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TMI Blog1991 (7) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration of Rs. 37 lacs. It received a sum of Rs. 8,25,000 near about Dewali 1983 at the time of agreement of sale. The balance amount of Rs. 28,75,000 was to be received on or before 2-4-1985 the time fixed for execution and registration of conveyance deed. It was stipulated in the agreement that on the balance stipulated payment the vendee would pay interest. For various reasons the matter of transfer and registration was held up and purchaser paid sum of Rs. 5,32,689 and Rs. 5,80,310 as interest in the period relevant to the assessment years 1985-86 and 1986-87. The assessee claimed that aforesaid amounts were not taxable income as the interest was received on " capital account ". The Assessing Officer did not accept this claim and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hip of debtor and creditor and, therefore, the amount could not be treated as interest. Sri Mukherjee relied upon the following decisions : (i) Janki Ram Bahadur Ram v. CIT [1965] 57 ITR 21 (SC). (ii) CIT v. Visakhapatnam Port Trust [1983] 144 ITR 146 (AP). (iii) Radha Kissen Chamaria v. Keshardeo Chamaria AIR 1957 SC 743. (iv) CIT v. JD. Italia [1983] 141 ITR 948 (AP). Sri Mukhopadhyay, the learned Departmental Representative strongly supported the order of the CIT(A). He emphasised that the assessee in the agreement of sale admitted the amount in question as interest. The same was shown and returned as interest but subsequently claimed to be receipt of capital nature. The amount in dispute was ' interest ' pure and simple an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal sum of damage, is not exigible to tax. The best illustration of this principle is provided by decision in the case of JD. Italia In the above case the court awarded a sum of Rs. 1,45,000 to the assessee for unauthorised use of his land. The amount comprised of the following items : (a) For land under suit Rs. 80,000 (b) Legal expenses Rs. 5,000 (c) Interest upto 13-7-1964 Rs. 24,000 (d) Interest from 13-7-1964 Rs. 16,000 (e) For balance land (approximately 1 acre 30 gts.) Rs. 20,000 ---------------------- Rs. 1,45,000 ---------------------- The CIT in proceeding under section 263 held the sum of Rs. 40,000 covered by items (c) (d) to be receipt of taxable nature. On reference High Court held that the name or la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Fifty thousand only) at the time of execution of the deed of conveyance by the party of the first part, and for the said amount of Rs. 28,75,000 (Rupees Twenty-eight lacs seventy five thousand only) the party of the second part shall furnish separately an irrevocable Bank Guarantee without recourse in favour of the party of the first part. 3. The party of the second part has agreed to pay simple interest @ 18% per annum on the balance amount of Rs. 28,75,000 (Rupees Twenty-eight lacs seventy five thousand only) with half yearly rests and such interest will be paid on the expiry of each half year on the said amount from the date hereof to the party of the first part." The aforesaid clauses leave no doubt that ' interest ' was to be p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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