TMI Blog1995 (10) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... ay scale than what was being allowed to him. The matter went up to the Hon'ble Punjab Haryana High Court where the claim of the assessee for higher Pay Scale was upheld. The Hon'ble High Court while passing the order for grant of higher Pay Scale had also ordered payment of interest @ 12% P. A. from the date of accrual of the amount till the date of actual payment. The amount of interest came to Rs. 1,17,975, which was claimed by the assessee as non-taxable being not in the nature of income. The matter also came up before the Hon'ble DCIT, Ranger-- ' I 'Jalandhar on a reference made by the assessee under section 144A of the Income-tax Act, 1961. The learned DCIT, however did not accept the assessee's contention and observed that interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x passed the assessment order rejecting the claim of the assessee. 4. On appeal Ld. CIT (Appeals) also concurred with the finding of Assessing Officer for the reasons enumerated in paragraphs 6 to 11 of his order, where he has discussed various case laws on the subject and came to the conclusion that the case of the assessee is neither a case of forfeiture of any asset nor a case of deprivation of any property. Therefore, he relied on the decision of Hon'ble Kerala High Court in the case of CIT v. Mrs. Annamma Alexander [1991] 191 ITR 551 and decision of Hon'ble Supreme Court in the case of RM. AR. AR. RM. AR. AR. Ramanathan Chettiar v. CIT [1967] 63 ITR 458 and held that interest paid on arrears of salary is a taxable receipt. 5. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eipts are not necessarily income. Therefore interest received by the assessee by the discretion of the Hon'ble High Court by way of compensation is not taxable. In this regard reliance was placed on the decision of ITAT Cochin Bench in the case of Lohtse Co-op. Housing Society v. Seventh ITO [1994] 51 ITD 608 ; Hon'ble Supreme Court in the cases of Parimisetti Seetharamamma v. CIT [1965] 57 ITR 532, Dr. Shamlal Narula v. CIT [1964] 53 ITR 151. Further for the proposition that the burden is on the revenue to prove that a particular receipt is income. The learned counsel for the assessee placed reliance on the decision of Hon'ble Madras High Court in the case of CIT v. A. V. M. Ltd [1984] 146 ITR 355 and decision of Hon'ble Supreme Court in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... representing profit, which the owner of the land might have made if he had the use of that land or the loss he suffered because he had not that use. In the cases of Dr. K. George Thomas and A. V. M. Ltd, the Hon'ble Supreme Court had held that in all cases where a receipt is sought to be taxed as income the burden lies upon the Revenue to prove that it is within the taxing provisions. It is also true that all incomes are receipts but conversly all receipts are not income. Therefore, the initial burden lies on the department to show that the receipt is taxable income of the assessee. 9. In this case, we find that the Ld. CIT (Appeals) has observed that interest awarded by the Hon'ble High Court on the arrears of salary consequent upon gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase the assessee claimed higher pay scale. The Hon'ble Punjab Haryana High Court, in its discretion awarded interest @ 12% per annum on the arrears of salary, therefore, it cannot be said that the assessee had foreseen or anticipated the payment of interest. 11. In a suit, the plaintiff certainly makes a request for rewarding penal interest and cost but it is always the discretion of the Court to accept that request or not. Where the Court has a discretion, whether to accept it or not to accept, that receipt becomes discretionary receipt and it cannot be said that it is foreseen or anticipated by the plaintiff. Therefore, the case decided by Hon'ble Supreme Court in RM. AR. AR. RM. AR. AR. Ramanathan Chettiar's case is distinguishable o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, the Government forfeited the security deposit. The Assessing Officer allowed deduction for the year in which the forfeiture occurred. The assessee challenged this action. Hon'ble High Court decreed the suit for return of security deposit and also interest @ 3% from date of the filing of suit till realisation. In pursuance to the said order, the assessee claimed that the interest was not taxable because it was awarded in discretion of the Court. This was not accepted by the Revenue Authorities and ultimately the Hon'ble High Court held that the interest received by the assessee was by way of compensation and was a casual receipt and could not be included in the income of the assessee. We feel that the facts of the present case are identi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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