DIXIT C.J. - In the consolidated reference under section 66(1) of the Indian Income-tax Act, 1922, arising out of assessment proceedings for the assessment years 1956-57, 1957-58, 1958-59 and 1961-62 by the Appellate Tribunal, Bombay, at the instance of the Commissioner of Income-tax, the question which we are required to answer is :
'Whether, on the facts and in the circumstances of the case, the interest that was received on the amount of compensation paid for resumption of the assessees jagirs was a capital receipt ?'
The material facts are that the assessee is an ex-jagirdar of the former Gwalior State. His jagir estate was abolished by the Madhya Bharat Abolition of Jagirs Act, 1951 (hereinafter referred to as the Act). The jagir stood resumed as from 4th December, 1952, on which date a notification under section 3 of the Act was published for the resumption of the all jagir lands in the quondam State of Gwalior. On the resumption of his jagir the assessee became entitled to receive compensation under section 3(1) of the Act as determined in accordance with the principles laid down in the Schedule to the Act. The compensation amount payable to the assessee, as also to other jagirdars, whose jagirs were resumed under the Act became due from the date of resumption and carried simple interest at the rate of 2 1/2 per cent. per annum from the date of resumption till the date of payment. Section 15 of the Act provided that the amount of the compensation would be paid in maximum ten annual instalments. In the assessment years in question the Income-tax Officer, Gwalior, brought to tax the interest amount on compensation which accrued to the assessee in the relevant as counting periods. The assessment against the ex-jagirdar, assessee, was as an individual. He claimed that the amount of interest which accrued to him was a part of the compensation payable to him for the resumption of his jagirs, and that it was a capital receipt not liable to tax under the Income-tax Act. The Income-tax Officer rejected this contention and so did the Appellate Assistant Commissioner who upheld in appeal the decisions of the Income-tax Officer. In the second appeal which the assessee then preferred before the Tribunal the assessee reiterated his contention that interest amounts included in the income of the assessment years stated earlier was part of the compensation that was payable for the resumption of his jagir and as such was a receipt of a capital nature not taxable under the Income-tax Act. This contention found favour with the Tribunal. The Tribunal held that the interest on the compensation amount was a capital receipt not liable to taxation. The reasoning of the Tribunal in support of this conclusion proceeded thus : that the assessee had a capital asset, namely, his jagir and he had been deprived of that asset on payment of compensation amount; the Act provided for payment of interest thereon; and that, as on being dispossessed of his jagir, the assessee was entitled to be paid immediately the compensation amount was 'solatium paid to the assessee by the Government for dispossession of the jagir', and, therefore, was a capital receipt. The Tribunal observed :
'As in the case of the acquisition of immovable property, the jagirdar was entitled to retain the right over the jagir; otherwise he must be paid the compensation amount the moment the jagir was acquired. Since the said amount of compensation was not paid then and there, certainly he was to be compensated for being dispossessed of the jagir which was in this case payment of some interest. It is practically a solatium paid to the assessee by the Government for dispossession of the jagir. As such, the receipt of interest on the compensation amount is a capital receipt not liable to taxation.'
Before dealing with the argument advanced on behalf of the assessee it is necessary to refer to the material provisions of the Act. Chapter II dealt with the resumption of all jagir lands. Section 3 provided for the appointment of a date for the issue of a notification by the State for the resumption of all jagir lands in the State of Madhya Bharat. Section 4 laid down that as from the date of resumption and notwithstanding anything contained in any contract, grant or document or in any other law, rule, regulation or order for the time being in force, but save as 'otherwise provided in the Act', the consequences stated in the various clauses of section 4(1) shall ensue. Section 8 of the Act then made a provision for the assessment of compensation and the procedure for the determination of the amount of compensation. A jagirdar on the resumption of his jagir lands became entitled to receive compensation at seven times his net income determined in accordance with Schedule I to the Act. Section 8 ran thus :
'8. Duty to pay compensation. - (1) Subject to the other provisions of this Act, the Government shall be liable to pay to every jagirdar whose jagir land has been resumed under section 3, such compensation as shall determined in accordance with the principles laid down in Schedule I.
(2) Compensation payable under this section shall be due as from the date of resumption and shall carry simple interest at the rate of 2 1/2 per cent. per annum from that date up to the date of payment :
Provided that no interest shall be payable on any amount of compensation which remains unpaid for any default of the jagirdar, his agent or his representative-in-interest.'
