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Issues: Whether interest on enhanced compensation awarded under section 28 of the Land Acquisition Act, 1894, is assessable year to year on accrual basis from the date of dispossession or only in the year in which the compensation and interest are finally determined and received.
Analysis: The right to enhanced compensation and the consequential interest was held to arise only when the court finally determined the claim, because until then the amount remained uncertain and not enforceable as a determinate liability. The distinction between interest under sections 28 and 34 of the Land Acquisition Act, 1894, was considered, but the decisive factor was that the assessee had no present right to any quantified enhanced compensation or interest before final adjudication. Since the assessee maintained no accounts, assessment could not be spread on an accrual basis year by year and the amount could be brought to tax when received.
Conclusion: The interest on additional compensation under section 28 was not assessable on proportionate accrual basis year to year; it was assessable only when the liability and quantum were finally determined. The answer was against the assessee and in favour of the Revenue.
Ratio Decidendi: Interest on enhanced compensation under section 28 of the Land Acquisition Act, 1894, does not accrue year to year before final adjudication, but becomes taxable only when the compensation and the corresponding interest are finally determined and receiveable.
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