BHASKARAN PILLAI V Vs. STATE OF KERALA

JUDGEMENT

(1.) A short and interesting question arises for consideration in this revision petition. Petitioner's property was acquired by the State as per the provisions contained in the Land Acquisition Act. Dissatisfied with the quantum of compensation awarded by the Collector, petitioner got the issue referred to Reference Court, under S.18 of the Land Reforms Act. Reference Court enhanced the amount of compensation. The total amount of compensation awarded was Rs. 1,37, 249.57. That amount was directed to carry interest. Petitioner filed E.P. claiming enhanced compensation and interest awarded thereon. Interest claimed in the E.P. was Rs. 1,64, 473.86. That amount in full was not deposited by the State. They consider that amount as the income accrued to the petitioner for the year and a sum of Rs. 18421.06, was deducted towards interest and surcharge. Only the balance was deposited. Deposit so made together with the enhanced compensation of Rs. 1,37, 249.56 was treated was treated by learned Subordinate Judge as in full satisfaction of the decree amount. Petitioner challenges this approach made by learned Sub Judge.

(2.) As stated earlier, petitioners property was acquired by the State invoking the provisions contained in the Land Acquisition Act. He was dispossessed on 2-3-1987. On reference, learned Subordinate Judge awarded enhanced compensation of Rs. 1,37,249.57 together with interest. Interest accrued on that enhanced compensation was treated as the income of the petitioner for the year 1995-96. Short question is whether the Government was justified in treating the interest portion of Rs. 1,64,473.86 as the income derived by petitioner for the year 1995-96. Interest on enhanced compensation for land compulsorily acquired under the Land Acquisition Act, awarded by court on reference under S.18 of the Land Reforms Act, must be treated as having accrued year after year from the date of delivery of possession of the land. Interest that was to be deposited on 20-7-1995, cannot be treated as income in one lump of the year 1995-96. This aspect was considered by Full Bench of this Court in Peter John v. Commissioner of Income Tax 1985 KLT 687 . Full Bench observed:

(3.) S.197A(1A) of the Income Tax Act, 1961 is in the following terms: