Law:

Section:

Section 4, read with section 2(34) of the Income-tax Act, 1961 (corresponding to section 3, read with section 2(11) of the Indian Income-tax Act, 1922) - Income - Chargeable as - Assessment year 1960-61 - Assessee agreed to sell his agricultural land to one 'R' for Rs. 2,28,442 and consideration amount for sale of land was agreed to be paid on 1-5-1958 - As purchaser failed to pay consideration amount immediately, execution of sale deed was postponed - Finally, amount was paid on 25-1-1959 i.e., on date of execution of sale deed - on account of said late payment, purchaser paid a sum of Rs. 15,083 by way of interest to assessee - Assessee did not declare amount of interest in returns for relevant assessment year and contended that, as instant amount was part and parcel of purchase price, it was not liable to tax - ITO brought to tax said amount by rejecting said contention - Tribunal treated amount of interest as part and parcel of the sale consideration and held that as interest was received during financial year 1958-59 some could be assessable in assessment year 1959-60 - Whether sum of Rs. 15,083 that was paid by way of interest was not part and parcel of purchase price but was an item by way of interest for inability of purchaser to pay price on agreed date and was a revenue receipt - Held, yes - Whether since interest was received by assessee during financial year 1958-59, same would be assessable in assessment year 1959-60, and not in assessment year 1960-61 - Held, yes FACTS The assessee agreed to sell his agricultural land to one 'R' for Rs. 2,28,442. The consideration amount for sale of land was to be paid on 1-5-1958 and there was expresses agreement for payment of interest at the rate of 6¾ per cent certain manuals were also sold under the agreement for which assessee received certain amount. As the purchases failed to pay the consideration amount immediately, the execution of the sale deed was postponed. The purchaser finally paid the amount on 25-1-1959, which was the date of execution of the sale deed, on account of late payment of the agreed amount, the purchaser paid a sum of Rs. 15,083 by way of interest to the assessee. For the assessment…

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