Satish Chandra, J. - (1.) THE assessee, a retired Deputy Collector, owned certain lands. In February, 1959, the Bihar Government acquired an area of 23'7 acres belonging to the assessee. THE compensation was determined at Rs. 86,070-92, including interest of Rs. 2,506'92 up to the end of August, 1959. This amount was paid to the assessee. THE assessee felt dissatisfied. He made a reference to the District Judge, who gave an award on 12th January, 1962, determining the compensation payable to the assessee at Rs. 6,99,648.50. On appeal by the Bihar Government, the Patna High Court, by an order of 28th September, 1967, determined the compensation at Rs. 3,32,632.50. This was in addition to the amount fixed by the Land Acquisition Officer. On this additional amount the assessee was paid an interest amounting to Rs. 1,68,176 which was actually paid on 16th December, 1967.
(2.) THE assessee filed returns for the years 1960-61 to 1968-69, spreading over the amount of interest in these various years. THE ITO upheld the spread-over and taxed the assesses on his returns. The CIT, acting under Section 263 of the I.T. Act, 1961, held that it is well settled that tl;e income, is said to accrue when it comes into existence or the right to receive it comes into existence. It appears that the assessee's right to receive the interest came into existence only in consequence of the decision of the High Court quantifying the amount of compensation and directing the payment of interest thereon. The ITO had no power to relate back income that accrued and arose in a subsequent year to earlier years. He set aside the assessment orders and directed the ITO to assess the entire interest income in the year 1968-69. The assesses appealed to the Tribunal. The Tribunal held that under the Land Acquisition Act the right to compensation and Interest starts from the date on which the land was taken over by the authorities. The asses-see was not a dealer in properties, and, therefore, there was no question of maintaining accounts for the amount of compensation. The right to interest started on the date on which the assessee's land was taken over, i.e., on 24th February, 1959, and the date on which the amount was actually determined had no relevance to the taxability of the income of interest. It, therefore, upheld the assessee's claim and set aside the order of the Commissioner.
(3.) AT the instance of the Commissioner the Tribunal has solicited our opinion on the question whether the amount of Rs. 1,68,179 was taxable in the assessment year 1968-69 or in the previous years beginning from 1960-61. Under Section 4(1)(b)(i) of the Indian I.T. Act, 1922, as well as Section 5(1)(a) and (b) of the I.T. Act, 1961, income is chargeable to tax in the year in which it, inter alia, accrues or arises. In. Laxmipat Singhania v. CIT [1969] 72 ITR 291 at page 294, the Supreme Court observed that it is not open to the ITO, if income has accrued to the assessee and is liable to be included in the total income of a particular year, to ignore the accrual and thereafter to tax it as income of another year on the basis of receipt.;