TaxTMI 
TaxTMI 
1966 (10) TMI 38
X X X X Extracts X X X X
X X X X Extracts X X X X
.... son, Arunachalam Chettiar (junior), viz., Umayal Achi. After the death of Arunachalam Chettiar (senior), disputes arose between his two widows and the widow of Arunachalam Chettiar (junior), Umayal Achi, in respect of the estate of Arunachalam Chettiar (senior). Umayal Achi filed O.S. No. 93 of 1938 in the Subordinate Judge's Court of Devakottai for administration and partition of the estate of deceased Arunachalam Chettiar (senior). She claimed a half-share in the properties under the provisions of the Hindu Women's Rights to Property Act. During the pendency of the suit, the Subordinate Judge appointed two advocates as receivers for the administration of the estate. On the death of Arunachalam Chettiar (junior), the estate duty authorities of Ceylon levied estate duty on what was described as the " deceased's half-share of the assets of the business carried on by the family in Ceylon ". Estate duty was also levied on the death of Arunachalam Chettiar (senior) in 1938. The two advocate-receivers who were administering the estate paid under protest to the Commissioner of Estate Duty in Ceylon the estate duty claimed from them. The administrators subsequently filed a suit in the co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction 4(3)(v)(ii) of the Indian Income-tax Act, 1922 (hereinafter referred to as the " Act "). The Income-tax Officer overruled the objection and his order was affirmed in appeal by the Appellate Assistant Commissioner and by the Appellate Tribunal. Before the Appellate Tribunal the assessee contended that the amount of Rs. 1,93,328, received from the estate duty authorities, Ceylon, was not income, but was only damages received for the unlawful retention of money, and even assuming that it was a revenue receipt, it was of a casual and non-recurring nature and, therefore, was not liable to assessment. The contentions of the assessee were overruled by the Appellate Tribunal. At the instance of the assessee, the Appellate Tribunal referred the following questions of law to the High Court : " 1. Whether the aforesaid interest receipt constitutes income ? 2. If so, whether it is exempt under section 4(3)(vii) of the Income-tax Act as a receipt of a casual and non-recurring nature ? " By its judgment dated September 24, 1962, the High Court answered the reference against the assessee and held that the receipt in question was a revenue receipt and could not be held to be receipt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ance II of 1889, which is to the following effect : " When the action is for a sum of money due to the plaintiff, the court may in the decree order interest according to the rate agreed on between the parties by the instrument sued on, or in the absence of any such agreement at the rate of nine per cent. per annum to be paid on the principal sum adjudged from the date of the action to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the action, with further interest at such rate on the aggregate sum so adjudged from the date of the decree to the date of payment, or to such earlier date as the court thinks fit ........" This provision corresponds to section 34 of the Civil Procedure Code in India. Section 192 of the Ceylon Ordinance II of 1889 expressly uses the word " interest " in contrast to " principal sum adjudged " and we do not see any reason why the expression should not be given the natural meaning it bears. In its judgment dated October 12, 1953, the Supreme Court of Ceylon acted under this section and ordered the Crown to refund to the appellant the sum of Rs. 7,00,402.65 with legal interes....
X X X X Extracts X X X X
X X X X Extracts X X X X
....It may be regarded either as representing the profit he might have made if he had had the use of the money, or conversely the loss he suffered because he had not that use. The general idea is that he is entitled to compensation for the deprivation. From that point of view it would seem immaterial whether the money was due to him under a contract express or implied, or a statute, or whether the money was due for any other reason in law. In either case the money was due to him and was not paid or, in other words, was withheld from him by the debtor after the time when payment should have been made, in breach of his legal rights, and interest was a compensation, whether the compensation was liquidated under an agreement or statute, as for instance under section 57 of the Bills of Exchange Act, 1882, or was unliquidated and claimable under the Act as in the present case. The essential quality of the claim for compensation is the same, and the compensation is properly described as interest. " This passage was quoted with approval by this court in Dr. Shamlal Narula v. Commissioner of Income-tax, in which a question arose whether the statutory interest paid under section 34 of the Lan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er. The expression " casual " has not been defined in the Act and must, therefore, be construed in its plain and ordinary sense. According to the Shorter Oxford English Dictionary, the word "casual" is defined to mean: "(i) Subject to or produced by chance ; accidental, fortuitous, (ii) Coming at uncertain times ; not to be calculated on, unsettled. " A receipt of interest which is foreseen and anticipated cannot be regarded as casual even if it is not likely to recur again. When the action was commenced by way of a petition in the District Court of Ceylon, it was well within the contemplation and anticipation of the persons representing the estate that a successful termination of the action would not merely result in a decree for the tax illegally collected, but would also make the Crown liable to pay interest on that amount from the date of the petition till the date of the payment. The receipt of interest in the present case by virtue of the decree of the Supreme Court of Ceylon bears no semblance, therefore, to a receipt of a casual character. It is not therefore possible to accept the argument of the appellant that the receipt of interest obtained under the decree of the Supre....