https://www.taxtmi.com/caselaws?id=63962 Interest is taxable when it arises from a contractual or statutory obligation, because it then constitutes revenue income; where no such source exists, a payment made by way of ex gratia compensation is a capital receipt and not chargeable to tax. Applying that principle, interest on the withheld contract amount was treated as non-taxable because the contract did not confer a right to interest on delayed bills, the arbitrator had no authority to award it for the relevant period, and the award itself negatived earlier interest. By contrast, interest on the security deposit was taxable because the contract clause created an implied obligation and corresponding right to receive such interest, bringing it within income. en-us Thu, 30 Jan 1992 00:00:00 +0530 Wed, 02 Feb 2011 18:25:46 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=63962 Interest is taxable when it arises from a contractual or statutory obligation, because it then constitutes revenue income; where no such source exists, a payment made by way of ex gratia compensation is a capital receipt and not chargeable to tax. Applying that principle, interest on the withheld contract amount was treated as non-taxable because the contract did not confer a right to interest on delayed bills, the arbitrator had no authority to award it for the relevant period, and the award itself negatived earlier interest. By contrast, interest on the security deposit was taxable because the contract clause created an implied obligation and corresponding right to receive such interest, bringing it within income. Case-Laws Income Tax Thu, 30 Jan 1992 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=63962