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2016 (1) TMI 504 - HIMACHAL PRADESH HIGH COURTCompensation received towards cancellation of the SPA - whether was a revenue receipt taxable in the hands of the appellant? - Held that:- If a receipt is a capital receipt in the hands of a recipient, it does not necessarily follow that expenditure is capital expenditure in the hand of a payer. Whether it is capital expenditure or revenue expenditure would have to be determined having regard to the nature of the transaction and other relevant factors. [M/s Empire Jute Co. Ltd. Versus Commissioner of Income Tax, (1980 (5) TMI 1 - SUPREME Court) ]. The assessee knew from the very beginning the conditionality Clause. He was conscious that no injury would be caused to his business in the event of SPA not being materialized and its non execution would in no manner impair its revenue. In the aforesaid factual background, in our considered view, the authorities below have rightly held the amount of compensation to be a revenue receipt. Income earned from such sources was to be taxed as business income.
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