Renewal commission commutation remains revenue receipt where lump sum only replaces future instalments of accrued income.

The commuted value of half of the renewal commission under the agency agreement was held to retain the character of income because it represented the present value of future instalments of commission already accrued and payable over time, even after termination of the agency. The lump sum was not shown to be consideration for ending the agency or compensation for loss of employment, and commutation did not change the nature of the underlying receipt. The HC therefore treated the amount as a revenue receipt, not a capital receipt, and denied exemption on the basis of compensation for loss of employment.

---

---

Issues: Whether the sum received by the assessee as the commuted value of half of the renewal commission payable under the agency agreement was a revenue receipt or a capital receipt, and whether it could be treated as compensation for loss of employment.

Analysis: The renewal commission had accrued under the agency agreement and was payable from time to time even after termination of the agreement. The commuted amount represented only the present value of future instalments of that income and was not shown to have been paid as consideration for terminating the agency or as compensation for loss of employment. Commutation merely substituted one lump sum for successive payments of the same income and did not alter the character of the receipt. The precedents relied upon by the assessee were distinguishable on their facts.

Conclusion: The amount received on commutation was a revenue receipt and not a capital receipt, and it was not exempt as compensation for loss of employment.

---