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Page | 16 ITA No.-1807/Del/2022 Bhupinder Singh Julka

17. The decision of the Himachal Pradesh High relied on by Mr Khaitan is on a very similar set of facts. In that case, the H.P. Housing Board floated a scheme under which flats were to be constructed by the Board/assessee from the money deposited by the allottees and which stipulated that the assesse would have to pay interest to the allottees if the flats were not provided within a certain time frame. Upon there being a delay in the construction of flats, the assessee paid interest at the agreed rate to the allottees in terms of the letter of allotment. The AO viewed the payment to be interest under section 2(28A) which was set aside by the Commissioner who held that the payment made was in the nature of compensation for the delay in handing over possession of the flats. This view was affirmed by the Tribunal. Confirming the decision of the Tribunal, the High Court held that the money was paid on account of damages suffered by the allottee for delay in completion of the flats. Notably. in coming to its finding, the High Court considered the decision of the Madras High Court in Viswapriya relied on by Mr Ghosal for the Revenue in the instant case- and held that the nature of the assessee's business in Viswapriya involved a return on investment made by the investor which was assured to be over and above a fixed percentage. The High Court in H.P. Housing Board's case (supra) also relied on a decision of the Hon'ble Supreme Court reported in Bikram Singh v. Land Aquisition Collector [1996] 89 Taxman 119/1997] 224 ITR 551 where the interest paid to persons whose land had been compulsorily acquired was held to be a revenue receipt (and not a capital receipt) and therefore not falling within the purview of section 194A. The Court also relied on Ghaziabad Development Authority v. Dr N.K. Gupta [2002] 258 ITR 337 (NCDRC) where it was held that section 194A had no application to payment of interest made to the allottees for Page | 17 ITA No.-1807/Del/2022 Bhupinder Singh Julka delayed completion of flats. Hence, although the Madras High Court decision in Viswapriya Financial Services & Securities Ltd's case (supra) gives a more inclusive definition of the term 'interest', the Himachal Pradesh High Court decision is more persuasive having considered the former and resting on an identical set of facts. Even if there were to be a doubt in the face of these two decisions, that doubt must be resolved in favour of the assessee tax-payer; Reference may be made to the Apex Court in Central India Spg. & Wvg & Mfg. Co. Ltd.'s case (supra). Besides agreeing with the reasons given by the Himachal Pradesh High Court for holding that payment for delayed allotment of flats cannot be brought under Section 2(28A) of the Act, the said decision is of a co-ordinate Bench and subsequent to the Madras High Court decision in Viswapriya Financial services & Securities Ltd's case (supra) and hence has greater persuasive value bearing in mind the principle of comity of Courts.