TaxTMI 
TaxTMI 
2005 (8) TMI 330
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....chst India Ltd. as a revenue receipt chargeable to tax in assessment year 1992-93 rejecting the appellant's contention that the said receipt is of capital nature and not liable to tax under any of the provisions of the Income-tax Act, 1961." 3. The material facts related to the issue involved in this appeal may be summarized, in brief, as under: 3.1 The assessee-company, is engaged in the manufacture of life saving drugs, which include Anti Sera Vaccine and various blood products. For manufacture of blood products, the assessee was securing plasma from the donors and carrying out tests to check the blood from Human Immuno Deficiency Virus and for Hepatitis B Antigen. In other words, the assessee secures blood from donors, and the blood secures from the donors were subjected to various tests before these were used for the manufacture of serum. One of the test is for detecting presence of Human Immuno Deficiency Virus (HIDV) which causes AIDS. For this purpose, the company was using, inter alia, a type of Kit called ELISA Test Kits. These ELISA Test kits were manufactured by a German Company, namely, Behring Worke Ag. (hereinafter called the BWAG) and are marketed and sold in India....
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....st (India) Ltd., in India, as a result of which an amount of Rs. 1.50 crore was paid to the assessee as full and final settlement of all claims of the assessee on account of damages suffered or to be suffered by the assessee company. The settlement was arrived at in writing vide compromise agreement dated 8-3-1991. The assessee's case before the Assessing Officer was that the amount of Rs. 1.5 crore received by the assessee is not in the nature of income but is a capital receipt not liable to tax inasmuch as the compensation of Rs. 1.5 crore received by the assessee was for discontinuance of assessee's business in certain blood products consequent upon appearance of HIV anti-bodies in some blood products, and compensation was against the loss of reputation and goodwill of the assessee and the fearful and horrendous consequences, for which the company had to go out of the business causing capital loss because of the suspension of this part of the business with a consequent loss of investment involved in the said business. It was also stated by the assessee that the receipt in question cannot be looked at from the point of view of compensation for loss of the stock that was destroyed....
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....------------------------------- Value of finished goods 1580787 5631040 7211836 destroyed ----------------------------------------------------------- Goods returned and 4929232 6690642 11619874 destroyed ----------------------------------------------------------- From the above, it may be seen that total sum of Rs. 2,04,08,695 were debited to the Profit & Loss A/c during the assessment years 1989-90 and 1990-91 and has already been allowed. The compensation received on account of this loss should be in the nature of revenue receipt. Otherwise loss of Rs. 2,04,08,695 should also have been taken as a capital loss and not revenue loss as done by the assessee company in the earlier assessments. Since the loss of Rs. 2,04,08,695 has already been taken as a revenue loss in the earlier assessment year, any compensation received out of this loss is also of the nature of revenue receipt. As per clause 7 of the compromise dated 8-3-1991, it is stated as under:- 'It is clearly understood by SIIL and Dr. Cycrus Poonawala, that in executing this deed neither bearing nor executing copy considered to have admitted whether expressly or implicitly the legitimacy or the maintainability of a....
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.... is no loss of goodwill or reputation in the name of the assessee company. In fact, possible loss in goodwill and reputation has been totally stopped by the preemptive action taken by the assessee company in this connection. Since there is no loss of goodwill or reputation, compensation received in the compromise from the supplier of defective kits is in the nature of revenue receipt. Considering all these facts, I am of the opinion that the compensation received via compromise dated 8-3-1991 of Rs. 1.50 crore by the assessee company from M/s. Hoechst (India) Ltd. during the year is in the nature of capital receipts. This is thus added to the income of the assessee company during the year. It is to be further noted that the sum of Rs. 3,50,794 credited to the capital reserved account pertaining to CCS has already been added by the assessee company vide its revised return dated 16-9-1994. The revised return dated 16-9-1994 is late and has been filed during the course of assessment proceedings. Since the CCS is part of income of the assessee company under section 28 of the Income- tax Act, 1961, this should have been offered for taxation in the original return itself. In view of thi....
