Interest on arrears of rent is taxable income, as it is distinct from rent under income-tax law.

Interest received on arrears of rent under Section 67 of the Bengal Tenancy Act was treated as distinct from rent and therefore as taxable income under income-tax law. The court followed an earlier Division Bench view that interest on arrears of rent is not rent, and on that basis held the amount assessable to tax. The reference was answered against the assessee, with costs awarded accordingly.

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Issues: Whether the sum received as interest on arrears of rent under Section 67 of the Bengal Tenancy Act constituted taxable income under the income-tax law.

Analysis: The question was held to be covered by an earlier Division Bench decision, which had concluded that interest on arrears of rent is not rent. On that basis, the amount representing interest on arrears of rent was treated as income liable to tax, and the reference was answered in the light of that settled position.

Conclusion: The sum of Rs. 36,810 representing income arising from interest on arrears of rent was taxable income, and the answer to the reference was against the assessee.

Final Conclusion: The reference was disposed of by holding that interest on arrears of rent is taxable income, with costs awarded against the assessee.

Ratio Decidendi: Interest on arrears of rent is distinct from rent and is taxable as income under the income-tax law.

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