UNIVERSAL RADIATORS, COIMBATORE vs COMMISSIONER OF INCOME TAX, TAMIL NADU

The Supreme Court held that the excess amount received by the assessee due to the devaluation of the Indian rupee, resulting from an insurance claim for goods seized by Pakistan, was a capital receipt and not taxable as a business receipt under Sections 4 and 10(3) of the Income Tax Act, 1961. The Court affirmed the Tribunal's finding that the character of the goods changed upon seizure, rendering the devaluation surplus non-recurring and casual in nature. The High Court's ruling that the amount was a revenue receipt was overturned, establishing that such receipts are not liable to tax.