Revenue receipt: compensation for interruption of trade treated as revenue, not capital, absent injury to assets or goodwill.

Whether compensation of Rs. 57,435 for compulsory vacation of business premises was capital or revenue turned on its characterisation as loss of profits due to interruption of trade. The court held that the payment was assessed and claimed as disturbance/loss of profits, there was no finding of injury to tangible capital assets nor any proved loss of goodwill, and therefore the sum constituted a revenue (trading) receipt rather than a capital receipt.

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Issues: Whether the sum of Rs. 57,435 received as compensation for compulsory vacation of business premises was a capital receipt or a revenue receipt.

Analysis: The payment arose from requisition of the premises which caused interruption of business and necessitated shifting to new premises. There was no finding or claim that tangible capital assets were injured. The claimed heads and accompanying correspondence framed the claim as disturbance and loss of business computed as two years' loss of profits; there was no express claim or particulars referring to loss of goodwill. The material accompanying the claim explained the amount as estimated loss of profits during the period the business would remain stopped or be reconstructed at a temporary site. The tribunal and the High Court did not find or record any loss of goodwill as a matter of fact.

Conclusion: The sum of Rs. 57,435 was a revenue receipt received as compensation for loss of profits and not a capital receipt.

Ratio Decidendi: A compensation paid for interruption of trade computed as loss of profits is a trading (revenue) receipt and not a capital receipt where no injury to tangible capital assets or proved goodwill is established.

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