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TMI Blog2003 (8) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... e discretion of the court and so would be the rate of interest in a case of this kind – Thus, the question, as referred by the Tribunal and as extracted above is answered in favour of the assessee and against the Department - - - - - Dated:- 19-8-2003 - Judge(s) : V. K. BALI., JASBIR SINGH. The judgment of the court was delivered by V. K. BALI J.-The following question of law has been referred to us for adjudication by the Income-tax Appellate Tribunal, Amritsar Bench, under section 256(1) of the Income-tax Act, 1961 : "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that interest amounting to Rs. 1,17,975 received on arrears of salary after grant of higher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revalent rate of interest. Accordingly, the Assessing Officer assessed the amount of Rs. 1,17,975 as the income of the assessee. This order of the assessing authority was challenged by the assessee in an appeal before the Commissioner of Income-tax (Appeals) but the order passed by the Assessing Officer was upheld primarily relying upon the decisions of the Kerala High Court in the case of CIT v. Annamma Alexander (Mrs.) [1991] 191 ITR 551 and the Supreme Court in the case of RM. AR. AR. RM AR. AR. Ramanathan Chettiar v. CIT [1967] 63 ITR 458. It was thus held that the interest paid on arrears of salary was a taxable receipt. The order of the Commissioner of Income-tax (Appeals) on a further appeal by the assessee has since been reversed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st is paid to an assessee under a statute, like section 34 of the Code of Civil Procedure, and we may mention here that interest as such was paid to the assessee in Ramanathan Chettiar's case [1967] 63 ITR 458 (SC), the same has to be calculated as income for the purpose of the income-tax. Where, however, interest to be paid, is in the discretion of the court, as is in the present case, the said payment would not amount to income for the purpose of the income-tax. It may be mentioned here that when the matter was decided against the assessee by the Assessing Officer and the Commissioner of Income-tax (Appeals), it was primarily on the ground that interest awarded by this court on the arrears of salary consequent upon grant of higher scale o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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