Chandroji Rao v. Commissioner Of Income-Tax, M.p. Nagpur

aeaztat twa AARC AAA, ALA TAT, ATTTT(Chandroji Rao The Commissioner of Income-tax,Madhya Pradesh, Nagpur)(28 aster, 1970)| (#ato So ato ag, Bo UA ENT AIT Yo Uo War) sfosaa gem zea daz, 1922 (1922 wt 11)—dat atkSaal—aeg area aatfaara aie write Baz, 1951 St art 8ele Gla ofaaz—sfaat ar arian fredt F za aa F adaStatafaae oe cara aa aaa BeHcraa B—arfayae ates at agea—arfing or atis are at aeataal at|faafaa adi ax aaa,fafreza: aa wa fe saat arat caseatt wafers| atiardt qaqa varferaz usa ar aiteare at faraat fara HerWea (Fa eT Ter) ere st wat. aaa wafaar aisais Ce, 1951 are wT at yearat4 fearaz,1952 at farTa | wT Bae a aT 8B ate ofHe Tae at age 1Hafaafad fagrdt & age ata ary sa are at stare (2) %welt aaa sfaat arene F gag at arta a aa at aati va(gaia at) arate a sfaat at cane damatte awatu feralH 10 aat at aafx F a8 at araren sara vft ay 23sfaaat at at & aaa or atta A araae afraret Hae ae aTaTfrat fas earey at cay a faHT BT UIT | site Got aT orftar Fag carmarae afraret ae ate gt ages ayaa (atta) arer Wh aedteafeat warfeat afar a ae afafraticrfrat fe sary at wagaitfreer at stfta g fae fratfedt at ara F afeafareal fear ot aaa | H, sea eataraa + aaa facta attardt & fase fearfaze“SITs THT Ea earaTaAT H at aE atte afer He ex, afafratica—antss tae at ars & ada agaat 1 Fatesfad frarat & agate aaraaarfer sfant at caH gazem atarte & arate HT aa gt ag1 fH ager wr GaysT at aceal aac va at oat ot, afew 10 ag at wate & feat Hazeatoat ot, gafre ear (2) Heart & ware F faq aqare aAratTST AT) BT TET Se BT THA TAT BY feu ary BT HITT agat fe st satar arerafa aH ofaat at cea & a faa cat war ar|faaranesa dfs sfaat ate sort H ate H qeax 8 acit-vifs ofefaaat, safag gat eqse aratat sata feat frat sa ate e far asTHRU Tet tact fe square (2) F ata sara gt afafea wat Fweg ar aeag sfrae ar arr at vat st aaar ar(Fe 4 ate 5)aa aera & fH are 8 arerfaa ara ada “seat der aael wae” ar, HE ate faswe sel frarar str aHRAT ITetfrg ararafte, art at aeataeit a faafaa ady we amar’,fafarsed: saaa H safes are at arer ease ate wafere et1 (Fz 4) aaatca frera [1953] 53 aT¥o do AIXo 151: SiRET MAMA AGA FATA MART WTA|qata,want, femaasta. atz afearet (Dr. Shamlal Narula Vs. The Commis-sionerof Income-tax, Punjab,Jammu &Kashmir,HimachalPradeshandPatiala )..4 fafast aati sree fica : 1967 at fafa adte deat 505 a 508. 1964 & yale fafaat areat deat 89 F weg yea eT egaTaTH atcha 20 asta, 1965 are facta ate aaa & faeg fea saraaAH BY TE ails| |stoaHefaa, aaterat at mc a(att attet 7) .aasttUtostoaHefaa,eraflo seeqougadls ATX Yo sitoeett seatatate a aaamifare areal atoUto Fae. (wat aatat 4) araraa at fara eararfarafat wo Wie Mat a feat | caraifaata Wat—| THTweq May Tes eOTATAT HUH et fava s favs fate saTT HT TEA atte fray ay 1956-57, 1957-58,1958-59 ate1961-62 & aaa FH gaat atta afewer gre faq ae facet aSEAT Faz|7 2. atta at fratfedt2 qaqa sarfrat Usa BT ANTNTAIT at) wer ara aatfaaa aieanitst Taz,1951 are, faa art“nfafqan’ sear qar 3,4 fearaz,1952 A atseatfar FY aeetofaitay at arr 8ata sagt# afsafad fagrat &AGat a want saa ary Ta ae HY rare (2) ¥ wea azgavan (fearraat) at arte & aaa afta aa at wart ation faeatRea ag at gafe & tae aera arr wfaat at VRWT(gaten at) ada & dara at ade aH ararey aary of at 23,fara a et & aaa arfraifedt ar ag agar at fe sate aT THAofaat at aT S ae Tat AY orfear1 araHt afaard & freatfeat& faeg afafrater fear ate sare at gaat ara A afeafert we fearaga maHe aged (ate)at at agt fear ary fag ate. afaacr Fag afafasifes fear fe sare at waa get at orftr gzait va fasifedt at ara & afeafea aat fear at aaat at1 fsa¥ ssa eqriaa at fatafafad sea fafase feat ar— cag aa oaTaa H geal ate ofefeafaat H ag satott freifedtt at