Capital receipt treatment for pre-award interest on acquired land upheld as compensation for loss of use, not taxable income.

Interest received for the period between taking possession of acquired land and the award was treated as compensation for deprivation of the owner's use and enjoyment of the land, because ownership had not yet passed to the Government until the award. It was therefore characterised as a capital receipt rather than interest on compensation after completed acquisition, and was not chargeable to income-tax; the addition was rightly deleted.

---

---

Issues: Whether interest received for the period from taking possession of acquired land till the date of the award was a capital receipt not chargeable to tax.

Analysis: The land was taken over before the award, but ownership had not passed to the Government until the award was made. Interest for the interregnum period was therefore not interest on compensation after acquisition had been completed, but compensation for deprivation of the use and enjoyment of the land while the assessee still remained the owner. That character distinguished the case from interest payable after the award on compensation already determined.

Conclusion: The amount was a capital receipt and not liable to income-tax, so the addition was rightly deleted.

---