Seetharama Reddy, J.
1. The question, at the instance of the Revenue, to be answered in this reference is, whether, on the facts and in the circumstances of the case, the interest awarded by the Land Acquisition Officer under s. 34 of the Land Acquisition Act is liable to be assessed for the assessment year 1970-71. This reference concerns 11 respondents, and since identical questions arise, the Commissioner of Income-tax required the Appellate Tribunal to draw up a statement of the case, which will be common to all.
2. All the assesses are members of an HUF, which owns certain agricultural lands, which were acquired by the Govt. of Andhra Pradesh by a notification under s. (44) of the Land Acquisition Act, published in the Gazette on December 1, 1966. The possession of the lands was taken in parts on the following dates, i.e., January 4, 1967, January 13, 1967, August 7, 1968, and August 31, 1968. The Land Acquisition Officer passed an award on September 29, 1969, and the compensation was awarded along with interest at the rate of 4 per cent. from the date of possession. The ITO was of the view that the compensation and the interest awarded by the Land Acquisition Officer, having accrued only in the year in which the award was made, i.e., September 29, 1969, the entire interest was assessable in the assessment year 1970-71, whereas the assessee's case was that the interest due on compensation awarded accrued from year to year from the date on which possession of the land was taken over by the Government and was taxable in the relevant assessment years. The assessees were successful on appeal before the AAC. The further appeals filed by the Department resulted in dismissal. Hence, this reference.
3. The Appellate Tribunal, relying on the decision of the Orissa High Court in Joyanarayan Panigrahi : 93ITR102(Orissa) which dealt with the interest payable under s. 34 of the Land Acquisition Act, held :
'......that it was a sum of money which was payable in future by reason of a present obligation and the fact that the amount was yet to be ascertained, did not make it any the l;less due to the assessee.'
It further held :
'Thus while the interest under section 28 is dependent upon the order of the court the interest receivable under section 34 cannot be denied to the owner of the land and only the quantification depends upon the award of the Land Acquisition Officer.'
4. The case of the Revenue is that the interest accrues or arises on the date when the award is finally passed by the Land Acquisition Officer and, therefore, it should be assessed in the relevant year after the said accrual. We are afraid, such cannot be the result of the interest that accrues under s. 34 of the Land Acquisition Act. No decision supporting the proposition evolved by the Revenue has been brought to our notice. We are, however, of the undoubted view that the interest arise on the date when the possession of the land is taken over and, therefore, the obligation arises at that point of time which continues to recur till it is eventually quantified day after day and year after year. Hence, the interest receivable under s. 34 of the Land Acquisition Act gets added up ipso facto and the same cannot be denied to the owner. What all has to be decided upon is the quantification which eventually depends upon the award made by the Land Acquisition Officer, which is quite unlike the interest that is determined under s. 28 of the Land Acquisition Act, which depends upon the order of the final court that determines the enhanced amount of compensation and, therefore, as it does not accrue for the first time on the date when the award is made and as and when that the enhanced amount is determined, the corresponding interest also is awarded simultaneously. Hence, the Revenue cannot take that as an analogy, so as to equate it with the interest that accrues under s. 34 of the Land Acquision Act.
5. In view of the above, the interest that is awarded along with the compensation will have to be assessed from year to year right from the date on which the assessees were dispossessed from the land.
6. The question, therefore, is answered in the negative and in favour of the assessee.