orite & gaaiger & ferg ean swferne at THA TTore gat ar gait at sft B 2”7 goa raTaTas F ga TT HT TAT aay’ H aie fratfeat faes fear 1967 ਦਾ 508 .CHANDROJI RAO COMMISSIONER OF INCOME-TAX, M.P. NAGPUR April 28, 1970 [J, C. SHAH, K. S. HEGDE AND A. N. GROVER, JJ.] . Indian Income-tax Act, 1922-Capital and Rei·enue Compensation payable under s. 8 of Madhya Bharat Abolition of Jagir A<·t, 19'51-Payabte In 10 years In annual instalments--lnterest on compensation lf'hether taxable as revenue receipt-Marginal notes, value of, The appellant was a Jagirdar of the erstwhile Gwalior State which marged in the State of Madhya Bharat (now Madhya Pradesh). The Madhya Bharat Abolition of Jagir Act 1951 abolished Jagirs with effect from December 4, 1952. Under s. 8 <if the Act compensation was payable in accordance with the principles laid down in Schedule I of the Act. Under sub-section (2) of that section the compensation payable became due as from the date of the resumption of the Jagir. Simple interest was payable at 2+ per cent per· mnum from that date up to the date of -par· ment of the amount of compensation which was payable w1thm a period of 10 years in annual instalments. The appellant claimed before the Income-tax Officer that the amount of interest formed part of the compensation and constituted a capital receipt. The claim \\Ifs disallowed by the Incom&otax Officer as well as by the 11.ppellate Assistant Commissioner. The Tribunal, however, held that the amount of interest was a capital receipt which could not be included in the assessee's income. In reference, the Hi1h Court held against the appellant. In appeal to this Court by special l~ve. HELD : Under s. 8 of the Jagir Act the compensation amount as determined in accolrdance with the principles laid down in Schedule 1 became due tq the Jagirdar from the date of resumption. Since the entire amount was not to be paid on the date of the resumption but was to be paid by instalments extending over 10 years. a provision had F to be made for the payment of interest in sub·s. (2). The amount of interest was thus given to the Jagirdar for bein11 kept out ctf the compensation amount for the aforesaid period. The .legislature being well nware of the distinction between compensation anu interest, employed clear languaee which leaves no room for doubt that under sub·s, (2) interest was payable in a well understood sense um! it could never form po1·t of the compensation. [425 E-H] The fact that the marginal heading of s. 8 was 'Duty to pay com· pensation' could not lead to a different conclllliion. The marginal head· 1ng canot control the words of a section, particularly, when the langual!" js clear and unambiguous. (425 Cl Dr. Sham Lal Narula v. Commissioner of Income-tax, Pun/ah, lammu & Kashmir, Hlmachal Pradesh and Pat/a/a, 53 I.T.R. 151, applied. CIVIL APPELLATE JURISDICTION : Civil Appeals N'os, sos to 508 of 1967. Appeals by _special leave from the judgment and order dated April 20, 1965 of the Madhya Pradesh High Court in Misc. Civil Case No. 89 oi. 1964. N. D. Karkhanis, P. W.Sahasrabuddhe and A.G. Ratnaparkhi, for the appellant (in au the appeals) . Gobind Das and R. N. Sachthey, for the respondent (in all the appeals) . The Ju~gment of the Court was delivered by Grover, 1. These appeals by special leave from a common appeals by special a common c judgment of the Madhya Pradesh High Coun arise out of re-ferences made by the Income-tax Appellate Tribunal relating to the assessment years 1956-57, 1957-58, 1958-59 and 1961-62. The appellant who is the assessee was a jagirdar of the erst- 3, afafrrn & gina’ srtdt ox cara fear aT ava glara 3(1) Fag gaara fear watg fe TTHTK afaqaat grat, USTHat att ote fe & gaan & faa ara fast aw ar 4 TO anit yfa & gaige Safer fee aes.