SENAIRAM DOONGARMALL vs COMMISSIONER OF INCOME-TAX, ASSAM

The Supreme Court held that the compensation received by the assessee, a Hindu undivided family owning a tea estate, for the requisition of factory buildings under the Defence of India Rules was not taxable under Section 10 of the Indian Income-tax Act, 1922. The Court established that the compensation was for the injury to the business as a whole, as the requisition halted all business operations, rather than for loss of profits. Consequently, the amounts received were classified as capital receipts and not liable to income tax.