- (1.) The assessee-respondent is a partnership firm engaged in the business of contractors, dealers in cement, sugar, iron, paddy, rice and petrol. The appeal relates to the assessment year 1972-73 for which the financial year 1971-72 was the previous year.
(2.) In its contract business, the assessee declared gross receipts of rs 22,72,997 the details of which are not relevant for our present purposes. A part of the receipts arose to the assessee as a result of an arbitration award. The dispute before us relates to certain amounts awarded by the arbitrators as interest payable to the assessee. The amount of such interest about which there was dispute between the parties was mentioned by the Income Tax Officer as rs 4,30,549. But the tribunal has found that the interest that can be taken into account for the assessment year under consideration is only Rs. 2,77,692. 00. '
(3.) The assessee contended that the amount received by him by way of interest was really in the nature of damages and was not taxable as a revenue receipt. This contention was rejected by the Income Tax Officer as well as appellate Assistant Commissioner. Before the tribunal again the assessee urged that the amount of Rs. 2,77,692. 00 was not at all taxable in its hands. However, it also took an alternative contention that, even if it is treated as a trading receipt or a revenue receipt, it should be treated as part of trading receipts accruing to the assessee from the contract. The assessee's assessment had been completed by applying a net profit rate of 10 per cent to the trading receipts. The assessee's contention was that this amount of Rs. 2,77,692. 00 should be treated as part of the trading receipts and that what was assessable in his hands as income was only 10 per cent of this amount. The tribunal did not accept either contention of the assessee. It held that the sum of Rs. 2,77,692. 00 was a revenue receipt and not a capital receipt. It was also of the opinion that the amount of interest was fully taxable as "income from other sources" and that it had to be linked from the other trading receipt for this purpose.;