1980 (2) TMI 72 - HC - Income Tax

Summary

Issues:
1. Interpretation of the accrual of interest under the Rajasthan Land Reforms and Resumption of Jagirs Act, 1952.
2. Deletion of interest for delayed payment of Jagirdar's compensation amount.

Analysis:
The judgment pertains to an application by the Commissioner of Income-tax under s. 256(2) of the I.T. Act, 1961, seeking the Tribunal to state a case and refer two questions of law. The first issue revolves around determining whether the Tribunal was correct in holding that the right to receive interest had accrued to the assessee earlier than the year of account. The second issue questions the Tribunal's decision in deleting the addition of Rs. 15,410, being the interest for delayed payment of Jagirdar's compensation amount. The relevant facts reveal that the assessee, an erstwhile Jagirdar, had his jagir resumed under the Rajasthan Land Reforms and Resumption of Jagirs Act, 1952, with compensation determined from the date of resumption. The interest accrued to the assessee for the period from November 24, 1955, to January 1, 1963, was included in the total income for the assessment year 1973-74 by the ITO. Subsequent appeals led to the Tribunal's decision in favor of the assessee, prompting the Commissioner's application for reference to the High Court.

The judgment delves into the legal framework of the Rajasthan Land Reforms and Resumption of Jagirs Act, 1952, specifically focusing on Section 26, which addresses the liability to pay compensation to jagirdars upon resumption of jagir lands. Sub-section (2) of Section 26 elucidates that the compensation payable shall carry simple interest from the date of resumption until the date of payment. Notably, the interest accrues year by year, emphasizing the continuous nature of the accrual. The court references precedents such as CIT v. Dr. Sham Lal Narula and T. N. K. Govindarajulu Chetty v. CIT to support the interpretation that interest accrual is an annual event, aligning with the provisions of the Act.

Drawing from established legal principles and precedents, the court concludes that the interest accrued to the assessee annually under the Rajasthan Land Reforms and Resumption of Jagirs Act, 1952. The Tribunal's decision aligns with settled law, as interest accrual is recognized as a yearly process. Consequently, the court dismisses the application without costs, indicating that seeking a reference would not serve any useful purpose. The judgment underscores the consistent application of legal principles in determining the accrual of interest under the Act, providing clarity on the matter at hand.