COMMISSIONER OF INCOME TAX, MADRAS vs MESSRS. BEST & CO.

The Supreme Court held that compensation received for the termination of an agency and a restrictive covenant is subject to different tax treatments under Section 10 of the Income-tax Act, 1922. The Court ruled that while the compensation for the loss of the agency is a revenue receipt, the portion attributable to the restrictive covenant is a capital receipt not liable to tax. The Court emphasized the need for the assessing authority to reasonably apportion the compensation between these two components.