Accrual of interest on enhanced compensation runs from dispossession day to day, making only the relevant year's portion taxable.

Interest on enhanced compensation under section 28 of the Land Acquisition Act, 1894 was treated as compensation for delayed payment, not a separate discretionary amount. The right to receive it arose when possession was taken and liability existed from that date, so the income accrued day to day until payment was quantified. Accordingly, the accounting method did not change the statutory accrual position. Only the portion of interest that accrued during the previous year relevant to assessment year 1961-62 was assessable in that year.

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Issues: Whether interest on enhanced compensation awarded under section 28 of the Land Acquisition Act, 1894 accrued only on the date of the court's award or accrued day to day from the date of dispossession, and whether for the assessment year 1961-62 only the portion attributable to that year was assessable.

Analysis: Interest awarded on enhanced compensation under section 28 was held to be compensation for the delayed payment of the amount due and not a separate discretionary payment. The right to receive such interest arose when possession was taken by the Government and the liability to pay existed from that date, though quantification followed later. The income therefore accrued from day to day during the relevant period and had to be spread over the years in which it arose. The method of accounting did not alter the statutory incidence of accrual for this item of income.

Conclusion: Only the portion of interest that accrued during the previous year relevant to assessment year 1961-62 was assessable in that year, and the assessee succeeded on the issue.

Ratio Decidendi: Interest on enhanced compensation under section 28 of the Land Acquisition Act, 1894 accrues from the date of dispossession on a day-to-day basis and is taxable in the assessment year corresponding to the period of accrual.

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