https://www.taxtmi.com/caselaws?id=6852 Compensation for the compulsory requisition of business premises is a capital receipt where the taking over destroys or seriously impairs the profit-making apparatus of the business. The Bombay HC noted that the assessee's godowns were essential storage facilities for its timber business, that the business had practically come to a standstill, and that no suitable alternative premises were available. Although the amount was quantified by reference to net annual profits, the decisive test was whether the payment replaced trading receipts or compensated injury to the business structure itself. On those facts, the receipt was treated as compensation for sterilisation of an enduring business asset and was not taxable as income. en-us Fri, 10 Feb 1967 00:00:00 +0530 Fri, 06 Feb 2009 17:31:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=6852 Compensation for the compulsory requisition of business premises is a capital receipt where the taking over destroys or seriously impairs the profit-making apparatus of the business. The Bombay HC noted that the assessee's godowns were essential storage facilities for its timber business, that the business had practically come to a standstill, and that no suitable alternative premises were available. Although the amount was quantified by reference to net annual profits, the decisive test was whether the payment replaced trading receipts or compensated injury to the business structure itself. On those facts, the receipt was treated as compensation for sterilisation of an enduring business asset and was not taxable as income. Case-Laws Income Tax Fri, 10 Feb 1967 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=6852