Karam Chand Thapar & Bros. (P) Ltd. v. CIT

80 ITR 167Supreme Court of India1971#7574 most cited

What is Karam Chand Thapar & Bros. (P) Ltd. v. CIT authority for?

Compensation for the cancellation of an agency agreement is normally considered a capital receipt if it impairs the assessee's trading structure or results in the loss of their source of income.

15

judgments rely on this decision, according to BharatTax’s citation analysis of 366,421 Indian tax judgments — from 2016 to 2025.

Also referred to as

Karam Chand Thapar & Bros (P) Ltd. v. CIT · capital receipt · cancellation of agency agreement · loss of source of income · trading structure impairment · business income · compensation

Issues it is cited on

personcompanyindiatotal incomebusinessinterest

Judgments citing Karam Chand Thapar & Bros. (P) Ltd. v. CIT

Shrikant Anantrao Zori, Aurangabad vs. Income Tax Officer Ward 1(1) Aurangabad, Aurangabad

In the result, the appeal of the assessee is partly allowed

ITA 798/PUN/2024[2020-21]Status: DisposedITAT Pune28 Jan 2025AY 2020-21
For Appellant: Shri Nikhil Patakh &For Respondent: Shri Arvind Desai
Section 10Section 143(1)Section 143(2)Section 17(3)(i)Section 89

…ement is normally a capital receipt", loss of source of Income is fundamental consideration for holding the compensation as Capital Receipts. Copy of Judgement is at pg. 95-109 of Legal Compilation. Karam Chand Thapar & Bros. Pvt. Ltd. vs. CIT - Supreme Court-80 ITR 167 (1971) wherein it has been held "For finding out a true nature of the receipt, one of the guidelines for finding out the same is to see whether by the cancellation of an agency the trading structure of the assessee is impaired or such cancellation results in loss of what may be regarded as the source of the assessee's Income. The payment made to c…

DCIT Circle 13(2)(2), Mumbai vs. Nandanbala Commercials Private Limited, Mumbai

In the result, the appeal filed by the revenue is dismissed and cross objection filed by the assesse is also dismissed

ITA 1134/MUM/2023[2016-17]Status: DisposedITAT Mumbai29 Jan 2024AY 2016-17

Bench: Shri Aby T Varkey & Shri Amarjit Singhdy. Commissioner Of Vs. Nandanbala Commercials Income Tax Circle 13(2)(2) Private Limited Room No. 452, 4 Th Floor, (Formerly Known As Sanjay Infraspace Limited) Aayakar Bhavan, 1401-A, Wing One Bkc, M.K. Road, Plot No. C-66, G-Block, Mumbai – 400020 Bkc, Bandra-East Mumbai -400 092 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aavcs1575L Appellant .. Respondent

For Appellant: Madhur AgarwalFor Respondent: HM Bhatt
Section 143(2)Section 36(1)(ii)

…s expediency of a transaction has been established the frequency of transaction becomes irrelevant to decide its nature as business transaction or investment transaction. b) The Hon'ble Apex Court in case of Karam Chand Thapar & Bros (P) Ltd. vs CIT (1969) in 74 ITR 26(SC) held that a transaction of sale may, in a given case, be isolated, in another, it may be intimately related to the business of the assessee. In the later case the profit arising from the P a g e | 10 ITA No.1134/Mum/2023 CO 67/Mum/2023 DCIT 13(2)(2) Vs. Nandanbala Commercials Pvt. Ltd. transaction will probably arise out of assessee's business…

