Interest on enhanced compensation accrues only on final determination, then is spread over the relevant years for taxation.

Interest on enhanced compensation was held taxable only when the enhanced compensation dispute attains finality, not on an accrual basis year by year from the date of possession. Once the compensation is finally determined, the interest attributable to the period from delivery of possession until the order is to be spread over the relevant years on a time basis. Applying that principle, the Tribunal's view was upheld, the issue was decided in favour of the assessee, and the Revenue's appeals were dismissed because no substantial question of law arose.

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Issues: Whether interest on enhanced compensation is taxable on accrual basis year by year from the date of possession, or only when the enhanced compensation attains finality.

Analysis: The Court applied the binding view that interest on enhanced compensation does not accrue until the dispute regarding enhanced compensation is finally decided. Once final determination takes place, the interest attributable to the period from delivery of possession up to the date of the order is to be spread over annually on a time basis. On that principle, the Tribunal's view that taxability arises only on finality of the enhanced compensation issue was upheld.

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

Final Conclusion: No substantial question of law arose, and the Revenue's appeals were dismissed.

Ratio Decidendi: Interest on enhanced compensation accrues only upon final determination of the enhanced compensation dispute and is thereafter to be spread over the relevant years on an annual basis.

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