Law: Income Tax Act, 1961

Section: 256

Income-tax----Income---Interest---Interest awarded under Motor Vehicles Act is a revenue receipt---Indian Motor Vehicles Act, 1939, S.110-CC. Section 110-CC of the Motor Vehicles Act, 1939, provides that the Claims Tribunal may direct that in addition to the amount of compensation, simple interest shall also be paid at such rate and from such date not earlier than the date of making the claim as it may specify in this behalf. The recognition of the right to claim interest is a statutory recognition. Hence, the interest awarded under section 110-CC of the Motor Vehicles Act, 1939, is a revenue receipt exigible to tax. CIT v. Periyar and Pareekanni Rubbers Ltd. (1973) 87 ITR 666 (Ker.); Govinda Choudhury & Sons v. CIT (1977) 109 ITR 497 (Orissa); Govindaraju Chetty (T.N.K.) v. CIT (1967) 66 ITR 465 (SC) and Shamlal Narula (Dr.) v. CIT (1964) 53 ITR 151 (SC) ref. JUDGMENT V.K. SINGHAL, J. ---The Income-tax Appellate Tribunal, vide its order dated October 23, 1982, in respect of the assessment year 1978-79 has referred the following question of law arising out of its order dated September 12, 1980, under section 256(1) of the Income Tax Act, 1961: "Whether, under the facts and circumstances of the case, the Appellate Tribunal was justified in holding that the interest amounting to Rs.5,757 awarded under section 110-CC of the Motor Vehicles Act, 1939, was a revenue receipt and thus exigible to tax?" The facts as stated in the statement of case are that the assessee met with an accident when a jeep hit him on February 4, 1972, as a result of which he received severe injuries including fracture of bone, sand was admitted in the hospital for medical treatment. The assessee is a practising lawyer and filed the claim for compensation under section 110-A of the Motor Vehicles Act, 1939, before the Claims Tribunal and the said Tribunal, vide its order, dated August 22, 1977, awarded a compensation of Rs.15,000 on account of physical disability and mental agony caused to him due to the accident. A further sum of Rs.2,600 was awarded for medical reimbursement. The claim of the assessee with regard to compensation on account of loss of income from profession was not…

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