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Capital Receipt versus Revenue Receipt - Some Important Decision of the Supreme Court |
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| 13-7-2010 | |||
2010 TMI - 76690 - SUPREME COURT OF INDIA Commissioner Of Income Tax, Gujarat Versus M/S. Saurashtra Cement Limited Liquidated damages - revenue receipt versus capital receipt - capital employed for the purpose of section 80J - delay in delivery of machinery - As per the agreement, in the event of delay caused in delivery of the machinery, the assessee was to be compensated at the rate of 0.5% of the price of the respective portion of the machinery for delay of each month by way of liquidated damages by the supplier, without proof of actual loss. - The supplier defaulted and failed to supply the plant and machinery on the scheduled time and, therefore, as per the terms of contract, the assessee received an amount of Rs.8,50,000/- from the supplier by way of liquidated damages. - AO and CIT(A) included Rs. 8,50,000 in the total income as revenue receipt- According to the Tribunal, the payment of liquidated damages to the assessee by the supplier was intimately linked with the supply of machinery i.e. a fixed asset on capital account, which could be said to be connected with the source of income or profit making apparatus rather than a receipt in course of profit earning process and, therefore, it could not be treated as part of receipt relating to a normal business activity of the assessee. The Tribunal also observed that the said receipt had no connection with loss or profit because the very source of income viz., the machinery was yet to be installed - HC confirmed the view of the ITAT - Held that: The afore-stated amount received by the assessee towards compensation for sterilization of the profit earning source, not in the ordinary course of their business, in our opinion, was a capital receipt in the hands of the assessee. We are, therefore, in agreement with the opinion recorded by the High Court and hold that the amount of Rs.8,50,000/- received by the assessee from the suppliers of the plant was in the nature of a capital receipt.
2008 TMI - 39956 - SUPREME Court Capital Receipt, Revenue Receipt
2008 TMI - 6351 - SUPREME Court Commissioner of Income-Tax, Poona Versus Manna Ramji And Company Whether the sum of Rs. 1,05,074 received by the applicant as compensation from the Government is taxable as income of the applicant or is a capital receipt in its hands - set aside the judgment of the High Court and answer the question referred by the Tribunal in favour of the department
2008 TMI - 6341 - SUPREME Court Commissioner of Income-Tax, West Bengal I Versus K. K. Roy Compensation for termination of service of the managing director - Held that the compensation of the type with which we are concerned in this appeal are capital receipts
2008 TMI - 6287 - SUPREME Court Compensation for termination of agreement - compensation received was neither in respect of the services rendered by him in the past nor towards the accumulated commission due to him - receipt must be considered as a capital receipt
2008 TMI - 6268 - SUPREME Court Maharaja Chintamani Saran Nath Sah Deo Versus Commissioner of Income-Tax, Bihar And Orissa When salami is payable in addition to rent and royalty in respect of lease of mining rights, whether it is capital receipt - answer to the question referred is returned in favour of the assessee
2008 TMI - 6239 - SUPREME Court Compensation received for termination of one of the several managing agencies - compensation for loss of office is capital receipt but there is an exception that the payment receipt even for termination of an agency agreement could be revenue if the agency was one of many which the assessee held and its termination did not impair the profit-making structure of the assessee - Assessee's appeal is allowed
2008 TMI - 6039 - SUPREME Court Commissioner of Income Tax Versus Rajaram Maize Products Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the power subsidy received by the assessee was a capital receipt, not liable to be taxed within the meaning of section 28(iv) -Held, no
2008 TMI - 5789 - SUPREME Court Travancore Rubber And Tea Co. Ltd. Versus Commissioner of Income-Tax Assessee is a plantation company engaged in the business of growing rubber and tea. In 1975, it entered into three agreements with three purchasers for sale of old rubber trees - Held that amounts received by the assessee/appellant in respect of an abortive sale transaction of rubber trees are capital receipts
2008 TMI - 5777 - SUPREME Court Commissioner of Income-Tax Versus Karnal Co-operative Sugar Mills Ltd. Assessee had deposited money to open a letter of credit for the purchase of the machinery required for setting up its plant in terms of the assessee's agreement with the supplier - interest earned on that money - held that interest was a capital receipt
2008 TMI - 5720 - SUPREME Court Oberoi Hotel Pvt. Ltd. Versus Commissioner of Income-Tax Assessee company agreed to operate the hotel known as Hotel Oberoi Imperial, Singapore, for which the assessee-company was to receive a certain fee - assessee had given up its right to purchase and/or to operate the property - loss of source of income - Tribunal is correct in law in confirming the decision of the CIT (Appeals) that the receipt of Rs. 29,47,500 by the assessee from the receiver of the hotel in the course of the assessee's hotel operation business, is a capital receipt
2008 TMI - 5368 - SUPREME Court Padmaraje R. Kadambande Versus Commissioner of Income-Tax Whether the amounts received from the Government of Maharashtra during the financial years ended March 31, 1963, and March 31, 1964, are receipts of an income nature and taxable under the provisions of the Indian Income-tax Act, 1922 (sic) (1961) - nature of the receipt is determined entirely by its character in the hands of the receiver - hold that the amounts received by the assessee have to be regarded as capital receipts and, therefore, are not income u/s 2(24)
2008 TMI - 5122 - SUPREME Court Durga Das Khanna Versus Commissioner of Income-Tax, Calcutta Assessee took on lease premises for a term of 99 years on a monthly rental - receipt of Rs.55,200 by the assessee was capital receipt because receipt was having all the character of capital payment being paid as premium or salami - Assessee's appeal allowed
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