(1.) This is an application for leave to appeal to His Majesty in Council against the decision of a Bench of this Court in a reference under Section 66 (3) of the Indian Income-tax Act. The facts that led to the reference are shortly as follows. Certain house property of Behari Lal Bahargave, the opposite party, was acquired by the Improvement Trust and a certain amount was awarded as compensation to the opposite party by the Acquistion Officer of the Trust. The opposite party being dissatisfied with the award of the Acquistion Officer, took the matter before the Improvement Trust Tribunal and the Tribunal increased the amount of the award and further awarded to the opposite party a sum of Rs. 12,708 by way of interest on the increased amount. It appears that after the award by the Acquisition Officer, the Trust had taken possession of the house and accordingly the Tribunal held that the opposite party was entitled to a sum of Rs. 12,708, by way of interest for the loss of the possession of the house.
(2.) The Income-tax Department assessed the opposite party on this sum of Rs. 12,708. The opposite party objected to this assessment and eventually the matter was referred to this Court under Section 66 (3) of the Income-tax Act. A Bench of his Court held that the sum of Rs. 12,708 was awarded to the opposite party by way of damages and was not liable to assessment. In particular, the Bench held that the said amount could not be regarded as an income accruing to the opposite party and therefore was not liable to assessment of income-tax. In this view of the matter the Bench held that the amount of Rs. 12,708 should not be assessed to income-tax. In the concluding portion of its judgment the Bench made the following observations :-
(3.) It is not without considerable doubt and hesitation that we have arrived at this decision, for there is much to be said on the other side; but upon the whole matter we think that this is the correct view to take and we also bear in mind that where the interpretation of a fiscal enactment is open to doubt, it should be construed favorably to the subject.