COMMISSIONER OF INCOME-TAX U.P. LUCKNOW vs M/S. GANGADHAR BAIJNATH GENERAL GANG, KANPUR

The Supreme Court held that the entire sum received by the B-firm upon the exit of its partners from the BJ-firm was a revenue receipt assessable under Section 10 of the Income Tax Act, 1922. The Court established that the distinction between capital and revenue receipts is largely factual, and in this case, the payments received were for the surrender of partnership rights, not for the cessation of business activities. The judgment clarified that the compensation was related to the termination of a contract in the ordinary course of business, thus reinforcing the principle that such payments are treated as revenue receipts.