Question 4 Which of the following is not an example of Capital profits (a) Profits on re-issue of forfeited shares (b) Profits earned prior to incorporation (c) Premium on issue of shares. (d) Compensation received on the termination of a contract.
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Answer:
(d) Compensation received on the termination of a contract.
Explanation:
Where consideration received by assessee was only towards termination of agency, income received by assessee was to be treated as business income and not as capital gain.
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