“sfeae’ afta atameats IIL BT areey are 8 & slat gz, Ht za gate F— “sfeae’ afta ata ““(1) sitet dara aeat at adea—za afafaaa % ggsree & aeitt ted gu aTaHTT eS a Tart HY, feast.are are 3ate garda we etre 2, tar ofan daraera at arat ett star fa aggdt lH afaafar fag ®agar waar fear gear; (2) ga ore & welt aaa sftax gage at arta &aa gia att va ade & dar at arte am ofrad 2h sfaaaat at & Ta It alareny sare Wh ata: -Fee Ta waeHT Ht fat wea Te ay Ta waeHT Ht fat wea Te ay waeHT Ht fat wea Te ay Ht fat wea Te ay fat wea Te ay wea Te ay Te ay aysneitzarx, sas sasafanat ar saa fer ofafafa & fact afaaa e are ar saa fer ofafafa & fact afaaa e are saa fer ofafafa & fact afaaa e are fer ofafafa & fact afaaa e are & fact afaaa e are fact afaaa e are afaaa e are e are are geettH are SMS sare aoa ae ata 1”. — OI 12 H yells getH VF Hrateare at, feast arate qfa arr 3 mata Gayda at we eft, gaa en sara & a ada F aftat ait<aigad & ana sfaaxt % att ar fear fafer seq F oe HearTST aT| aa Hr farcry set BA a THe Aaa BY are 8 Fadta start at aaa afte St Tay ggT aT 4(1) (3) % aeta Ba (TTT) F ayetla wat ae are 13FH afore wea faqat ar *dastt Fag ga vat F— “(1) Duty to pay compensation.—Subject to otherprovisions of this Act the Government shall be liable to payto every Jagirdar whose Jagir-land has been resumed underSec.3,suchcompensationasshallbedeterminedin aecordance with the principles laid down in Schedule I.(2) Compensation payable under this sectionshall be.due as from the date of resumption and shallcarry simpleinterest at the rate of 24% per annum from that date up tothe date of payment: Provided that no interest shall be payable on anyamount of compensation which remains unpaid for anydefault of the Jagirdar, his Agent or his representative-ininterest.”’ FMT SAT AT) AT 14 ® seta Taare S ageiia waa sta 8 H aha sa aaa slant a sete at aayAtiare 154gfant at & darafac soarfearwar agriare 8 e wetsTMNTaTT BY AAT afHe st can gaat st wa wre are 14 Fgalt sae a can al weteygtart F geara,aretFt aaysara (1) & agare afaa a ofa za feat F feat sat atererer (4) % seta, ariteare arfe wt ofsaz aah dare aT weae at fe arte ate & gaggr Hazy vitae& after J ATHIT STqrqy seAaTT gt Tar B| while Gwalior State. By the Madhya Bharat Abolition of Jagir D Act 1951, hereinafter called the "Act'', the jagirs were abolished with effect from December 4, 1952. Under &. 8 of the Act compensation was payable to him in accordance with the princi- · pies laid down in Schedule 1. Under sub-s. (2) of that section the co'l'!pensation pa~able !Jecam~ due as from the. date of tho resum~uon of the 1ag1r. Simple interest was payable at the rato I of 2i Yo per annum from that date upto the date of payment on· · the amount of compensation which was payable within a period' of ten years in annual instalments. The assessee maintained' that the amount of interest formed part of the compensation and· constituted a capital receipt. The Income-tax Officer held against the assessee and included the interest in . his income .. The Appellate Assistant Commission.er took the same . view .. The appellate tribunal, however, held that the amount of interest was a capital receipt and could not be included in the assessee's: · income. The following question was referred to the High Coll!'! by the tribunal :-· "Whether on the facts and in the circ111I1stanoos . of the case the Interest that was received on the amount of compensation paid for resumption of the a11C1see'• jagir was a capital receipt ?" The High Court answered the question in the negative an<f against the assessee. - H The relevant provisions of the Act may be noticed. Sectiori 3 ( 1 ) provided that the Govel'lllltent shall, by notification, a~lnt a date for the resumption of all jagir lands in the State. Secttpn 4-. gave the consequences of the resumption of jagir land. Chapter rn headed "compensation" commenced with s. 8 which reads : "( l) Duty to pay compensation.-Subject to other provisions of this Act the Government shall be liable to pay to every Jagirdar whose Jagir-land has been resumed under Sec .. ~. such com-pensation as ·shaH be determined in accordance with the principles laid down in Schedule I. I)) Compensation payable under this section shall be due as from the date of resumption · and shall carry simple interest at the rate of 21% per annum from that date up to the date of c payment: Under s. I 2 every jagirdar who2.~ jagir land had been resumed under s. 3 had to file in the prescribed form a statement of claim for compensation before the Jagir Commissioner within two months f1om the date of resumption. On receipt of a statement of claim the Jagir Commisoioner was to determine the amount cf compensation payable to the Jagirdar under s. 8 as also the amounts recoverable from him under s. 4(1) (e) and other matters mentioned in the section 13. Under s. 14 the amount recoverable from a Jagirdar was to be deducted from the compensation payable to him under s. 8. Section 15 provid· ed for payment of compensation money. According to sub-·section (I ) after the amount of compensation payable to n Jagirdar under s. 8 had been determined and th.~ amount deduct--eel from it under s. 14, the balance was to .be payable in maxi-. mum ten annual instalments. Under sub-s. ( 4) payment of compensation money to a Jagirdar etc. was to be a full discharge of the Government from the liability to pay compensation in lieu of resumption of the jagir lands. 4, faaifeat at ate & a 1g sett qera: are 8-H gfe artafta “ofaat dar set ar wader” ot ararfer &1 ae eater atve fe dea sara sfanx aa ar dl art 21 gah aarar age wt gfaafeat qar fe afafaaa at are 13, 14 ar 1S A ars aT was are 8at gaara (1) ate scare (2)& fac ae dara & dhe sal fearmars att ga lal MaralBT aoa Tatcare at aaa shane H wT Ffeat war gi get sat, ara 15 at soar (4) & alta ag sareafer sfant aa dt wT vfawe BR gear F afar F oTBATT HT HA HAT S| SAW Ta A Bea eararay gre at saitatat weatatt feat starsfaar ar arr 8 at stare (2)A ease.eq 8 ag saaea fear marefe sfaax gaten at arta a ea atSUA| SA THT TAHT HY THA Gaya at arta a fafeta aleaaa gt re| sare aT Tag Hae gafaefear war ar aaife sfaaeae atten faeat & dec feararar ar) saare (1) * weta weesfant ate soarer (2) * aeta aaaeqrsT H sty eqse se farTat gohaat ar aerate aga 1 A afrafaa faarat F aqar<HT €1 3a TIT A ag soataa gars fe slants aaa gsae 8 Tare Brats arary agt 21 sfaa ate ales & Ja aaat asaracl & faaaa atfaafaa aval fear atasat,fafasea: gaear t aafe ga are at aot ease ate wafarr at) ga rarataa 4Bet AAMT ATA FATTMARL Maes, IAS, TAHT,fenraa ste site ofzarat Hoag oafafastfa fear feafafacita aH at zHA gz, Yfa asta afafaae, 1894 at ae 34% aad, aTS F ya Faget A afraTs wT A afta yf BT Heat faar dtdwafa % faq dat areal sara, sfeac ® faafeaa dara ® fa demsara gat gafay gna gay tae F geta Suda armed} at grit¢| stat fe ga fafasaa # efna fear aar 2 fe frarqaese 3 gardBMA Saaer F ‘sara’ gag Hr wat gaw afafea arene] ( aatteart )% fear t att safae sa afuenfsg a aal taraifaasey 2ar faa@ ot fe guar gt weqe aaa A A ad faara aM tal| ay eqez”@ fe afaftam at are 8 & atta aqgdt 1 ae afaafaa feared &AGU Far aaarhea chase Ht HA GeisT at ade & anitearxal aa gt 1g 1 afm argu wea Gada at ara at daa amet atiart at afen aa at at gafe e feet e deq at ary at aa:STMT (2) FH sare F aera H fe saary qaray csr ary sq WHITHAT BY aT HY THT UTdat gate Re fac va vfawe st waaamit & alt & Te & aeit-aife ofefaa at ma: vat eqez wg HTa faa art & arer ay 7s qtdfs famanqesa sfaaxt alc ga azsat fear free arg tar ade ad we arate fe soar (2) ¥wets sary art afafad ate afaart agada at sit ag oftaTaT BT TT HAY Tal St THAT| fear5. at adel Fare goyg ads ate stad afea afer sat {1 aH qaars st Gta shit a.