Income-tax---

----Income---Income or capital---Interest---Interest awarded by arbitrator-- Not assessable as revenue receipt.

Interest received by the assessee in relation to an arbitration award is of a capital nature. It is not taxable as a revenue receipt.

Govinda Chaudhury and Sons v. C.I.T. (1977) 109 ITR 497 (Orissa) fol.

R.P. Kar for the Commissioner,

S. Ray for the Assessee.

JUDGMENT

A. PASAYAT, J: --Since both the cases involve an identical dispute, they are disposed of by this common judgment.

Heard Mr. R.P. Kar for the Department and Mr. S. Ray for the assessee. On being moved by the Revenue under section 256(2) of the Income Tax Act, 1961 (in short, "the Act"), this Court had directed the Income-tax Appellate Tribunal, Cuttack Bench, Cuttack (in short, "the Tribunal"), to state a case and refer the following question for our opinion:

"Whether, on the facts and in the circumstances of the case, interest awarded by an arbitrator is income to be assessed to tax under the Act?"

The dispute relates to the taxability of interest received by an assessee in relation to an arbitration award. Taxability of such interest came up for consideration of this Court in several cases. In Govinda Choudhury and Sons v. C.I.T. (1977) 109 ITR 497 (Orissa), this Court held such interest to be of capital nature and, therefore, not taxable as a revenue receipt. We are in agreement with this view expressed in Govinda Choudhury 's case (1977) 109 ITR 497 (Orissa) and the answer to the question referred to us is in the negative, in favour of the assessee and against the Revenue.

The reference is, accordingly, disposed of. No costs.

D.M. PATNAIK, J.---A agree.

M.BA./2379/TOrder accordingly.