Shah, J. - (1.) The Income-tax Appellate Tribunal submitted two questions for the opinion of the High Court of Madras: "1. Whether the sum of Rs. 1,28,716 is assessable as income under any of the provisions of the Act 2. If the answer is in the affirmative, the assessment years in which the amount falls to be assessed by suitable apportionment." The first question was answered by the High Court in the affirmative. The High Court declined to answer the second question because it did not, in their view, arise out of the order of the Tribunal. The assessees have appealed to this Court.
(2.) By order dated January 30, 1944, the Collector of Madras, exercising power under Rule 75A of the Defence of India Rules, 1939, requisitioned a property known as "Lutterals Gardens" belonging to the assessees. The property continued to remain under requisition till it vested in the Government of Madras absolutely in consequence of an order made on May 24, 1949 by the Collector of Madras under Section 5 of the Requisitioned Land (Continuance of Powers) Act, 1947, declaring the intention of the Government of Madras to acquire that property. The assessees declined the offer made by the Collector to pay Rs. 2,40,000 as compensation for acquisition of the property and interest at the rate of 6 per cent thereon from the date of notification for acquisition, and the dispute relating to compensation payable to the assessees was referred to the Chief Judge of the Court of Small Causes, Madras. By order of the High Court of Madras in appeal from the order of the Chief Judge it was adjudged that the assessees be paid Rs. 5,00,000 as compensation for the property. The High Court also awarded interest at the rate of 6 per cent on the amount of compensation from the date of notification for acquisition.
(3.) During the two previous years corresponding to the assessment years 1955-56 and 1956-57 the assessees received pursuant to the order of the High Court, a total sum of Rs. 6,28,716. In proceedings for assessment of tax for the assessment years 1955-56 and 1956-57, the Income-tax Officer apportioned the amount of Rs. 1,28,716 on the basis of actual receipts in the two previous years and assessed the amounts so apportioned to income-tax. The Appellate Assistant Commissioner held that the apportioned amounts were of the nature of revenue and not capital receipts, but in his view the income received was liable to be calculated on accrual basis year after year from the date of the notification for acquisition, and on that account the assessments of the previous years from 1950-51 to 1954-55 should be reopened and the interest which accrued in those years should be assessed.;