Law:

Section:

Section 4 of the Income-tax Act, 1961 - Income - Chargeable as - Interest received by assessee from date of taking over possession of assessee's land to date of passing an award under Land Acquisition Act, 1894 is liable to be treated as a capital receipt [In favour of assessee] Interest received by assessee from date of taking over possession of assessee's land to date of passing an award under Land Acquisition Act, 1894 is liable to be treated as a capital receipt. CASES REFERRED TO CIT v. Periyar and Pareekanni Rubbers Ltd. [1973] 87 ITR 666 (Ker.), Govindaraju Chetty (T.N.K.) v. CIT[1967] 66 ITR 465 (SC), Inglewood Pulp and Paper Co. Ltd. v. New Brunswick Electric Power Commission[1928] AIR 1928 PC 287, Revenue Divisional Officer, Trichinopoly v. Venkatarama Ayyar [1936] AIR 1936 Madras 199 and Shamlal narula (Dr.) v. CIT [1964] 53 ITR 151 (SC). S.R. Ashok for the Appellant. Y. Ratnakar for the Respondent. JUDGMENT Madan B. Lokur, CJ. - A substantial question of law was not framed while admitting this appeal filed under section 260A of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). Accordingly, after hearing the learned counsel for the parties, we frame the following substantial question of law: "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that the interest received by the assessee from November 1, 1988 (the date of taking over possession of the assessee's land) to March 29, 1992 (the date of passing an award under the Land Acquisition Act, 1894) is liable to be treated as a capital receipt?" 2. The assessee is an individual doing business of trading in cycles and cycle parts. He also derives income from agricultural land owned by him. 3. A part of the assessee's agricultural land was taken possession of by the Government on October 31, 1988, with his consent. While taking over possession, an agreement was entered into between the assessee and the Government that interest would not be payable to the assessee up to October 30, 1988, or till the date of the award, whichever is earlier. At that time, although proceedings under the Land Acquisition Act, 1894…

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