Case Law Details
Khanna and Annadhanam Vs. CIT, ITA No. 1286/2008, Judgment delivered on: 29.01.2013, High Court of Delhi
Issue- Whether the amount received by the appellant from DTTI in terms of release agreement with DTTI is capital receipt or revenue receipt?
Whether the Compensation to CA Firm for loss of referral work is a non-taxable capital receipt?
Facts – The understanding between the assessee-firm and the chartered accountants firm in Calcutta was limited to the work in Delhi and surrounding areas only. In 1996, it transpired that DHS wanted another firm of chartered accountants by name C.C. Chokshi & Co., of Bombay to represent its work in India. Accordingly an agreement was entered into on 14.11.1996 which was called a release agreement, under which the assessee firm was to no longer represent DHS in India; thereafter DHS would not refer any work to the assessee-firm. In consideration of the termination of the services of the assessee-firm, a compensation of US$ 325000 amounting to Indian Rs. 1,15,70,000/- was paid by DHS to the assessee-firm.
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