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1962 (10) TMI 82 - MADRAS HIGH COURTCharacter of the amount received - compensation with interest at 6% from the date of publication of the notice under section 5 of the Act, namely, 24th May, 1949 - capital receipt or busniss income - - Held that:- We have no doubt that in the present case the award of interest was not part of the compensation fixed for the acquisition of the land. The statute authorized the Government to pay only the market value of the land as per the provisions of section 6 of the Act. It would be in contravention of the statute to hold that the direction to pay interest was in effect to result in a payment over and above the market value, the upper limit of which is fixed by the statute itself. So much is clear. The assessee having received the amount, the only question that arises for consideration is, did he receive it as income or as capital. It seems to us that the award of interest was made on the footing that the State Government became a debtor to the assessee for the payment of the true compensation for the acquired land under the Act as on the date of section 5 notification, and that the debt not having been discharged by payment on that particular date, the assessee was entitled, in law or in equity, to have interest at 6 per cent. till payment. This in substance appears to be the proper way of justifying the payment of interest and determining its true character. We, therefore, answer the first question against the assessee and in favour of the department. The amount of ₹ 1,28,716 is assessable to tax as income in the hands of the assessee. The Tribunal has not dealt with the question of apportionment of the tax amount between the two assessment years 1955-56 and 1956-57 as in its view the amount was not taxable at all. Question No. 2, therefore, does not arise out of the order of the Tribunal. It will be open to the Tribunal to go into this question afresh and pass suitable orders after hearing the assessee and the department.
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