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Issues:
1. Whether the sum received by the assessee from the power of attorney holder is of a capital or revenue nature. Analysis: The judgment addressed the issue of whether a sum of Rs. 42,294 received by the assessee from their power of attorney holder, who misused authority by setting up a company for personal benefit, was a capital or revenue receipt. The assessee, engaged in garment business, appointed the power of attorney holder to manage a branch in Bombay and set up a company for export benefits. However, the power of attorney holder registered the company in his and his wife's name, misappropriating benefits. The assessee filed a suit for account rendition, resulting in a compromise where the power of attorney holder paid Rs. 42,294 to the assessee. The Income-tax Officer initially treated the receipt as revenue, stating it was for preserving the business. The Appellate Assistant Commissioner upheld this view, but the Tribunal reversed it. The High Court analyzed the compromise terms, noting the transfer of company shares to the assessee without consideration and the payment of Rs. 75,000 from funds deposited in court. The court found the amount received akin to what the assessee would have received if in control of the company, thus a revenue receipt. The court rejected the argument that the receipt was capital due to the transfer of company ownership without consideration. Referring to a similar case, the court emphasized that the amount received was what the assessee would have obtained through the company if under their control. Despite initial misappropriation by the power of attorney holder, the nature of the amount remained revenue. Consequently, the court ruled in favor of the Revenue, determining the sum received as a revenue receipt. The Revenue was awarded costs amounting to Rs. 1,000.
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