Case Law Details
Case Name : CIT Vs Saurashtra Cement Ltd. (Supreme Court of India)
Related Assessment Year :
Courts :
Supreme Court of India
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Where the damages paid to the assessee was directly and intimately linked with the procurement of a capital asset, compensation paid for the delay in procurement of capital asset amounted to sterilisation of the capital asset of the assessee as supplier had failed to supply the plant within time as stipulated in the agreement and the amount received by the assessee towards compensation for sterilisation of the profit earning source, was a capital receipt.
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I have a doubt with regard to income tax given as below:-
What would be the income tax treatment of liquidated damages pertaining to delayed supply machinery
If we consider liquidated damages as capital receipts (CIT vs Saurashtra Cement) then do we need to reduce from actual cost of assets.
I shall be greatful if you can provide any case law in this regard