Summarize the following court judgment. Appeals Nos. 1425 and 1426 of 1966. Appeals by special leave from the judgment and order dated October 29	 1962 of the Madras High Court in Tax Case No. 195 of 1960. section Swaminathan and R. Gopalakrishnan	 for the appellant (in both the appeals). 654 T. V. Viswanatha Iyer	 T. A. Ramachandran	 section P. Nayyar for R. N. Sachthey	 for the respondent (in both the appeals). The Judgment of the Court was delivered by Shah	 J. The Income tax Appellate Tribunal submitted two questions for the opinion of the High Court of Madras : "1. Whether the sum of Rs. 1	28	716/ is assessable as income under any of the provisions of the Act ? 2. If the answer is in the affirmative	 the assessment years in which the amount falls to be assessed by suitable apportionment. " The first question was answered by the High Court in the affirmative. The High Court declined to answer the second question because it did not	 :in their view	 arise out of the order of the Tribunal. The assessees have appealed to this Court. By order dated January 30	 1944	 the Collector of Madras	 		exercising power under r. 75A of the Defence of India Rules	 1939	 requisitioned a property known as "Lutterals Gardens" belonging to the assessees. The property continued to remain under requisition till it vested in the Government of Madras absolutely in consequence of an order made on May 24	 1949 by the Collector of Madras under section 5 of the Requisitioned Land (Continuance of Powers) Act	 1947	 declaring.the intention of the Government of Madras to acquire that property. The assessees declined the offer made by the Collector to pay Rs. 2	40	000/ as compensation for acquisition of the property and interest at the rate of 6% thereon from the date	 of notification for acquisition	 and the dispute relating to compensation payable to the assessees was referred to the Chief Judge of the Court of Small Causes	 Madras. By order of the High Court of Madras in appeal from the order of the Chief Judge it was adjudged that the assessees be paid Rs. 5	00	0001 as compensation for the property. The High Court also awarded interest at the rate of 6% on the amount of compensation from the date of notification for acquisition. During the two previous years corresponding to the assessment years 1955 56 and 1956 57 the assessees received	 pursuant to the 	order of the High Court	 a total sum of Rs. 6	28	716/ . In proceedings for assessment of tax for the assessment years 1955 56 and 1956 57	 the Income tax Officer apportioned the amount of Rs. 1	28	716/ on the basis of actual receipts in the two previous years and assessed the amounts so apportioned to income tax. The Appellate Assistant Commissioner held that the apportioned amounts were of the nature of revenue and not capital receipts	 but ' in his view the income received was liable to be calculated on accrual basis year after year from the date of the notification for ac 655 quisition	 and on that account the assessments of the previous years from 1950 51 to 1954 55 should be reopened and the interest which accrued in those years should be assessed. The Commissioner of Income tax and the assessees appealed to the Appellate Tribunal against the order of the Appellate Assistant Commissioner. The assessees submitted that Rs. 1	28	716/received as interest being part of compensation were not assessable to tax	 whereas the Commissioner claimed that the Income tax Officer was justified in assessing the amounts in the years in which they were received. The Income tax Appellate Tribunal accepted the contention of the assessees that the receipts were not assessable to tax because they were of the nature of capital receipts. At the instance of the Commissioner	 the Tribunal referred the two questions set out here in before. Section 5 of the Requisitioned Land (Continuance of Powers) Act	 1947 authorises the Government by which or under the authority of which land has been requisitioned	 to acquire the land subject to requisition	 by publishing a notice to the 'effect that the Government has decided to acquire such land. Section 6 of the Act provides	 inter alia	 that compensation payable to the owner of the land shall be determined in accordance with the provisions of section 19 of the Defence of India Act	 1939	 and the rules made thereunder. Section 19 of the Defence of India Act	 1939	 sets out the principles for determining the compensation payable to a claimant. The amount of compensation may be fixed by agree ment between the owner and the Government : where no such agreement is reached the Central Government is enjoined to appoint an arbitrator having the qualifications prescribed therein. Under section 19(1) (e.) the arbitrator in making his award must have regard	 inter alia	 to the provisions of sub section (1) of section 23 of the Land Acquisition Act	 1894 in so far as the same can be made applicable. An appeal Res against the award of the arbitrator to the High Court. Sub sections (2) and (3) of section 19 confer upon the Central Government authority to frame rules for the purpose of carrying into effect the provisions of section 19. In exercise of that power	 the Government of India framed "The Defence of India (Payment of Compensation and Arbitration) Rules	 