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2019 (11) TMI 579 - AT - Income TaxMethod of accounting of interest received on delayed compensation - Accrual of income - whether the impugned interest income is attributable to the period of 18 years beginning from the assessment year 1991-92 and up-to the assessment year 2008-09 as claimed by the assessee? - HELD THAT:- The court has awarded the interest on the enhanced compensation to the 5 parties. Therefore in our considered view the impugned interest income belongs to the 5 parties as claimed by the assessee. Assessee during the assessment proceedings has submitted the details of the parties who are entitled for the interest income along with the period to which the interest pertains. The details are available on page 24 of the paper book. None of the authorities below have pointed out any defect therein. The impugned interest income i.e. interest on the enhanced compensation was chargeable to tax to the respective years to which it pertains till the assessment year 2009-10. In holding so, we draw our support and guidance from the judgment of Hon’ble Supreme Court in the case of Rama Bai v/s CIT [1989 (11) TMI 2 - SUPREME COURT] as held interest cannot be taken to have accrued on the date of the order of the Court granting enhanced compensation but has to be taken as having accrued year after year from the date of delivery of possession of the lands till the date of such order. Amendment under section 145A of the Act which mandates to levy the tax on the interest on the enhanced compensation in the year of receipt doesn’t apply to the year under consideration. Therefore we hold that such interest income shall be subject to tax on accrual basis for the year under consideration. We note that the assessee has paid the tax on such interest income which was worked out for the each year involved separately in the year under consideration. Indeed the TDS certificate was issued in the name of the assessee and accordingly the assessee has paid the taxes due on such income on behalf of all other parties. This fact can be verified from the income tax return filed by the assessee placed on page 1 of the paper book. Therefore, it is immaterial whether other parties have paid the taxes on such income. As such there is no loss to the revenue as well as there is no technique used by the assessee to avoid the tax on such income adopting the colorable device - we set aside the order of the learned CIT (A) and direct the AO to delete the addition made - Decided in favour of assessee.
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