Assessee, engaged in mining and power generation, purchased wind turbine generators (WTGs) from Suzlon Energy Limited (SEL) under contracts that included a performance guarantee clause. The WTGs failed to meet the guaranteed generation levels, and SEL compensated the assessee for the shortfall. Assessee claimed this compensation as a capital receipt, arguing it was for the impairment of a capital asset. AO, however, treated it as a revenue receipt pleading that the same compensated for lost power generation (business income). On appeal the Tribunal held that the WTGs’ under-performance impaired the capital asset’s utility, making the compensation akin to damages for sterilization of a capital asset. Accordingly, the compensation was a capital receipt, not chargeable to tax.(AY. 2008 -09 )