COMMISSIONER OF INCOME TAX Vs. PERIYAR AND PAREEKANNI RUBBERS LIMITED

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the Income-tax Act, 1961, by the Income-tax Appellate Tribunal, Cochin Bench, at the instance of the revenue and the question referred is :

(2.) THE question arose with reference to the assessment of the Periyar & Pareekanni Rubbers Ltd. for the year 1963-64. During the year that ended on December 31, 1963, the relevant accounting period for the assessment year, the assessee had received an amount of Rs. 24,103.33. This amount was paid as compensation by way of interest on the compensation amount payable to the assessee on compulsory acquisition of land that belonged to the company under the Land Acquisition Act, 1894. THE possession of the land was taken by the Government not under the provisions of the Land Acquisition Act as envisaged by Section 17 or by Section 16 after the award, but on agreement between the assessee and the Government. Such possession was taken on Nqvember 29, 1961. THE award in the case was passed on August 31, 1962. THE amount of Rs. 24,106.33 represented the interest on the amount of compensation awarded for the period from November 29, 1961, to September 6, 1962, the date of payment. THE Tribunal considered the bulk of this amount as representing compensation for deprivation of property, and, therefore, receipts in the nature of capital, and held that the receipts were not taxable. Paragraph 9 of the Tribunal's order is in these terms :

(3.) WE answer the question referred to us in the affirmative, that is, against the department and in favour of the assessee. WE make no order as to costs.