Taxability of interest received, Income Tax

[shyamal roychowdhury]

An architect entered into a contract / agreement with P.U.C FOR WORKS . THE CONTRACT CARRIED an arbitration clause , after compleating Job , there was a dispute on Bill settlement . the matter was referred to Arbitrator who in his award in addition settlement of bills also allowwed an amount for loss of profit & also directed payment of X amount as interest on loss of profit amount . The question is taxability of the amount 7 interest received in respect of LOSS OF PROFIT , Is it a capital receipt & not taxable or it is a revenue amount as normal receipt in business . opinion supported bycase laws/ circular / prvision of section /rule will be appriciated since we hv claimed as capital receipt which the A.O IS NOT AGREEING . he is likely to include it under income . Thanks

Posts / Replies

[Surender Gupta]

On the basis of apparent wording of the it is assumed that issue is related to loss of revenue / profit. The basic issue makes is apparently clear that the amount received with interest is a revenue receipt. You may refer the decision of honorable Supreme Court reported in 2008 -TMI - 6351 - SUPREME Court.

[shyamal roychowdhury]

FOR SRI SURENDRA GUPTA . THANKS FOR THE REPLY .CAN U PLEASE GIVE ME THE CASE DETAIL & ALSO WHERE IN TMI I WILL GET TEXT OF THE JUDGEMENT THANKS