COMMISSIONER OF INCOME-TAX, NAGPUR vs RAI BAHADUR JAIRAM VALJI AND OTHERS

The Supreme Court held that the sum of Rs. 2,50,000/- paid as solatium for the cancellation of a contract dated May 9, 1940, was a revenue receipt and thus chargeable to tax under the Indian Income-tax Act, 1922. The Court reasoned that the contract was entered into in the ordinary course of business and did not constitute an asset of an enduring character. The High Court's ruling that the amount was not chargeable to tax was overturned, affirming the income tax authorities' position.