TMI Blog1962 (5) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... doption of this course. The reference has been made under section 66(1) of the Income Tax Act. The questions referred to this court are : (1) Whether, on the facts and circumstances of the case, the initiation of proceedings under section 34 was valid in law ? (2) Whether, on the facts and in the circumstances of the case, the sum of ₹ 1,16,259 was a revenue receipt assessable to Income Tax ? The facts giving rise to the reference are that a sum of ₹ 18 lakhs stood in several banks in the joint names of Rani Chhatra Kumari Devi and Bhagirath Malla alias Amrit Bahadur Malla, husband of the applicant, in this reference, Rani Chhatra Kumari Devi was the last holder of Ram Nagar Raj in the State of Bihar. Bhagirath ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est was accruing all the same, and that on the accrual basis the interest might be assessable year after year in the years in which it accrued. His case always appears to have been that as he had actually not received the interest in the years earlier than the assessment year, 1948-49, he could not be assessed in respect thereof, and this position appears to have been accepted by the Income Tax authorities. Then we come to the assessment year 1948-49. In that year Bhagirath Malla filed a return of his income showing therein an income of ₹ 10,687. There is nothing to show how this figure of ₹ 10,687 was arrived at. It may be that it represents the amount of interest which might have accrued on his share of the deposit in that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus the interest income also accrued to him in the relevant accounting period. An alternative argument appears to have been addressed to the Appellate Assistant Commissioner that the sum of ₹ 1,16,259 represented a capital receipt and not a revenue receipt and as such it was not assessable. This argument was also overruled. The assessee could not show how the amount was a capital receipt. Another claim raised by Bhagirath Malla before the Appellate Assistant Commissioner was in respect of a sum of ₹ 1,03,000 as litigation expenses incurred by him in defending the suit in the Bombay High Court and asking it to be allowed as a deduction under section 12(2). This claim was also negatived by the Appellate Assistant Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was that the so-called interest was compensation or damages for wrongful detention of the money by the banks in which it was deposited. As seen above this contention was negatived by the Appellate Assistant Commissioner and it was similarly negatived by the Income Tax Appellate Tribunal. The banks had never wrongfully detained the money. All that the banks had done was that, having been restrained by the injunction order of the Bombay High Court, they did not make the payment in contravention of the injunction. The money was, therefore, not compensation or damages for wrongful detention but interest. Interest income on a bank deposit is undisputedly a revenue, and not a capital, receipt. The view taken by the Tribunal on this point also was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and no question of allowing the balance arises in this case. Another question which is raised in Civil Misc. Application No. 172 of 1962 is in respect of the sum of ₹ 17,499 awarded as penal interest under section 18A. This point was not raised by the assessee in appeal before the Income Tax Appellate Tribunal and nothing is mentioned in the order of the Tribunal in regard to that point. It follows that the question does not arise out of the appellate order of the Tribunal and cannot be required by us to be stated to this court. The last question raised in the application is with respect to the assessability of the sum of ₹ 1,16,259 not in one lump sum in the assessment year in question but in smaller sums of money in dif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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