OM PARKASH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE questions referred to us for the asst. year 1968 -69 are as follows :

(2.) THESE questions have been raised as a result of the acquisition of certain agricultural lands belonging to the assessee under the Defence of India Act, 1939. It appears that part of the land was acquired under the Requisitioned Land (Continuance of Powers) Act, 1947, and part of the land was acquired under the Requisitioning and Acquisition of Immovable Property Act of 1952. Some compensation was offered to the assessee by the Land Acquisition Collector on December 16, 1957, but an agreement could not be reached. So, the matter was referred to arbitration of Shri G. R. Luthra (as his Lordship then was), the then Senior Sub -judge, Delhi. The award was given on April 26, 1967, which also granted compensation and interest - commencing from May 15, 1945. The total amount of interest granted for a period of about 22 years was only Rs 7,288. The ITO wanted to include the entire sum as income related to the asst. year 1968 -69. The assessment order shows that in case this is done, the income -tax payable comes to Rs. 940, but in case the interest is spread over the period of 22 years, then no tax is payable. The net result of the present reference, therefore, is only regarding the taxability of this amount in the year in question and does not involve a large amount. But the material question is whether the amount is to be taxed as income accruing in 22 years or as a revenue receipt relating to the asst. year 1968 -69.

(3.) AS a result of the decision of the authorities, the assessee sought this reference and the case was stated to this Court under S. 256(1) of the INCOME TAX ACT, 1961. It may be pointed out that both ss. 28 and 34 of the Land Acquisition Act are not, strictly speaking, applicable to the facts of this case because the acquisition was not under the Land Acquisition Act, nor was the interest paid under that Act. However, there is considerable authority for the view that even otherwise interest can be paid under the relevant provisions of the Defence of India Act and the Requisitioning and Acquisition of Immovable Property Act of 1952. Reference was made to Satinder Singh vs. Umrao Singh, AIR 1961 SC 908, which was the case of Cis Sutlej Jagirs being acquired under the Punjab Requisitioning and Acquisition of Immovable Property Act, 1953. There also, when the land of the jagirdar was acquired, no interest was paid but the Supreme Court, reversing the judgment of the Punjab and Haryana High Court, held that interest was nevertheless payable. The Supreme Court indicated that the interest was payable in the same manner as under ss. 28 and 34 of the Land Acquisition Act. The Court observed :