1. CIT v. Saurashtra Cement 2. S.Zoraster & Co. v. CIT (322 ITR 59) 3. CIT v. Bombay Burmah Trading Corporation(

259 ITR 116High Court2003#8921 most cited

What is 1. CIT v. Saurashtra Cement 2. S.Zoraster & Co. v. CIT (322 ITR 59) 3. CIT v. Bombay Burmah Trading Corporation( authority for?

Compensation received for the cancellation of a distribution agreement, which leads to the impairment of the profit-making apparatus and sterilization of the source of income, is considered a capital receipt and exempt from tax.

12

judgments rely on this decision, according to BharatTax’s citation analysis of 366,315 Indian tax judgments — from 2016 to 2025.

Also referred to as

CIT v. T.I & M Sales Ltd. · 259 ITR 116 · compensation for cancellation of distribution agreement · capital receipt · impairment of profit making apparatus · sterilization of income source · section 143(3)

Sections most often in play

Section 143(3)

Judgments citing 1. CIT v. Saurashtra Cement 2. S.Zoraster & Co. v. CIT (322 ITR 59) 3. CIT v. Bombay Burmah Trading Corporation(

M J Associates, Palakkad vs. ACIT, Circle-1, Palakkad

In the result, the appeal filed by the assessee stands allowed

ITA 785/COCH/2024[2013-14]Status: DisposedITAT Cochin19 May 2025AY 2013-14

Bench: Shri Inturi Rama Rao, Am & Shri Soundararajan K., Jm

For Appellant: Shri Sriram A.S., AdvocateFor Respondent: Shri Suresh Sivanandan, CIT-DR
Section 143(3)

…5. The appellant firm claimed that the compensation amount of Rs. 25,71,00,000/- is capital receipt and exempt from tax as held by the Hon'ble Madras High Court in the case of CIT v. Ambadi Enterprises Ltd. [2004] 267 ITR 702 and CIT v. TL&M Sales Ltd. [2003] 259 ITR 116. 6. However, the AO was of the opinion that on account of cancellation of the contract of distribution vide settlement deed M.J. Associates dated 04.07.2011, the business of the appellant firm had not resulted in closure nor deprived the appellant from carrying on similar line of business in the absence of any restrictive covenant. Therefore, he…

M J Associates, Palakkad vs. ACIT, Circle-1, Palakkad

In the result, the appeal filed by the assessee stands allowed

ITA 784/COCH/2024[2012-13]Status: DisposedITAT Cochin19 May 2025AY 2012-13

Bench: Shri Inturi Rama Rao, Am & Shri Soundararajan K., Jm

For Appellant: Shri Sriram A.S., AdvocateFor Respondent: Shri Suresh Sivanandan, CIT-DR
Section 143(3)

…5. The appellant firm claimed that the compensation amount of Rs. 25,71,00,000/- is capital receipt and exempt from tax as held by the Hon'ble Madras High Court in the case of CIT v. Ambadi Enterprises Ltd. [2004] 267 ITR 702 and CIT v. TL&M Sales Ltd. [2003] 259 ITR 116. 6. However, the AO was of the opinion that on account of cancellation of the contract of distribution vide settlement deed M.J. Associates dated 04.07.2011, the business of the appellant firm had not resulted in closure nor deprived the appellant from carrying on similar line of business in the absence of any restrictive covenant. Therefore, he…

Late Shri T.T. Vasu, Chennai vs. ACIT, Chennai

The appeal stands partly allowed in terms of our above order

ITA 2247/CHNY/2016[2000-01]Status: DisposedITAT Chennai21 Mar 2022AY 2000-01

Bench: Hon’Ble Shri Mahavir Singh & Hon’Ble Shri Manoj Kumar Aggarwal, Am

For Appellant: Shri Philip George (Advocate) – Ld. ARFor Respondent: Ms. R. Halen Ruby Jesintha (Addl. CIT)
Section 143(3)Section 2(22)(e)Section 28

