Insurance Claim Received On Dead Horses Is Capital Receipt, Not Taxable As Income U/S 41(1): Bombay High Court

The Bombay High Court held that insurance compensation received by a charitable trust for the death of horses used in its activities is a capital receipt, not taxable as income under Section 41(1) of the Income Tax Act, 1961.

The Court clarified that since the horses were not trading assets and had no direct connection to income generation, the compensation could not be treated as revenue income.

The ruling came in response to a tax department appeal challenging the ITAT's decision.

The court reaffirmed that capital receipts not linked to income generation are outside the scope of taxation, thus providing relief to the trust.