9911796707
TMI Blog1985 (7) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... land acquisition interest of Rs. 80,253 included by the Income-tax Officer under section 5(1)(b) of the Income-tax Act, 1961, in the total income for 1968-69 assessment, accrued de die in them from the date of taking possession of the lands during the years 1961 and 1962 up to March 31, 1968, inclusive and, therefore, only Rs. 12,626 which accrued de die in them during the concerned previous year of 366 calendar dates from April 1, 1967, to March 31, 1968, inclusive should have been included in the total income for 1968-69 assessment and the balance interest of Rs. 67,627 should be similarly included on accrual basis under section 5(1)(b) of the I.T. Act, 1961, in the income for the six assessment years from 1962-63 to 1967-68 inclusive, as had already been done by the Income-tax Officer by his orders dated June 6, 1972, for the 1967-68 and 1969-70 assessments ? " The accounting years for the assessment years 1967-68 and 1968-69 are the years ended March 31, 1967, and March 31, 1968, respectively. Certain lands of the assessee were compulsorily acquired and after settlement of compensation, taken possession of somewhere in 1961 and 1962. Dissatisfied with the quantum of compensa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee appealed to the Tribunal for the assessment year 1968-69, contending that only Rs. 12,626 should be brought to tax for the assessment for 1968-69. The Department as a protective measure appealed to the Tribunal for the year 1967-68. The assessee presented cross-objection for the assessment year 1967-68 pleading that the Appellate Assistant Commissioner should not have deleted the interest amount in that assessment year. The Tribunal for reasons stated in its order upheld the view of the Income-tax Officer and sustained the assessment for the assessment year 1968-69. It, therefore, dismissed the departmental appeal as well as the cross-objection of the assessee for the assessment year 1967-68. Annexure A is a copy of the order of the Tribunal. In the reference order, it has been pointed out by the Tribunal that assessment for the assessment year 1969-70 was never the subject-matter of appeal before the Tribunal. Before proceeding to examine the two Kerala decisions, the correctness of which was canvassed by the counsel for the assessee, let us try to have a clear idea as to what the expressions " compensation " and " interest " in the context of the Land Acquisition Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of compensation on account of delay in payment of compensation. In other words, interest payable is on the amount of compensation awarded or decreed from the date on which it was payable by the Government till the date of actual payment. This is on the analogy of certain amount belonging to the land owner being lent to the Government and the Government being liable to pay interest on such debt from the date of the debt till the discharge thereof. In other words, it has to be treated as a debt on which interest is due from the date on which the debt was incurred. When does the compensation accrue or when is it deemed to accrue ? It is well settled that the owner of the property is entitled to compensation from the date on which he is dispossessed of the property on acquisition. This is because what the Land Acquisition Officer does is to offer to purchase the property for the market value and when in the process he takes possession of the property at whatever stage it might be, the owner of the property is deprived of the income and enjoyment of the property from that time. Whether the offer in regard to the quantum of compensation is accepted by the land owner straightaway or fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istence at a later date. And if, as the High Court has held, interest at 6% per annum rules from the date possession was taken in the case of compensation determined by the learned District judge, there is no reason why the same rate should not be applied from the date possession was taken in the case of the enhancement effected by the High Court." By the decision of the Supreme Court in Mrs. Khorshed Shapoor Chenai v. Assistant Controller of Estate Duty [1980] 122 ITR 21, it is well-settled that there are no 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 section 11 and by the civil court under section 26 of the Land Acquisition Act. It is true that under section 11, the Collector after holding the necessary inquiry determines the quantum of compensation by fixing the market value of the land, and in doing so is guided by the provisions containe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 11 or of a decree under section 26 of the Act, from the date of the award or from the date of the decree, but from the date of dispossession. The impression we have gained is that in the case of the interest on compensation under an award, the Revenue concedes that it has to be spread over the years between the date of dispossession and that of actual payment. A difference, however, is sought to be drawn between the interest granted on compensation awarded by the Land Acquisition Officer under section 34 on the one hand and interest granted by the decree of the court under section 28 of the Act, on the other. In the former case, it is submitted, the interest runs automatically, the Land Acquisition Officer having no option in the matter, whereas there is an element of discretion vested in the court in granting the interest on the additional compensation under section 28 of the Act. Shri Gopalakrishna Warriyar, the counsel for the assessee, submitted that this approach suggested by the Revenue is both illogical and unreasonable. He would submit that really the court had no discretion in the matter, it being a statutory right vested in the land owner to receive compensation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch ought to have been awarded by the Land Acquisition Officer himself) has been declared by that court. Citing the decision of the Supreme Court in Mrs. Khorshed Shapoor Chenai's case [1980] 122 ITR 21, he submitted that the entire compensation awarded has to be treated as an integrated whole and the right to interest accrues on the entire amount from the date of dispossession, irrespective of the date or stages when the quantification takes place or is completed. Placing reliance on the decision of the Supreme Court in Satinder Singh's case [1961] 3 SCR 676; AIR 1961 SC 908, he submitted that when the owner. of the property was dispossessed pursuant to the order of compulsory acquisition, an agreement with the acquiring authority to pay interest on the amount of compensation was implied. Confronted with the observations of the Supreme Court in paragraph 7 at page 469 of the report in Raghubans Narain's case, AIR 1967 SC 465, 469 wherein, construing the provisions in section 28 of the Act; it was stated as follows : " In its plain language the discretion that is conferred on the court is, whether, in the given circumstances of a particular case, the court should award interest or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old that in spite of the court having a discretion in the matter, once it grants interest, it does not assume a quality different from that of interest allowed under section 34 of the Act for taxation purposes. The whole argument in regard to different points of time at which interest accrues appears to proceed from a basic error in the understanding that right to compensation is not one but several, whereas it is not so, as clearly laid down by the Supreme Court in Mrs. Khorshed Shapoor Chenai's case [1980] 122 ITR 21. We find little force in the contention of Shri Menon that until and unless in the decree, a provision for the grant of interest is made by the court, right to receive interest does not arise or accrue in favour of the land owner (assessee). We have already noticed that the settled legal position is that the interest relates back to the date of dispossession of the property on which date compensation becomes payable whatever be the time taken to finally settle the quantum of compensation. Even assuming that the court had the discretion not to grant interest, once it is granted, the right to receive interest relates back to the date of dispossession as is the case i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the court under section 28 of the Act accrues only on the date of such decree is clearly wrong. The decision in Sassoon's case [1954] 26 ITR 27 (SC) can be clearly distinguished, it being a case in which the right to receive the remuneration or commission accrued in favour of the managing agents on the completion of the year when the balance-sheet and profit and loss account were drawn up and trade results ascertained, not from the beginning of the financial year, day by day, or month by month. Our Division Bench has stated that it found tempting the logic of reasoning in Sankari Manickyamma's case [1976] 105 ITR 172 (AP) extending to the question of accrual of interest, the principle enunciated in Alladin's case [1969] 74 ITR 651 (AP) that the (additional) compensation decreed by the District Court, High Court and the Supreme Court accrued only on the dates on which the decrees or orders were passed by the respective courts. It is not necessary to discuss in detail to establish that these decisions, relied on by the Division Bench, do not represent the correct law on the question in the light of the decisions of the Supreme Court which we have already adverted to. The Karnataka ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