…on of Hon’ble Supreme Court in the case of CIT V/s Guffic Chem. P. Ltd. V/s CIT (332 ITR 602) wherein it was held that such receipts were capital receipts. Reliance was also placed on the decision of Hon’ble High Court of Madras in CIT V/s T.I.& M Sales Ltd. (259 ITR 116) wherein similar payment were held to be compensation for impairment of the profit- making apparatus of the assessee and for the sterilization of the very source of income. Similar was stated to the decision of Hon’ble Court in CIT V/s Ambadi Enterprises Ltd. (267 ITR 702). The assessee thus submitted that the amount were capital receipts and not…

Siva Industries and Holdings Limited, Chennai vs. DCIT, Chennai

In the result, the assessee’s appeals in ITA No 1392/2016 for the

ITA 1973/CHNY/2016[2010-11]Status: HeardITAT Chennai21 Jan 2020AY 2010-11

Bench: Shri Duvvuru Rl Reddy & Shri S. Jayaraman

Section 250(6)

…pensated it. It was submitted that compensation is not Interest and relied upon the following case laws: 1. CIT v. Saurashtra Cement 2. S.Zoraster & Co. v. CIT (322 ITR 59) 3. CIT v. Bombay Burmah Trading Corporation(161 ITR 386) 4. CIT v. T.I & M Sales Ltd. (259 ITR 116) 5. CIT Madras v South India Flour Mills Pvt. Ltd. (75 ITR 147) 6. Parle Soft Drinks Pvt. Ltd. vs KIT (TS 467 ITAT 2013) 7. ACIT vs 3i Infotech Ltd.(TD 417 ITAT 2013) 8. CIT & Others Vs. Sapthagiri Distilleries Ltd. (366 ITR 270) 9. Khanna and Anandham vs. CIT in ITA No.1286/2008, dt. 29.01.2013 5.3.2 Considering the facts of the case, submission…

DCIT, Chennai vs. Siva Ventures Ltd., Chennai

In the result, the assessee’s appeals in ITA No 1392/2016 for the

ITA 1421/CHNY/2016[2008-2009]Status: DisposedITAT Chennai21 Jan 2020AY 2008-2009

Bench: Shri Duvvuru Rl Reddy & Shri S. Jayaraman

Section 250(6)

…pensated it. It was submitted that compensation is not Interest and relied upon the following case laws: 1. CIT v. Saurashtra Cement 2. S.Zoraster & Co. v. CIT (322 ITR 59) 3. CIT v. Bombay Burmah Trading Corporation(161 ITR 386) 4. CIT v. T.I & M Sales Ltd. (259 ITR 116) 5. CIT Madras v South India Flour Mills Pvt. Ltd. (75 ITR 147) 6. Parle Soft Drinks Pvt. Ltd. vs KIT (TS 467 ITAT 2013) 7. ACIT vs 3i Infotech Ltd.(TD 417 ITAT 2013) 8. CIT & Others Vs. Sapthagiri Distilleries Ltd. (366 ITR 270) 9. Khanna and Anandham vs. CIT in ITA No.1286/2008, dt. 29.01.2013 5.3.2 Considering the facts of the case, submission…

DCIT, Chennai vs. Siva Ventures Limited, Chennai

In the result, the assessee’s appeals in ITA No 1392/2016 for the

ITA 663/CHNY/2015[2010-11]Status: DisposedITAT Chennai21 Jan 2020AY 2010-11

Bench: Shri Duvvuru Rl Reddy & Shri S. Jayaraman

Section 250(6)

…pensated it. It was submitted that compensation is not Interest and relied upon the following case laws: 1. CIT v. Saurashtra Cement 2. S.Zoraster & Co. v. CIT (322 ITR 59) 3. CIT v. Bombay Burmah Trading Corporation(161 ITR 386) 4. CIT v. T.I & M Sales Ltd. (259 ITR 116) 5. CIT Madras v South India Flour Mills Pvt. Ltd. (75 ITR 147) 6. Parle Soft Drinks Pvt. Ltd. vs KIT (TS 467 ITAT 2013) 7. ACIT vs 3i Infotech Ltd.(TD 417 ITAT 2013) 8. CIT & Others Vs. Sapthagiri Distilleries Ltd. (366 ITR 270) 9. Khanna and Anandham vs. CIT in ITA No.1286/2008, dt. 29.01.2013 5.3.2 Considering the facts of the case, submission…

