TMI Blog1978 (2) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... ining the compensation payable to the assessee at ₹ 6,99,648.50. On appeal by the Bihar Government, the Patna High Court, by an order of 28th September, 1967, determined the compensation at ₹ 3,32,632.50. This was in addition to the amount fixed by the Land Acquisition Officer. On this additional amount the assessee was paid an interest amounting to Rs, 1,68,176 which was actually paid on 16th December, 1967. The assessee filed returns for the years 1960-61 to 1968-69, spreading over the amount of interest in these various years. The ITO upheld the spread-over and taxed the assessee on his returns. The CIT, acting under s. 263 of the I.T. Act, 1961, held that it is well settled that the income is said to accrue when it com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the I.T. Act, 1961, income is chargeable to tax in the year in which it, inter alia, accrues or arises. In Laxmipat Singhania v. CIT [1969] 72 ITR 291 at page 294, the Supreme Court observed that it is not open to the ITO, if income has accrued to the assessee and is liable to be included in the total income of a particular year, to ignore the accrual and thereafter to tax it as income of another year on the basis of receipt. It is well established that if an assessee acquires the right to receive the income, the income accrues, though it may be received later on, on its being ascertained. If it is a debt, the fact that the amount has to be ascertained does not make it any the less a debt if the liability is certain, and what remains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thheld the compensation amount which the claimant would be entitled to under the provisions of the Act. Therefore, a statutory liability has been imposed upon the Collector to pay interest on the amount awarded from the time of his taking possession until the amount is paid or deposited. The Court went on to hold that the legislature expressly used the word interest with its well-known connotation in s. 34 of the Act. It is, therefore, reasonable to give that expression the natural meaning it bears. The court referred to the House of Lords' decision in Westminster Bank Ltd. v. Riches [1947] 28 TC 159 at p. 189 ; 15 ITR (Supp) 86, where it was observed that interest was compensation for the deprivation of money. It would be i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ula [1972] 84 ITR 625, the Madras High Court in T. N. K. Govindarajulu Chetty v. CIT [1973] 87 ITR 22 and of the Orissa High Court in Joyanarayan Panigrahi v. CIT [1974] 93 ITR 102. The decision in Khan Bahadur Ahmad Alladin Sons v. CIT [1969] 74 ITR 651 (AP) is not at all material. There the Andhra Pradesh High Court considered the true nature and character of compensation paid for acquisition of land. In that case it was found that the assessee had purchased the site and the buildings in the course of a profit-making scheme. It was from this point of view that it was held that the compensation received by the assessee was revenue in nature. The case of CIT v. Motilal Padampat Sugar Mills Co. [1979] 118 ITR 825 (All) cited by the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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