TMI Blog2009 (3) TMI 410X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as capital receipts.– Decision in favor of assessee – against the revenue - 78 of 1988 - - - Dated:- 17-3-2009 - DEEPAK VERMA C. J. and R. C. GANDHI J. N. M. Ranka with N. K. Jam for the assessee. J. K. Singhi with Anuroop Singhi for the Commissioner. JUDGMENT 1. Pursuant to the directions issued by this court under section 256(2) of the Income-tax Act, 1961, (hereinafter shall be referred to as "the Act") for drawing up a statement of the case, the following question has been referred to be answered by us: "Whether in the facts and circumstances of the case or in law, the Tribunal was justified in holding that the sum of Rs.20,000 received by the assessee was in the nature of revenue receipt or otherwise liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e nature of non-taxable capital receipt as no capital asset was transferred. The matter pertains to the assessment year 1974-75. The Income-tax Officer observed in his order that it is true that it was not a receipt in the normal course of the assessee's business but it would definitely be an income of the assessee and has to be assessed to tax under the head "Income from other sources". The matter was referred to the Inspecting Assistant Commissioner of Income-tax under section 144B of the Act. The assessee once again submitted that the receipt did not fall under any of the heads of the income under the Act and further since the compensation was for the termination of agreement of transfer of capital asset, the receipt does not bear the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2000] 243 ITR 158 and CIT v. D P. Sandu Bros. Chembur P. Ltd. [2005] 273 ITR 1(SC). 8. We find from the judgment of Travancore Rubber and Tea Co. Ltd. [2000] 243 ITR 158 (S)C that the question stands fully answered in favour of the assessee and against the Revenue. After considering the matter, the Supreme Court has held as under (page 166): "The logic of the principle is that the assessee's right to recover the compensation was to place the assessee in the same position as if the breach had not taken place. Applying the rule to this case, if the agreed sums of money under the agreements had been received by the assessee, they would have been credited in its account as a capital receipt. That being so, the forfeited amounts must also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e S. G. Mercantile Corporation P. Ltd. v. CIT [1972] 83 ITR 700 (SC)). Furthermore, it would be illogical and against the language of section 56 to hold that everything that is exempted from capital gains by the statute could be taxed as a casual or non-recurring receipt under section 10(3) read with section 56. We are fortified in our view by a similar argument being rejected in Nalinikant Ambalal Mody v. S. A. L. Narayan Row, CIT [1966] 61 ITR 428 (SC), 432, 435. The appeal is accordingly dismissed without any order as to costs." 10. Even though learned counsel for the Revenue submitted that the aforesaid judgments may not be applicable to the facts of this case, but we are neither convinced nor impressed by the line of argument t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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