she did at the site was to find a spot and dig a well, for there was no municipal water supply in that locality and she needed water, initially, for building operations, and, thereafter, to serve sheer god fortune, she happened to strike a perennial spring at the spot where she cut for the well. THE water was good. It was also plentiful. This was just abut the time when the rest of Madras found itself in the throes of an acute water famine. Scarcity of water was not only a practical problem, but was apparently the main topic of conversation among city dwellers. In may, 1969, when the drought was at its worst, the assessee's husband had been to a Rotary meeting at Hotel Connemara. THEre he chanced to meet the secretary of Spencer and Co. Ltd., Madras. Spencer had an aerated water factory in the city. THEy were exeriencing production problems on account of depletion of their usual sources of water supply. When the assessee's husband heard about their difficulties, he made a sporting offer to the secretary then and there. He said that Spencers might unreservedly help themselves from his wife's well to help their factory out of their shortages. Spencers fell in with the suggestion, and later found that the assessee's well could meet all heir demands with ease. Thus began a steady baling out of lorry loads of water by Spencers from the assessee's domestic well. THE whole thing happened just like that, in this casual off-hand way. THEre was no thought in anyone's mind abut payment for the water. Later, however, Spencers did not, and could not, grudge paying the assessee at the rate of Rs. 50 a lorry, considering that they made quite a profit out of processing it in their aerated water factory. A neighbour of Spencers at Mount Road, the First National City Bank of New York, also had a water problem of their own. THEy needed potable water to keep their air-conditioning plant going. THEy too approached the assessee and obtained a like facility from her paying for their lorry loads at the same rate of Rs. 50 a load. In this way, by the end of the year, the assessee had received as much as Rs. 37,770 from both these concerns.

(3.) MR. Jayaraman then urged that the Tribunal was wrong in thinking that the receipts in question were casual receipts. He said that receipts cannot properly be regarded as casual when they are known, foreseen, anticipated and provided for, as had happened in this case. He pointed out that what the assessee got was so much per lorry load of water, and this was nothing but a commercial price mutually agree to between the parties for the quantity sold. Receipts from a series of such sales, MR. Jayaraman said, cannot be regarded as casual or fortuitous.