9911796707
TMI Blog1981 (4) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Hyderabad on July 12, 1968, under the Land Acquisition Act. The Land Acquisition Officer, by his award dated August 30, 1968, awarded a total compensation of Rs. 1,12,585. During the assessment year 1969-70, the assessee returned the profit of Rs. 37,191 as arising out of the acquisition. The assessee, being dissatisfied by the compensation award of the Land Acquisition Officer, sought a reference under S.18 of the Land Acquisition Act for enhanced compensation. The city civil court, by its judgment dated December 19, 1970, allowed a further sum of Rs. 90,068 as compensation. It is thus to be seen that the compensation payable on account of the land acquisition became payable to the assessee first in an amount of Rs. 1,12,585 by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2, 1968, under the Land Acquisition Act, was a single and indivisible right ? 2. If the answer to question No. 1 above is in the affirmative, whether the Appellate Tribunal's decision that the enhanced compensation as per the court's judgment on December 19, 1970, arose or accrued to the assessee on the date and fell outside the relevant 'previous year' for the assessment year 1969-70, was sound in law?" Both the questions referred to us present little or no difficulty. This court in Mrs. Khorshed Shapoor Chenai v. Asst. CED [1973] 90 ITR 47, had occasion to go into the question which is identical in terms with the first question referred to us. Sriramulu J., speaking for the Bench, observed (p. 62): "The right to receive compensation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In our opinion, the High Court was right in holding that there are no two 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 s. 11 and by the Civil Court under s. 26 of the Land Acquisition Act... This, however, does not mean that the Civil Court's evaluation of this right done subsequently would be its valuation as at the relevant date either under the E.D. Act or the W.T. Act. " The view expressed by this cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings to recover a debt or damages, and thus inchoate in the sense that the compensation has not in fact been determined or become payable. In so far as the Income-tax Act is concerned, an income is assessable to charge only when it accrues or arises or is deemed to accrue arise in the year of assessment." Dealing with the question as to whether the enhanced compensation accrued or is deemed to have accrued to the assessee, the court in the same decision referred to above, after referring to E. D. Sassoon Co. Ltd. v. CIT [1954] 26 ITR 27 (SC), Rogers Pyatt Shellac Co. v. Secretary of State for India [1925] 1 ITC 363 (Cal) [FB] and CIT v. Gajapathi Naidu [1964] 53 ITR 114 (SC) observed (pp. 656, 657, 658 of 74 ITR): "The deeming p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the compensation, it is only that amount which had accrued or deemed to accrue, whether in fact paid or not. But by no stretch of the words in section 4(1)(b)(i), could it be said that the right to enhanced compensation, which has not yet been accepted by the proper forum, namely, the court, has also become payable on the date when the original compensation became payable, for being included in that year of assessment. The enhanced compensation accrues only when it becomes payable, i.e., when the court accepts the claim. As has been; stated earlier, a mere claim by the assessee, after taking of possession of the land, at a particular rate or for a certain sum is not compensation. " Mr. Rama Rao, learned counsel appearing for the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue immediately it becomes legally due and before it is actually received; and it brings into debit expenditure the amount for which a legal liability has been incurred before it is actually disbursed'., The book profits are taken for the purpose of assessment of tax though the credit amount is not realised or the debit amount is not actually disbursed If an income accrues within a particular year, it is liable to be assessed in the succeeding year... When an Income-tax Officer proceeds to include a particular income in the assessment, he should ask himself, inter alia, two questions, namely : (i) what is the system of accountancy adopted by the assessee ? and (ii) if it is the mercantile system of accountancy subject to the deemed provision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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