M/S. Zensar Technologies Ltd, Mumbai vs. The DCIT -2(3), Mumbai

In the result, ground No.5 and the additional ground of appeal are allowed

ITA 2907/MUM/2008[2002-2003]Status: DisposedITAT Mumbai28 Aug 2023AY 2002-2003

Bench: Shri Vikas Awasthy & Shrigagan Goyalआअसं.2907/मुं/2008 ("न.व.2002-03) Zensar Technologies Ltd. Magnet House, 2Nd Floor, Narottam Morarjee Marg, Ballard Estate, Mumbai 400 038. Pan: Aaacf-0742-K ...... अपीलाथ"/Appellant बनाम Vs. Dy. Commissioner Of Income Tax, Circle 2(31), Mumbai Mumbai. ..... ""तवाद"/Respondent अपीलाथ" "वारा/ Appellant By Shri Nitesh Joshi, Advocate : ""तवाद" "वारा/Respondent By : S/Shri Jasdeep Singh, Cit-Dr & Pratap Narayan Sharma, Sr. Ar सुनवाई क" "त"थ/ Date Of Hearing : 02/06/2023 घोषणा क" "त"थ/ Date Of Pronouncement : 28/08/2023 आदेश/Order

For Respondent: S/Shri Jasdeep Singh, CIT-DR &
Section 10ASection 115JSection 234DSection 80HSection 94(7)

…compensation as “Income from other Sources”. In support of his submissions, the Ld.Counsel for the assessee placed reliance on the following decisions: (i) Kettlewell Bullen & Co. Ltd, vs. CIT, 53 ITR 261 (SC) (ii) Karan Chand Thapar & Bros P. Ltd. vs. CIT, 80 ITR 167 (SC) (iii) CIT vs. Bombay Burmah Trading Corp., 27 Taxman 314(SC) (iv) CIT vs. Vazir Sultan & Sons , 36 ITR 175 (SC) The Ld.Counsel for the assessee further submitted that with the execution of Compromise Agreement, the assessee surrendered the right to sue. Any compensation received in lieu of surrender of right to sue is capital in nature, henc…

The Assistant Commissioner of Income-Tax-3(1), Raipur, Raipur (Cg) vs. M/S M/S Risabh Infrastructure Pvt Ltd, Raipur (Cg)

ITA 30/BIL/2017[2012-13]Status: DisposedITAT Raipur06 Apr 2022AY 2012-13

Bench: Shri Ravish Sood & Shri Jamlappa D Battullआयकरअपीलसं. / Ita No.(S)29 & 30/Rpr/2017 Co No.(S) 04 & 05/Rpr/2017 "नधा"रणवष" / Assessment Years : 2010-11 & 2012-13 The Assistant Commissioner Of Income Tax-3(1), Raipur (C.G.) .......अपीलाथ" / Appellant बनाम / V/S. M/S. Risabh Infrastructure Pvt. Ltd. Manas Bhawan, Near Adarsh Garage, Opp. Pujari Park, Tikrapara, Raipur (C.G.). Pan : Aaccr4411P ……""यथ" / Respondent

For Appellant: Shri Nikhilesh Begani, ARFor Respondent: Shri Debashis Lahiri, CIT DR
Section 143(1)Section 143(3)Section 147Section 148

…y drawing the conclusion of law ultimately from the facts of the particular case and it is not possible to lay down any single test as infallible or any single criterion as decisive. This Court in the case of Karam Chand Thapar & Bros. (P) Ltd. vs. CIT (1971) 80 ITR 167 (SC) : TC 13R.1235 discussed and held that in CIT vs. Chari & Chari Ltd. (1965) 57 ITR 400 (SC) : TC 38R.878 it was held that ordinarily compensation for loss of an office or agency is regarded as capital receipt, but this rule is subject to an exception that payment received even for termination of agency agreement would be revenue and not capita…

The Assistant Commissioner of Income-Tax-3(1), Raipur, Raipur (Cg) vs. M/S M/S Risabh Infrastructure Pvt Ltd, Raipur (Cg)

