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Issues:
1. Liability to income-tax on interest paid under the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974. Detailed Analysis: The judgment revolves around the issue of the liability to income tax on the interest paid on deposits made under the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974. The Income Tax Officer (ITO) rejected the assessees' claim for exemption under section 80L(1)(vi) of the Income-tax Act, 1961, arguing that the exemption is irrelevant whether the deposits were made voluntarily or under statutory compulsion. The Commissioner (Appeals) upheld this decision, stating that section 7(3) of the 1974 Act would be redundant if the interest was not considered as income. The main argument on behalf of the assessees was that the interest received should be considered compensation, a capital receipt, and that the interpretation in favor of the assessee should be adopted. The assessees argued that the interest received should be considered compensation based on various legal authorities and precedents. They relied on the compulsory nature of the deposits under the 1974 Act, constitutional provisions, and court decisions to support their claim. On the other hand, the departmental representative argued for judicial discipline to follow a previous Pune Bench decision and cited several cases where compensation was considered a revenue receipt. He emphasized the provisions of section 7(3) of the 1974 Act and section 80L of the 1961 Act to support the taxability of the interest paid on compulsory deposits. The Tribunal analyzed the arguments presented by both sides and examined various legal precedents cited. It concluded that the nature of the receipt in question depended on the original asset acquired or requisitioned. The Tribunal held that the interest received by the assessees was a revenue receipt as it represented the price for the use of money, which would have generated revenue if invested elsewhere. The Tribunal also reasoned that the provisions of section 7(3) and section 80L indicated the taxability of the interest paid on compulsory deposits. Therefore, the Tribunal confirmed the orders of the Commissioner (Appeals) and dismissed the appeals, ruling in favor of the taxability of the interest paid under the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974.
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