TMI Blog1982 (8) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... h was ultimately decreed on January 22, 1963. The Azam Jahi Mills Ltd. filed an appeal in this court , being A.S. No. 167 of 1963. In this appeal, a compromise was entered into between the parties which was recorded by this court on July 8, 1968, in CMP No. 9839/68. According to this compromise, the Azam Jahi Mills agreed to pay a total sum of Rs. 1,45,000 to the legal representatives of the plaintiff (plaintiff died pending the proceedings) comprised of the following items : Rs. (a) For land under suit 80,000 (b) Legal expenses 5,000 (c) Interest up to 13-7-64 24,000 (d) Interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edo the same after proper enquiries in regard to the correct nature of the transaction, the nature of the receipt in the hands of the assessee and other relevant factors." (only the operative portion extracted). Against the orders of the Addl. Commissioner, the assessee filed an appeal to the Income-tax Appellate Tribunal. A preliminary objection was raised before the Tribunal on behalf of the Department to the effect that the appeal itself was not maintainable for the reason that the Commissioner's orders are not final orders but are merely orders of remand directing further enquiry. This preliminary objection was overruled by the Tribunal. On merits, the Tribunal held that the sum of Rs. 40,000 was not a revenue receipt. It was of the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in so far as the other assessment which is called " alternative " or " protective assessment ", as the case may be, is concerned, the assessee filed an appeal before the AAC which was dismissed. A further appeal was preferred to the Tribunal which held, following its earlier order, that it was not a revenue receipt. Thereupon, another reference was asked for and made which is numbered as R.C. No. 272 of 1978. Thus, it would be seen that R.C. No. 48 of 1977 is the substantive reference and the other one is merely consequential. Mr. M. Suryanarayana Murthy, the learned standing counsel for the Department, contended that the distinction made by the Tribunal, viz., whether the interest was received under a statutory provision or otherwise t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain amount had fallen due and is not paid to the person entitled thereto and the person who is liable to pay the said amount is made liable to pay interest to compensate the other person for the deprivation of the use of money which he suffered, it is interest and a revenue receipt, whether this happens under a statute or under an agreement or otherwise. This position is clear from the observations of the Supreme Court in two decisions. In Dr. Shamlal Narula v. CIT [1964] 53 ITR 151, the Supreme Court observed inter alia thus (p. 156): " interest, whether it is statutory or contractual, represents the profit the creditor might have made if he had the use of the money or the loss he suffered because he had not that use. It is something ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that though styled as " interest ", the amount covered by items (c) and (d) in the memorandum of compromise is damages for use and occupation; or, in other words, compensation for the deprivation of possession of the assessee over the suit land. Now it is not disputed that the amount paid by way of damages for use and occupation or paid by way of compensation for depriving the true owner of his use and enjoyment of the land is not taxable as revenue receipt. Therefore, the question is whether the said sum represents interest and if so on what amount ? For this purpose, Mr. Suryanarayana Murthy evolved an ingenious argument to the effect that the sale must be deemed to have taken place on the date the encroachment was made by the defendant. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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