9911796707
TMI Blog1999 (8) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 20,00,000. The assessee was to receive the aforesaid payment in instalments as under :--- 1. Rs. 11,10,000 on the date of execution of the Agreement. 2. Rs. 3,82,000 within three months from the date of Agreement. 3. Rs. 4,93,000 within six months from the date of Agreement. 4. Rs. 15,000 at the time of execution of final conveyance. Clause 6 of the agreement provided that if there was any delay in payment of the aforesaid instalments, the interest at the rate of 15% shall be charged and the said plot shall stand charged with for the payment of all the delayed instalments alongwith interest. However, the other party could not pay the 3rd instalment of Rs. 4,93,000 which was due to be paid on 25th March, 1989. The sum of Rs. 3,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding in the court in this regard. He also invited our attention to the letter of assessee dated 9th April, 1991, appearing at page 12 of the paper-book to show that right to receive interest on the delayed payment of 3rd instalment was waived by the assessee keeping in view the facts and circumstances of the case. He also invited our attention to clause 6 of the agreement to point out that no date of payment of interest was specified though the assessee was entitled to interest at the rate of 15%. It was also submitted by him that interest was nothing but the compensation which could be quantified only when the said instalment was finally paid and therefore, no income could be said to have accrued. In support of his contention, he relied o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said to have accrued to him though it may be received later on its being ascertained. The basic conception is that he must have acquired a right to receive the income. There must be a debt owned to him by somebody. There must be as is otherwise expressed debitum in praesenti, solvendum in futuro. See W.S. Try Ltd. v. Johnson (Inspector Taxes) and Webb v. Stenton and Others, Garnishees. Unless and until there is created in favour of the assessee a debt due by somebody it cannot be said that he has acquired a right to receive the income or that income has accrued to him." It is also well settled that interest accrues on day to day basis according to the principle of de die in diem. That is why it is taxable year after year even though it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest the moment there was failure to pay the instalment as provided in the agreement. We are not concerned with the first two instalments. The third instalment which was due on 25th March, 1989 was paid to the assessee on 18-1-1991. That means, therewas default committed by the other party on 25th March 1989 which continued upto the date of the payment. Hence, an enforceable debt was created in favour of the assessee. It is to be noted that a charge was created by clause 6 of the agreement on the land to the extent of instalment alongwith interest if it was not paid. Therefore, it would be incorrect to say that interest did not accrue to the assessee during the period of default. Therefore, in our opinion, interest income accrued to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. On the contrary, the earning of the commission was dependent on the profits of the managed company. Therefore, no sum could be said to be due to the assessee unless such profits were ascertained. In view of this particular fact, the date of accrual was held to be the date when the accounts of the managed company were finalised. Admittedly, the right to commission was given up before the ascertainment of such profits. It is because of this fact, the Hon'ble Supreme Court held that no income arose to the assessee. But, in the present case, the rate of interest, the amount on which it was payable and the period of default were known to everybody and nothing was to be ascertained. The interest accrued to the assessee on the principle of de d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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