Interest received by Contractor due to delay in payment is Business Income

Indisputably, the interest amount was received by the assessee on account of delay in payment of money due to it by its contractee. This issue is no longer res integra. The Hon’ble Supreme Court in the case of CIT Vs. Govinda Choudhury & Sons, 203 ITR 881 held as follows:

“…….If the amounts are not paid at the proper time and interest is awarded or paid for such delay, such interest is only an accretion to the assessee’s receipts from the contracts. It is obvi

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