Taxability of interest on delayed compensation turns on its true character as revenue income, not statutory compensation.

Interest received on delayed payment of compensation for compulsory acquisition was held to be taxable as income because its true character, not its label, governed the assessment. The Court applied the principle that the receipt was a separate revenue item for being kept out of the proper compensation and was not part of the statutory capital compensation under the governing land acquisition scheme. The amount was therefore assessable in the assessee's hands. The apportionment question was not decided on the merits, as the Tribunal had not addressed it after treating the receipt as non-taxable; it was left open for fresh consideration.

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Issues: Whether the sum received as interest on enhanced compensation for compulsory acquisition was assessable as income, and whether the question of apportionment between the assessment years survived.

Analysis: The amount was described as interest, but its tax character had to be determined by its true nature and not by nomenclature. The statutory scheme under the Requisitioned Land (Continuance of Powers) Act, 1947 limited compensation to the prescribed market-value ceiling, and the additional amount awarded from the date of notification was not part of the statutory compensation. Applying the principle that the real question is whether the receipt is capital or income, the Court held that interest awarded for the period during which the assessee was kept out of the proper compensation was a separate revenue receipt and not a capital accretion. Since the Tribunal had held the amount non-taxable, it had not decided the apportionment issue.

Conclusion: The amount of Rs. 1,28,716 was assessable as income in the hands of the assessee, and the Revenue succeeded on that question. The apportionment question was left to be considered afresh by the Tribunal.

Ratio Decidendi: Interest awarded on delayed payment of compensation is taxable as income where it is a separate payment for the time-value of money and not part of the statutory compensation itself.

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