ITA 29/BIL/2017[2010-11]Status: DisposedITAT Raipur06 Apr 2022AY 2010-11

Bench: Shri Ravish Sood & Shri Jamlappa D Battullआयकरअपीलसं. / Ita No.(S)29 & 30/Rpr/2017 Co No.(S) 04 & 05/Rpr/2017 "नधा"रणवष" / Assessment Years : 2010-11 & 2012-13 The Assistant Commissioner Of Income Tax-3(1), Raipur (C.G.) .......अपीलाथ" / Appellant बनाम / V/S. M/S. Risabh Infrastructure Pvt. Ltd. Manas Bhawan, Near Adarsh Garage, Opp. Pujari Park, Tikrapara, Raipur (C.G.). Pan : Aaccr4411P ……""यथ" / Respondent

For Appellant: Shri Nikhilesh Begani, ARFor Respondent: Shri Debashis Lahiri, CIT DR
Section 143(1)Section 143(3)Section 147Section 148

…y drawing the conclusion of law ultimately from the facts of the particular case and it is not possible to lay down any single test as infallible or any single criterion as decisive. This Court in the case of Karam Chand Thapar & Bros. (P) Ltd. vs. CIT (1971) 80 ITR 167 (SC) : TC 13R.1235 discussed and held that in CIT vs. Chari & Chari Ltd. (1965) 57 ITR 400 (SC) : TC 38R.878 it was held that ordinarily compensation for loss of an office or agency is regarded as capital receipt, but this rule is subject to an exception that payment received even for termination of agency agreement would be revenue and not capita…

M/S Ace Designers Limited vs. The Additional Commissioner of

In the result, the order of the Tribunal dated

ITA/184/2013HC Karnataka09 Sept 2020

Bench: ALOK ARADHE,H.T. NARENDRA PRASAD

Section 143(2)Section 260Section 260ASection 28

…1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 9TH DAY OF SEPTEMBER 2020 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD I.T.A. NO.184 OF 2013 BETWEEN: M/S. ACE DESIGNERS LIMITED REPRESENTED BY ITS MANAGING DIRECTOR SHRINIVAS G. SHIRGURKR PLOT NO.7 & 8, II PHASE PEENYA INDUSTRIAL AREA BANGALORE-560058. ... APPELLANT (BY SRI. A. SHANKAR, SR. COUNSEL A/W SRI. M. LAVA, ADV.,) AND: THE ADDITIONAL COMMISSIONER OF INCOME TAX (LTU), JSS TOWERS 100 FEET RING ROAD BANASHANKARI III STAGE BANGALRE-560085. ... RES…

ACIT, Circle- 2(2), New Delhi vs. Anant Raj Ltd., New Delhi

In the result assessee’s appeal is partly allowed and Revenue’s appeal is dismissed

ITA 5677/DEL/2017[2013-14]Status: DisposedITAT Delhi11 May 2020AY 2013-14

Bench: Shri Amit Shukla & Dr. B.R.R. Kumar

For Appellant: Shri V.K. Bindal, CAFor Respondent: Shri Sanjay Goel, CIT-DR
Section 143(3)Section 36(1)(vii)Section 36(2)Section 4Section 50C

…t income earned from activities undertaken during normal course of business is to be assessed as ‘business income’ and in support, he strongly relied upon the judgments of Hon’ble Supreme Court in the case of: (a) Karam Chand Thapar and Bros. (P.) Ltd. [1969] 74 ITR 26 (SC). (b) Karanpura Development Co. Ltd. vs. Commissioner of Income-tax [1962] 44 ITR 362 (SC). I.T.A. Nos.5169 & 5677/DEL/2017 11 (c) Chennai Properties & Investments Ltd. [2015] 56 taxmann.com 456 (SC). He further submitted that one has to be examine the substance of the transaction which here in this case clearly shows that sale consideration…

Anant Raj Ltd, New Delhi vs. Addl.CIT, Range-2, Circle-2(2), New Delhi

In the result assessee’s appeal is partly allowed and Revenue’s appeal is dismissed

ITA 5169/DEL/2017[2013-14]Status: DisposedITAT Delhi11 May 2020AY 2013-14

Bench: Shri Amit Shukla & Dr. B.R.R. Kumar

For Appellant: Shri V.K. Bindal, CAFor Respondent: Shri Sanjay Goel, CIT-DR
Section 143(3)Section 36(1)(vii)Section 36(2)Section 4Section 50C

