Interest on enhanced land acquisition compensation accrues over time, not as a lump sum in the year of receipt.

Interest on enhanced compensation in land acquisition matters is not assessed as a single receipt in the year of payment; it accrues from the date of possession and must be spread over the relevant period on a time basis. Only the portion attributable to the previous year concerned can be brought to tax for that assessment year. The principle therefore treats the interest component as accruing year by year rather than wholly on the date of the court order.

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Issues: Whether interest on enhanced compensation awarded in land acquisition matters is to be assessed in a lump sum in the year of receipt or spread over on an accrual basis from the date of possession till the date of the court order.

Analysis: The question was governed by the Supreme Court decisions which held that interest awarded on enhanced compensation does not accrue wholly on the date of the court's order. Instead, it accrues from the date of delivery of possession and must be allocated over the relevant period on a time basis. On that principle, only the portion relatable to the relevant previous year could be brought to tax for the assessment year in question.

Conclusion: The issue was answered in favour of the assessee and against the Revenue.

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