KAILASH NARAIN GUPTA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, vide its order dated October 23, 1982, in respect of the assessment year 1978-79 has referred the following question of law arising out of its order dated September 12, 1980, under Section 256(1) of the Income-tax Act, 1961 :

(2.) THE facts as stated in the statement of case are that the assessee met with an accident when a jeep hit him on February 4, 1972, as a result of which he received severe injuries including fracture of bone, and was admitted in the hospital for medical treatment. THE assessee is a practising lawyer and filed the claim for compensation under Section 110A of the Motor Vehicles Act, 1939, before the Claims Tribunal and the said Tribunal, vide its order dated August 22, 1977, awarded a compensation of Rs. 15,000 on account of physical disability and mental agony caused to him due to the accident. A further sum of Rs. 2,600 was awarded for medical reimbursement. THE claim of the assessee with regard to compensation on account of loss of income from profession was not accepted by the Tribunal. THE Tribunal directed that the assessee will be entitled to interest at the rate of six per cent. on the compensation amount awarded on August 3, 1977, to the date of realisation thereof. THE interest amount was determined to the extent of Rs. 5,757 which was included by the Income-tax Officer in the income of the assessee. It was contended before the Income-tax Officer that the interest amount was a part of compensation and did not constitute as taxable income under the Act.

(3.) THE Income-tax Appellate Tribunal found that under the provisions of Section 110 of the Motor Vehicles Act though interest is discretionary which the Claims Tribunal may award, but it was awarded under the statute itself and if the interest is awarded under a statute or under the contract the same is exigible to income-tax.