1988 (12) TMI 62

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....year in which the forfeiture occurred. The assessee challenged the action of the Central Government in forfeiting the amount by filing a civil suit. The High Court, by judgment and decree dated December 4, 1970, decreed the suit for return of the security and allowed interest at the rate of 3 per cent. per annum from the date of filing of the suit till realisation. In pursuance of the High Court decree, the assessee got back the security amount as also interest amounting to Rs. 13,871 and in the relevant assessment year, namely, 1972-73, filed a return in which the refund of the security amount was included in the income and claimed that the amount of Rs. 13,871 received as interest was a casual receipt, which was in the discretion of the....

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....f his money, the interest received is chargeable to tax as income. The same principle would apply if interest is payable under the terms of an agreement and the court or the arbitrator gives effect to the terms of the agreement-express or implied-and awards interest which has been agreed to be paid." On the principles laid down in the quotation, the facts of the case were examined and the following conclusion was drawn (at p. 473) "We are, therefore, of the view that the principle on which Commissioners of Inland Revenue v. Ballantine [1924] 8 TC 595 (C. Sess) and Simpson v. Executors of Bonner Maurice as Executor of Edward Kay [1924] 14 TC 580 (CA), were based has no application to this case. It may be recalled that, in those cases, the ....