…t income earned from activities undertaken during normal course of business is to be assessed as ‘business income’ and in support, he strongly relied upon the judgments of Hon’ble Supreme Court in the case of: (a) Karam Chand Thapar and Bros. (P.) Ltd. [1969] 74 ITR 26 (SC). (b) Karanpura Development Co. Ltd. vs. Commissioner of Income-tax [1962] 44 ITR 362 (SC). I.T.A. Nos.5169 & 5677/DEL/2017 11 (c) Chennai Properties & Investments Ltd. [2015] 56 taxmann.com 456 (SC). He further submitted that one has to be examine the substance of the transaction which here in this case clearly shows that sale consideration…

Butterfly Marketing Pvt. Ltd. (by Successor V.M. Chettiar & Sons India P. Ltd.), Kancheepuram vs. DCIT, Chennai

In the result, the appeal of the assessee stands allowed

ITA 3079/CHNY/2016[2012-13]Status: DisposedITAT Chennai19 Sept 2019AY 2012-13

Bench: Shri George Mathan & Shri Inturi Rama Rao

For Appellant: Shri. R. Clement Ramesh Kumar
Section 143(3)

…nd liable to tax. Any compensation received towards loss of source of income cannot be treated as Revenue receipts but capital receipts which is not liable to be taxed. The Hon’ble Supreme Court in the case of Karam Chand Thapar Bros (P) Ltd vs. CIT (1971) 80 ITR 167, wherein it was held as follows. :- 7 -: ‘’9.In the determination of the question whether a receipt is capital or income, it is not possible to lay down any single test as infallible or any single criterion as decisive. The question must ultimately depend on the facts of the particular case, and the authorities bearing on the question are valuabl…

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

…firmative, the source of income itself being destroyed or severely impaired, the receipt was held to be capital in nature. fCIT vs. Chari & Chari Ltd. (1965) 57 ITR 400 (SC) : (1965) TAX 20(3) 106 : TC13R.1229, Karamchand Thapar & Bros. P. Ltd. vs. CIT (1971) 80 ITR 167 (SC) : TC13R.1235A reversing the decision of the Calcutta High Court in CIT vs. Karamchand Thapar & Bros. P. Ltd. (1968) 67 ITR 705 (Cal): TC13R.1236]. 18. Relying on the proposition of law laid down by the Supreme Court in CIT vs. Chari & Chari (1965) 57 ITR 400 (SC) : (1965) TAX 20(3) 106 : TC13R.1229 and Karamchand Thapar & Bros, vs. CIT (195…

V.C. Nannapaneni vs. Commissioner of Income Tax

In the result, the appeals are allowed

ITTA/159/2005HC Telangana05 Jan 2018

Bench: C.V.NAGARJUNA REDDY,T.AMARNATH GOUD

For Appellant: Mr. K. Vasant KumarFor Respondent: Ms. K. Mamata
Section 10(3)Section 143(1)Section 143(3)

…he assessee has received the amount in question. The amount was received because the assessee had given up its right to purchase and/or to operate the property. Further, it is loss of source of 15 (1971) 80 ITR 167 (SC) 16 (1965) 57 ITR 400 (SC) CVNR, J & TA, J ITTAs 159 & 160/2005 26 income to the assessee and that right is determined for consideration. Obviously, therefore, it is capital receipt and not a revenue receipt. (emphasis is ours) 15. The legal position that could be summarised from the case law discussed abo…

Knight Riders Sports P. Ltd, Mumbai vs. Asst CIT Cen Cir 29, Mumbai

The appeal of the assessee is partly allowed in terms of our aforesaid observations

