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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether interest income accrued on fixed deposit receipts, created out of compensation received in land acquisition proceedings, was liable to be taxed in the assessment year despite the assessee's claim that the principal amount and the eventual entitlement were still in dispute.
Analysis: The relevant principle is that income is taxable when it has accrued and the assessee has an enforceable right to receive it. The earlier authorities concerning disputed compensation were distinguished because those cases involved a dispute regarding the very right to receive the amount, whereas here only the quantum of compensation was under challenge. The interest on the fixed deposits had already accrued, and no lien, encumbrance, or guarantee arrangement prevented its taxation as income.
Conclusion: The interest of Rs. 10,79,858 was taxable in the relevant assessment year and its deletion by the appellate authorities was erroneous; the finding is against the assessee and in favour of the Revenue.
Final Conclusion: The substantial question of law was answered in favour of the Revenue, and the addition on account of accrued interest income was restored.
Ratio Decidendi: Interest that has actually accrued on fixed deposits is taxable where the assessee's right to that interest is not itself under dispute and no encumbrance prevents its receipt.
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