JOYANARAYAN PANIGRAHI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the Income-tax Act of 1961. The question referred to us is:

(2.) THE facts of the case are these: A Hindu joint family of which Joyanarayan Panigrahi is the karta owned properties in the villages of Pudapara and Baunsamura located in the district of Sambalpur. Under the provisions of Orissa Act 18 of 1948, 47.15 acres of land in village Pudapara were acquired by the State of Orissa for the Hirakud Dam Project. This acquisition was covered by two independent notifications, one dated November 9, 1951, and the other dated March 28, 1955. Possession of these lands was taken on June 11, 1956, and on June 7, 1957, the competent authority offered compensation of Rs. 23,804-3-0 under Rule 5 of the rules made under the said Act. 3.24 acres of land in the other village came to be notified for acquisition on April 12, 1957. On October 18, 1957, possession thereof was taken and the competent authority under Rule 5 offered compensation of Rs. 2,514.03 on August 11, 1958. THE assessee objected to the quantum of compensation and claimed higher compensation. Under section 7 of the Orissa Act, the dispute was referred to arbitration and the arbitrator ultimately determined the compensation on the basis of the law laid down in the case of State of Ori v. Bharat Chandra Nayak, AIR 1955 Ori 27. On 30th of January, 1961, the entire compensation was paid for both the lands including interest of Rs. 15,519 for the first acquisition and Rs. 941 for the second acquisition. As indicated above possession had been taken of the lands in village Pudapara in June, 1956. THErefore, payment of interest of Rs. 15,519 was for the period between June 11, 1956, and 30th of January, 1961. In regard to the lands in the other village, possession had been taken from April, 1957, and the interest paid related to the period from 1957 up to 1961.

(3.) ACCORDING to the assessee, interest is payable under the Act on the amount of compensation from the date of taking over of possession till the date of payment of the compensation. Therefore, when possession was taken in the acquisition proceeding under the Orissa Act, both compensation as also interest on a prescribed basis became payable. Payability is not dependent upon quantification though there may not be any payment until quantification is final. The amount of interest has been apportioned by arithmetical process by the assessee thus: