1979 (2) TMI 1

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....mortised interest of Rs. 20,39,036 of the Zamindari Abolition Bonds was not income liable for income-tax for the assessment year 1967-68 ? " The question referred by the Tribunal in .T.R.C. No. 163 of 1975 reads : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the amortised interest of Rs. 16,24,030 of the Zamindari Abolition Bonds was not income liable for income-tax for the assessment year 1968-69 ? " Both the above questions relate to the same assessee but for two different assessment years, namely, 1967-68 and 1968-69. The facts of these two cases, as set out in the appellate order of the Tribunal are, briefly, as follows, The assessee-bank was holding a large block....

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....or determination in these references is whether the annual payments received by the assessee during these two years should be regarded as income receipts or capital receipts or partly as income receipts or partly as capital receipts. The answer to this question can be found in Andrew Scoble v. Secretary of State for India [1903] 4 TC 618 (HL) in which the facts were very similar to those in the present case. There, the contract between the East India Company and the G.I.P. Railway Company provided that at the expiration of a certain period the East India Company had the option to give to the railway company the notice of its intention to purchase the railway and the works. The British Government which succeeded to the East India Company exe....

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....tax is payable only on the portion representing interest. The income-tax authorities have to ascertain what proportion of such annual payments represents interest. " In the light of the foregoing discussion, our answer to the question referred to us in I.T.R.C. No. 162 of 1975 is as follows: " On the facts and in the circumstances on the case the Tribunal was right in law in holding that the amortised interest of Rs. 20,39,036 of the Zamindari Abolition Bonds, was not income liable for income-tax for the assessment year 1967-68 ; but the Tribunal should have held that that portion of the annual repayment received or receivable by the assessee during the accounting year relevant to the assessment year 1967-68, which represented interes....