TaxTMI 
TaxTMI 
1981 (4) TMI 50
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.... award of the Land Acquisition Officer, sought a reference under S.18 of the Land Acquisition Act for enhanced compensation. The city civil court, by its judgment dated December 19, 1970, allowed a further sum of Rs. 90,068 as compensation. It is thus to be seen that the compensation payable on account of the land acquisition became payable to the assessee first in an amount of Rs. 1,12,585 by the award dated August 30, 1968, of the Land Acquisition Officer and later by the judgment of the city civil court dated December 19, 1970, awarding to her a sum of Rs. 90,068 as additional compensation. While making the assessment for the assessment year 1969-70, the ITO took into account the enhanced compensation as well for determining the profit arising out of the acquisition of the land, despite the objection raised by the assessee that the additional compensation did not accrue to her during the relevant accounting year. On the assessee's appeal, the AAC held in favour of the assessee. The revenue has taken the matter in further appeal before the Income-tax Appellate Tribunal, Hyderabad Bench 'A'. The said Tribunal, following the decision of this court in Khan Bahadur Ahmed Alladin &....
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....eive extra compensation' accrued to the heirs of the deceased and that it was owned and possessed by the heirs of the deceased. " That case arose under the E.D. Act. In the aforesaid decision, this court held that such enhanced compensation should also be computed as assets of the deceased and it was or that point that the assessee went in appeal to the Supreme Court. The Supreme Court in Mrs. Khorshed Shapoor Chenai v. Asst. CED [1980] 122 ITR 21, have approved the aforesaid extracted observations made by this court and observed (pp. 31, 32): " In our opinion, the High Court was right in holding that there are no two separate rights-one a right to receive compensation and the other, a right to receive extra or further compensation. Upon acquisition of his lands under the Land Acquisition Act the claimant has only one right which is to receive compensation for the lands at their market value on the date of the relevant notification and it is this right which is quantified by the Collector under s. 11 and by the Civil Court under s. 26 of the Land Acquisition Act... This, however, does not mean that the Civil Court's evaluation of this right done subsequently would be its valu....
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.... the income is receivable, and once it is receivable, then the determination of the question whether it is actually received or is deemed to have been received might depend upon the system or method of accounting. But before ever the right to receive a particular amount as income accrues. , no charge can be levied on that amount in any year anterior to the one in which it is receivable ...... What is the income that can be said to have accrued to him on that date which can be assessed to tax in the year of assessment? If the actual amount of compensation has not been fixed, no income could accrue to him. It cannot be contended that the mere claim by the assessee, after taking of possession, at a particular rate or for a certain sum is the compensation. It is the amount actually awarded by the Collector or subsequently decreed by the court which accrues to him, and the respective amounts, whether awarded by the Collector or the court accrue on the respective dates on which the award or the decree is passed. Income-tax is not levied on a mere right to receive compensation ; there must be something tangible, something in the nature of debt, something in the nature of an obligation to ....
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....s the cash basis and the other, the mercantile basis. The latter system of accountancy 'brings into credit what is due immediately it becomes legally due and before it is actually received; and it brings into debit expenditure the amount for which a legal liability has been incurred before it is actually disbursed'., The book profits are taken for the purpose of assessment of tax though the credit amount is not realised or the debit amount is not actually disbursed If an income accrues within a particular year, it is liable to be assessed in the succeeding year... When an Income-tax Officer proceeds to include a particular income in the assessment, he should ask himself, inter alia, two questions, namely : (i) what is the system of accountancy adopted by the assessee ? and (ii) if it is the mercantile system of accountancy subject to the deemed provisions, when has the right to receive that amount accrued ? If he comes to the conclusion that such right accrued or arose to the assessee in a particular accounting year, he shall include the said income in the assessment of the succeeding assessment year. No power is conferred on the Income-tax Officer under the Act to relate back an i....