Delayed open offer payment treated as part of share sale consideration, not taxable interest income.

Additional amount received under a delayed open offer was held to be integrally connected with the share transfer and not separable as interest income. The amount arose from the revised offer price under the SEBI-approved open offer mechanism, not from any borrowing, credit facility, or delayed repayment by a debtor. As the assessee only tendered shares under the offer, the receipt was treated as part of the consideration for transfer of shares and not as income from other sources.

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Issues: Whether the additional amount received on account of delay in the open offer was taxable as interest income or formed part of the share sale consideration.

Analysis: The additional amount was paid pursuant to the open offer mechanism approved by SEBI and arose from the revised offer price linked to the delayed completion of the transaction. The receipt was not referable to any borrowing, credit facility, or delayed repayment by a debtor to a creditor. On the facts, the assessee had merely tendered shares under the open offer, and the sum received was integrally connected with the share transfer. The amount therefore could not be segregated as penal interest or as independent income from other sources.

Conclusion: The additional amount formed part of the consideration for transfer of shares and was not taxable as interest income; the issue was decided in favour of the assessee.

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