The taxpayer, which was entitled to a long lease of land in consideration of developing the land, assigned its ultimate rights to the lands to a bank, which paid £1,500,000 to the taxpayer and was required to grant a long underlease of the lands to the taxpayer at a rack rent upon completion and in the mean time to make payments (which the taxpayer was not obligated to repay), to the taxpayer to finance development of the lands. When the aggregate of these payments reached £2,135,000, the taxpayer was required to pay "interest" on the aggregate amount until the granting of the underlease.
The "interest" did not qualify as "interest of money" for the purpose of a source deduction requirement.
The payments to be made are not payments made for the use of the money of another, but payments made because the Company has not proceeded fast enough with its obligations to complete the development and enter into an agreement for the grant of the sub-underlease. The payments are not compensation for delay in payment but for delay in the performance of other obligations.