DCIT, Chennai vs. Siva Ventures Ltd., Chennai

In the result, the assessee’s appeals in ITA No 1392/2016 for the

ITA 1075/CHNY/2014[2009-10]Status: DisposedITAT Chennai21 Jan 2020AY 2009-10

Bench: Shri Duvvuru Rl Reddy & Shri S. Jayaraman

Section 250(6)

…pensated it. It was submitted that compensation is not Interest and relied upon the following case laws: 1. CIT v. Saurashtra Cement 2. S.Zoraster & Co. v. CIT (322 ITR 59) 3. CIT v. Bombay Burmah Trading Corporation(161 ITR 386) 4. CIT v. T.I & M Sales Ltd. (259 ITR 116) 5. CIT Madras v South India Flour Mills Pvt. Ltd. (75 ITR 147) 6. Parle Soft Drinks Pvt. Ltd. vs KIT (TS 467 ITAT 2013) 7. ACIT vs 3i Infotech Ltd.(TD 417 ITAT 2013) 8. CIT & Others Vs. Sapthagiri Distilleries Ltd. (366 ITR 270) 9. Khanna and Anandham vs. CIT in ITA No.1286/2008, dt. 29.01.2013 5.3.2 Considering the facts of the case, submission…

Dy.C.I.T. 1(2), Raipur (Cg) vs. M/S Rishabh Infrastructure Pvt.Ltd, Raipur

In the result, the appeal filed by the revenue is dismissed

ITA 157/BIL/2014[2011-12]Status: DisposedITAT Raipur23 Oct 2018AY 2011-12

Bench: Sh. R.K. Panda & Ms. Suchitra Kambleassessment Year: 2011-12

Section 165Section 4Section 44A

…is transferred or let out to other persons constituted capital receipt, reversing the judgment of Calcutta High Court in CIT vs. Oberoi Hotesl (P) Ltd. (1994) 122 CTR (Cal) 347 : (1994) 209 ITR 732 (Cal) : TC13PS.62. 20. In CIT vs. T.I. & M. Sales Ltd. (2003) 259 ITR 116 (Mad) in which principle laid down in P.H. Divecha vs. CIT (1963) 48 ITR 222 (SC) and CIT vs. Seshasavee Bros. (P) Ltd. (1999) 151 CTR (Mad) 598 : (1999) 239 ITR 471 (Mad) was applied, it was held that distributorship agreement on principal to principal basis was not an agency agreement and did not fall within the ambit of s. 28(ii)(c) of the Act…

ACIT, New Delhi vs. M/S. Jagat Ram Trehan & Sons, New Delhi

In the result, the Appeal filed by the Revenue stands dismissed

ITA 5404/DEL/2011[2007-08]Status: DisposedITAT Delhi29 Mar 2017AY 2007-08

Bench: Shri H.S. Sidhu & Shri L.P. Sahu

For Appellant: Sh. R.S. Singhvi, CA & Sh. SatyajitFor Respondent: Sh. Umesh Chand Dubey, Sr. DR
Section 142(1)Section 143(1)Section 143(2)Section 143(3)Section 28

…Hon'ble Supreme Court in the case of P. H. Divecha & Anr. Vs CIT - 48 ITR 222 held that compensation received on termination of agency was capital receipt not taxable as revenue receipt. Hon'ble Madras High Court in the case of CIT vs. T. 1. & M. Sales Ltd, 259 ITR 116 held that compensation for impairment of profit making apparatus was capital receipt. It was also observed by Hon'ble Supreme Court in the case of reported at 236 ITR 903 that compensation received for the destruction or sterilization of capital asset were nothing but capital receipt. In the instant case also, after the dispute with DDA, assess…

