Compensation Received

Is compensation received on termination of rent agreement a capital receipt or revenue receipt?

If yes or no are there any case laws on the same?

Replies (4)

Dear Sir,

 

It appears to be revenue receipt since there is no compensation for termination of source,

only termination of agreement.

I got this on the internet, regarding income from business or profession... i feel same logic should be applied..

 

https://delhicourts.nic.in/Oct07/Commissioner%20of%20Income%20Tax%20Vs.%20All%20India%20Films.pdf

 

https://law.incometaxindia.gov.in/DitTaxmann/IncomeTaxActs/2009ITAct/%5B1985%5D154ITR0777(AP).htm

Please see this link....It may be useful.......

https://www.taxguru.in/income-tax-case-laws/taxability-of-compensation-amount-received-by-an-assessee-for-termination-of-its-agreement.html

I also agree if the same was received on termination of any agreement the income for which is taxable under business income is taxable. But my question is what happens in a case where the compensation is received or deposit is forfeited where income under consideration is rent income and not business income.

Please share your views

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