To tax or not The IT laws do not clearly distinguish what kind of receipts are capital receipts and what are revenue receipts. A capital receipt is considered to be an amount which is received for loss of capital, for example, the amount received on loss of a source of income. On the other hand, a revenue receipt is an amount which is received as a gain or profit in a transaction, such as profit in trading by a trader. But there are many instances where difficulty arises in ascertaining whether the amount received is for loss of a source of income or profit in a transaction. Such borderline cases give rise to vexing problems and litigation with the tax authorities. Generally, any amount received by a professional from his principal who has engaged him to perform professional activities is considered as revenue receipt and is therefore taxable. For example, the fee received by a doctor, chartered accountant, lawyer or journalist from the person to whom he has rendered his services ...