Law:

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Section 10(3) of the Income-tax Act, 1961 - Exemptions - Casual and non-recurring receipt - Assessment year 1976-77 - Assessee received a sum as consideration for surrendering tenancy of godown - Whether aforesaid receipt was casual receipt and clause (3) covers even a capital receipt - Held, yes - Whether aforesaid receipt was not a capital gain chargeable under section 45 as tenancy right had no cost of acquisition and as such, said receipt was not excluded from purview of section 10(3) by virtue of proviso (i) to section 10(3) - Held, yes Words and phrases - Word 'receipt' occurring in section 10(3) of the Income-tax Act, 1961 FACTS The assessee, an individual, carried on the business of dealing in shares. During the relevant previous year the assessee received an amount of Rs. 15,000 by way of consideration for surrendering the tenancy of godown occupied by him as tenant. In the return filed the assessee disclosed the said amount as a capital gain. Later, however, he contended before the ITO that it was not at all taxable, not being a revenue receipt. The ITO, however, rejected this contention and held the said receipt to be a casual receipt within the meaning of section 10(3). Accordingly, he exempted a sum of Rs. 1,000 and brought the remaining Rs. 14,000 to tax. On appeal, the AAC agreed with the ITO. On further appeal, the Tribunal took the view that the said amount represented a capital gain and was taxable as capital gain. On reference: HELD Section 10 deals with exemption of particular types of income from being included in the total income of an assessee. Clause (3 ), in particular, uses the expression 'any receipts'. One should, however, read the expression 'receipts' as synonymous with 'income' since that is the dominant theme and purpose of section 10. The expression 'receipts 'occurring in clause ( 3) does not necessarily mean that receipts must be revenue receipts and not capital receipts. The word 'receipt' must be understood as synonymous with 'income'. The expression 'income' has been defined in clause ( 24) of section 2 to include capital gains. It is precisely for this reason that proviso (i) to clause (3) of section 10 expressly excludes…

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