ITA 1307/MUM/2013[2009-10]Status: DisposedITAT Mumbai29 Dec 2017AY 2009-10

Bench: Shri G.S.Pannu, Am & Shri Ravish Sood, Jm M/S Knight Riders Sports Acit, Central Circle-29, Private Limited, Deepvan बिधम/ Mumbai. Anand Vihar Society, 20Th Vs. Road, Khar (W), Mumbai-400 052 स्थामी रेखा सं./ जीआइआय सं./ Pan No. Aadck3118M (अऩीराथी /Appellant) (प्रत्मथी / Respondent) :

For Appellant: Mr. J.D. Mistry, A.RFor Respondent: Mr. Rajesh Yadav, D.R
Section 143(3)Section 250Section 32(1)(ii)Section 37(1)

…he later previous years, it cannot be disallowed as deduction merely on the basis that the accounts are maintained on mercantile basis and that it related to a transaction of the earlier year.  Karam Chand Thapar and Bros. P. Ltd. us. CIT (Central) Calcutta (74 ITR 26) (SC) In the facts of this case, the assessee sold its factory on 1 October 1948, but the price was finally settled in December 1949, pursuant to which a loss was determined. This loss was claimed by the assessee as a deduction in a subsequent Assessment year (AY) 1950-51. The tax authorities held that the business of the factory was not carried ou…

DCIT 3(2), Mumbai vs. Lml Ltd, Mumbai

In the result, appeal of the revenue stands dismissed

ITA 3666/MUM/2011[2006-07]Status: DisposedITAT Mumbai21 Jun 2016AY 2006-07

Bench: Shri G S Pannu & Shri Amit Shukla

Section 143(3)

…o be fatal in the subsequent years. The Hon’ble Supreme Court, later on in the case of Oberoi Hotels Pvt. Ltd. vs CIT (supra) applying the guiding principle of Kettlewell Bullen & Co.Ltd (supra) as well as the decision of Karamchand Thapar, reported in [1971] 80 ITR 167(SC) held that, if the enduring benefit was reflected on the capital of the assessee and giving up the contractual right on the basis of principal agreement which had resulted into loss and source of assessee’s income, the receipt in hands of the assessee is a capital receipt. 11. Now coming to the argument of Ld. DR that provision of section 28(v…

The ACIT RG-3(2) vs. M/S. Lml Ltd

In the result, appeal of the revenue stands dismissed

ITA 3668/MUM/2004[2000-2001]Status: DisposedITAT Mumbai21 Jun 2016AY 2000-2001

Bench: Shri G S Pannu & Shri Amit Shukla

Section 143(3)

…o be fatal in the subsequent years. The Hon’ble Supreme Court, later on in the case of Oberoi Hotels Pvt. Ltd. vs CIT (supra) applying the guiding principle of Kettlewell Bullen & Co.Ltd (supra) as well as the decision of Karamchand Thapar, reported in [1971] 80 ITR 167(SC) held that, if the enduring benefit was reflected on the capital of the assessee and giving up the contractual right on the basis of principal agreement which had resulted into loss and source of assessee’s income, the receipt in hands of the assessee is a capital receipt. 11. Now coming to the argument of Ld. DR that provision of section 28(v…

M/S. Lml Ltd., Mumbai vs. The Addl CIT RG.3(2)

In the result, appeal of the revenue stands dismissed

ITA 3540/MUM/2004[2000-2001]Status: DisposedITAT Mumbai21 Jun 2016AY 2000-2001

Bench: Shri G S Pannu & Shri Amit Shukla

Section 143(3)

…o be fatal in the subsequent years. The Hon’ble Supreme Court, later on in the case of Oberoi Hotels Pvt. Ltd. vs CIT (supra) applying the guiding principle of Kettlewell Bullen & Co.Ltd (supra) as well as the decision of Karamchand Thapar, reported in [1971] 80 ITR 167(SC) held that, if the enduring benefit was reflected on the capital of the assessee and giving up the contractual right on the basis of principal agreement which had resulted into loss and source of assessee’s income, the receipt in hands of the assessee is a capital receipt. 11. Now coming to the argument of Ld. DR that provision of section 28(v…