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Compensation Received

Aditya Maheshwari (CA in Practice) (35867 Points)

05 March 2010

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?

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4 Replies

Max Payne (employed) (2574 Points)
Replied 05 March 2010

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

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C.Balaji (Learner) (1867 Points)
Replied 05 March 2010

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

Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 05 March 2010

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.