Revenue receipt: lump-sum for surrender of future profit streams treated as taxable business income, not capital proceeds.

A lump-sum payment received for surrendering an entitlement to future per-ton profits was treated as the capitalised value of ongoing profit streams and not as proceeds from transfer of a distinct capital asset; labelling the payment as "goodwill" did not change its character. Because the transaction left the underlying quota rights intact and the payment arose from the assessee's continuing commercial arrangement, the sum constitutes a realised business receipt of revenue character and is therefore taxable as income.

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Issues: Whether the lump sum of Rs. 60,000 received by the assessee-company from its partner is a revenue receipt liable to income-tax or a capital receipt.

Analysis: The payment arose from a contractual modification by which the assessee surrendered future per-ton profit (royalty) that it had been receiving from the partnership; under the arrangement the assessee continued to purchase steel under its quota and deliver it to the partnership at cost while the partnership paid for supply. The lump sum corresponds to the capitalised value of the profits the assessee would have received by charging the per-ton amount under the original agreement. No transfer of the underlying quota rights occurred and the description of the payment as "goodwill" did not alter its substantive character as consideration for surrendering future profit streams. The payment therefore represents realised business receipts derived from the assessee's ongoing commercial activities rather than a transfer of a separate capital asset.

Conclusion: The sum of Rs. 60,000 is a revenue receipt and is liable to income-tax; the appeal is dismissed.

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