Schedule I to the Act is important. It laid down the principles for determining the compensation payable to a jagirdar whose jagir lands had been resumed. Under clause 5 of the Schedule such a jagirdar became entitled to receive seven times the net income of his jagir lands calculated in accordance with the provisions contained in the Schedule. The net income was arrived at after deducting certain items from the gross income. The gross income in the Schedule meant the aggregate of rent payable in respect of the lands in the jagir for the agricultural year immediately preceding the agricultural year in which the jagir lands were resumed, whether payable by the tenant or sub-tenant or the to and included income of the previous agricultural year from excise, forest quarries etc. In the calculation of compensation 'interest on compensation' did not form an element.
Under section 12 of the Act every jagirdar whose jagir land had been resumed was required to submit a statement of claim for compensation within the prescribed time. Section 13 then said that on the receipt of a statement of claim from a jagirdar under section 12, or if no statement was received from him, the jagir Commissioner shall determine 'the amount of compensation payable to the jagirdar under section 8' and other matters mentioned in that section. Section 14, while dealing with the deduction of amounts, in respect of dues and debts from a jagirdar, from the compensation, said that these amounts 'shall be deducted from the compensation payable to him under section 8.' Section 15(1) of the Act was concerned with the payment of compensation money. It said that 'after the amount of compensation payable to a jagirdar under section 8 is determined under clause (a) of section 13 and the amount deducted from it under section 14, the balance shall be payable in maximum ten annual instalments.' Sub-section (4) provided for the discharge of the Governments liability from payment of compensation in lieu of the resumed jagir thus :
'The payment of compensation money, under this Act, to a jagirdar, and to his zamindars and co-sharers and to persons entitled to a maintenance allowance, if any, shall be a full discharge of the Government from the liability to pay compensation in lieu of the resumption of his jagir lands by the Government, but shall not prejudice the rights to which any other persons may be entitled, by due process of law to enforce against the person to whom any amount has been so paid.'
Shri Adhikari, learned Advocate-General appearing for the department, submitted that section 8 itself made a distinction between the amount awarded as compensation and interest payable on the amount so awarded; that in the determination of the amount of the compensation in accordance with the principles laid down in Schedule I, no amount as 'interest' was included; that as under section 10 of the Act the amount of compensation became payable to the jagirdar in maximum ten annual instalments and not immediately on resumption, the interest paid to him under section 8(2) was not any compensation paid to him for loss of his right to possession of the resumed jagir but was given to him for the deprivation of the use of the money representing the compensation for the resumed jagir; that the interest awarded to the jagirdar was thus in true sense 'interest' and not a capital sum of compensation estimated in terms of interest; that, therefore, the Tribunal was wrong in holding that the interest amount which accrued to the assessee as compensation was a capital receipt not liable to tax and that it should have been held that it was a revenue receipt liable to tax.
In reply, Shri Chitaley, learned counsel for the assessee, submitted that though section 8 of the Act contained two sub-sections, one dealing with the determination of the compensation and another with regard to the payment of interest on compensation, yet the interest on the compensation amount was not in reality 'interest' but that it partook the character of compensation and was a part of the compensation payable to the assessee for the deprivation of his jagir estate. It was argued that having regard to the article 31(2) if the Constitution the assessees jagir could not be resumed under the Act unless it either fixed the amount of compensation or specified the principles on which and the manner in which the compensation was to be determined; that when the assessee was deprived of his jagir lands, the right to receive compensation together with 'interest' took the place of the right of retain possession of the jagir lands; and that, therefore, consistent with article 31(2), the provision in section 8(2) must be read as a provision for the calculation of interest as part of the compensation amount for the resumed jagir. Learned counsel sought to reinforce his argument that what a jagirdar received as 'interest' was in reality a capital sum as art of the compensation by referring to the heading 'duty to pay compensation' of section 8. It was said that this heading showed that the amounts payable to a jagirdar under sub-section (1) as well as under sub-section (2) was compensation. It was further said that the section 13, 14 and 15 did not make any distinction between the payment dealt with by sub-section (1) and (2) of section 8 and spoke of both these payments as 'the amount of compensation payable to a jagirdar under section 8' and the under sub-section (4) of section 15 it was the payment of compensation money under section 8 which included interest that operated as a full discharge of the Governments liability to pay compensation on the resumption of the jagirdars jagir lands. Learned counsel proceeded to say that interest matter pertained to the domain of payment after ascertainment of the compensation amount and that if interest on the amount of compensation determined under section 8(1) had not considered to be a part of the compensation given for the resumption of the jagir, then the legislature would have made provision for interest not in section 8 itself but elsewhere separately.
