Which of the following is not a capital profit?

Profit prior to incorporation of the company

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Profit from the sale of fixed assets

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Premium on issue of shares

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Compensation received on the termination of a contract

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Solution

The correct option is D Compensation received on the termination of a contract
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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Similar questions

Under which head the following items of a non-financial company will be shown :

(i) Sales (ii) Sale of Scrap (iii) Dividend received (iv) Interest earned (v) Profit on sale of fixed asset and (vi) Profit on sale of investments.

Amount received from which of the following is not a capital receipt?

Q. Mark the following statements True or False:
(a) A private company must file a statement in lieu of prospectus.
(b) A company which does not want to prepare its own Articles of Association can adopt Table A.
(c) A company wanting to raise capital must issue a prospectus.
(d) A private company can start its business immediately after incorporation.
(e) Capital clause is a part of the Articles of Association.
(f) The Memorandum of Association defines the relationship of a company with or outsiders.
(g) Every company must issue a prospectus to raise share capital.

Q. Which follow from application of the undermentioned legal principle:

LEGAL PRINCIPLE: Contract is an agreement freely entered into between the parties.

FACTUAL SITUATION: Tapan was a dealer in mustard oil. The Government of India by an order issued under the Essential Commodities Act, fixed the price of mustard oil, and also the quantity which a person can buy from the dealer. Tapan carried on his business under this order for a while, but he refused to pay sales tax on his sale transactions on the ground that these were not the contracts freely entered into by him.

DECIDE

Assuming that the Debt-Equity Ratio is 2 : I, state, giving reasons, which of the following transactions would (I) Increase; (ii) Decrease; (ii.) Not alter the Debt-Equity Ratio :

(i) Issue of new shares (Preference/Equity) for Cash.

(ii) Issue of new shares (Preference/Equity) against purchase of fixed asset.

(iii) Buy-back of its own shares by a Company.

(iv) Issue of Debentures for Cash.

(v) Issue of Debentures against purchase of fixed asset.

(vi) Repayment of Long-term Borrowings.

(vii) Conversion of Debentures into Equity Shares/Preference Shares.

(viii) Sale of a fixed asset at par.

(ix) Sale of a fixed asset at profit.

(x) Sale of a fixed asset at loss.

(xi) Purchase of a fixed asset on a credit of 2 months.

(xii) Purchase of a fixed asset on long-term deferred payment basis.

(xiii) Issue of Bonus Shares.

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Which of the following is not a capital profit?

The correct option is D Compensation received on the termination of a contractWhere 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.

The correct option is D Compensation received on the termination of a contract
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.