Accrual of statutory interest on compensation follows the underlying enforceable right, not the later award quantifying it.

A statutory right to receive interest on compensation arose under the Indian Electricity Act and the Punjab Electricity Act when payment was delayed; the later umpire's award merely quantified that pre-existing obligation and did not create a new entitlement. The repeal of the Punjab Electricity Act did not extinguish accrued rights or liabilities. For tax purposes, income accrues when the right to receive it becomes enforceable, so the entire interest could not be taxed only in assessment year 1963-64. The Tribunal's treatment of the whole amount as taxable in that year was rejected, while apportionment for the relevant year was left for fresh consideration.

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Issues: (i) whether the right to receive interest on the compensation amount arose under the Indian Electricity Act and the Punjab Electricity Act or only from the umpire's award; (ii) whether the entire interest was taxable in the assessment year 1963-64.

Issue (i): whether the right to receive interest on the compensation amount arose under the Indian Electricity Act and the Punjab Electricity Act or only from the umpire's award.

Analysis: The statutory scheme provided for payment of purchase money within the prescribed period and made the purchaser liable to pay interest if payment was delayed. The repeal of the Punjab Electricity Act did not extinguish accrued rights or liabilities. The award did not create a new entitlement in isolation; it only determined the amount payable under the pre-existing statutory obligation and adjudicated the assessee's claim under that framework.

Conclusion: The right to receive interest arose under the statutory provisions and not merely from the umpire's award; this issue was answered in favour of the assessee.

Issue (ii): whether the entire interest was taxable in the assessment year 1963-64.

Analysis: Income accrues when the right to receive it becomes enforceable. The assessee's right to compensation and interest crystallised from the date the undertaking was taken over, and the later award only quantified that entitlement. On that basis, the full amount of interest could not be treated as having accrued only in the previous year relevant to assessment year 1963-64. The separate question whether any proportionate amount was taxable for that year could not be finally determined on the material before the Court and was left for fresh consideration by the Tribunal.

Conclusion: The Tribunal was not justified in taxing the entire interest in assessment year 1963-64; this issue was answered in favour of the assessee.

Final Conclusion: The reference was disposed of by holding that the statutory right to interest existed independently of the award and that the entire interest could not be fastened to assessment year 1963-64, while the arithmetical apportionment for the relevant year was left open for reconsideration.

Ratio Decidendi: Where a statute creates an enforceable right to compensation and interest upon takeover or dispossession, later adjudication or award merely quantifies that pre-existing right and does not itself create the income; accrual follows the underlying statutory right and the date on which it becomes enforceable.

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