Case: Rm. Ar., Ar. Rm. Ar. Ramanathan Chettiar Vs. Commissioner Of Income-Tax, Madras

of land compulsorily acquired is interest paid for the delayed payment of the compensation and is therefore a revenue receipt liable to tax under the Act. It was held that the amount was not compensation for land acquired or for depriving the claimant of his right to possession but was paid to the claimant for the use of his money by the State and the statutory interest paid was, therefore a revenue receipt liable to income-tax. The principle of this decision applies to the present case also and we are of opinion that the interest paid to the assessee under the decree of the Supreme Court of Ceylon on the amount of Estate Duty directed to be refunded was income liable to be taxed under the Act.5. We shall proceed to consider the next question whether the receipt of interest, even if it constituted income, was exempt under S. 4 (3) (vii) of the Act as receipt of a casual and nor-recurring nature. Section 4 (3) (vii) of the Act is in the following: terms:"4. (3) Any income, profits or gains falling within the following classes shall not be included in total income of the person receiving them:* * * * *(vii) Any receipts not being capital gains chargable according to the provisions of S. 12-B and not being receipts arising from business or the exercise of a profession, vocation or occupation which are of a casual and non-recurring nature, or are not by way of addition to the remuneration of an employee."It was argued on behalf of the appellant that the amount in question was a lumpsum payment awarded under the decree of the Court and there was no quality of recurrence about it. We do not think that this submission is correct. It is true that the appellant received lump-sum payment on account of interest. That does not, however necessarily mean that the amount of interest is not a receipt of a recurring nature. On the other hand, the interest was granted under the decree of the Court from the date of the institution of the proceedings in the District Court and was calcu1ated upon the footing that it accrued de die in diem, and hence it has the essential quality of recurrence which is sufficient to bring it within the scope of the Act. It was also contended that the receipt of interest was casual in its character. The expression casual has not been defined in the Act and must therefore be construed in its plain and ordinary sense. According to the Shorter Oxford English Dictionary the word casual is defined to mean: (i) Subject to or produced by chance; accidental, fortuitous, (ii) Coming at uncertain times, not to be calculated on, unsettled". A receipt of interest which is foreseen and anticipated cannot be regarded as casual even if it is not likely to recur again. When the action was commenced by way of a petition in the District Court of Ceylon, it was well within the contemplation and anticipation of the person representing the estate that a successful termination of the action would not merely result in a decree for the tax illegally collected, but would also make the Crown liable to pay interest on that amount from the date of the petition till the date of the payment. The receipt of interest in the present case by virtue of the decree of the Supreme Court of Ceylon bears no semblance, therefore, to a receipt of a casual character. It is not therefore possible to accept the argument of the appellant that the receipt of interest obtained under the decree of the Supreme Court of Ceylon was of a casual or non-recurring nature. We accordingly reject the submission of the appellant on this aspect of the case.6. It was lastly submitted on behalf of the appellant that the payment interest under the decree of the Supreme Court of Ceylon was made by the Ceylon Estate Duty Authorities to the estate of Arunachalam Chettiar(senior) and what was received by the appellant for his one-third share, namely, Rs. 1,93,328 was a share in the estate of the deceased and therefore was received by the appellant as part of the estate. In other words, the contention of the appellant was that the receipt was a capital receipt and was not assessable in his hands. It is not, however open to the appellant to advance this argument at this stage because the question did not arise out of the order of the Tribunal and no such question was referred by the appellate Tribunal for the decision of the High Court. Mr. A.K.Sen for the appellant also referred to the decision of the Madras High Court in Commissioner of Revenue, Madras v. Veerappa Chettiar, 1966-61 ITR256 (Mad) which dealt with `a share of the same income by another branch of the family. It was decided by the Madras High Court in that case that the receipt of interest prior to February 17, 1947 should be regarded as capital and the rest should be regarded as income receipt. But the question of the disruption of the status of joint family on February 17. 1947 and the effect of that disruption upon the character of the interest receipt was never raised before the appellate Tribunal and was not decided by it in the appeal before us. In Commissioner of Income-tax, :Bombay v. Scindia Steam Navigation Co. Ltd., 1961-42 ITR.589: (AIR 1961 SC 1633 ) it was pointed out by this Court that in hearing a reference under S. 66 of the Act the High Court acts purely in an advisory capacity, and it is of the essence of such a jurisdiction that the court can decide only question which are referred to it and not any other questions. In the present case, the High Court has rightly pointed out that the question did not arise out of the order of the Tribunal and was not the subject-matter of reference to the High Court.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]Under the provisions of the Estate Duty Act of Ceylon, as it stood at the material time any person aggrieved by the assessment of estate duty could appeal to the appropriate District Court naming the Attorney-General as the respondent. After the Attorney-General is served in the matter the appeal is proceeded with as an action between the assessee as plaintiff and the Crown as defendant. The statute specifically provides that the provisions of the Civil Procedure Code and of the Stamp Ordinance shall apply to the proceeding. The petition of appeal should be stamped as though it were a plaint filed for the purpose of originating the action, and if it is not stamped with the requisite stamps it may be dealt with in the same manner as if it is a plaint which is insufficiently stamped. Any party aggrieved by any decree or order of the District Court may further appeal to the Supreme Court in accordance with the provisions of the Civil Procedureprovision corresponds to S. 34 of the Civil Procedure Code in India. Section 192 of the Ceylon Ordinance II of 1889 expressly uses the word interest in contrast to principal sum adjudged and we do not see any reason why the expression should not be given the natural meaning it bears. In its judgment, dated