Revenue receipt classification of post-termination occupation damages upheld for continued use of leased property.

Damages received for continued use and occupation of leased property after termination of the tenancy were characterised by their source and nature, not by the label of "damages" attached to them. Because the payment represented compensation for post-termination occupation of the lessor's property and the property continued to generate income, it was treated as consideration for use of the asset rather than as compensation for loss or sterilisation of a capital asset. The receipt was therefore held to be revenue in nature, not capital, and the issue was decided against the assessee and in favour of the Revenue.

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Issues: Whether the amount awarded as damages for use and occupation of property after termination of the lease was a capital receipt or a revenue receipt in the hands of the assessee.

Analysis: The receipt was held to arise from the use and occupation of the lessor's property after termination of the tenancy. Its character was determined by the source and nature of the payment, not by the description given to it as damages. The property continued to yield income to the owner, and the amount payable for continued occupation after termination was treated as compensation for use of the property rather than as a receipt representing loss or sterilisation of a capital asset.

Conclusion: The amount was a revenue receipt, not a capital receipt, and the issue was answered against the assessee and in favour of the Revenue.

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