Dismissing the appeal of the revenue the Court held that ; there was a breach of contract giving rise to a claim for damages and the compensation was paid on account of failure to honour the commitment. That was capital in nature. A detailed business plan was submitted by the assessee, which was rejected without any specific reason. Thus, there was a breach of the right of first refusal and a receipt of compensation after negotiation, which was shown as non-taxable capital receipt. The contention that such a receipt could not have been taxed as revenue receipt or casual income, was accepted by the Tribunal and had held that the amount received by the assessee by way of compensation, for breach of commitment, was not a capital gain, but a non-taxable capital receipt.( AY. 1998-99)
CIT v. Parle Soft Drinks (Bangalore Pvt. Ltd. (2018) 400 ITR 108/ 161 DTR 86/ 252 Taxman 147 / 300 CTR 415 (Bom) (HC) CIT v. Parle Bottling Pvt Ltd (2018) 400 ITR 108/ 161 DTR 86 / 252 Taxman 147 / 300 CTR 415 /(2017) 88 Taxmann.com 24 (Bom) (HC) Editorial ; Order in Parle Soft Drinks P. Ltd. v. JCIT ( 2013) 27 ITR 663 ( Mum) (Trib) is affirmed. Editorial: SLP of revenue is dismissed CIT v. Parle Soft Drinks (Bangalore Pvt. Ltd. (2018) 258 Taxman 6 (SC)
S. 4 : Charge of income-tax –Capital or revenue – Causal and non –recurring- Capital gains- Compensation paid for breach of contract was held to be capital in nature [ S. 2(24), 10(33) 45. 55(2)(a) ]