Accrual of interest on enhanced land compensation turns on when the right to receive becomes legally enforceable, not receipt.

Interest on enhanced land acquisition compensation accrues year by year when it becomes legally due and recoverable, not only when later received or quantified. The liability arises when possession is taken and continues when compensation is enhanced by decree carrying interest, with pendency of appeals or absence of stay not deferring accrual. Income is taxable on accrual when the assessee acquires a vested, enforceable right to receive it. On this basis, interest attributable to earlier periods had accrued in those years, and only the portion referable to assessment year 1962-63 was taxable in that year.

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Issues: Whether interest on enhanced compensation arising from land acquisition accrued year by year as it became legally due and recoverable, or whether the entire interest received in the assessment year 1962-63 was taxable in that year alone.

Analysis: Interest became payable when possession was taken and the statutory liability under the Land Acquisition Act arose, and further interest became payable when the compensation was enhanced by judicial decrees carrying directions for interest. The pendency of appeals did not suspend accrual, and the absence of any stay did not prevent the right to recover the accumulated interest from arising as each part became legally due. Income is chargeable when it accrues, that is, when the assessee acquires a vested right to receive it, and the timing of quantification or receipt does not postpone accrual. On the facts, the interest attributable to earlier periods had accrued in those earlier years, and only the portion referable to the relevant previous year could be brought to tax in assessment year 1962-63.

Conclusion: The interest did not accrue only on receipt in 1961. It accrued progressively when it became legally due and recoverable, and only the proportionate interest relatable to the assessment year 1962-63 was taxable in that year.

Ratio Decidendi: Income becomes taxable when the assessee acquires a vested and legally enforceable right to receive it, and accrual is not postponed by later quantification, pending appeals, or actual receipt.

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