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2017 (12) TMI 410 - HC - Income TaxAddition on account of amount received by the assessee towards settlement compensation - revenue or capital receipt - Held that:- Compensation in question was meant, intended and paid for withdrawal of aforesaid litigation instituted by assessee which could have resulted in many adverse consequences for the reputation of Coca Cola/Atlantic besides entailing huge cost and efforts of litigation. Relinquishment of right to sue is neither a capital asset nor taxable u/s 28 which provides specific types of receipt to be held taxable as business income. Relinquishment of right to sue does not find any mention therein. In this eventuality we have no hesitation to hold that the impugned amount of ₹ 8,16,22,040/- is a capital receipt not liable to Income Tax. When the party has compromised and withdraw the litigation, if that compensation is received, it is always to be treated compensation. In our considered opinion, the Tribunal has not committed any error in allowing the appeal and we are in complete agreement with the view taken by the Tribunal. Decided in favour of assessee and against the Department.
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