The question whether the interest received by the assessee was a capital or a revenue receipt depends on whether the interest amount did, or did not, form a constituent of the commutation sum which was paid to the assessee as compensation for the loss of his jagir. There is no dispute that the commuted amount received by the assessee as compensation for the loss of his jagir was a capital receipt not liable to be taxed. The question whether a receipt is capital or income has been considered in many cases. But, as pointed out by the Supreme Court in Commissioner of Income-tax v. Rai Bahadur Jairam Valji and Kettlewell Bullen and Co. Ltd. v. Commissioner of Income-tax, though various rules have been enunciated as furnishing a key for the solution of the question, no single test as infalliable or no single criterion as decisive in the determination of the question can be formulated and the question must ultimately be decided on the facts of the particular case. In Kettlwell Bullen and Co. Ltd. v. Commissioner of Income-tax, it was observed :
'It may be broadly settled that what is received for loss of capital is a capital receipt; what is received as profit in a trading transaction is taxable income. But the difficulty arises in ascertaining whether what is received in a given case is compensation for loss of a source of income, or profits in a trading transaction.'
So also in Senairam Doongarmal v. Commissioner of Income-tax while dealing with the question whether when a tea estate belonging to a person was requisitioned for defence purposes by the military authorities, the compensation paid to him on the basis of the out-turn of tea that would have been manufactured by him during the period of requisition was a revenue receipt or a capital receipt, the Supreme Court said that the question to be considered was, that the payment made to the assessee replaced, whether the payment was made 'to fill a hole in the capital of the assessee' or whether it was made 'to fill a hole in the profits of a going business.'
Examining the circumstances of the present case is the light of the broad rules indicated in the two cases of the Supreme Court just referred to, we have no doubt that what the assessee here received as interest on compensation was a revenue receipt and not a capital receipt. It will be seen from the provisions contained in section 8 of the Act that when the assessees jagir was resumed, he became entitled to receive under sub-section(1) thereof compensations as determined in accordance with the principles laid down in Schedule I. This compensation amount became due to him under sub-section(2) from the date of resumption. The compensation amount was, however, made payable not on the date of the resumption of the jagir but in maximum ten annual instalments. As on the date of the resumption of the jagir there arose a right in favour of the assessee to receive compensation and as the compensation amount was not aid on the date of the resumption itself, therefore, provision was made by sub-section(2) of section 8 for payment of interest on the compensation sum form the date of resumption till the date of payment of the rate of 2 1/2 per cent. per annum. Section 8 itself thus made a clear distinction between the compensation determined in accordance with the principles laid down in Schedule I payable to a jagirdar for the jagir resumed and the interest payable on the compensation so determined. A perusal of the provisions in Schedule I shows that the interest amount provided by sub-section(2) of section 8 does not in any way from an element in the calculation of the compensation in accordance with the principles laid down in Schedule I. There is nothing in the section 8 or Schedule I or section 15 to indicate that the interest amount payable to a jagirdar under sub-section(2) of section 8 was added to the compensation amount determined in accordance with Schedule I; and that the total anount was made payable in maximum ten annual instalments. The express provisions of section 8 and Schedule I thus clearly show that the statutory interest payable to a jagirdar under sub-section(2) was not any compensation paid to him for being kept out of the compensation amount for a period of time extending up to ten years after resumption of his jagir when it became due to him on the date of the resumption of the jagir. The interest paid to a jagirdar under sub-section(2) was thus not a constituent of the compensation amount received by him under sub-section(1) but was a separate amount which was 'interest' in the true sense on the compensation amount for the loss of the jagir.
