Income Tax – Liquidated Damages for delay in Supply of plant is Capital receipt – Supreme Court – Our Case Today

By Vijay Kumar

IN a judgement delivered on Friday, the Supreme Court held that Compensation paid for the delay in procurement of capital asset amounted to sterilization of the capital asset of the assessee as supplier had failed to supply the plant within time as stipulated in the agreement. The amount received by the assessee towards compensation for sterilization of the profit earning source, not in the ordinary course of their business, was a capital receipt in the hands of the assessee.

We bring you this judgement today.

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