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..... on account of alleged loss or damage caused to the appellant company by use of product, which had been subjected to or processed by ELISA Test Kit. This also goes on to show that the compensation is mainly for the loss of business or loss of profit and not for destruction of profit-making apparatus. The company was not forced to close down its unit on account of defective test kit supplied to it. What it was asked was only to destroy the existing batches which were defective and the same was complied. After destroying the batches, the company had itself claimed its loss in the concerned years, as a revenue loss. The monetary settlement arrived at is clearly against defective goods and kits supplied to the assessee company and not for loss of reputation and goodwill in the business. The basis for arriving at the amount of compensation is unknown. Since the total loss of goods is of Rs. 2.04 crore, the agreed compensation of Rs. 1.50 crore can be said to be a re-compense for the loss which the company would have suffered on account of being out of market in manufacture of blood products. It is also noted that the suit filed by the company itself is not for damage to the reputation ....
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....d by the appellant are also not at par with that of the appellant company. Having regard to all these facts and circumstances of the case, I am of the view that the compensation amount of Rs. 1.50 crore received by the company is in the nature of revenue receipt, as it is for defective supply of test kits, which are used by the appellant in manufacturing goods. The addition of Rs. 1.50 crore so made by the Assessing Officer, is therefore, confirmed." 4. Still aggrieved, the assessee is in appeal before us. 4.1 The learned counsel for the assessee, Shri B.K. Khare, C.A. has submitted that from the records and statements issued by Paul Ehrlics Institute, which approved ELISA Test Kits supplied by the German Company BWAG through its marketing company in India, i.e. Hoechst (India) Ltd., it has discovered that BWAG were fully aware of the defect in ELISA Test Kits supplied by them to the assessee and the said kits had lost their quality, strength and period and, therefore, they have become completely useless, nonfunctional, un-reliable and lethal as much before the date of the recall of the defective kits by the Paul Ehrlics Institute. But, BWAG dishonestly, deliberately and fraudule....
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....f of great impounding peril. In other words, the learned counsel for the assessee has put great emphasis on the point that the real issue for taking criminal action was to save the assessee company's name, reputation and goodwill and if this not averted, the entire business including manufacturing blood products of the assessee company could be in danger. 4.2 It was further pointed out that after filing the criminal complaint, BWAG and Hoechst (India) Ltd. wanted to arrive at a settlement with the assessee. After deliberation, this was agreed to and a compromise petition was filed before the Court on 2-3-1991. Some of the offences complained of were compoundable in nature being punishable under sections 415 and 420, but some other offences arising under the Drugs and Cosmetics Act, 1940 could not be compounded. Thus, in the compromise petition, it was stated that the offences, which could be compounded could be taken as compromised and in respect of non-compoundable offences, it was stated that the assessee company would not like to lead any evidence. Accordingly, the court discharged the accused persons. He further submitted that the compromise agreement in writing was also enter....
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....etti Seetharamamma v. CIT [1965] 57 ITR 532. 4.4 The learned counsel for the assessee further contended that in order to decide as to whether the receipt is in the nature of income liable to tax, it is to be seen as to why the payment was made. It has already been explained that the payment was made to the assessee company to save the reputation of BWAG and Hoechst and to persuade the assessee company not to lead any evidence to prove their guilty. He, therefore, submitted that the payment made to persuade a person not to do certain things cannot have any characteristics of income. In this connection, he referred to the observation made by the Hon'ble Supreme Court in the case of Gillanders Arbuthnot & Co. Ltd. v. CIT [1964] 53 ITR 283. At this stage, he again pointed out that the covenent in the compromise agreement was not to pursue the complaint filed by the assessee company which would otherwise result in loosing all the good reputation of BWAG and Hoechst in the market. It was further argued that the assessee company suffered a loss of about Rs. 2 crore on account of stock that was destroyed because of appearance of anti-bodies in the blood products manufactured by the assess....
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.... the production of blood serum and that to that extent there was impairment of capital structure. He further stated that the destruction of stock and the loss resulted out therefrom was not a subject-matter of the criminal complaint nor was BWAG has to compensate to it not the compromise deed makes any reference to it and, therefore, by making a reference that the compensation received by the assessee, were against the loss incurred by the assessee as a result of destruction of stock is not at all warranted. He further submitted that the authorities below had failed to understand the correct import of the compromise of the deed under which the payment was made. 4.7 Reasons for withdrawing the complaint as given by the assessee is that the strength of the criminal complaint cannot be premised in Court of Law on perceived beliefs and assertions of the complainant, but on the availability of concrete clinching evidence that can be demonstrated before the Court. It was further submitted that the offence is not decided unlike in a civil case on the principle of probabilities. There were obvious weaknesses in proving to the hilt in the court of Law the guilt on the part of BWAG and Hoec....