1943" which amongst other provisions directed that the Collector shall pay compensation as soon as may be practicable. But neither section 19(1) of the Defence of India Act	 nor the Rules framed under section 19(2) and (3) provide that interest shall be paid on the amount of compensation. In the present case	 interest was	 however	 offered to be paid by the Collector; and the High Court also awarded interest on the amount of compensation from the date of the notification of acquisition. It was held by this Court in Dr. Shamlal Narula vs Commis sioner of Income tax	 Punjab	 Jammu and Kashmir	 Himachal 656 Pradesh and Patiala(1) that the statutory interest paid under section 34 of the Land Acquisition Act	 1894	 on the amount of compensation awarded from the date on which the Collector has taken possession of land compulsorily acquired under the Land Acquisition Act	 1804	 is interest paid for delayed payment of the compensation and is a revenue receipt liable to tax under the Income tax Act. It was observed in that case at p. 156 ". interest	 whether it is statutory or contractual	 represents the profit the creditor might have made if he had the use of the money or the loss he suffered because he had not that use. It is something in addition to the capital amount	 though it arises out of it. Under section 34 of the Act when the legislature designedly used the word "interest" in contradistinction to the amount awarded	 we do not see any reason why the expression should not be given the natural meaning it bears. The scheme of the Act and the express provisions thereof establish that the statutory interest payable under section	 34 is not compensation paid to the owner for de priving him of his right to possession of the land acquired	 but that given to him for the deprivation of the use of the money representing the compensation for the land acquired. " Counsel for the assessee however contended that the principle of Dr. Shamlal Narula 's case(1) is not applicable to this case	 since there is no provision in the Requisitioned Land. (Continuance of Powers) Act	 1947 and the Defence of India Act	 1939	 and the rules framed thereunder for payment of interest on the amount of compensation. Counsel said that under the Act	 the owner is paid not the market value of the property	 but compensation determined in accordance with a highly artificial scheme	 and that the interest paid	 in truth	 bears the same quality as compensation for deprivation of property and is on that account a capital receipt not exigible to tax. In support of his.contention	 counsel invited our attention to two decisions : The Commissioners of Inland Revenue vs Ballantine(2) and Simpson (H.M. Inspector of Taxes) vs Exe cutors of Bonner Maurice as Executor of Edward Kay(3). In Ballantine 's case(2) a claim of a firm of contractors against a railway company for "additional costs	 loss and damage ' was referred to arbitration. The arbitrator awarded to the claimant a sum of money mainly as damages	 together with interest thereon at 5 per cent. per annum from the date of lodgement of claim until payment. The Revenue sought to charge the interest paid by the (1) (3) (2) 657 railway company to tax under Case III of Sch. D of the Income tax Act	 1918. It was held that the sum added in the name of interest was part of damages	 and was not "interest of money" chargeable to income tax under Case III of Sch. D. Lord President Clyde observed : "Now it is familiar that an assessment of the kind may contain as one of its constituent elements an allowance in respect that the claimant has lain for a long time out of his remedy. The propriety of such an allowance may depend on the character of the claim	 and its amount may depend on many considerations of which time is only one. But an interest calculation is a natural and legitimate guide to be used by an arbiter in arriving at what he thinks would be a fair amount. In most cases in which such an allowance is a constituent of an award it does not separately appear	 but is slumped along with other elements in the gross sum decerned for; but there is nothing to prevent an arbiter	 if he thinks it just and reasonable in a particular case	 to make the allowance in the form of an actual interest calculation from a past date until the sum fixed as at that date is paid. In all such cases	 however whether the allowance is wrapped up in a slump award or is separately stated in the decree the interest calculation is used in modum aestimationis only. The interest is such merely in name	 for it truly constitutes that part of the compensation decerned for which is attri butable to the fact that the claimant has been kept out of his due for a long period of time. It is not therefore "interest of money" chargeable under Case ITT of Schedule D." In Simpson vs Executors of Bonner Maurice as Executor of Edward Kay(1) the executors of Kay	 a naturalised British subject	 who died during the First World War received	 as the result of the peace treaty claims	 amounts representing partly capital of securities	 stocks and shares in Banks in Germany deposited by Kay; partly interest and dividends; and partly compensation under the Peace Treaty. In a proceeding for assessment of the receipt to tax it was held that the compensation computed on the basis of interest was not income for the purposes of income tax. Lord Hanworth	 M. R.	 observed at p. 601 "I want to add now one more word in reference to the sum which has been paid by way of compensation under Article 297. It is said in reference.to that 'that. at least	 arose at the time when it was paid under the order of the Mixed Arbitral Tribunal '. It wag a sum (1) c. CI/67 12 658 which was calculated as interest" . 