| ada aftr at 1E ts qo /Fo Tarun Mehra The argument on b.~half of the assessee was based principally on the marginal heading of s. 8 which is "Duty to pay compen-~ation'". It has been contended that the interest payable formed part of the compensation money. It has further been pointed 'Out'that ss. 13, 14 and 15 of the Act did not make any distinc-tion between the payment dealt with by sub-s. (I) and sub'6. (2) -of s. 8 arid described both these paym.~nts as compensation pav-al:!le .. to If jagirdar .. Similarly under s. 15 ( 4) it was the ll&Ynl,ent of compensation money which included interest that '°per~ted as a foll discharge of the liability of the Government to pay compensation. In our opinion the High Court rightly rejected these contentions. Section 8 ( 2) clearly provide..! that compensation shall be due as from the date of resumption. Thus the amount of compensation became ascertained and payable from the date of resumption. The provision for interest was made simply because the compensation was to be paid in ten annual instalments. A clear distinction has been made between the compensation payable under snb-s. (I ) and the interest which is payable under sub-s. ( 2). The compensation has to be determined in accordance with the principles laid down in Schedule I. That Schedule indicates that the determination of compensation had nothing to do with the payment of interest. The marginal heading cannot control the interpretation of the words of the section particularly when the language of the section is clear and unambiguous. This Court has held in Dr. Sham Lal Naru/a v. Commissioner of Income-tax, Punjab, Jamm11 & Kashmir, Himachal Pradesh & Patiala(1), that the statutory interest paid under s. 34 of the Land Acquisition Act 1894 on' the amount of compensation awarded for the period D from the date the Collector has taken possession of the land compulsorily acquired is interest paid for the delayed . payment of the compensation and is, therefore, a revenue receipt liable to tax· under the Income-tax Act. As has been pointed out in that decision the legislature has expressly used the word interest with its well known connotation In the relevant stattitory provi-E sion and it is therefore reasonable to give that expression the natural meaning, it bears. The same . principle would be applicable to the present case. It is apparent that under s. 8 ot the Act the- comjl)Cnsation amount as determined in accordance with the principles laid down in Schedule I became due to the jagirdar from the date of resumption. Since the F entire amount was not to be 11aid on the date of the resumption but was to be paid by instalments extending over ten years a provision had to be made for the payment of interest in sub-s. (2). The amount of interest was thus iiiven to the jagirdar for beinl! keot out of the compensation amount for the aforesaid period. Th" iegislature being well aware of the distin~tion between compensation and interest thereon employed clear G language which leaves no room for doubt that under sub-s. (2) interest was payable in its well known and well understood sense and it could never form a part of the compensation money, There is no merit in these appeals which are dismissed witn costs. , One hearing fee. · H G.C. Appeals dismissed. (I) 53 l.T.R. ISi.