26 T.C. 545">*545 This proceeding involves a deficiency in personal holding company tax in the amount of $ 15,729.33 for the year 1950.

26 T.C. 545">*546 The only issue is whether 80 per cent or more of the petitioner's gross income for the year 1950 consisted of personal holding company income as defined by section 502 of the 1939 Code.

Some of the facts were stipulated.

FINDINGS OF FACT.

The stipulated facts are so found and are incorporated herein1956 U.S. Tax Ct. LEXIS 163">*165 by this reference.

Petitioner is a New York corporation whose stock was wholly owned by two individuals during the year 1950. It filed a corporate income tax return for such year with the collector of internal revenue for the third district of New York.

On August 19, 1948, the Board of Estimate of the City of New York subjected premises, which petitioner owned inthe Borough of Manhattan, to condemnation proceedings under the City's power of eminent domain. By order of the Supreme Court of New York, title to the premises became vested in the City on September 21, 1948. On May 2, 1950, the Supreme Court of New York entered its final decree in the condemnation proceedings, awarding petitioner the sum of $ 317,255 as compensation for its condemned property, together with interest on such amount at the rate of 4 per cent per annum from the 21st day of September 1948 to the 2d day of May 1950. The City of New York duly paid the award and interest due petitioner.

Section B15-28.0 of the Administrative Code of the City of New York provides, as follows, with reference to condemnation awards:

Sec. B15-28.0 Damages; when, how and to whom paid.

a. All damages awarded by the court, 1956 U.S. Tax Ct. LEXIS 163">*166 with interest thereon from the date of the filing of the final decree, or if title to the real property acquired shall have vested in the city prior thereto, from the date of such vesting, and all costs, charges and expenses which may have been taxed shall be paid by the city to the respective owners mentioned or referred to in the final decree or to the personsin whose favor such costs, charges and expenses were taxed, as hereinafter provided. [Emphasis added.]

On its income tax return for 1950, petitioner reported gross income of $ 26,871.85 which consisted of the following amounts: Interest received "on Condemnation Award" in the amount of $ 20,728.81, $ 6,000 of rent which it received from a corporation whose stockholders were the same as its stockholders, and miscellaneous income of $ 143.04.

Respondent determined that the $ 20,728.81 paid to petitioner by the City of New York as interest on the condemnation award was interest income within the meaning of section 502 (a) ¹ of the 1939 Code; 26 T.C. 545">*547 and that petitioner was, therefore, subject to tax as a personal holding company since 80 per cent or more of its income was personal holding company income within the1956 U.S. Tax Ct. LEXIS 163">*167 meaning of section 502.

OPINION.

Petitioner argues that the $ 20,728.81 which it reported as interest on the condemnation award did not constitute interest within the meaning of section 502 (a); that such amount was a part of the condemnation award itself; and that it in fact is entitled to a refund since the amount of so-called interest was not ordinary income.

The respondent argues that what was denominated as interest in the Administrative Code of the City of New York, in the decree of the Supreme Court of New York, in the payment which the City made to petitioner, and as reported by petitioner on its return, was both in name and in fact interest and, therefore, clearly1956 U.S. Tax Ct. LEXIS 163">*168 within the meaning of the word "interest" as used in section 502 (a) of the Code. In support of his position, he cites .

In the Kieselbach case, the Supreme Court held that a similar interest payment received by a taxpayer from the City of New York was ordinary income within the meaning of section 22, and was not a capital gain realized upon the sale of an asset under section 117. In the course of its opinion, the Court said of such an interest payment, page 403:

Whether one calls it interest on the value or payments to meet the constitutional requirement of just compensation is immaterial. It is income under § 22, paid to the taxpayers in lieu of what they might have earned on the sum found to be the value of the property on the day the property was taken. It is not a capital gain upon an asset sold under § 117. * * *

The property was turned over in January, 1933, by the resolution. This was the sale. Title then passed. The subsequent earnings of the property went to the city. The transaction was as though a purchase money lien at legal interest was retained upon the property. Such interest1956 U.S. Tax Ct. LEXIS 163">*169 when paid would, of course, be ordinary income. [Emphasis added.]

We, therefore, think it clear that petitioner correctly reported the amount of interest received from the City as ordinary income and that its present argument to the contrary is wrong. (C. A. 2, 1945); .

In the course of its opinion in the Kieselbach case, the Court specifically refrained from decidingwhether the interest payment there in question was in fact "interest" or some other form of ordinary income. We do not understand, however, how the nature or character of the payments there and here could result in their being called anything 26 T.C. 545">*548 other than interest. In the above-quoted paragraph from the Kieselbach opinion, the Court characterized the payment as being in lieu of earnings on the award which the taxpayer would have received if the award had been paid promptly, and thereafter invested. Both payments there and here were for the use of money which rightfully belonged to the taxpayers from the date the title to their property vested in the City until the1956 U.S. Tax Ct. LEXIS 163">*170 time when the condemnation award was ultimately paid to them. We think such payments fall clearly within the Supreme Court's definition of interest in Deputy v. du ; and .

Petitioner did not point to, nor do we find, any evidence that Congress intended the word "interest" in section 502 (a) to have some different meaning than it has in other sections of the Code. We think the word has the same meaning in section 502 (a) as it does in section 22 (a), section 23 (b), and elsewhere. See .

We therefore conclude that the sum which the petitioner received from the City of New York as interest, and reported on its return as interest, was, in fact, interest within the meaning of section 502 (a).

Petitioner advanced an alternative argument against the imposition of the personal holding company tax on the grounds that, even assuming the interest income which it received to be interest within the meaning of section 502 (a), the rent which it received was not personal holding company income; and that, 1956 U.S. Tax Ct. LEXIS 163">*171 because the amount of interest received did not constitute 80 per cent of its gross income, it does not satisfy the statutory requirement that 80 per cent of its gross income be personal holding company income. It argues that the rent which it received was not compensation for the use of property within the meaning of section 502 (f) ² and, therefore, personal holding company income, because of the enactment of section 223 of the Revenue Act of 1950.

1956 U.S. Tax Ct. LEXIS 163">*172 In section 223 of the 1950 Revenue Act, ³ as amended by Pub. L. 370, 84th Cong., 1st Sess. (1955), Congress provided that section 502 (f) of the Code should not apply to rents received by what would otherwise be a personal holding company during taxable years ended after December 26 T.C. 545">*549 31, 1945, and before January 1, 1954, if such rents were received for the use of its property in the operation of a bona fide commercial venture by an individual holding 25 per cent or more of its stock.

The rent which petitioner received was received from a corporation whose stockholders were identical with its own stockholders. But the lessee corporation was a separate entity apart from the stockholders. It was not an "individual" within the meaning of section 502 (f). See H. Rept. No. 1546, 75th Cong., 1st Sess. (1937), p. 6. Nor can the stockholders be deemed to be the lessees of the property in its place. See 1956 U.S. Tax Ct. LEXIS 163">*173 ; .The rent which petitioner received was not compensation for the use of the property within the meaning of section 502 (f), but was rent within the meaning of section 502 (g). ⁴ We, therefore, conclude that more than 80 per cent of petitioner's income was personal holding company income and that it is subject to tax as a personal holding company.

1956 U.S. Tax Ct. LEXIS 163">*174 Decision will be entered for the respondent.