THE NATIONAL STEEL WORKS LTD. vs COMMISSIONER OF INCOME-TAX, BOMBAY

The Supreme Court ruled that the sum of Rs. 60,000 received by the assessee company, National Steel Works Ltd., was a capital receipt and not a revenue receipt under the Indian Income-tax Act, 1922, specifically Section 66A(2). The Court established that the amount represented capitalized profits from the transfer of steel purchased under a government quota, rather than payment for the transfer of rights in the quota itself. Consequently, the High Court's decision to tax the amount as a revenue receipt was overturned.