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TMI Blog2015 (12) TMI 1290X X X X Extracts X X X X X X X X Extracts X X X X ..... r written by the publisher acknowledges that the compensation was being paid "Due to the loss of his work place and in consideration of his long time association". These factors have a bearing on the character of the receipt in the hands of the Assessee. Indeed this was compensation for loss of an income-generating asset. The Court concurs with the conclusion of the CIT (A) that the sum paid to the Assessee was "to compensate for the abrupt loss of source of income" and that the termination of contract had fatally injured the appellant's only source of income for the last 20 years." The mere fact that the Assessee was free to earn through other sources would not make a difference to this position. Recently this court in Khanna and Annadh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for any published contributions whose copyright would be with the German publisher. Either party could terminate the contract at the end of a calendar quarter by giving notice of six weeks. Der Speigel terminated the contract with effect from 1st December 1993 and paid compensation of DM 3,00,000 (Rs.53,82,000) for the association of the past 23 years and loss of work space. 3. In the original return the assessee claimed this amount as a revenue receipt but on revising the return, it was claimed to be a capital receipt. In the course of the assessment proceedings, the AO by means of a notice under Section 142(1) asked the assessee to furnish the following details: i) Copy of Agreement with M/s. Der Spiegel. ii) Was your profess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transmitting DM 3 lacs to your bank account in New Delhi as sign off compensation for performance of authorship/professional services for a continuous period of 23 years. 6. The Assessing Officer (AO) by the order dated 20th February, 1995 negatived the plea that the aforementioned amount was a capital receipt. It was held that the termination of contract with Der Spiegel did not mean that the Assessee had lost his right of authorship in future for all the publications in the universe . It was observed that since the Assessee was free to contribute his article/stories etc. to any other magazine, publication, the Assessee neither had any right/ claim over the sum so received from Der Spiegel, nor it was anticipated by him. 7. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constitutes the receipt of capital nature. The compensation of ₹ 53,82,000/- is therefore directed to be excluded from the appellant's total income. 8. By the impugned order dated 5th March, 2003, ITAT confirmed the order of CIT(A). 9. This Court has heard the learned counsel for the parties. While admitting the appeal on 23rd February, 2004, the Court framed the following question for consideration: Whether the Income Tax Appellate Tribunal was correct in law in holding that the compensation of ₹ 53,82,000/- received by the assessee from the German publisher was a capital receipt not chargeable to tax under Income Tax Act? 10. It is urged by Mr. Rohit Madan, learned standing counsel for the Revenue, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. Recently this court in Khanna and Annadhanam v. Commissioner of Income Tax [2013] 351 ITR 110 (Del) was considering the nature of a receipt in the hands of the Assessee, a firm of Chartered Accountants for the termination of an arrangement by which it was receiving referral work from abroad. After discussing the decisions of the Supreme Court in Kettlewell Bullen and Co. Ltd. (supra) and Oberoi Hotel Pvt. Ltd. v. CIT [1999] 236 ITR 903 (SC), this court held as under: What appears to be the ratio of the judgment is that if the receipt represents compensation for the loss of a source of income, it would be capital and it matters little that the assessee continues to be in receipt of income from its other similar operations. 13. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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