'and it is interest	 and therefore it is within the words of the Schedule	 which undoubtedly impose a tax upon interest which arises or accrues to a person liable to tax. ' But is it interest ? Is that its quality	 or is it compensation estimated and measured in terms of interest ? It appears to me quite clear that	 apart from Article 297	 no such sum could have been recovered. " Lawrence	 L.J.	 observed at p. 605 "Neither the fact that the compensation was measured by the amount of the interest	 which but for the embargo placed upon the money by the German Government could have been earned by the Respondents	 nor the fact that part of the compensation was described as "interest" in the decision of the Mixed Arbitral Tribunal in my judgment	 has the effect of altering the character of the compensation paid to the Respondents. " But it must be noticed that liability to pay interest arose in Ballantine 's case(1) under the award of the arbitrator and in the Executors of Bonner Maurice as Executor of Edward Kay 's case (2) under the order of the Mixed Arbitral Tribunal	 and in each case	 it was held that what was paid	 though called "interest"	 was in truth compensation for loss suffered on account of deprivation of property. According to the view taken by this Court in Dr. Shamlat Narula 's case(3)	 if the course of the obligation imposed by the statute to pay interest arises because the claimant is kept out of his money	 the interest received is chargeable to tax as income. The same principle would apply if interest is payable under the terms of an agreement and the Court or the arbitrator gives effect to the terms of the agreement express or implied and awards interest which has been agreed to be paid. It is therefore necessary to determine whether the obligation to pay interest awarded under the order of the High Court of Madras arose out of the statute or out of the award. In Satinder Singh & Ors. V. Amrao Singh and Ors. (4) lands forming part of Cis Sutlej Jagir were compulsorily acquired under the East Punjab Acquisition and Requisition of Immovable Property (Temporary Powers) Act	 1948. The claimants to the lands claimed in addition to statutory compensation interest from the date from which they were dispossessed and till the date of payment of compensation. The arbitrator appointed under the Act awarded interest on the amount of compensation and the High Court of Punjab in appeal Confirmed the order. This Court held that the claimants were (1) 	 (2) (3) (4) ; 	 659 entitled to interest on the compensation amount from the date of dispossession till the date on which 'the amount of compensation was paid to the claimants. Section 5 of the East Punjab Acquisition and Requisition of Immovable Property (Temporary Powers) Act	 1948	 set out the principles according to which compensation was to be paid in regard to the acquired property	 and by cl. (e) thereof it was provided that the arbitrator in making the award shall have regard 'to the provisions	 of sub section (1) of section 23 of the Land Acquisition Act	 1894 in so far as the same may be applicable. The Act contained no express provision for payment of interest on compensation determined by the arbitrator. This Court rejected the contention of the State of Punjab	 that sections 28 and 34 of the Land Acquisition Act which dealt with the payment of interest were not intended to apply to the proceedings before the arbitrator. It was observed "Stated broadly the act of taking possession of immovable property generally implied an agreement to pay interest on the value of the property and it is oil this principle that a claim for interest is made against the State. " The Court further observed : "It would thus be noticed that the claim for interest proceeds on the assumption that when the owner of immovable property loses possession of it he is entitled to claim interest in place of right to retain possession. The question which we have to consider is whether the application of this rule is intended to be excluded by the Act of 1948	 and as we have already observed	 the mere fact that section 5(e) of the Act makes section 23(1) of the Land Acquisition Act of 1894 applicable we cannot reasonably infer that the Act intends to exclude the application of this general rule in the matter of the	 payment of interest. " The Court also observed "When a claim for payment of interest is made by a person whose Immovable property has been acquired compulsorily he is not making claim for damages properly or technically so called; he is basing his claim on the general rule that if be is deprived of his land he should be put in possession of compensation immediately; if not	 in lieu of possession taken by compulsory acquisition interest should be paid to him on the said amount of compensation. " The scheme of the East Punjab Acquisition and Requisition of Immovable Property (Temporary Powers) Act	 1948 is similar to the scheme of the Requisitioned Land (Continuance of Powers) Act	 1947. The Court in Satinder Singh 's case(1) held that be (1)[1961] 3 S.C.R. 676. 