Law:

Section:

Section 5 of the Income-tax Act, 1961 read with section 26(2) of the Rajasthan Land Reforms and Resumption of Jagirs Act, 1952 - Income - Accrual of - Assessment year 1973-74 - Assessee's Jagir was resumed under 1952 Act and compensation was determined from date of resumption - However, compensation was not paid for a considerable time, and, therefore, interest amounting to Rs. 15,410 accrued to assessee and same was paid during accounting year relevant to assessment year in question - ITO included said amount of interest in total income of assessee - On appeal, Tribunal deleted addition of said amount holding that right to receive interest had accrued to assessee earlier than year of account - Whether in view of section 26(2) of 1952 Act, right of assessee, provision of to get interest on amount of compensation accrued from date of resumption and, consequently, interest would be deemed to have accrued to assessee, year to year, from date of resumption up to date of payment - Held, yes - Whether in view of said fact, order of Tribunal was correct and it needed no reference - Held, yes FACTS The assessee was an erstwhile Jagirdar of a village. His Jagir was resumed under the 1952 Act and the compensation was determined as from the date of resumption. However, the compensation was not paid for a considerable time, and, therefore, interest amounting to Rs. 15,410, accrued to the assessee, which was paid during the accounting year relevant to the assessment year 1973-74. The ITO included the aforesaid amount of interest in the total income of the assessee for the assessment year 1973-74. On appeal, the AAC, confirmed the order of the ITO in that respect. On further appeal, the Tribunal deleted the addition of Rs. 15,410 and held that right to receive interest had accrued to assessee earlier than year of account. On reference : HELD The provision of section 26(2) of 1952 Act makes it clear that the right of assessee, in instant case, to get interest on amount of compensation accrued from date of resumption and, consequently, interest would be deemed to have accrued to assessee, year to year, from date of resumption up to date of payment. Interest accrued to the…

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