COMMISSIONER OF INCOME TAX Vs. SANTI DEVI

JUDGEMENT

(1.) In the present reference under Section 256(1) of the I.T. Act, 1961, the question posed before us is as follows :

(2.) This reference relates to the assessment year 1962-63, the corresponding accounting period of which ended on March 31, 1962. The assessee derived income from house property and also interest. The assessee owned a property situated at Behala being Plot Nos. 629, 630, 631 and 609 within the District of 24-Parganas. This property was acquired by the Land Acquisition Collector with effect from April 5, 1950, under the Land Acquisition Act. A sum of Rs. 1,33,933 was paid to the assessee towards the compensation amount. Further, a sum of Rs. 86,208 was paid on April 26, 1961, towards the interest under Section 34 of the Land Acquisition Act. Before the ITO, the assessee claimed that the whole of the interest on the compensation amount received by the assessee was not taxable during this year as the same related to the earlier years also. The assessee's claim was not accepted by the ITO, He held that the assessee kept his accounts on cash basis and as such the full amount of interest received by the assessee during this year amounting to Rs. 86,208 was taxable in this year.

(3.) The assessee came up in appeal before the AAC. It was urged before him that possession of the land was taken in 1950 and the assessee was entitled to receive interest since then and as such the proportionate interest referable to each successive year was assessable in that respective year. Accordingly, only the proportionate interest referable to the assessment year 1962-63 could be assessed in this year and the entire interest which was actually paid could not be assessed in this year alone.