COMMISSIONER OF INCOME-TAX, BOMBAY CITY vs TATA LOCOMOTIVE & ENGINEERING CO., LTD.

The Supreme Court held that the surplus amount from the repatriation of commission received by the assessee, a limited company, was not taxable as it was not a trading transaction but rather a capital transaction aimed at purchasing capital goods. The Court emphasized that the assessee's decision to keep the money in the U.S.A. for capital purposes, with the Reserve Bank's sanction, distinguished it from a typical revenue receipt. Thus, the High Court's ruling in favor of the assessee was upheld, confirming that the surplus due to devaluation was not subject to income tax.