The fact that section 8 bears the heading 'Duty to pay compensation' and that in sections 13, 14 and 15 the expression 'the amount of compensation payable to a jagirdar under section 8', 'the compensation payable to him (i.e. jagirdar) under section 8', and 'after the amount of compensation payable to a jagirdar under section 8 is determined' have been used, does not afford any justification for holding that the statutory interest payable to a jagirdar under sub-section(2) of section 8 is a part of the compensation payable to him under sub-section(1) of section 8. The language of the two sub-sections of the section 8 is clear enough to point out the distinction between the compensation payable under section 8(1) and the interest payable under section 8(2) on the compensation determined in accordance with the principles laid down in Schedule I. That being so, the heading prefixed to the section cannot control the construction of the language used in the body of the section when it is clear and unambiguous. It is well settled that if there is any doubt in the interpretation of the words of a section, then the heading and marginal notes can be resorted to by the court to resolve that doubt; but that if the language is otherwise clear and unambiguous, then they are of no help in the construction of the section (see Western India Theartres v. Municipal Corporation of the City of the Poona and Bhinka v. Charan Singh). The argument of learned counsel for the assessee that as provision for interest has been made in section 8 itself, therefore it should be considered to be a part of the compensation for the resumption of his jagir is altogether untenable. It is true that the question of payment of interest on any amount pertains to the domain of its payment after it has been ascertained. But the question whether the provision dealing with interest is one for its payment after a certain amount is ascertained or is one for inclusion of interest as a part of the amount ascertained has to be determined not on the location of the provision in the Act but on its wording. The place at which a particular section is to be found is not sufficient reason for placing an interpretation on the plain words of the section which is not justified by the words themselves. Here, the wording of sub-section (2) of section 8 is very clear, and it shows that the interest provided thereby is on the compensation determined under sub-section (1) read with Schedule I and not as part of it.
When section 8 itself uses the word 'interest' in contradistinction to the amount of compensation and when in the calculation of the compensation amount in accordance with the principles laid down in Schedule I, 'interest' does not at all the enter, there can be no reason for thinking that the by using the expression 'the amount of compensation payable to a jagirdar under section 8' in section 13, and like expression in sections 14 and 15, the legislature intended to make the interest payable under section 8(2) as part of the compensation for loss of jagir and included interest in sections 14 and 15. Having regard to the distinction made by sub-sections (1) and (2) between compensation and interest thereon and to the provisions of Schedule I, the expression 'the amount of compensation payable to a jagirdar under section 8' used in section 13, or like expressions used in section 14, means only the amount of compensation payable under sub-section (1) of sections 8 and not the total sum of compensation as determined in accordance with the principles laid down in Schedule I and interest thereon as 'compensation' for loss of jagir.
Learned counsel for the assessee laid all emphasis on sub-section (4) of sections 15 as a provision showing that interest payable to a jagirdar under sub-section (2) of section 8 was a constituent of the compensation paid to him for the resumption of his jagir. We are unable to accept this reading of sub-section (4). It is true that when that provision says that, 'The payment of compensation money, under this Act, to a jagirdar...... shall be a full discharge of the Government from the liability to pay compensation in lieu of the resumption of his jagir lands by the Government', what is meant is that it is only when the amount of compensation as determined under sub-section (1) of section 8 read with Schedule I together with interest thereon as provided by section 8(2) is fully paid in the manner laid down in section 15 that the Government is absolved from its liability to pay compensation in respect of the resumed jagir. The Government is not absolved from its liability for the payment of compensation in respect of the resumed jagir if its not paid within the prescribed time-limit together with interest thereon. But from the fact that the Governments liability does not cease so long as the interest amount is not paid, it does not follow that interest provided by sub-section (2) of section 8 is an integral part of the compensation determined under sub-section(1) of section 8. The determination of compensation for the resumption of a jagir after taking into consideration certain constituent elements is one thing. The award of the interest on the amount of compensation from the date when the jagirdar became entitled to receive the compensation from the dare when the jagirdar became entitled to receive the compensation, that is, from the date of the resumption of his jagir, is quite another. Yet different is the payment of compensation together with interest thereon, within the prescribed time in accordance with the prescribed mode for the purpose of absolving the Government from its liability to pay compensation for the resumed jagir. If the legislature had intended to make any interest amount part of the compensation payable to a jagirdar for the loss of his jagir, it would have expressed its intention directly and in express terms and words and not left such an intention to be inferred from a provision dealing with the payment of compensation together with interest thereon for discharge of the Governments liability to pay compensation in respect of the resumed jagir.
