9911796707
TMI Blog1990 (7) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... n which that was deemed to have been earned or accrued ?" Despite valid service of notice, the assessee has not entered appearance. The assessee is a Hindu undivided family. It pays income-tax on cash basis. In the year 1962, land belonging to the assessee was compulsorily acquired under the Land Acquisition Act, 1894, possession of which was taken on May 20, 1962. Compensation with interest was offered on July 31, 1963. Receiving the amount under protest, the assessee claimed higher compensation for which a reference to the court was made under section 18 of the Land Acquisition Act. The trial court awarded higher compensation on December 23, 1968. In appeal by the State Government, this court reduced the compensation awarded by the tria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eleting the amount from the year of assessment. There is no dispute that the amount of Rs. 26,253 is income liable to tax. The only question is whether it should be assessed during the year of receipt or during the years of its accrual. Income is assessed on the basis of cash received or amount accrued during the year. The first one is called cash system and the second one is called mercantile system. The choice remains with the assessee to accept any method which is to be considered by the Assessing Officer. If the method adopted by the assessee is acceptable, the Income-tax Officer shall not reject the same merely because the said method would yield less tax. However, the assessee shall not be permitted to change his method during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which it had accrued. The Income-tax Officer, however, can, in such a situation, permit the assessee to adopt the accrual method. In the decision in Joyanarayan Panigrahi's case [1974] 93 ITR 102, the assessee was not liable to pay tax earlier than the year when he received compensation with interest and keeping the said fact in mind, the court held that interest received is to be spread over the years of accrual. Besides, the amount of interest was paid on January 30, 1961, at a time when the Indian Income-tax Act, 1922, was in force and the 1961 Act had not come into force. Taking into consideration the provision of section 4(1)(b)(i) of the 1922 Act, it was held that tax is to be paid during the year it accrues or is deemed to accrue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de with reference to compensation payable under the Orissa Estates Abolition Art, 1951, the general principle laid down that the right to interest would accrue only when the compensation gets quantified is applicable to the present case. Besides, the assessee was paying tax for earlier years on cash basis as in the present case and not having indicated that the interest had accrued, the Income-tax Officer called upon him to pay tax on the total interest received which was approved by this court. In the decision of the Gujarat High Court in Topandas Kundanmal v. CIT [1978] 114 ITR 237 (Gujarat) it has been observed that compensation under the Land Acquisition Act is offered only by Land Acquisition Collector and on a claim for higher compens ..... X X X X Extracts X X X X X X X X Extracts X X X X
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