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....seen in the manufactured products even they were not present in the plasma at the time of test. He, therefore, contended that no direct link or nexus between the kits supplied by BWAG and Hoechst and the defects found in the blood products could be established by the assessee. In other words, he submitted that the defect found in the blood products were not the direct result of kits used by the assessee company in testing the plasma. He further submitted that the criminal complaint is by itself is not a determining factor to say that the compensation received by the assessee is of capital in nature. In this connection, the learned DR had invited our attention to the various terms and conditions of the compromise agreement entered into by the assessee with BWAG and Hoechst to demonstrate that whatever compensation paid to the assessee were on account of damages caused to the assessee's products which has also caused loss of business profit. He further submitted that as per clause 6 of the compromise agreement the payment of Rs. 1.50 crore was in full and final settlement of the claims made by the assessee company in respect of damages alleged to have been suffered by the assessee in....
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....acture of serum and one of the test is for detecting presence of HIV. For the purpose of various tests carried out for detecting HIV, the assessee company was using certain kits including the kit called ELISA Test Kit. The assessee used kits manufactured by various companies which were available in the Indian market. The imported test kits which were available in the market at the relevant point of time are as under as stated by the assessee company in its "written note" on blood products manufactured by the assessee: (i) Abbott GMBH (ii) Wellcome Boroughs (iii) Behring (iv) ENI It was stated by the assessee in the note that the assessee used kits from all the above four manufacturers. However, Behring Kits were used mostly as they were comparatively cheap and also easy to handle and use while performing the test. It is also not in dispute that one particular batch of ELISA Test kits manufactured by Behring was withdrawn from the market in Europe. It is also not in dispute that blood product of batch No. 83, amongst others, manufactured by the assessee was found containing HIV positive. On reading the letter dated 1-3-1989 of Food & Drug Administration, Mumbai it reveals that ....
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....ed and settled by and between the assessee-company and the accused that neither of the parties would file any prosecution or suit against each other in respect of the aforesaid supply of defective ELISA Test Kit manufactured and supplied by the accused to the assessee-company. This withdrawal petition was allowed by the learned Judicial Magistrate by saying that the offences under sections 415 and 420 of IPC read with section 34 of IPC are allowed to be compounded and the other offences under Drugs & Cosmetics Act, 1940 and offences under sections 269, 270 of IPC are to be dropped as the assessee-company i.e., the complainant did not wish to lead any evidence for the aforesaid non-compoundable offences. The learned Judicial Magistrate, therefore, acquitted the accused for the offences under sections 415,420 read with section 34 of IPC read with sections 107, 109, 120, 120B of IPC and the accused were discharged for the offences under sections 269, 270 read with sections 107, 109, 120, 120B of IPC and the offences under Drugs & Cosmetics Act, 1940. Thereafter, the assessee entered into a written compromise for claims and damages vide agreement dated 8-3-1991. The complaint filed by ....
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....le any prosecution/suit against each other in respect of the cause of action for this complaint i.e., the supply of defective ELISA Test Kits manufactured and supplied by the Accused to the Complainant. It is therefore prayed that the offices be compounded and permission be granted to the Complainant, to withdraw the complaint and/or the complaint be dismissed for want of prosecution. Pune 2-3-1991 Sd/- Sd/- Advocated for Complainant Complainant Order of the Judicial Magistrate.- Readover to the complainant in the presence of his advocate. Accused No. 24 and advocate of accused Nos. 18 to 20 and 22 to 25 are present. Accused Nos. 1 to 17 and accused No. 21 are not served. Permission is granted and compounds the offence under section 415/420 under section 34 of IPC which is compoundable with permission. The offences under sections 269, 270 of IPC and offences under the Drugs & Cosmetics Act, 1940 are not compoundable. The Complainant does not wish to lead any evidence for the above non-compoundable offences. Hence, accused Nos. 18 to 20 and 22 to 25 arc acquitted under section 320(8) Cr.PC for the offences under section 415/420 under section 34 of IPC read with sections 107, 1....