Learned counsel for the assessee referred us to Inglewood Pulp and paper Co. v. New Brunswick Electric Power Commission and Satinder Singh v. Umrao Singh and contended on the basis of the those authorities that the right to receive interest took the place of the right to retain possession of the jagir lands; and that, therefore, the statutory interest provided by section 8(2) was nothing but a provision for calculation of interest as part of the compensation amount payable to a jagirdar for the loss of his jagir. We are unable to accept this contention. The decisions relied on by learned counsel no doubt lay down that upon the expropriation of land under statutory power, whether for the purpose of private gain or of good to the public at large, the owner is entitled to interest upon the principal sum awarded from the dare when possession was taken, unless the statute clearly shows a contrary intention. But they also point out that when such a claim for payment of interest is made, the claim is not for damages or compensation properly for the property expropriated, but that it is a claim based on the general rule that if a person is deprived of his property he should be put in possession of compensation immediately; if not, in lieu of possession taken by compulsory acquisition, interest should be paid to him on the said amount of compensation. The decision of the Supreme Court in Satinder Singhs case makes it very clear that interest that is paid in such a case is not as compensation amount which the person concerned was entitled to get immediately after he was deprived of his property.
It is not necessary for us to refer to the cases in which the question was whether the particular receipt is a capital or a revenue receipt. Each of those cases is distinguishable on facts and is an authority in the context of its own facts. Reference must, however, be made to the decision of the Court in Raja Rameshwara Rao v. Commissioner of Income-tax to which our attention was drawn by the learned counsel for the assessee. That case is clearly distinguishable on facts. In that case payments made by way of maintenance allowance under the Hyderabad (Abolition of Jagirs) Regulation to a jagirdar whose jagir had been abolished under that regulation, to the extent that it did not form part of the commutation amount payable to him under the Hyderabad Act, were held to be of the nature of income taxable under the Indian Income-tax Act, 1922, inter alia, for the reason that they were made for the interim period between the time when the income of the jagir began to be collected by the Government and the date when the compensation for the loss of the jagir right first became payable. The payments were thus not by way of compensation for loss of jagir but by way of compensation for loss of income during the interim period. The decision in Raja Rameshwara Raos case turned on the construction of the relevant provisions of the Hyderabad Act, and we do not find any observations in that case lending supports to the assessees contention here that the interest received by him was a art of the compensation amount payable to him under section 8(1) of the Act.
A case very near to the one in hand and which concludes the matter before us is the decision of the Supreme Court in Dr. Shamlal Narula v. Commissioner of Income-tax. In that case the Supreme Court held that the statutory interest paid under section 34 of the Land Acquisition Act, 1894, on the amount of the compensation awarded for the period from the date the Collector had taken delayed payment of the compensation and was, therefore, a revenue receipt liable to tax under the Income-tax Act, and that this amount of interest was not compensation for the land acquired or for depriving the claimant of his right to possession but was paid to the claimant for the use of his money by the State. The reasoning given by the Supreme Court in support of the above conclusion applies equally here and on that reasoning there can be no escape from the conclusion that the statutory interest paid to a jagirdar under section 8(2) of the Act on the amount of compensation is a revenue receipt liable to tax under the Income-tax Act. In Narulas case, the Supreme Court no doubt observed that if interest on the amount of compensation determined under section 23 of the Land Acquisition Act had been a part of the compensation or given in consideration of the compulsory nature of the acquisition, the legislature would have provided for it in section 23 itself. But this observation does not mean that whenever in an enactment one and the same section contains a provision for the payment of compensation for compulsory acquisition and provision for payment of statutory interest on the amount of compensation from a certain date, then the interest amount would necessarily be a part of the compensation. As already stated by us, the plain meaning of a provision cannot be departed from merely because of its location at a particular place in the Act. It is noteworthy that the proviso to section 8(2) of the Act lays down that no interest shall be payable on any amount of compensation which remains unpaid for any default of the jagirdar, his agent or his representative-in-interest. If the statutory interest awarded by section 8(2) had been an integral part of the compensation paid to the jagirdar for depriving him of his right to possess the jagir, then there would not have been in its very nature a provision for stop page of interest resulting in the reduction of the compensation amount because of the amount remaining unpaid for any default of the jagirdar.
For all these reasons, our conclusion is that the amount awarded to a jagirdar under section 8(2) of the Act as interest is not any amount of compensation or damages for the loss of his jagir but only compensation payable by the State for keeping back the amount of compensation from him. The interest amount paid to the jagirdar only represents the profit which the jagirdar might have had if he had been paid the compensation money on the date of the resumption of his jagir if he had the use of the money from that date.
Out answer to the question propounded is, therefore, in the negative. The Commissioner of Income-tax shall have the costs of this reference. Counsels fee is fixed at Rs. 200.
Question answered in the negative.