Accrual of statutory interest year to year governs taxability where compensation and interest run from resumption date.

Under the Rajasthan Land Reforms and Resumption of Jagirs Act, 1952, compensation became due from the date of resumption and simple interest ran from that date until payment. On that statutory scheme, the right to receive interest arose year to year as it accrued, so the interest was assessable in the relevant years of accrual rather than only in the year of actual receipt. Applying the settled accrual principle, the Tribunal's view that no question of law arose for reference was upheld, and the application was dismissed in favour of the assessee.

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Issues: Whether interest on compensation payable under the Rajasthan Land Reforms and Resumption of Jagirs Act, 1952 accrued to the assessee year to year from the date of resumption so as to justify the Tribunal's view and decline a reference under section 256(2) of the Income-tax Act, 1961.

Analysis: Section 26(2) of the Rajasthan Land Reforms and Resumption of Jagirs Act, 1952 made compensation due from the date of resumption and provided for simple interest from that date until payment. On that statutory scheme, the right to receive interest arose from the date of resumption and the interest accumulated each year until actual payment. The Court applied the settled principle that income which accrues in a particular year must be assessed in that year and cannot be shifted to another year merely because it is received later in a lump sum.

Conclusion: The Tribunal was right in holding that the interest had accrued year to year from the date of resumption, and no question of law arose warranting a reference. The application was dismissed, in favour of the assessee.

Ratio Decidendi: Where a statutory provision makes compensation and interest payable from a specified date, the interest accrues year to year from that date and is assessable in the years of accrual, not in the year of actual receipt.

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