COMMISSIONER OF INCOME TAX Vs. SAKIL AHMED

JUDGEMENT

(1.) : In this reference under s. 256(1) of the IT Act, 1961, at the instance of the Revenue, the question that falls for determination is whether interest paid on the additional compensation by the Court under s. 28 of the Land Acquisition Act, 1894, is assessable for the relevant year in which it was awarded or was received by the assessee or such interest dates back to the date of dispossession and assessable from year to year on the basis of accrual.

(2.) THE facts of this case are in a narrow compass.

(3.) AGGRIEVED by the order of the AAC, the Department came up in appeal before the Tribunal. It was submitted before the Tribunal by the Departmental Representative that the right to receive interest accrued to the assessee on July 4, 1970, when the Land Acquisition Judge decreed the payment of enhanced compensation along with interest. According to him, before the date of the decree, the assessee had no right to receive any compensation and interest. He urged that the interest computed by the ITO was rightly included in the assessment of the assessee. It was urged on behalf of the assessee that the right to receive the interest accrued to the assessee from the date of taking of possession by the Government as it was on the date of acquisition of the property that the enhanced compensation was also to be paid. He placed reliance on the decision in the case of T.N.K. Govindarajulu Chetty vs. CIT (1973) 87 ITR 22 (Mad) in support of his contention. The Departmental Representative, on the other hand, pointed out that the assessee did not maintain any accounts on the mercantile system and the decision in Govindarajulu Chetty's case (supra) was not applicable to the facts of the present case.