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TMI Blog2014 (7) TMI 1265X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee and Shri M.L. Sundar, ld. JCIT Sr. D.R., represented on behalf of the Revenue. 3. In the assessee's appeal, the assessee has raised the following grounds:- (1) The orders passed by the lower authorities are arbitrary, unreasoned, erroneous, invalid and bad in law. (2) On the facts and in the circumstances of the case, the ld. CIT(A) erred in failing to appreciate that the lump sum receipt of Rs. 1,49,49,018/- on giving up the right to receipt of retirement benefits by the appellant was for loss of a potential source of income of the appellant and hence, the same constituted 'capital receipt' in his hands. (2)(b) On the facts and in the circumstances of the case, the ld. CIT(A) erred in observing that the receipt of Rs. 1,49,49,018/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal receipt. 7. In reply, ld. Sr. D.R. submitted that the amount received by the assessee was liable to be treated as profit in lieu of salary. He vehemently relied upon the order of the ld. CIT(Appeals) and the Assessing Officer. It was the submission that the surrender of the right to receive pension was voluntarily opted for by the assessee. 8. We have considered the rival submissions. A perusal of the order of the Hon'ble Delhi High Court in the case of Khanna and Annadhanam referred to supra clearly shows that the ratio of the decisions of the Hon'ble Supreme Court is that if the receipt represents compensation for loss of the source of income, it would be capital and it matters little that the assessee continues to be in receipt of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contract being a normal incident of the business, and such cancellation leaves him free to carry on his trade (freed from the contract terminated) the receipt is revenue : Where by the cancellation of an agency the trading structure of the assessee is impaired, or such cancellation results in loss of what may be regarded as the source of the assessee's income, the payment made to compensate for cancellation of the agency agreement is normally a capital receipt. In the present case, on a review of all the circumstances, we have no doubt that what the assessee was paid was to compensate him for loss of a capital asset. It matters little whether the assessee did continue after the determination of its agency with the Fort William Jute Co. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceiver of the Singapore Hotel. The Supreme Court held that the amount was received because the assessee had given up its right to purchase or operate the property and thus it was a loss of a source of income. The receipt was accordingly held to be capital in nature. It was observed, after a review of the earlier cases, that ordinarily compensation for loss of office or agency is to be regarded as a capital receipt and the only exception where the payment received for termination of an agency agreement could be treated as revenue was where the agency was one of many which the assessee held and its termination did not impair the profit-making structure of the assessee, but was within the framework of the business, it being a necessary incide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating the receipt as being revenue in nature. 8. On behalf of the revenue our attention was drawn to another judgment of the Supreme Court in CIT v. Best & Co. (P) Ltd.: (1966) 60 ITR 11. This judgment was rendered by the same bench which had earlier rendered the judgment in Kettlewell Bullen & Co. Ltd. (supra). The decision was however in favour of the revenue. The earlier judgment in Kettlewell Bullen & Co. Ltd. (supra) was referred to in the judgment but the Supreme Court observed that the application of the principle laid down in Kettlewell Bullen & Co. Ltd. (supra) must depend on the facts of each case. Their Lordships distinguished the facts and held that in the case of Best & Co. (supra) the assessee had innumerable agencies in diff ..... X X X X Extracts X X X X X X X X Extracts X X X X
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