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2013 (10) TMI 1133 - ITAT MUMBAINature of compensation received for breach of contract - capital receipt or revenue receipt or casual income or to be taxed as long term capital gain or short term capital gaine - Compensation amount of ₹ 16,05,82,500 is capital receipt or revenue receipt that is whether it is non-taxable or taxable receipt – Held that:- The Hon'ble Supreme Court in Kettlewel Bullen & Co. Ltd.[ 1964 (5) TMI 4 - SUPREME Court] have observed that where on a consideration of the circumstances, payment is made to compensate a person for cancellation of a contract which does not affect the trading structure of his business, nor deprive him of what is substance of his source of income, termination of the contract being a normal incident of the business, and such cancellation leaves him free to carry on his trade the receipt is revenue. However, where by the cancellation of an agency, the trading structure of the assessee itself is impaired or such cancellation results into loss of what may be regarded as the source of the assessee's income, the payment made to compensate for cancellation of the agency agreement is normally a capital receipt. In the present case, what the assessee has lost, is the very source of his business and loss of a trading structure. If the right given by the ROFR would have continued, the assessee would have the source of income from the bottling business and this would have constituted its profit making apparatus - Even before the assessee's actual business could start, there was a breach by the other party which ended up the said business itself. Thus, clearly this is a case of loss of source of income itself and hence, the compensation which was received by the assessee is on capital field i.e., capital receipt which cannot be taxed under the income laws – Decided in favor of Assessee. Whether the receipt is casual income - taxability u/s 10(3) -Held that:- the receipt cannot be said to be casual because it has not been incurred by chance or by fortuitous. Here, it is a case of breach of an agreement and the amount has been settled after a dispute among the parties. This receipt cannot be termed as neither casual nor non recurring - Decided in favor of assessee. Higher rate of depreciation to be allowable to the assessee, when the vehicle is used by the third party instead of assessee – Held that:- Once it is not disputed that the assessee was the owner of the vehicle and its business is for hiring and leasing of vehicles to the third parties, the higher rate of depreciation has to be allowed – Reliance has been placed upon the decision of Delhi High Court in MGF India Ltd., [2006 (7) TMI 125 - DELHI High Court] Professional fee paid for negotiation with Coca-cola Co., a business expenditure to be deductible – Held that:- He was a person who was instrumental in carrying out the negotiation with The Coca Cola Co. for settling the dispute and for awarding the compensation, such an expenditure has to be allowed as business expenditure and no disallowance can be made – Decided in favor of Assessee.
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