TMI Blog2021 (4) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... in favour of the assessee. - T.C.A.No.288 of 2013 - - - Dated:- 31-3-2021 - Hon'ble Mr. Justice M.Duraiswamy And Hon'ble Mrs.Justice T.V.Thamilselvi For the Appellant : Mr.M.Swaminathan, Senior Standing Counsel assisted by Ms.V.Pushpa, Standing Counsel For the Respondent : Mr.M.Kaushik for Mr.S.Sridhar JUDGMENT M.DURAISWAMY, J. Challenging the order passed in I.T.A.No.1582/Mds/2012 in respect of the assessment year 2002-03 on the file of the Income Tax Appellate Tribunal, Chennai, B Bench, the Revenue has filed the above appeal. 2.The above appeal was admitted on the following substantial questions of law: 1)Whether on the facts and in the circumstances of the case, the Appellate Tribunal was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be treated as capital receipt, it cannot suffer the incidence of taxation, whereas, if it were to be treated as a revenue receipt, the order of assessment as affirmed by the CIT(A) has to be upheld. 7. It will be appropriate to notice as to how this very question has been answered by the Supreme Court in Oberoi Hotel (P) Ltd vs. CIT [ 1999] 236 ITR 903/103 Taxman 236 Paragraphs 3 to 7 of the judgment read as under: 3. The question whether the receipt is capital or revenue is to be determined by drawing the conclusion of law ultimately from the facts of the particular case and it is not possible to lay down any single test as infallible or any single criterion as decisive. This Court in the case of Karam Chand Thapar Bros. P. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d assessee. It was agreed that Receiver would be at liberty to sell or otherwise dispose of the said property at such price and on such terms as he may deem fit and was not under any obligation requiring the purchaser thereof to enter into any agreement with the operator (assessee) for the purpose of operating and managing the hotel or otherwise and in its return, agreed consideration was as stated above in Clause X. On the basis of the said agreement the assessee has received the amount in question. The amount was received because the assessee had given up its right to purchase and or to operate the property. Further it is loss of source of income to the assessee and that right is determined for consideration. Obviously therefore, it is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome. But the difficulty arises in ascertaining whether what is received in a given case is compensation for loss of a source of income, or profit in a trading transaction. After considering various decisions it was further held as under: These cases illustrate the principle that compensation for injury to trading operations, arising from breach of contract or in consequence of exercise of sovereign rights, is revenue. These cases must, however, be distinguished from another class of cases where compensation is paid as a solatium for loss of office. Such compensation may be regarded as capital or revenue; it would be regarded as capital, if it is for loss of an asset of enduring value to the assessee, but not where payment is recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of Principal Agreement has resulted in loss of source of assessee's income. 8.Thus, starting from CIT Vs. Rai Bahadur Jairam Valji's , [1959] 35 ITR 148 (SC) case, Kettlewell Bullen Co Ltd Vs. CIT [1964] 53 ITR 261 (SC) case , Karam Chand Thapar Bros (P.) Ltd. Vs. CIT [1971] 80 ITR 167 (SC) case, the underlying principle spelt-out was to ascertain from the facts and circumstances of the case as to whether the injury is inflicted on the capital asset of the assessee resulting in loss of a source of assessees income or not. The Supreme Court in Gillanders Arbuthnot Co. Ltd vs. CIT [ 1 964] 53 ITR 283 has brought out a dichotomy between receipt of compensation by an assessee for loss of agency and receipt of c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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