Compensation for loss of income-generating asset is not revenue in nature
CIT Vs. Sharda Sinha (Delhi High Court), Appeal No. ITA 471/2003, Date of Pronouncement-22.12.2015
The Respondent is the successor-in-interest and legal representative of the deceased Assessee. The Assessee was a journalist by profession and was appointed as the Foreign Correspondent in India of a German news magazine Der Spiegel by an agreement dated 14th December 1970 at a monthly flat rate honorarium of $250 in addition to a further payment for any published contributions whose copyright would be with the German publisher. Either party could terminate the contract at the end of a calendar quarter by giving notice of six weeks. Der Speigel terminated the contract with effect from 1st December 1993 and paid compensation of DM 3,00,000 (Rs.53,82,000) for the association of the past 23 years and loss of work space.
In the original return the assessee claimed this amount as a revenue receipt but on revising the return, it was claimed to be a capital receipt.