TaxTMI 
TaxTMI 
2011 (11) TMI 364
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....terest paid/credited by the Housing Board on the amount deposited by the allottees on account of delayed allotment of flats does not fall under the definition of interest as assigned to it in subsection (28A) of Section 2 of the Income-tax Act, 1961? 2. Whether on the facts and in the circumstances of the case, the Hon'ble Tribunal was right in holding that the interest paid or credited by the Housing Board to its allottees (payees) was of capital nature and thus not subject to deduction of tax at source when as per law it is the recipient (payee) who can decide if a particular receipt (interest in this case) is of revenue or capital in nature." 2. Briefly stated the facts are that the assessee-Housing Board had floated ....
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....judgement, which was dismissed. Hence, this appeal. 4. To appreciate the rival contention of the parties, it would be appropriate to refer to the relevant portion of Sections 2(28A) and 194A of the Income-tax Act, which read as follows:- "Section 2(28A): Interest means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilized. Section 194A: (1) Any person not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of int....
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....here is no relationship of debtor and creditor or borrower and lender, if payment is made in any manner in respect of any moneys received as deposits or on money claims or rights or obligations incurred in relation to money, such payment is, by this statutory definition, regarded as interest." 6. Ms. Kuthiala, relying upon the aforesaid observation submits that the allottees had deposited some amount with the Board and now when interest was being paid on this amount the same was interest within the meaning of Section 2(28A) and in terms of Section 194A of the Act tax at source had to be deducted by the Board. 7. In our view this judgement is not applicable to the facts of the present case. In the case before the High Cou....
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....use the parties by mutual agreement agreed to find out a suitable and convenient system of calculating the damages which would be uniform across the Board for all the allottees. 9. While taking this view we are relying upon the judgement of the Apex Court in Bikram Singh and others vs. Land Acquisition Collector and others (1997) 224 ITR 551. In the case before the Apex Court the question was whether the interest paid to the persons whose land had been compulsory acquired under Sections 28 and 31 of the Land Acquisition Act was a revenue receipt or a capital receipt. The Apex Court held that though it was termed as interest on delayed payment, it was actually a revenue receipt and therefore the provisions of Section 194A of the In....