October 12, 1953 the Supreme Court of Ceylon acted under this Section and ordered the Crown to refund to the appellant the sum of Rs. 7,00,402.65 with legal interest thereon from the date of the institution of the proceedings in the District Court. We see no warrant for accepting the submission of the appellant that the interest awarded by the Supreme Court of Ceylon under S. 192 of Ordinance II of 1889 should be taken to be a capital receipt being in the nature of damages for wrongful retention of money. In WestminsterBank Ltd. v. Riches, (1947) 28 Tax Cas 159(HL), the question at issue was whether the amount of interest awarded by the Court in exercise of its discretionary power under S. 8 of the Law Reform (Miscellaneous Provisions) Act, 1934 was interest of money within the meaning of Sch. D and General Rule 21 of the Income-tax Act, 1918 and whether income-tax was accordingly deductible therefrom. It was contended in that case on behalf of the respondent that the amount though awarded under a power to add interest to the amount of debt and though called interest in the judgment, was not really interest such as attracts income-tax but was damages. This argument was rejected by the House of Lords and it was held that there was no incompatibility between the two conceptions and that the amount was taxable as interest of money with Sch. D and General Rule 21 of the Income-tax Act, 1918. It was pointed out that the real question in cases of this type was not whether the amount received was interest proper or damages but whether it had the quality of income or it was a capital sum estimated in terms ofpassage was quoted with approval by this Court in Dr. Shamlal Narula v. Commissioner of Income-tax Punjab, Jammu and Kashmir. Himachal Pradesh and Patiala 1964-53 ITR (SC) 151: (AIR 1964 SC 1878  ) in which a question arose whether the statutory interest paid under S. 34 of the Land Acquisition Act, 1894, on the amount of compensation awarded for the period from the date the Collector has taken possession of land compulsorily acquired is interest paid for the delayed payment of the compensation and is therefore a revenue receipt liable to tax under the Act. It was held that the amount was not compensation for land acquired or for depriving the claimant of his right to possession but was paid to the claimant for the use of his money by the State and the statutory interest paid was, therefore a revenue receipt liable to income-tax. The principle of this decision applies to the present case also and we are of opinion that the interest paid to the assessee under the decree of the Supreme Court of Ceylon on the amount of Estate Duty directed to be refunded was income liable to be taxed under theis true that the appellant received lump-sum payment on account of interest. That does not, however necessarily mean that the amount of interest is not a receipt of a recurring nature. On the other hand, the interest was granted under the decree of the Court from the date of the institution of the proceedings in the District Court and was calcu1ated upon the footing that it accrued de die in diem, and hence it has the essential quality of recurrence which is sufficient to bring it within the scope of the Act. It was also contended that the receipt of interest was casual in its character. The expression casual has not been defined in the Act and must therefore be construed in its plain and ordinary sense. According to the Shorter Oxford English Dictionary the word casual is defined to mean: (i) Subject to or produced by chance; accidental, fortuitous, (ii) Coming at uncertain times, not to be calculated on, unsettled". A receipt of interest which is foreseen and anticipated cannot be regarded as casual even if it is not likely to recur again. When the action was commenced by way of a petition in the District Court of Ceylon, it was well within the contemplation and anticipation of the person representing the estate that a successful termination of the action would not merely result in a decree for the tax illegally collected, but would also make the Crown liable to pay interest on that amount from the date of the petition till the date of the payment. The receipt of interest in the present case by virtue of the decree of the Supreme Court of Ceylon bears no semblance, therefore, to a receipt of a casual character. It is not therefore possible to accept the argument of the appellant that the receipt of interest obtained under the decree of the Supreme Court of Ceylon was of a casual or non-recurring nature. We accordingly reject the submission of the appellant on this aspect of theother words, the contention of the appellant was that the receipt was a capital receipt and was not assessable in his hands. It is not, however open to the appellant to advance this argument at this stage because the question did not arise out of the order of the Tribunal and no such question was referred by the appellate Tribunal for the decision of the High Court. Mr. A.K.Sen for the appellant also referred to the decision of the Madras High Court in Commissioner of Revenue, Madras v. Veerappa Chettiar, 1966-61 ITR256 (Mad) which dealt with `a share of the same income by another branch of the family. It was decided by the Madras High Court in that case that the receipt of interest prior to February 17, 1947 should be regarded as capital and the rest should be regarded as income receipt. But the question of the disruption of the status of joint family on February 17. 1947 and the effect of that disruption upon the character of the interest receipt was never raised before the appellate Tribunal and was not decided by it in the appeal before us. In Commissioner of Income-tax, :Bombay v. Scindia Steam Navigation Co. Ltd., 1961-42 ITR.589: (AIR 1961 SC 1633  ) it was pointed out by this Court that in hearing a reference under S. 66 of the Act the High Court acts purely in an advisory capacity, and it is of the essence of such a jurisdiction that the court can decide only question which are referred to it and not any other questions. In the present case, the High Court has rightly pointed out that the question did not arise out of the order of the Tribunal and was not the subject-matter of reference to the Highdo not think there is any justification for this argument. The amount was paid by the Ceylon Estate Duty Authorities under the judgment and decree of the Supreme Court of Ceylon the relevant portion of which reads aswould, therefore, set aside the order under appeal and substitute a decree (a) declaring that no Estate Duty was payable under Estate Duty Ordinance (Cap. 187) in respect of the estate of Arunachalam Chettiar (senior) and (b) ordering the Crown to refund to the appellants the sum of Rs. 7,00,402.65 P. with legal interest thereon from the date on which these proceedings were instituted in the District Court. The appellants are also entitled to their costs in this Court and in the Courtdo not think that this submission is correct.