DCIT, Chennai vs. Sella Synergy India Pvt Ltd., Chennai

In the result, the appeal of the assessee in ITA

ITA 557/CHNY/2015[2010-11]Status: DisposedITAT Chennai15 Sept 2016AY 2010-11

Bench: Shri Chandra Poojari & Shri G. Pavan Kumarआयकर अपील सं./I.T.A. No.398/Mds/2015 "नधा"रण वष" /Assessment Year : 2010-2011

For Appellant: Shri. Percy PardiwallaFor Respondent: Smt. Parminder Kaur, CIT
Section 142(1)Section 143(1)Section 143(3)Section 2Section 28Section 5OSection 92C

…by the Honorable DRP. The finding of the DRP as read in conjunction with the principles conclude that the sum received by the Assessee constituted a "capital receipt" in its hands. The jurisdictional High Court ruling in the case of CIT Vs. T.I.&M Sales Ltd [259 ITR 116- Madras HC], which was rendered on similar facts, although relating to transfer of a distributorship business. The assessee company also wishes to place reliance on the following rulings of the Supreme Court which originally laid down the principles relating to treatment of sum received on impairment of a source of business: • Kettlewell Bullen…

Banca Sella S.P.A. Chennai Branch (It Division), Chennai vs. DCIT, Chennai

In the result, the appeal of the assessee in ITA

ITA 417/CHNY/2015[2010-11]Status: DisposedITAT Chennai15 Sept 2016AY 2010-11

Bench: Shri Chandra Poojari & Shri G. Pavan Kumarआयकर अपील सं./I.T.A. No.398/Mds/2015 "नधा"रण वष" /Assessment Year : 2010-2011

For Appellant: Shri. Percy PardiwallaFor Respondent: Smt. Parminder Kaur, CIT
Section 142(1)Section 143(1)Section 143(3)Section 2Section 28Section 5OSection 92C

…by the Honorable DRP. The finding of the DRP as read in conjunction with the principles conclude that the sum received by the Assessee constituted a "capital receipt" in its hands. The jurisdictional High Court ruling in the case of CIT Vs. T.I.&M Sales Ltd [259 ITR 116- Madras HC], which was rendered on similar facts, although relating to transfer of a distributorship business. The assessee company also wishes to place reliance on the following rulings of the Supreme Court which originally laid down the principles relating to treatment of sum received on impairment of a source of business: • Kettlewell Bullen…

Sella Synergy India Pvt. Ltd., Chennai vs. DCIT, Chennai

In the result, the appeal of the assessee in ITA

ITA 398/CHNY/2015[2010-11]Status: DisposedITAT Chennai15 Sept 2016AY 2010-11

Bench: Shri Chandra Poojari & Shri G. Pavan Kumarआयकर अपील सं./I.T.A. No.398/Mds/2015 "नधा"रण वष" /Assessment Year : 2010-2011

For Appellant: Shri. Percy PardiwallaFor Respondent: Smt. Parminder Kaur, CIT
Section 142(1)Section 143(1)Section 143(3)Section 2Section 28Section 5OSection 92C

…by the Honorable DRP. The finding of the DRP as read in conjunction with the principles conclude that the sum received by the Assessee constituted a "capital receipt" in its hands. The jurisdictional High Court ruling in the case of CIT Vs. T.I.&M Sales Ltd [259 ITR 116- Madras HC], which was rendered on similar facts, although relating to transfer of a distributorship business. The assessee company also wishes to place reliance on the following rulings of the Supreme Court which originally laid down the principles relating to treatment of sum received on impairment of a source of business: • Kettlewell Bullen…

1. CIT v. Saurashtra Cement 2. S.Zoraster & Co. v. CIT (322 ITR 59) 3. CIT v. Bombay Burmah Trading Corporation( (259 ITR 116) — Cited in 12 Judgments | BharatTax