https://www.taxtmi.com/caselaws?id=369980 Compensation received on termination of a memorandum of understanding was treated as capital in nature because it was paid for stalling and discontinuing the agreed infrastructure work. The surrounding circumstances and the agreement as a whole showed that the payment was linked to sterilisation of the assessee's profit-making apparatus and loss of its source of income, not to ordinary trading operations. Applying the principle that cancellation compensation is capital where it impairs the trading structure, the receipt was held not chargeable to tax as business income. The addition was deleted. en-us Tue, 23 Oct 2018 00:00:00 +0530 Tue, 06 Nov 2018 12:28:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=369980 Compensation received on termination of a memorandum of understanding was treated as capital in nature because it was paid for stalling and discontinuing the agreed infrastructure work. The surrounding circumstances and the agreement as a whole showed that the payment was linked to sterilisation of the assessee's profit-making apparatus and loss of its source of income, not to ordinary trading operations. Applying the principle that cancellation compensation is capital where it impairs the trading structure, the receipt was held not chargeable to tax as business income. The addition was deleted. Case-Laws Income Tax Tue, 23 Oct 2018 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=369980