GILLANDERS ARBUTHNOT AND CO., LTD. vs THE COMMISSIONER OF INCOME-TAX, CALCUTTA

The Supreme Court held that the compensation received by the appellant company for the termination of an agency agreement was revenue in nature and taxable under the Indian Income-tax Act, 1922. The Court reasoned that the cancellation of a single agency, amidst the appellant's diverse business operations, did not constitute a loss of a capital asset but rather a loss of profit. Thus, the amount received was not a capital receipt but income chargeable to tax, affirming the Income-tax Officer's assessment.