Law:

Section:

Section 5 of the income-tax act, 1961-Income-Accrual of-Whether interest under section 34 of the land acquisition act arises on date when possession of land is taken over and, therefore, it is to be assessed from year to year from date of dispossession of assessee and not entirely in year in which award is made-Held, yes Facts The assessee's lands were acquired by the Government by a notification published on 1-12-1966. The possession of the lands was taken in parts on various dates spread over 1967 and 1968 and the award was passed on 29-9-1969 when compensation was awarded along with interest under section 34 of the Land Acquisition Act. The ITO held that the compensation and the interest accrued in the year in which the award was made so that the entire interest was assessable in the assessment year 1970-71. The assessee's claim that the interest due on compensation awarded accrued from year to year from the date on which the possession of the land was taken over by the Government and the whole of the interest was not taxable in the relevant assessment years was, however, accepted by the AAC and the Tribunal. On reference: Held Under section 34 of the Land Acquisition Act, the interest arises on the date when the possession of the land is taken over. Hence, the interest got added up ipso facto and the same could not be denied to the owner. What had to be decided upon was the quantification which was quite unlike the interest determined under section 28 of the Land Acquisition Act which depended upon the order of the final Court which determined the enhanced amount of compensation. Therefore, the Tribunal was justified, and the interest awarded was assessable from year to year right from the date on which the assessee was dispossessed of the land and the entire amount could not be assessed in the assessment year 1970-71. Case referred to Joyanarayan Panigrahi v. CIT [1974] 93 ITR 102 (Orissa). JUDGMENT REDDY, J. - The question, at the instance of the revenue, to be answered in this reference is, whether, on the facts and in the circumstances of the case, the interest awarded by the Land Acquisition Officer (LAO) under section 34 of the Land Acquisition Act,…

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