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TMI Blog2017 (8) TMI 379X X X X Extracts X X X X X X X X Extracts X X X X ..... bove substantial question of law arises on identical facts in the four appeals. Therefore, facts in any one of the four appeals would be sufficient to answer the above substantial question of law raised in all the four appeals. Therefore, by consent of the parties we shall refer to the facts in Income Tax Appeal No.19 of 2011 relating to Assessment Year 1998-99. 4. The brief facts giving rise to the appeals are as under : (a) The appellant/assessee owned agricultural land in village Borkhedi, Dist. Nagpur. This agricultural land was compulsorily acquired by Government of India issuing a notification dated 5th March, 1992 under Section 4 of the Land Acquisition Act, 1894. The Land Acquisition Officer in September, 1995 granted a compensation of Rs. 9.33 Lakhs (inclusive of interest) to the appellants on acquisition of the notified land. (b) As the appellant was aggrieved by above compensation it ensured a Reference was filed under Section 18 of the Land Acquisition Act by the Collector to the Civil Judge, Senior Division. By an order dated 21st September, 1996, Civil Judge, Senior Division enhanced the compensation to Rs. 63.33 Lakhs (including interest of Rs. 17.57 Lakhs). (c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to enhanced compensation had not yet been finally determined. Consequently, no income could have been said to have accrued during the subject assessment year as same was subject to final decision of the High Court in the pending appeal. It held that till issue of compensation was finally determined, no income on account of compensation and interest thereon can said to accrue. Further, it invoked the principle of restitution to hold that the interest on fixed deposit accrued would be subject to restitution under Section 144 of the Civil Procedure Code. Consequently, it held that interest earned on the fixed deposit was also subject to the final conclusion of the proceeding in respect of compensation for acquisition of land by the High Court. (f) Being aggrieved with the common order dated 14th September, 2004 of the CIT (A), the Revenue filed six appeals, one each for the Assessment Years 1996-97 to 2001-02 to the Tribunal. By the impugned order dated 30th May, 2011, the Tribunal recorded the fact that the parties are agreed that the original compensation and enhanced compensation received on account of land being acquired is not taxable, for the reason it is agricultural income. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interim stage subject to the condition that in case assessee failed at the final hearing he would refund the amount to the respondent along with interest at the rate prescribed in the interim order the amount earned on. (c) In any view of the matter, on the principle of restitution as provided in Section 144 of the Civil Procedure Code the appellant/assessee would be obliged to return the amount of Rs. 63.33 Lakhs along with all further benefits obtained by her (including the interest on fixed deposit) on the aforesaid amount to the successful party. 7. As against the above, Mr. Parchure, learned counsel for the Revenue, submits as under : (a) In the present facts, the appeals are only concerned with the issue of bringing to tax, interest earned on the fixed deposit made by the appellant/assessee. It has no connection with the compensation to be finally awarded along with interest in the land acquisition proceedings before the High Court. (b) The interest earned on the fixed deposit by the Appellant-assessee is not a continuation of the compensation proceedings along with interest thereon which are receivable consequent to the land acquisition. Thus the two should not be linked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. Therefore, such an uncertain event cannot by itself divest the accrual of interest income on the fixed deposit in subject assessment year in the hands of the appellantassessee. Further as pointed out above, there was no obligation in terms of the order allowing the appellant to withdraw the amount of Rs. 63.33 lakhs, to deposit the same in fixed deposits and return it along with interest received on fixed deposit to the State in case it loses in the appeal filed by the State before the High Court. Therefore, the interest if awarded at the final hearing would not necessarily be related to the interest earned on the fixed deposit in the absence of any such direction being made in the interim order. Thus the impugned order of the Tribunal has correctly held that the decision of the Delhi High Court in Paragon Construction (supra) would have no application in view of the above distinction to the present facts. 9. In fact the above findings of ours would dispose of the substantial question of law in favour of the Revenue. However, we have considered the further submissions made by the appellantassessee challenging the impugned order. This as we heard the parties on the same at lengt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alth to be utilised/disposed of as she deems fit. Therefore, the fixed deposit which is made in the Bank at the time of deposit loses its character as compensation amount received at the interim stage from the High Court. This link/connection is broken. It is a deposit made in the Bank by the appellantassessee in her own capacity as an individual and not as a trustee appointed by the Court to make fixed deposit for the benefit of any accrual or interest arising therefrom for the benefit of successful party in the litigation before it. Therefore, there is no continuity as submitted on behalf of the appellant so as to exclude the interest earned on the fixed deposit from exigiblity to tax. 11. The source of funds to earn income cannot determine the taxability of the income earned on the capital amount which has been invested. This in the absence of any statutory mandate otherwise. The income earned would be chargeable to tax irrespective of the source of the funds from which the income has been earned. In the mercantile system of accounting, income accrues when the right to receive the same arises, even though the actual receipt could be at a later date. In the present case it is an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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