Interim payments under estate abolition law were revenue receipts, not capital compensation, so reopening for tax was sustained.

Under the Madras Estates Abolition Act, interim payments pending final compensation were treated as a distinct statutory receipt and not part of capital compensation. Section 50 separately provided for interim payments, and section 50(8) expressly excluded them from compensation payable under section 41 or from being in lieu of that compensation. The adjustment and reconciliation mechanism also showed that such amounts were provisional and linked to temporary deprivation of income rather than the estate's capital value. On that basis, the receipts were held to be revenue in character and taxable, and the reopening notice under the Income-tax Act was sustained.

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Issues: Whether interim payments made under the Madras Estates Abolition Act are capital receipts forming part of compensation, or revenue receipts liable to income-tax; and whether the reopening notice under the Income-tax Act could be sustained on that basis.

Analysis: The statutory scheme distinguishes compensation from interim payments. Compensation is determined separately under the provisions dealing with final compensation and advance deposit, while section 50 provides for interim payments pending final determination. Section 50(8) expressly states that no interim payment shall be deemed to constitute any part of the compensation payable under section 41 or to be in lieu of such compensation. The provisions for adjustment, revision, excess, deficiency, and later reconciliation of interim payments further show that they are a distinct category of receipts. The payments were therefore treated as arising from the temporary deprivation of income pending final compensation and not as part of the capital compensation for the estate.

Conclusion: The interim payments were held to be revenue receipts and not capital compensation, and the reopening notice was upheld.

Final Conclusion: The petitions failed, and the impugned reopening of assessment was sustained on the footing that the interim payments were taxable income.

Ratio Decidendi: Where a statute separately provides for interim payments pending final compensation and expressly excludes them from the compensation payable, such payments are not capital receipts but are taxable as revenue receipts.

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