1982 (10) TMI 13

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....interest of Rs. 35,190 awarded by the Land Acquisition Collector could be included as the income of the assessee for the assessment year 1966-67 ? " The Land Acquisition Collector acquired the " Rani Bagan " property measuring 6.959 acres belonging to the assessee. The date of acquisition was 29th August, 1963, and the date of the award was 29th March, 1966. For the period of 2 years and 7 months a sum of Rs. 35,19 was allowed as interest by the Land Acquisition Collector. It was common ground that in the subsequent year the District judge further allowed a sum of Rs. 1,05,643 as interest. The ITO treated the entire interest receipt of Rs. 35,190 as income of the year in question which the AAC upheld in appeal. The appeal was taken up to....

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.... asks us to say that even if the right to interest had accrued to the assessee periodically during the many years which preceded the assessment year 1962-63, so long as the assessee did not maintain his accounts on the mercantile basis, the interest received by him during the previous year relating to the assessment year 1962-63 could be taxed during that assessment year. In support of this argument he depended upon the observations in Gajapathy Naidu's [1964] 53 ITR 114 (SC), in which there was an explanation of the familiar rule that income is taxable when it accrues or is earned, if the assessee's accounts are maintained on the mercantile basis, and when it is received, if the method of accounting is the cash system. But this elucidation....