1992 (4) TMI 8

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..... DER The assessee-respondent is a partnership firm engaged in the business of contractors, dealers in cement, sugar, iron, paddy, rice and petrol. The appeal relates to the assessment year 1972-73 for which the financial year 1971-72 was the previous year. In its contract business, the assessee declared gross receipts of Rs.22,72,997, the details of which are not relevant for our present purposes. A part of the receipts arose to the assessee as a result of an arbitration award. The dispute before us relates to certain amounts awarded by the arbitrators as interest payable to the assessee. The amount of such interest about which there was dispute between the parties was mentioned by the Income-tax Officer as Rs. 4,30,549. But the Tribuna .....

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..... on the facts and in the circumstances of the case, the sum of Rs. 2,77,692 awarded to the assessee as interest was rightly held to be a revenue receipt ? 2. If the answer to question No. 1 is in the affirmative, whether, on the facts and in the circumstances of the case, the aforesaid sum of Rs. 2,77,692 was rightly separated from the other amounts under the awards and taxed in full ? " The High Court answered the first question in favour of the assessee and, in this view of the matter, did not go into the second question. The Commissioner of Income-tax is in appeal. After some arguments before us, learned counsel for the assessee stated before us that, having regard to the facts and circumstances of the present case, his instructions a .....

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..... t cannot be brought within one or the other of the specific heads of charge. We find it difficult to comprehend how the interest receipts by the assessee can be treated as receipts which flow to him de hors the business which is carried on by him. In our view, the interest payable to him certainly partakes of the same character as the receipts for the payment of which he was otherwise entitled under the contract and which payment has been delayed as a result of certain disputes between the parties. It cannot be separated from the other amounts granted to the assessee under the awards and treated as "income from other sources". The second question is, therefore, answered in favour of the assessee and against the Revenue. We are conscious tha .....

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