| COURT: | Bombay High Court |
| CORAM: | M. S. Sanklecha J, Manish Pitale J |
| SECTION(S): | 144 CPC, 28, 4, 56 |
| GENRE: | Domestic Tax |
| CATCH WORDS: | capital vs. revenue receipt, restitution |
| COUNSEL: | C. J. Thakkar, S. C. Thakkar |
| DATE: | August 1, 2017 (Date of pronouncement) |
| DATE: | August 9, 2017 (Date of publication) |
| AY: | 1998-99, 1999-00, 2000-01, 2001-02 |
| FILE: | Click here to view full post with file download link |
| CITATION: | |
| Interest on interim compensation received pending final disposal by the High Court is income if there is no direction given by the Court. The source of funds to earn income cannot determine the taxability of the income. The fact that the assessee may have to return the compensation and interest on the principle of restitution as provided under S. 144 of the Civil Procedure Code is not relevant because restitution is not a certainty. Paragon Construction 274 ITR 413 (Del) distinguished | |
The source of funds to earn income cannot determine the taxability of the income earned on the capital amount which has been invested. This in the absence of any statutory mandate otherwise. The income earned would be chargeable to tax irrespective of the source of the funds from which the income has been earned. In the mercantile system of accounting, income accrues when the right to receive the same arises, even though the actual receipt could be at a later date. In the present case it is an accepted position that the right to receive the interest from the fixed deposits already accrued to the assessee. In such circumstances, the interest on the fixed deposit would be chargeable to tax, as sought to be done by the Assessing Officer under the head income from other sources
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