Law:

Section:

section 5 of the income-tax act, 1961-accrual of income-state government acquired assessee's and took possession thereof on 11-5-1962-in appeal, additional compensation together with interest thereon from the date of dispossession was allowed on 29-5-1959-assessee contended that excess compensation with interest thereon was in lieu of dispossession and, therefore, right to interest was accrued from the date of dispossession-whether right to interest on additional compensation accrued or arose, or is deemed to have accrued or arisen on the date of dispossession or on the date of -held that right accrued to assessee on the date of the Facts The State Government acquired the assessee's land for the purpose of Cochin Ship Building Yard and took possession thereof on 11-5-1962. The assessee having not been satisfied with the compensation awarded by the Land Acquisition Officer referred the matter to the Sub-Judge for more compensation. The Sub-Judge, by his order, dated 29-5-1969, awarded an additional compensation together with interest thereon at the rate of 6 per cent from the date of dispossession. During the accounting year relevant for the assessment year 1970-71, the assessee received certain amount as interest on additional compensation awarded. The assessee claimed that only a proportionate amount of the interest referable to the accounting year, and not the entire interest, was assessable in the assessment year 1970-71. The Tribunal held that the interest accrued on the date of the decree of the court and, therefore, it became income of the assessee only on that date and not prior to it. The Tribunal accordingly held that the entire amount of interest for the period from 1962 to 1969 was assessable in the assessment year 1970-71. On reference, the assessee contended that the excess compensation with the interest thereon was in lieu of the dispossession of the property and, therefore, the right accrued from the date of dispossession. On the other hand, the Revenue contended that the right of excess compensation could arise only if proceedings by way of reference were pursued ; and even then, the right to award interest on excess compensation was…

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