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Issues: Whether the entire interest on enhanced compensation awarded under section 28 of the Land Acquisition Act accrued only when the court passed the decree and was therefore assessable in the assessment year in which it was awarded and received, or whether it had to be spread over the years to which it related.
Analysis: Interest under section 28 of the Land Acquisition Act is distinct from statutory interest under section 34. Under section 34, interest becomes payable by force of law from the date possession is taken until payment or deposit of compensation, and therefore accrues from year to year. By contrast, interest under section 28 depends on two contingencies: enhancement of compensation by the court and the court's discretionary direction granting interest. The assessee had no enforceable right to such interest until the decree enhancing compensation was passed. The principle of accrual applied is that income arises when the right to receive it comes into existence, not merely when the factual basis for a claim exists.
Conclusion: The entire interest on enhanced compensation accrued only on the passing of the decree and was fully assessable in the assessment year in which it was awarded and received. The answer to the reference was against the assessee.
Ratio Decidendi: Interest awarded on enhanced compensation under section 28 of the Land Acquisition Act accrues only when the court, in its discretion, awards it, because the right to receive such interest arises only on the passing of the decree and not on the earlier taking of possession.
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