Interest for delay in buy back process is part of Sale consideration

In the case in hand the interest is received in pursuance to the directions of the SEBI and due to delay in completion of the process of buy back of shares as prescribed under the SEBI regulations. The real acquisition of shares took place only in the month of November 2001 and prior to the said date it cannot be said that the interest was paid due to delay in the payment of consideration. Therefore, we held that the additional amount received by the assessee being 15% interest from 8.8.2000 to 22.11.2001 is part of sale consideration and accordingly will be treated as part of capital gain and not the income from interest. The other decisions relied upon by the assessee are not applicable on the facts of the case because in those cases the issue was either the interest received on delayed trade receipts and therefore there was no dispute of revenue or capital receipt or the payment was as compensation for delay in construction.

INCOME TAX APPELLATE TRIBUNAL “BENCH, MUMBAI

I.T.A. No. 2878/Mum/2006 – Assessment Year : 2002-03

Genesis Indian Investment Company Ltd.

Vs.

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