1955 (9) TMI 63

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.... suspended. The assessee contended that it was due to the negligence of the consignee that the goods were illegally taken to Durban and unloaded there and therefore he claimed damages from him and the matter was referred to arbitration and the assessee received Rs. 39,292-4-3 as damages. The taxing department contended that this was a revenue receipt liable to be taxed and the Tribunal held that it was not, and the Commissioner has now come on this reference. In our opinion, the facts of this case are not distinguishable on principle from our decision in Commissioner of Income-tax vs Shamsher Printing Press, (1953) 23 ITR 363. That was a case where under the Defence of India Rules the assessee's business was requisitioned by Governme....

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.... damages paid could only be for the destruction or sterilization of the capital asset and not as a solatium for the profits which the assessee might have earned. In the case just referred to we also laid down that in order that a payment should be a revenue receipt it must be earned in the course of the business. It is impossible to suggest that the amount received by the assessee in this case was in the course of the business. Far from the amount being in the courses of the business, his business was brought to a standstill and because the business was brought to a standstill he proceeded against his consignee and recovered damages. The Advocate-General has suggested that when we decided Shamsher's case, (1953) 23 ITR 363 a very rel....

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....s we have already pointed out, in the case before us the capital asset which would have enabled the assessee to earn profits did not exist and therefore no question can arise of the assessee being deprived of the opportunity of earning profits when in law he could not have carried on the business which would have given him the profits. The Lord President in his Judgment points out the distinction between an injury on trading and a hole made in the profits of the assessee and a hole made in the capital assets, and he says that in the case which he was considering it was an injury on the trading of the assessee and there was a hole in the profits of the assessee. In the case before us it would be impossible to suggest that there was any injur....