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During its 2020 year of assessment Bindulashu furnitures CC (a furniture dealer) contracted Maranga Products (Pty) Limited to repair its showroom. Maranga Products (Pty) Limited
During its 2020 year of assessment Bindulashu furnitures CC (a furniture dealer) contracted Maranga Products (Pty) Limited to repair its showroom.
Maranga Products (Pty) Limited was unable to complete the repairs on time. Maranga Products (Pty) Ltd then paid R50 000 to Bindulashu Furnishers CC (a furniture dealer) by way of compensation for the delay in repairing its showroom.
Because of the delay, Bindulashu Furnishers CC was unable to continue its showroom business. It believes that the R50 000 is a receipt of a capital in nature and is thus excluded from its gross income.
Required:
Discuss whether the R50 000 receipt is of a capital in nature. (10)
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