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TMI Blog1987 (11) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... tent to bring to tax the capital gains for the assessment year 1973-74 on the ground that the lands vested in the Government prior to the assessment year under consideration ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the interest has to be assessed on accrual basis ? " Lands in survey Nos. 30, 43 and 72 situated at Bakshiguda were acquired under the Land Acquisition Act. The total extent was 35 acres 25 guntas. Invoking the provisions of section 17 of the Land Acquisition Act, possession of the lands was taken on January 12, 1967. Thereafter, award proceedings continued and an award was passed on November 2, 1970, according to which the compensation payable was Rs. 1,500 per ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee, the transfer of the lands took place in the previous year relevant to the assessment year 1967-68 and consequently capital gain was not liable to be taxed for the year 1973-74. It was further claimed that the interest paid under section 34 of the Land Acquisition Act was mandatory and not discretionary and, consequently, it was liable to be taxed from year to year and the assessment of the interest for the assessment year 1973-74 was also erroneous. The assessee filed an appeal before the Appellate Assistant Commissioner of Income-tax raising the above contentions. The Appellate Assistant Commissioner accepted the contention that the capital gain is not liable to be taxed in the assessment year 1973-74 but has to be consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me from year to year from the date of possession to the date of payment and, therefore, the legal right to receive the interest accrues in favour of the assessee from year to year with the result that interest has to be assessed for the corresponding years to which it related. The Tribunal pointed out that the interest which was the subject-matter of the assessment in Sankari Manickyamma's case [1976] 105 ITR 172 (AP) was under section 28 of the Land Acquisition Act. Inasmuch as the grant of interest under section 28 was discretionary, the view taken was that the interest accrues as income only when the court exercises the discretion and not before. The Tribunal held that that principle does not apply to the interest payable under section 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position, we find that the Appellate Assistant Commissioner as well as the Tribunal were quite justified in coming to the conclusion that the capital gain on the compulsory acquisition of the lands is not liable to be taxed in the assessment for the year 1973-74. We accordingly answer the first question referred to us in the Affirmative, that is, in favour of the assessee and against the Revenue. As regards the second question, there cannot be the slightest doubt, on the above facts, that the interest paid to the assessee was under section 34 of the Land Acquisition Act. Payment of such interest is statutory and not discretionary. That being so, the right to receive that interest accrues in favour of the assessee from year to year and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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