https://www.taxtmi.com/caselaws?id=49623 Compensation received on cancellation of a contract entered into in the ordinary course of business is treated as a trading receipt, not a capital receipt. The long unexpired term of the contract does not change that character if the arrangement remains part of ordinary trading operations. The receipt is also not compensation for sterilisation of a capital asset where the business is not prevented from continuing and there is no injury to capital structure. On that reasoning, the amount is taxable as revenue income, and the ratio is that cancellation payments for trading contracts represent business profits or their commutation. en-us Tue, 07 Oct 1958 00:00:00 +0530 Fri, 05 Sep 2014 10:15:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=49623 Compensation received on cancellation of a contract entered into in the ordinary course of business is treated as a trading receipt, not a capital receipt. The long unexpired term of the contract does not change that character if the arrangement remains part of ordinary trading operations. The receipt is also not compensation for sterilisation of a capital asset where the business is not prevented from continuing and there is no injury to capital structure. On that reasoning, the amount is taxable as revenue income, and the ratio is that cancellation payments for trading contracts represent business profits or their commutation. Case-Laws Income Tax Tue, 07 Oct 1958 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=49623