Escrow surplus on promoters' share sale treated as taxable income, not capital receipt, due to active transaction facilitation.

Surplus received under an escrow arrangement on the sale of promoters' shares was treated as taxable income, not a capital receipt, because the receipt arose from an arranged transaction in which the assessee actively facilitated the sale, arranged brokerage and marketing, and secured the agreed price for the divesting promoters. The analysis applied the wide, inclusive definition of income and noted that section 56 taxes income not otherwise chargeable under a specific head. On those facts, the surplus was characterised as a calculated gain from the transaction rather than a casual or windfall receipt, and the authorities cited by the assessee were distinguished.

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Issues: Whether the surplus received by the assessee under the escrow arrangement on sale of promoters' shares constituted taxable income or a capital receipt.

Analysis: The definition of income under the Act is inclusive and its amplitude is wide. Section 56 brings to tax every kind of income not excluded from total income and not chargeable under any specific head. The receipt arose from an arranged transaction for sale of shares, in which the assessee actively facilitated the sale, arranged brokerage and marketing, and secured the agreed price for the divesting promoters. The surplus was therefore not a casual or windfall receipt, but a calculated gain arising from the transaction. The authorities and case law relied on by the assessee were distinguished on facts.

Conclusion: The surplus amount was taxable income and not a capital receipt; the issue is decided against the assessee and in favour of the Revenue.

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