TMI Blog1971 (1) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... Later on, a notification was issued on II th October, 1953, withdrawing the acquisition proceedings. The validity of this notification was challenged by the assessee and this, notification was quashed by the Pepsu High Court on 14th of February, 1955. On the 15th October, 1951, the assessee was deprived of possession of the land. The Collector made his award on 30th of September, 1955. The assessee was dissatisfied with this award and applied for reference under section 18 of the Land Acquisition Act to the district judge. The learned district judge enhanced the compensation and, excepting by way of historical importance, this fact has no material bearing on this case. In the ultimate analysis, it was found that the assessee was due interest on the amount of compensation awarded to him to the tune of Rs. 48,660. This intereswas paid to him in the year previous to the assessment year 1956-57. The department proceeded to assess this interest to income-tax. The assessee claimed that the interest could not be taxed to income-tax at all. He failed in his contention right up to the Supreme Court. After the decision of the Supreme Court, the assessee raised the contention that the entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sufficient to hold that the amount claimed had accrued. It is only at the stage when the claim was found to be correct by the arbitrator in that case that the claim could be said to have become an actual enforceable liability against the assessee. An enforceable liability would be deemed to have come into existence when and only when it was determined and fixed by the arbitrator. " At page 19 their Lordships have quoted the observations of their Lordships of the Supreme Court to the following effect ? " But in order that the income can be said to have accrued to or earned by the assessee it is not only necessary that the assessee must have contributed to its accruing or arising by rendering services or otherwise but he must have created a debt in his favour. A debt must have come into existence and he must have acquired a right to receive the payment. Unless and until his contribution or parenthood is effective in bringing into existence a debt or a right to receive the payment or in other words a debitum in Praesenti, solvendum in futuro it cannot be said that any income has accrued to him. " In the instant case, it would be noted that the assessee's claim was very much in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have gone through this decision and find that it has no applicability to the facts of the present case. The main stress of the learned counsel's argument was that the right of compensation under the Land Acquisition Act is an inchoate right until an award is given, but this argument cannot be accepted so far as the question of interest is concerned because section 34 of the Land Acquisition Act does not leave the right to interest inchoate. In fact, the decision of the Tribunal is in line with the decision of the Mysore High Court in Commissioner of Income-tax v. Sampangiramaaiah . The facts of the Mysore case are more or less in pari materia with the facts in the present case. It is not necessary for us to restate the reasons that prevailed with the learned judges of the Mysore High Court. We have for facility of reference reproduced the relevant extract from their judgment : " But the question in this reference is, whether the right to the whole of the interest accrued only when it was paid. It did not, and if the interest in respect of the period which commenced on April 1, 1961, and expired on October 12,1961, was all that accrued during the relevant preceding year and the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any stage. On the contrary, it should be remembered that the contention of the assessee has all along been that no part of the interest was a revenue receipt and it is not unintelligible that it is due to that reason that there was an omission to disclose the interest which had accrued due when he produced the returns for the earlier years. The principle on which the finding of the Tribunal rested was that which emerges from the decision of the Supreme Court in E. D. Sassoon Company Ltd. v. Commissioner of Income-tax, in which it was observed: 'The computation of the profits whenever it may take place cannot possibly be allowed to suspend their accrual . . . .' What has however got to be determined is whether the income, profits or gains accrued to the assessee and in order that the same may accrue to him it is necessary that he must have acquired a right to receive the same or that a right to the income, profits or gains has become vested in him though its valuation may be postponed or though its materialisation may depend on the contingency that the making up of the accounts would show income, profits or gains. This enunciation continues to be the law and stands in no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrived for the view which has prevailed with the Tribunal. Under section 34, the right to recover interest arises the moment the owner is deprived of his property under the Land Acquisition Act. The rate at which he is entitled to interest is also specified. The reason for this is obvious. The owner of property after his dispossession under section 17 of the Land Acquisition Act is deprived of the income from the same. This does not happen if the possession is taken under section 16 of the said Act. It is for this reason that section 34 made a special provision for payment of interest from the date he is deprived of possession without payment of compensation so that the interest on such compensation, compensates him for the loss of income which would have accrued to him If the possession had been taken after making the award under section 6 and after payment of compensation. Interest is only payable where an owner is deprived of his property and the payment of its compensation is deferred. Therefore, it is obvious that the benefit which he was to acquire from the property or land was benefit accruing every year which is compensated by way of interest under section 34. If this is ke ..... X X X X Extracts X X X X X X X X Extracts X X X X
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