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ITAT held that the compensation received by the assessee from settlement agreement is a capital receipt, not taxable under Section 28(ii)(e) or Section 28(va)(a). The tribunal determined that the payment arose from a settlement to avoid legal consequences of a suit, granting parties unrestricted rights to conduct business activities. The compensation was for not exercising the right to sue, which does not constitute revenue receipt. The JV agreement contained no provisions for compensation upon termination, and the settlement agreement explicitly preserved parties' business rights. Consequently, the receipt was classified as a capital receipt, exempt from taxation under the specified sections.
ITAT held that the compensation received by the assessee from settlement agreement is a capital receipt, not taxable under Section 28(ii)(e) or Section 28(va)(a). The tribunal determined that the payment arose from a settlement to avoid legal consequences of a suit, granting parties unrestricted rights to conduct business activities. The compensation was for not exercising the right to sue, which does not constitute revenue receipt. The JV agreement contained no provisions for compensation upon termination, and the settlement agreement explicitly preserved parties' business rights. Consequently, the receipt was classified as a capital receipt, exempt from taxation under the specified sections.
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