J.C. SHAH, J.

(1) ARUNACHALLAM Chettiar, who will hereinafter be called "A. Senior", had three wives-Valami Achi, Lakshmi Achi and Nachiar Achi. By Valami Achi he had a son who was also called Arunachallam we will call him "A. Junior". A. Junior married Umayal Achi. A. Senior, A. Junior and the wives of the two members formed a joint Hindu family, possessing a large estate in Ceylon. A. Junior died on 9/07/1934. A. Senior died on 23/02/1938, leaving heirs running his two wives Lakshmi Achi and Nachiar Achi and his sons widow Umayal Achi. The Revenue authorities in Ceylon levied Rs. 2,21,743.00 as estate duty in respect of the estate of A. Junior and Rs. 6,33,601.76 in respect of the estate of A. Senior. The levy was challenged by the three widows and the dispute was carried to the Judicial Committee of the Privy council. The Board set aside the entire levy. In 1957 the government of Ceylon deposited in court the duty which was levied together with Rs. 7,97,072.00 as interest due from the date on which the estate duty was collected.

(2) AFTER the death of A. Senior, there were disputes between the three widows Lakshmi Achi, Nachiar Achi and Umayal Achi, and each widow adopted a son to her deceased husband. A suit for partition of the joint family property was then filed in the Civil court at Deokotai. Under a settlement reached on 17/02/1949 between the three widows and the adopted son of A. Junior (whom we will hereinafter call the assessee) was held entitled to 5/24th share in the estate.

(3) THIS appeal relates to the liability to income-tax on the share of the assessee in the amount of interest paid on the estate duty which was refunded by the Ceylon government after the Judicial Committee set aside the order levying the duty.

(4) THE Income-tax Officer, Karai Kudi brought to tax the assessees share in the amount of interest received from the Ceylon government on the estate duty. The Income-tax Officer rejected the contention of the assessee that the receipt was of a capital nature, and that in any case it was a casual receipt and on that account exempt from tax Under Section 4(3)(vii) of the Income-tax Act, 1922. The order was confirmed by the Appellate Assistant Commissioner. The Income-tax Appellate tribunal, however, reversed the order holding that the amount of interest received by the assessee was of a capital nature and was on that account not liable to tax.

(5) THE tribunal referred the following question to the High court of Madras under Section 66(1) of the Income-tax Act, 1922 :

"WHETHER the sum of Rs. 1,20,810.00 or any part thereof is assessable to tax ?"

The High court was of the opinion that the assessees share in the interest attributable to the period ending 17/02/1947 was not taxable but the share attributable to the period between that date and the date of payment by the Ceylon government was taxable. Against that decision, with certificate granted by the High court the Commissioner of Income-tax has appealed to this court. The assessee has not appealed against the opinion in so far as it was held that the receipt to the extent to which it related to a period subsequent to 17/02/1947 is taxable. In the view of the High court the amount paid as estate duty must be deemed in law to have come from the joint family estate and on severance of the joint family status in February, 1947, each adopted son received his share in the estate then existing as capital. Counsel for the Revenue contended that the High court erred in holding that the assessees share in the amount of interest received from the Ceylon government was of the nature of capital. Counsel submitted that tlie character of the receipt which was revenue when received by the joint family, could not be altered when it was divided between the members of the family. Counsel also contended that this court has held that the share in the amount of interest on estate duty received by the son adopted by Nachiar Achi was l