Interest on enhanced compensation taxed by accrual, and no referable question of law survived after Supreme Court guidance.

Interest on enhanced compensation was treated as having the same character under section 34 of the Land Acquisition Act as interest under section 28, so it could not be assessed entirely in the year of receipt and had to be taxed in the assessment years of accrual. Because the Supreme Court had already settled the legal position, no referable question of law survived for reference under section 256(1) of the Income-tax Act. The reference application was therefore not maintainable and was rejected.

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Issues: Whether the interest received on enhanced compensation was taxable in the year of receipt or spread over the relevant years of accrual, and whether any referable question of law arose for a reference to the High Court.

Analysis: The Tribunal had held, on the basis of the Supreme Court decisions considered by it, that interest payable on enhanced compensation stood on the same footing under section 34 of the Land Acquisition Act as interest under section 28 of that Act. On that footing, the amount could not be assessed wholly in the year of receipt and had to be taxed in the assessment years in which it accrued. Since the legal position had already been concluded by the Supreme Court, no surviving question of law arose for reference under section 256(1) of the Income-tax Act, 1961.

Conclusion: The reference application was not maintainable and was rejected; the revenue failed.

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