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....nd that the use of the said ELISA Test Kits has caused damage to its products and that it has, as a consequence, also caused a loss of business. 5. Behring and Hoechst deny each and every allegation made by the SIIL that the said ELISA Test Kits supplied to SIIL were in any way defective. 6. With a view to avoiding prolonged litigation and controversy and with a view to preventing any damage to the long established and impeccable reputation of Behring and Hoechst and of all of their associated or affiliated companies and their officers and with a view to maintaining good business relations with other manufacturers and consumers Behring and Hoechst have agreed to pay to SIIL the sum of Rs. 1,50,00,000 in full and final settlement of all the claims made by the SIIL in respect of damages alleged to have been suffered by them including the alleged damage to its fair name and reputation and also in consideration of SIIL agreeing to drop all claims against Behring and Hoechst and all of their directors, former directors, employees and former employees and agreeing not to institute any further proceedings in respect of all or any of the claims or any other claims arising in future out o....
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....he use of any product of SIIL which has been subjected to or processed by the said ELISA Test Kit SIIL hereby indemnifies Behring and Hoechst that SIIL shall not claim from Behring or Hoechst or any of their directors, former directors, employees, former employees and compensation that the court may ask SIIL to pay and SIIL shall not directly or indirectly make Hoechst or Behring or any of their directors, former directors, employees or former employees as defendants in such proceedings in any court of law. Signed and delivered by and on behalf of Behring Worke AG. By Dr. E. Baltin in the presence of Signed and delivered by and on behalf of Hoechst India Limited in pursuance of the Board Resolution dated 19-1-1991 by Dr. E. Baltin. Signed and delivered by Dr. Cyrus Poonawalla on behalf of Serum Institute of India Limited in pursuance of the Board Resolution dated 25-1-1991 in the presence of Signed and delivered by Dr. Cyrus Poonawalla on his own behalf and on behalf of all companies and entities controlled by him. In the presence of: 6.5 The application for withdrawing the complaint and the compromise agreement for claims and damages were made by the assessee out of his free ....
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....ecution, both the parties have also specifically agreed not to file any suit against each other in respect of the said cause of action related to the supply of defective ELISA Test Kits. The cause of action for supply of defective ELISA Test Kits may be of criminal or civil in nature or both as it depends on the facts and circumstances of a given case. Mere because a criminal prosecution has been instituted in respect of a given cause of action, it does not debar the complainant from filing any civil suit also if it is otherwise permissible or maintainable in the eyes of law contained in that behalf. It is also not in dispute that under the law of the land, the assessee-company was also entitled to seek compensation for damages of stocks destroyed by the assessee as a result of appearance of antibodies HIV in the blood products manufactured by the assessee-company. There was no bar under the eyes of law to file such suit for compensation, but by this agreement entered into by and between the assessee-company and BWAG & Hoechst, the assessee itself had agreed not to file any suit against these parties in respect of the cause of action arising from supply of defective ELISA Test Kits....
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....greement dated 8-3-1991. On reading the said clause, it is, thus, clear that the sum of Rs. 1.50 crore was paid to the assessee-company in full and final settlement of the following claims:- (i) All the claims, actions and demands made by the assessee-company in respect of the damages alleged to have been suffered by the assessee-company by use of the ELISA Test Kits. (ii) All the claims include the claim in respect of damages to the assessee's fame, name and reputation. (iii) The amount is also paid in consideration of the assessee-company agreeing to drop all claims whatsoever against the BWAG & Hoechst and all of their directors, former directors, employees and former employees. (iv) The amount is also paid in consideration of the assessee-company agreeing not to institute any further proceedings in respect of all or any of the claims or any other claims of any nature whatsoever arising in future out of the use of the said ELISA Test Kits by the assessee-company. 6.8 It is, thus, clear that the said sum of Rs. 1.50 crore was not paid only on account of damages to the assessee-company's fame, name and reputation, but it covers all types of claims either in presentia or may a....
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....he payment is being made in full and final settlement of all claims and damages of any nature whatsoever suffered by the assessee-company is very much clear and explicit from the stipulations and covenants agreed to by the assessee and BWAG & Hoechst as found embodied in the withdrawal application as well as in the compromise agreement dated 8-3-1991. On reading condition No. 2 of the mutual agreement, it is also clear that the assessee-company had confirmed that it shall not at any time in the future institute, or provoke the institution, whether directly or indirectly of any proceeding of any manner whatsoever, whether by themselves or by association with any other person, against the BWAG & Hoechst, and anyone or more of their directors, former directors, employees and former employees in respect of any damage that the assessee-company have allegedly suffered or that the company may suffer at any time in the future by the use of the ELISA Test Kits and in respect of any claim for damages which third parties may prefer against the assessee-company or its directors in respect of the use by third parties of any of the products of the assessee-company. This stipulation also clearly ....
