Law:

Section:

Section 5 of the income-tax act, 1961-Income-Accrual of-Assessment year 1969-70 relevant to accounting year being Diwali year - Assessee's land acquired under the land aquisition act-Compensation awarded on 12-7-1968-Additional compensation awarded on 19-12-1970-Whether additional compensation could be treated as accrued or deemed to have accrued during assessment year 1969-70-Held, on facts, no Facts The assessee was deriving income from different sources including income from purchase and sale of land. During the assessment year 1969-70, relevant for the accounting year being the Diwali year ending 21-10-1968, a certain area of land belonging to her was acquired by the municipal corporation on 12-7-1968 under the Land Acquisition Act and she was awarded Rs. 1,12,585 as compensation. For the aforesaid assessment year, the assessee returned a profit of Rs. 37,191 as accruing out of acquisition. She, however, also sought a reference under section 18 of the Land Acquisition Act for enhanced compensation. On 19-12-1970, the City Civil Court awarded her additional compensation of Rs. 90,068. The ITO, while making the assessment for the assessment year 1969-70, took into account the enhanced compensation as well for determining the assessee's profits arising out of the acquisition of her land by the Government. On appeal, the AAC decided in the assessee's favour. The Tribunal, on appeal, by the revenue, sustained the AAC's order holding that as the enhanced compensation accrued to the assessee on 19-12-1970, that is, outside the relevant accounting year, the enhanced compensation could not be taken into account during the assessment year 1969-70. On reference : Held The law is well-settled that the right to receive compensation for the lands acquired by the Government at their market value on the date of acquisition is one and indivisible right. There are no separate rights - One a right to receive compensation and the other a right to receive extra or further compensation. However, an income is assessable to charge only when it accrues or arises or is deemed to accrue or arise in the year of assessment. The amount of compensation under the Land Acquisition Act…

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