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TMI Blog2012 (8) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... ristic of income being what it is, the amount received towards statutory interest has to be subject to tax under the head "income from other sources" & and is exigible to tax - in favour of revenue. - ITA 1208/2011 - - - Dated:- 27-7-2012 - MR. JUSTICE S. RAVINDRA BHAT, MR. JUSTICE R.V. EASWAR, JJ. For Appellant: Mr.N.P.Sahni, Sr.Standing Counsel with Mr.Ruchesh Sinha, Jr.Standing Counsel For Respondent: Ms.Anusuiya Salwan Mr.Vikas Sood, Advocates MR. JUSTICE S.RAVINDRA BHAT (OPEN COURT) 1. Revenue claims to be aggrieved by the order of the Income Tax Appellate Tribunal (ITAT) to the extent that it allowed the assessee‟s appeal, holding that the sum of Rs.2, 57, 55, 508/- crores received as interest on inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t since the matter regarding interest earned on the surplus funds of these schemes is covered by the orders of various Appellate Authorities, the interest of Rs.2,57,55,508/- would also be exempt from tax along the same lines. However, I do not agree with the appellant s contention because the sum of Rs.2,57,55,508/- in question is not the interest earned directly from the funds of the relocation and CETP schemes but is rather interest on income tax refund, which is exigible to tax. The matter is not covered by the orders of Higher Appellate Authorities in the appellant s case as contended because the issue dealt with in the appellant s case in earlier years was interest earned on the surplus funds of the schemes owned by the Delhi Administ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding the interest belongs to the Government of Delhi and as such it is not exigible to tax in the hands of the assessee. It has further been claimed that assessee had paid the entire amount including the interest to the Delhi Government. We find considerable cogency in the assessee s plea that when the interest itself is not chargeable to tax, the consequential refund was also not chargeable to tax. We find cogency in the contention of the assessee that when Ld. Commissioner of Income Tax (Appeals) has decided to the effect that there is no tax liability in respect of interest relating to relocation of industries and CETP, consequential refund and interest on the same, cannot be chargeable to tax. In this regard, however we note that necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efined under Section 2(24) of the Income Tax Act) cannot be ignored. It is no doubt true that this amount cannot be treated as interest income since the assessee did not earn it through conscious choice or voluntarily, nor was it engaged in the activity of investing its amount and earning interest. However, the basic characteristic of income being what it is, the amount received towards statutory interest has to be subject to tax under the head income from other sources‟. 8. In the result, the question is answered in favour of the revenue and in the affirmative; the appeal has to succeed. The order of the assessing officer, to the extent discussed above, is hereby restored. The appeal is allowed in the above terms. - - TaxTMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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