C.I.T. BOMBAY CITY vs BOMBAY BURMAH TRADING CORPORATION, BOMBAY

The Supreme Court addressed the tax implications of compensation received by an assessee-company under the Income-tax Act, 1922, specifically under Section 10(2)(vii) and Section 66A(2). The Court held that the compensation received in the form of logs was a capital receipt and not liable to tax, distinguishing between capital and revenue receipts. The High Court's ruling in favor of the assessee was upheld, confirming that the sale proceeds from the logs received in lieu of depreciable assets were exempt from taxation.