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....as resulted in substantial pecuniary losses coupled with loss of goodwill and reputation. Therefore, the pecuniary losses suffered by the assessee was also a factor for initiating a legal action against BWAG & Hoechst. 6.9 It is well settled that the term 'income' under the Income-tax Act is very wide and varied in its import. It is an expression of elastic ambit. It has been held by the courts times and again that the term 'income' defined under the Income-tax Act is not an exhaustive but inclusive. It has also been held times and again that basically, in order to decide whether the receipt is capital or income, what has to be examined is the character of the receipt in the hands of the receiver. It is also well-settled that in order to decide whether the receipt is capital or income, the receipt has to be examined from a commercial point of view. The capital receipts in the hands of one may be income in the hands of another, in the case of CIT v. Scindia Workshop Ltd [1979] 119 ITR 526-531, the Hon'ble jurisdictional Mumbai High Court has held that so far as fiscal provisions of the income-tax are concerned, whenever there is a receipt of an amount by an assessee, it is not the ....
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....ds of one person maybe trading assets in the hands of another. The determining factor is the nature, of the trade in which the asset is employed. Compensation received for immobilization, sterilisation, destruction or loss, total or partial, of a capital asset would be capital receipt. If a sum represented profit in a new form, then that would be income but where the agreement relates to the structure of the assessee's profit-making apparatus and affects, the conduct of the business, the sums received for cancellation or variation of such agreement would be capital receipt.'" 6.12 In the case of Kettlewell Bullen & Co. Ltd. v. CIT [1964] 53 ITR 261, the Hon'ble Supreme Court has held as under:- "Whether, a particular receipt is capital or income from business, has frequently engaged the attention of the courts. It may be broadly stated that what is received for loss of capital is a capital receipt: what is received as profit in a trading transaction is taxable income. But the difficulty arises in ascertaining whether what is received in a given case is compensation for loss of a source of income, or profit in a trading transaction." After considering various decisions, it was fu....
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....n of the Hon'ble Supreme Court in the case of CIT v. Best & Co. (P.) Ltd. [1966] 60 ITR 11, where it was held and observed as under: "Held, (i) that the compensation agreed to be paid was not only in lieu of the loss of the agency but also for the respondent accepting a restrictive covenant for a specified period; (ii) that the restrictive covenant was an independent obligation which came into operation only when the agency was terminated and that part of the compensation which was attributable to the restrictive covenant was a capital receipt and hence not taxable. Break v. Robson [1942] 25 Tax Cas. 33 and Gillanders Arbuthnot & Co. Ltd. v. CIT [1964] 53 ITR 283 (SC) followed. (iii) That, on the facts, that part of the compensation received towards loss of the agency was a revenue receipt, as the loss of the agency was only a normal trading loss. Gillanders Arbuthnot & Co. Ltd. v. CIT [1964] 53 ITR 283 (SC) relied on (iv) That, if compensation was paid in respect of two distinct matters, one taking the character of a capital receipt and the other of a revenue receipt, there was no principle which prevented its apportionment between the two matters. Difficulty in apportionmen....
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....ss of agency was a taxable income, adverse inference could be drawn against the assessee if he had suppressed documents and evidence, which were exclusively within his knowledge or keeping." 6.15 In the case of Oberoi Hotel (P.)Ltd. v. CIT [1999] 236 ITR 903 (SC), after considering the judgment in the case of Kettlewell Bullen & Co. Ltd. v. CIT [1964] 53 ITR 261, it is laid down by the Hon'ble Supreme Court as under: "It may be broadly stated that what is received for loss of capital is a capital receipt: what is received as profit in a trading transaction is taxable income. But the difficulty arises in ascertaining whether what is received in a given case is compensation for loss of a source of income, or profit in a trading transaction. Whereon a consideration of the circumstances, payment is made to compensate a person for cancellation of a contract which does not affect the trading structure of his business, nor deprive him of what in substance is his source of income, termination of the contract being a normal incident of the business, and such cancellation leaves him free to carry on his trade (freed from the contract terminated) the receipt is revenue: Where by the cancell....
