Law:

Section:

Section 5 of the Income-tax Act, 1961 - Income - Accrual of - Assessment year 1975-76 - Property in question was declared as evacuee property and competent authority held that a certain share in said property belonged to assessee, as legal heir of owner of said property - However, a dispute arose between family members in respect of said property - Action of Assistant Custodian in declaring property as evacuee property was upheld by Supreme Court - During litigation period, property was sold and sale proceeds were kept in bank as short-term deposit carrying interest - Subsequently, on account of compromise, assessee, received amount falling to her share, along with interest - ITO treated entire amount of interest as income of assessee for relevant assessment year - Whether in view of findings recorded by Tribunal that interest in question accrued from year to year as bank had credited amount of interest in respective account, entire interest was not liable to be taxed in relevant assessment year - Held, yes CASE REFERRED TO Azimunnissa v. Dy. Custodian, Evacuee Properties, District Deoria AIR 1961 SC 365. [Para 2]. Shambhu Chopra for the Applicant. Gaurav Mahajan for the Respondent. JUDGMENT Prakash Krishna, J. - The Income Tax Appellate Tribunal, Allahabad has referred the following question of law under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as the Act) for opinion to this Court:- "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that the interest on the deposit falling to the share of the assessee accrued from year to year and, therefore, the entire interest of Rs. 1,98,238 was not liable to tax in the assessment year 1975-76 only?" 2. Briefly stated the facts giving rise to the present reference are as follows: The reference relates to the assessment year 1975-76. One Smt. Khatoon Bibi along with several other persons was owner of M/s. Noori Sugar Factory. Smt. Khatoon Bibi has gone Karachi in 1947 and the Asstt. Custodian, Evacuee Properties had published a declaration that all the properties of Smt. Khatoon were evacuee property. On 20th March, 1956,…

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