TMI Blog1966 (10) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... eipt of interest obtained under the decree of the Supreme Court of Ceylon was of a casual or non-recurring nature. Thus reject the submission of the appellant on this aspect of the case. Appeal dismissed - - - - - Dated:- 27-10-1966 - Judge(s) : V. RAMASWAMY., J. C. SHAH., V. BHARGAVA JUDGMENT The judgment of the court was delivered by RAMASWAMI J.--This appeal is brought by special leave on behalf of Ramanathan Chettiar (hereinafter called the " assessee ") from the judgment of the High Court of Madras dated September 24, 1962, in T. C. No. 144 of 1960. Arunachalam Chettiar (senior) was a resident of Devakottai, Ramanathapuram District, who owned extensive properties including properties in Ceylon. He married three wives, viz., Valami Achi, Lakshmi Achi and Nachiar Achi. Valami Achi died in 1913, leaving behind her a son, Arunachalam Chettiar (junior), and three daughters. Lakshmi Achi and Nachiar Achi did not have natural born sons. Arunachalam Chettiar (junior) died on July 9, 1934. Arunachalam Chettiar (senior) died on February 23, 1938. He was survived by his two widows, Lakshmi Achi and Nachiar Achi, and by the widow of his predeceased son, Arunachalam Chettiar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a boy called Veerappa Chettiar on June 17, 1945. The estate was divided into three equal shares, Lakshimi Achi and her adopted son taking one-third share, Nachiar Achi and her adopted son taking another one-third share, and Umayal Achi and her adopted son, Veerappa, taking the balance of one-third share. Ramanathan, the adopted son of Arunachalam Chettiar (senior), taken in adoption by Nachiar Achi was assessed to income-tax for the assessment year 1958-59, the relevant previous year being the year ending March 31, 1958. He was assessed in the status of a Hindu undivided family on a total income of Rs. 2,53,828, and a total tax of Rs. 1,79,412.12 nP. was levied. The assessment included a sum of Rs. 1,93,328, which was received by the assessee as his share of the amount of interest paid by the estate duty authorities of Ceylon consequent to the judgment of the Supreme Court of Ceylon ordering the refund of the amount. The assessee objected to the inclusion of this amount on the ground that it was not a revenue receipt assessable to income-tax and that, in any event, the receipt was of a casual and non-recurring nature falling within the exemption under section 4(3)(v)(ii) of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e also entitled to their costs in this court and in the court below. " Under the provisions of the Estate Duty Act of Ceylon, as it stood at the material time, any person aggrieved by the assessment of estate duty could appeal to the appropriate District Court naming the Attorney-General as the respondent. After the Attorney-General is served in the matter, the appeal is proceeded with as an action between the assessee as plaintiff and the Crown as defendant. The statute specifically provides that the provisions of the Civil Procedure Code and of the Stamp Ordinance shall apply to the proceeding. The petition of appeal should be stamped as though it were a plaint filed for the purpose of originating the action, and if it is not stamped with the requisite stamps it may be dealt with in the same manner as if it is a plaint which is insufficiently stamped. Any party aggrieved by any decree or order of the District Court may further appeal to the Supreme Court in accordance with the provisions of the Civil Procedure Code. The relevant provision under the Ceylon Civil Procedure Code empowering the court to award interest is contained in section 192 of Ordinance II of 1889, which is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome Tax Act, 1918. It was pointed out that the real question in cases of this type was not whether the amount received was interest proper or damages but whether it had the quality of income or it was a capital sum estimated in terms of interest. In the course of his judgment, Lord Wright observed at page 189 of the report as follows : " The contention of the appellant may be summarily stated to be that the award under the Act cannot be held to be interest in the true sense of that word because it is not interest but damages, that is, damages for the detention of a sum of money due by the respondent to the appellant, and hence the deduction made as being required under Rule 21 is not justified because the money was not interest. In other words the contention is that money awarded as damages for the detention of money is not interest and has not the quality of interest. Evershed J., in his admirable judgment, rejected that distinction. The appellant's contention is in any case artificial and is, in my opinion, erroneous, because the essence of interest is that it is a payment which becomes due because the creditor has not had his money at the due date. It may be regarded either a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson receiving them : ..... (vii) Any receipts, not being capital gains chargeable according to the provisions of section 12B and not being receipts arising from business or the exercise of a profession, vocation or occupation, which are of a casual and non-recurring nature, or are not by way of addition to the remuneration of an employee. " It was argued on behalf of the appellant that the amount in question was a lump sum payment awarded under the decree of the court and there was no quality of recurrence about it. We do not think that this submission is correct. It is true that the appellant received lump sum payment on account of interest. That does not, however, necessarily mean that the amount of interest is not a receipt of a recurring nature. On the other hand, the interest was granted under the decree of the court from the date of the institution of the proceedings in the District Court and was calculated upon the footing that it accrued de die in diem, and hence it has the essential quality of recurrence which is sufficient to bring it within the scope of the Act. It was also contended that the receipt of interest was casual in its character. The expression " casual ..... X X X X Extracts X X X X X X X X Extracts X X X X
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