Capital receipt treatment for statutory compensation paid for delay in land acquisition award, not taxable as income.

Compensation awarded under section 48A of the Land Acquisition Act for delay in making the award was held to be a capital receipt, because it compensated damage caused by delay rather than constituting interest on a quantified sum. The fact that loss of interest was used only as a basis to measure damages did not change the character of the receipt. As it arose from a special statutory provision, was non-recurring, and did not represent business income, loss of profit, or interest in the assessee's hands, it was not taxable as income.

---

---

Issues: Whether compensation awarded under section 48A of the Land Acquisition Act, 1894 for delay in making the award was a capital receipt not includible in the assessee's income, or a revenue receipt taxable as interest or income from other sources.

Analysis: The compensation under section 48A was awarded for damage suffered because of delay in making the award, and not as interest on any quantified sum. The use of loss of interest as a basis for quantifying damages did not determine the character of the receipt. The statutory scheme distinguished between compensation and interest in separate provisions, and the amount received under section 48A did not arise from any business activity, nor did it represent loss of profit or interest in the hands of the assessee. It was a receipt arising from a special statutory provision and was of a non-recurring character.

Conclusion: The receipt was a capital receipt and was not taxable as income.

---