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2012 (6) TMI 659 - ITAT, MUMBAINon-compete fees - capital gains or business income – Held that:- Considering the provisions of proviso to section 28(va)(a), i.e. income chargeable to income-tax under the head "profits and gains of business or profession and the clauses of the agreement that the assessee has not only transferred its entire business to TSIL but also agreed not to carry on any business in any capacity in India which competes with the business of Saffolin-DS, CIT(A) rightly held that the A.O. has not correctly appreciated the facts and the provisions of law before disallowing the claim of the assessee - when the assessee has transferred the entire business and has thereby transferred its right to manufacture or produce or process the product namely Saffolin -DS, the consideration so received has to be taxed under the head "capital gains" and not under the head "profits and gains of business or profession"- against revenue. Compensation from multilateral Fund under the Montreal Protocol for phasing out the production of Chlorinated Rubber and supply of Carbon Tetra Chloride to non feed stock sector - revenue receipt or capital receipt – Held that:- Considering the details furnished by the assessee that the compensation received by the assessee was for phasing out the use of CTC as the Govt. of India issued a memorandum to all companies which were producing or consuming 85% of Carbon Tetra Chloride, requesting them to phase out the consumption as required under the multilateral fund of the Montreal Protocol the provisions of the second proviso to section 28(va) have been fulfilled and therefore the assessee is entitled to the benefit - although the assessee has not filed full details as alleged by the A.O. in the body of the assessment order, we find the assessee filed full details before the ld. CIT(A) – compensation was not liable to be taxed as income as proposed by AO - against revenue. Disallowance towards expenses attributable to the earning of dividend income – Held that:- As the assessment year involved is 2006-07, the case is to be restored to the file of the A.O. for fresh adjudication in the light of the ratio laid down by the GODREJ AND BOYCE MFG. CO. LTD. Versus DEPUTY COMMISSIONER OF INCOME-TAX AND ANOTHER [2010 (8) TMI 77 (HC)] stating that Rule 8D is applicable from Assessment Year 2008-09 and not retrospective – in favour of assessee for statistical purpose. Treatment of the repairs and maintenance expenditure on roads - capital expenditure or as revenue expenditure – Held that: - As expenditure incurred is for repairs of existing road or construction of new roads and full facts are not coming out of the records it is proper to restore the issue to the file of the A.O. with a direction to verify as to whether there was existence of road in the past - If there was road earlier and if the expenditure is incurred for repair of the existing road then of course the assessee is entitled to claim the same as revenue expenditure - in favour of assessee for statistical purpose. Treatment of the product development expenditure - capital expenditure or as revenue expenditure – Held that:- Assessee has made only legal arguments without giving any factual data as nothing was brought to notice to establish that the consultancy charges have been paid for new products for existing business of the assessee - the consultancy charges have been paid to find out some new area for existing business is also a mere submission without any documentary evidence – against assessee. Non deletion of entire ad-hoc disallowance in respect of foreign travel expenses – Held that:-The questionnaire issued by the A.O during the course of the assessment has not called for any details under the head foreign travel expenses - since the CIT(A) without going through the assessment records did not accept the additional evidence filed before him in the interests of justice restore the issue to the file of the A.O. with a direction to decide the issue afresh - in favour of assessee for statistical purpose.
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