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....nt made on 8-3-1991 shows that the BWAG & Hoechst has denied each and every allegation made by the assessee-company that the ELISA Test Kits supplied to the assessee-company were in any way defective as is clear from clause (5) of the Preamble to the said compromise agreement. On the other hand, the assessee-company has alleged in the said agreement that the ELISA Test Kits were defective and that the use of the ELISA Test Kits has caused damages to its products and that it has, as a consequence, also caused a loss of business as is revealed from clause (4) of the Preamble to the said Compromise agreement. Therefore, the question as to whether ELISA Test Kits supplied by BWAG & Hoechst to the assessee were defective or not was not decided in either way. The presence of anti-bodies HIV in the blood products of the assessee-company was not solely due to ELISA Test Kits as the assessee-company has itself given some other reasons or causes for the same, which are reproduced as under: "Anti-bodies found in the production not always be attributed to defective kits. Anti-bodies could result because of absence of observations of GNP (Good Manufacturing Practice) which has a predominant ro....
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....ion thereof may lead to a prosecution, is by itself not a sufficient and determining criteria to say that one has been restrained from doing business. Business enterprises have to abide by the rules and regulations of a given licence or permit granted to carryon any business. Business enterprises have to accept all these as part of the game of doing business. They are in no way to be treated as hardships or restraints. Business involves assumption and absorption of risks, challenges, threats and obligations, windfalls and economic power. Legal obligations are part of the package within the framework of which business enterprises have to function. To comply with the terms and conditions of a given licence or permit is a normal incidence of a business being carried on by anybody else. It is also of a common knowledge that some kind of risk, more or less, is always present in all the business. The nature of risk varies from case to case. If one does not like to take a risk inherently involved in one line of business and thus decide not to carry on said business cannot be regarded a basis to conclude that he has been compelled by others to go out of the said business. It is stated by t....
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....ct, in this case, the tables could be turned on us. Hoechst (H) can maintain that they had imported the product at the request of Drugs Controller of India (DCI) to help out the country. DCI will firmly support H by placing its right hand on the heart and stating that Indian Manufacturers through their criminal negligence had placed the country in a sudden and grave danger of an AIDS epidemic. Since the Indian products were not at all good enough for the country, terrible vacuum of life saving Blood Products had developed and he had no option but to get the products imported immediately to alleviate the sufferings of the Indian community. The DCI would further maintain that not only Hoechst was allowed to import but half a dozen other people also were allowed to import and this would show conclusively that neither H nor DCI had any ulterior motive in the transaction. In fact before the Court, both of them would pass off knights in shining armour come to the rescue of the country. On this count, there is also a possibility of H hitting us back on ground of false and vexatious prosecution and even defamation. Since we have no evidence in this connection, our defence could be quite e....
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....this Act is identified. Sd/- (P.K. Sholapurwala)" 6.20 In the light of the foregoing facts and discussion, one can safely say that supply of ELISA Test Kits by BWAG & Hoechst to the assessee-company is not proved or established to be a factor or cause for assessee's running out of its business of dealing in blood products. The tests carried out by Food and Drug Administration Department revealed in almost all cases of blood manufacturing companies that there was contamination. The assessee-company could have continued to deal in blood products by using other brands of Kits available in the market. There was no complete restraint on the assessee in carrying the said line of business of blood products. The sterilisation, if any, of the very source of profit-making apparatus, here source of blood product, is not attributable to the use of ELISA Test Kits supplied by BWAG & Hoechst nor the intention of both the parties while making the settlement at Rs. 1.50 crores was to compensate the assessee for sterilisation of the very source of profit-making apparatus of the assessee-company. Having regard to the cumulative effect of the terms and conditions of compromise agreement and othe....
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....receipt. The Hon'ble Supreme Court in the case of Best & Co. (P.) Ltd. has held that, 'if compensation was paid in respect of two distinct matters, one taking the character of a capital receipt and the other of a revenue receipt, there was no principle which prevented its apportionment between the two matters. Difficulty in apportionment was not a ground for rejecting the claim either of the revenue or of the assessee. Therefore, apportionment had to be made of the compensation in this case on a reasonable basis between the loss of the agency in the usual course of business and the restrictive covenant'. The case before us is also of the nature where we have taken a view that the compensation paid is in respect of two distinct matters, one taking the character of revenue receipt being damages for loss of stock, profit or business on revenue account and the other of a capital receipt being compensation for loss of assessee's name, fame, reputation and goodwill. It is an admitted position that the assessee has destroyed the stock of blood products worth Rs. 2,04,08,695, which was allowed as a business loss in the assessment years 1989-90 and 1990-91. The stock of blood products was d....