Law: Income Tax Act, 1922

Section:

Income-tax--Capital or revenue receipt---Compensation---Interest---Non-supply of tippers in time---Finding that compensation received by contractor was for work done---Compensation was a revenue receipt---Interest for delayed payments---Revenue receipt---Indian Income Tax Act, 1961. The assessee claimed that receipt of Rs.7,66,242 awarded as compensation by the arbitrator for non-supply of tippers in time and interest of Rs.2,67,170 for delayed receipt of contract amounts were not revenue receipts. The Tribunal after considering the arbitration award held that the amount of Rs.7,66,242 received by the contractor was for the work done and hence was a revenue receipt and that the interest of Rs.2,67,170 awarded by the arbitrator for delayed receipt of contract amounts was also a revenue receipt. On a reference: Held, that in view of the finding of fact by the Tribunal the receipts of Rs.7,66,242 and Rs.2,67, 170 by the assessee must be held to be revenue in character. JUDGMENT R. JAYASIMHA BABU, J.--- The questions referred to us at the instance of the assessee arise out bf the assessment made the assessee for the assessment years 1977-78 and 1978-79: "(1) Whether the Appellate Tribunal was right in coming to the conclusion that the receipt of Rs.7,66,242 awarded as compensation by the arbitrator for non-supply of tippers in time was revenue in nature and hence taxable? (2) Whether the Appellate Tribunal was right in law in holding that the interest of Rs. 2,67,170 awarded by the arbitrator for delayed receipt of contract amounts could be brought to charge as revenue receipt?" The Tribunal has in the course of the order found that the payments were made to the assessee for the work done…

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