Accrual of interest on enhanced compensation depends on enforceability, not the earlier period for which it was computed.

Interest on enhanced land acquisition compensation accrues for income-tax purposes when it becomes legally payable or enforceable, not by apportionment over the earlier period for which it is calculated. Sections 4 and 5 of the Income-tax Act, 1961 tax income that accrues during the previous year, and the decisive date is when the right to receive the amount crystallises. A mere claim is not accrued income. On the stated facts, the compromise decree dated 9 May 1963 made the entire interest payable, so the full amount was assessable in assessment year 1964-65.

---

---

Issues: Whether the entire interest of Rs. 31,659 received on 1 March 1964 on enhanced land acquisition compensation was assessable as income for assessment year 1964-65, or only the proportionate amount attributable to the relevant accounting year.

Analysis: Under the Land Acquisition Act, interest on enhanced compensation became payable only when the court directed payment and the amount became legally enforceable. For income-tax purposes, sections 4 and 5 of the Income-tax Act, 1961 bring to tax income that accrues during the previous year. The decisive factor is the date on which the right to receive the amount becomes enforceable, not the period for which the interest is computed. Once the compromise decree dated 9 May 1963 made the entire interest payable, the amount could not be split over the years for which it was calculated. The principle applied was that compensation or interest accrues only when it becomes payable or enforceable, and a mere claim does not constitute accrued income.

Conclusion: The entire interest amount of Rs. 31,659 accrued on 9 May 1963 and was assessable in assessment year 1964-65; the answer was in favour of the Revenue and against the assessee.

Ratio Decidendi: Income arising from enhanced compensation or statutory interest under the Land Acquisition Act accrues for income-tax purposes when it becomes legally payable or enforceable by virtue of the court's determination, and not by apportionment over the earlier period for which it is calculated.

---