CAPITAL AND REVENUE: ILLUSTRATION 8
The owner of a patent sells it to an organization for Rs. 20,000. It will be a capital receipt for him because the right has been completely surrendered by him. On the other hand, if he provides the patent for use for a payment of Rs. 2,000 per annum for a period of five years, the amount received by him annually will be a revenue receipt.
3. SUBSTITUTION OF SOURCE OF INCOME
An amount received in substitution of source of income is a Dfa Ho capital receipt, but where it is a substitution of income alone, it will be a revenue receipt.