Interest on deferred compensation remains a taxable revenue receipt, not part of capital compensation under the jagir abolition law.

Interest payable on deferred compensation for resumption of jagir land under section 8(2) of the Madhya Bharat Abolition Jagirs Act, 1951 was treated as distinct from the compensation under section 8(1). The provision made compensation due on resumption and separately provided interest because payment was spread over instalments; the marginal heading could not override the plain statutory text. Interest paid for being kept out of the compensation amount therefore retained its ordinary character as interest and was not part of the compensation itself. It was taxable as a revenue receipt rather than a capital receipt.

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Issues: Whether interest payable on compensation for resumption of jagir land under section 8(2) of the Madhya Bharat Abolition Jagirs Act, 1951 formed part of the compensation and was therefore a capital receipt, or was taxable as a revenue receipt.

Analysis: The compensation under section 8(1) became due from the date of resumption and was to be determined in accordance with Schedule I, whereas the interest under section 8(2) was separately provided for because payment of the compensation was spread over instalments. The language of the provision drew a clear distinction between compensation and interest. The marginal heading could not control the plain words of the section. Interest paid for being kept out of the compensation amount for the period of deferment retained its ordinary character as interest and was not part of the compensation itself.

Conclusion: The interest was not a capital receipt and was liable to tax as a revenue receipt, against the assessee and in favour of the Revenue.

Final Conclusion: The appeals failed on the taxability of the interest component, and the interest received on the compensation amount was held to be separately taxable.

Ratio Decidendi: Statutory interest payable for delayed or deferred payment of compensation is distinct from the compensation itself and is taxable as revenue receipt unless the statute expressly makes it part of the compensation.

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