Sarkar, J. - (1.) The question raised is whether a certain sum received by the respondent was a capital receipt or a revenue receipt.
(2.) The respondent was a firm carrying on a business of purchasing and selling paper, stationary and other things and manufacturing books, exercise books, diaries etc. and for the purpose of its business it had a printing press. The business was carried on and the press housed, in a building belonging to its partners where the latter also resided. This building was requisitioned by the Government in September 1943 for the duration of the war. The respondent had thereupon to shift its business to another place where it was restarted sometime later. The respondent claimed compensation for the requisition on various accounts and was paid various sums. One of the claims was made in these words:"On account of the compulsory vacation of the premises disturbance and loss of business on the basis of two years at Rs. 2,29,450/- per annum.....Rs. 4,58,900." On this head the Government paid Rs. 57,435/-.
(3.) The question is whether this sum of Rs. 57,435/- was liable to income-tax and excess profits-tax. It would be liable if it was a revenue receipt and not, if it was a capital receipt. It was, no doubt, paid in respect of some injury suffered by the respondent on account of the requisition. If that injury was to the respondent's capital assets then the receipt would be a capital receipt. If, on the other hand, the injury was to the respondent's trading, then it would be a revenue receipt.;