Law:

Section:

Section 4 of the Income-tax Act, 1961 - Capital or revenue receipt - Assessment year 1975-76 - Assessee-company entered into agreement with State Electricity Board for construction of transmission towers in 1963 - There were disputes between assessee and Board, in final settlement whereof assessee was paid under Board's order dated 11-12-1974, certain amount which included interest amount from 3-6-1969 till date of payment - Whether, amount received by assessee as interest was a revenue receipt assessable in hands of assessee - Held, yes Section 5 of the Income-tax Act, 1961 - Income - Accrual of - Whether on facts stated under head 'Capital or revenue receipt', in absence of any evidence as to whether assessee was following mercantile system of accounting, amount received as interest, was assessable in year of receipt and could not be spread over earlier years - Held, yes FACTS The assessee-company entered into a certain agreement with the State Electricity Board for the construction of transmission towers in 1963. There were disputes between the assessee and the Board and the Board filed suits for compensation. The assessee also filed counter-claims in respect of outstanding payments. Finally, the suit and the counter-claims were settled, under which the assessee was paid, under the Board's order dated 11-12-1974, a certain amount, inclusive of interest from 3-6-1969 till the date of payment. For the assessment year 1975-76, the assessee claimed that the interest amount was not assessable to tax. The ITO disallowed the assessee's claim and brought to tax the interest amount as revenue receipt. On second appeal, the Tribunal upheld the assess-ability of the aforesaid amount. On reference, the assessee contended that the interest amount was not a revenue receipt and that since it was maintaining accounts as per the mercantile system, even if the amount was assessable, it should be spread over the relevant earlier years. HELD In the instant case, the assessee's receipt dated 20-12-1974 showed that the assessee had received the entire amount in final settlement of all claims including compensation and 'interest' claims. The Tribunal had stated that though the…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492