Taxability of delayed land acquisition compensation interest confirmed as revenue receipt under income tax law.

Interest received on delayed payment of land acquisition compensation is treated as a separate revenue receipt because it compensates for deprivation of the use of money, not as part of the compensation itself. The amended definition of "interest" in section 2(28A) does not exclude this category from taxability, and once characterised as income it falls within the charging provisions unless specifically exempted. The result stated is that such interest is chargeable to income-tax and does not qualify as exempt agricultural income.

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Issues: Whether interest received on delayed payment of compensation under the Land Acquisition Act, 1894 is taxable as income under the Income-tax Act, 1961.

Analysis: The interest paid on delayed compensation under the Land Acquisition Act is distinct from the compensation amount itself. It is received because the claimant was deprived of the use of money representing the compensation, and long-settled precedent treats such receipt as a revenue receipt. The amended definition of "interest" in section 2(28A) did not exclude this category of receipt from taxability. Once the amount is characterised as income, it falls within the charging provisions unless exempted by a specific provision.

Conclusion: The interest on delayed payment of compensation is chargeable to income-tax and is not exempt as agricultural income. The contention of the appellants failed.

Ratio Decidendi: Interest awarded for delayed payment of land acquisition compensation is a revenue receipt chargeable to tax under the Income-tax Act, 1961, and the inclusive definition of "interest" does not exclude such taxability.

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