660 cause of the injunction expressly to apply the provisions of section 23(1) of the Land Acquisition Act	 1894	 in the determination of compensation	 the application of sections 28 and 34 dealing with the payment of interest on the amount awarded as compensation cannot be deemed excluded. The Court also held that when the owner of property is dispossessed pursuant to an order for compulsory ac quisition	 an agreement that the acquiring authority will pay interest on the amount of compensation is implied. The reasoning on which the right of the owner of the lands acquired to interest was affirmed in Satinder Singh 's case(1)	 prima facie	 applies in this case. Counsel for the assessees contended that the application of sections 28 and 34 of the Land Acquisition Act in proceedings for arbitration under the Requisitioned Lands (Continuance Powers) Act	 1947	 was expressly excluded by section 19(1)(g) of the Defence of India Act which enacted that: "Save as provided in this section and in any rules made thereunder	 nothing in any law for the time being in force shall apply to arbitration under this section." But cl. (g) is not susceptible of any such interpretation. Clauses (a) to (f) of section 19(1) are a Code relating to arbitration in determining the compensation payable to a person deprived of his property. Provisions relating to payment of interest are not	 however	 part of the law relating to arbitration and there is nothing in cl 1. (g) which excludes the application of the substantive law relat ing to payment of interest when the arbitration is determining the amount of compensation. We are therefore of the view that the principle on which The Commissioners of Inland Revenue vs Ballantine(2) and Simpson (H.M. Inspector of Taxes) vs Executors of Bonner Maurice as Executor of Edward Kay(3) were based has no application to this case. It may be recalled that in those cases the arbitrator and the Arbitral Tribunal were	 in awarding interest	 not seeking to give effect to	 or to recognize a right to interest	 conferred by statute or contract. The source of the right to interest in both the cases did not arise from the statute or agreement. In the case on hand	 the right to interest arose by virtue of the provisions of sections 28 and 34 of the Land Acquisition Act	 1894	 and the arbitrator and the High Court merely gave effect to that right in awarding interest on the amount of compensation. Interest received by the assessee was therefore properly held taxable. The appeals fail and are dismissed with costs. One hearing Y.P. Appeals dismissed. (1)[1961] 3S.C.R. 676.

The assesses& were offered compensation and interest on the amount of compensation in respect of their property which was first requisitioned under r. 75A of the Defence of India Act	 1939 and later acquired by the State under section 5 of the Requisitioned Land (Continuance of Powers) Act. The Requisition Act provided that. compensation payable shall be determined in accordance with the provisions of section 19 of the Defence of India Act and the rules thereunder	 but neither section 19 nor the Rules provided that interest shall be paid on the amount of compensation. The assessee demanded more compensation and interest	 and	 the High Court in appeal enhanced the compensation and awarded interest on it The Revenue assessed to income tax the amount of interest	 which was upheld	 in reference	 by the High Court. In appeal. this Court. HELD : Interest received by the assessee was taxable. If the source of the obligation imposed by the statute to pay interest arises because the claimant is kept out of his money	 the interest received is chargeable to tax as income. The same principle would apply if interest is payable under the terms of an agreement and the court or the arbitrator gives effect to the terms of the agreement express or implied and awards interest which has been agreed to be paid Clauses (a) to	 (f) of section 19(1) of the Defence of India Act are a Code relating to a arbitration in determining the compensation payable to a person depraved of his property. Provisions relating to payment of interest	 are not	 however	 part of the law relating to arbitration and there is nothing in cl. (g) which excludes the application of the substantive law relating to payment of interest when the arbitration is determining the amount of compensation. In this case	 the right to interest arose by virtue of the provisions of Ss. 28 and 34 of the Land Acquisition Act	 1894	 and the arbitrator 'and the High Court merely gave effect to that right in awarding interest on the account of compensation. [658 E F; 660 D H] Dr. Shamtal Narula vs Commissioner of Income tax	 Punjab	 Jammu and Kashmir	 Himachal Pradesh and Patiala	 53 I.T.R. 151	 and Satinder Singh & Ors. vs Amrao Singh & Ors. ; 	 followed. The Commissioners of Inland Revenue vs Bellantine	 8 T.C. 59	5	 and Simpson (H. M. Inspector of Taxes) vs Executors of Bonner Maurice as Executor of Edward Kay	 	 distinguished.