| Case ID |
14da604a-faef-4dec-99ee-f778547b7d1b |
| Body |
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| Case Number |
D-2741 of 1942 |
| Decision Date |
Jan 01, 1952 |
| Hearing Date |
Dec 31, 1951 |
| Decision |
The court held that the sum of Rs. 37,248, received by the assessee-firm as compensation for the termination of the contract, could not be considered taxable income. The ruling emphasized the distinction between compensation for non-performance of a contract and compensation for the discontinuation of a business. The court concluded that the sum was not a revenue receipt and therefore not subject to income tax under the Indian Income-tax Act. |
| Summary |
In the landmark case of Hari Kailash & Co. v. Commissioner of Income Tax, the Allahabad High Court examined the taxation implications of compensation received by an assessee-firm for the termination of a business agreement. The case revolved around the Income-tax Act, 1961, and the Indian Income-tax Act, 1922, particularly focusing on whether the compensation received was a revenue receipt. The court found that the compensation, amounting to Rs. 37,248, was paid for the termination of business rights and not for profits accrued, thus ruling it as non-taxable income. This case is pivotal for understanding the nuances of income tax law, especially in relation to contractual agreements and their termination. Legal professionals and tax consultants often reference this case when assessing similar situations regarding contract termination and tax obligations. Key terms include 'income tax', 'business termination', 'revenue receipt', and 'contractual agreements', making it highly relevant in the field of tax law. |
| Court |
Allahabad High Court
|
| Entities Involved |
Assessee-firm,
Messrs E. Sefton and Company, Limited
|
| Judges |
Malik, C.J.,
Bhargava, J.
|
| Lawyers |
G.S. Pathak,
R.S. Pathak,
S.C. Das
|
| Petitioners |
Hari Kailash & Co.
|
| Respondents |
Commissioner of Income Tax
|
| Citations |
1952 SLD 287,
(1952) 22 ITR 195
|
| Other Citations |
CIT v. Shaw Wallace & Co. AIR 1938 PC 138,
Kedsall Parsons & Co. v. CIR [1938] 21 Tax. Cas. 608 (SC),
Short Bros. Ltd. v. CIR [1927] 12 Tax. Cas. 955 (HL),
Bush, Beach & Gent Ltd. v. Road [1940] 22 Tax. Cas. 519 (HL)
|
| Laws Involved |
Income-tax Act, 1961,
Indian Income-tax Act, 1922
|
| Sections |
4,
3
|