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2014 (11) TMI 296 - AT - Income TaxTaxability of amount received on transfer of technical know-how and marketing know-how – Held that:- CIT(A) rightly recorded that the assessee has only shared the technical know-how with M/s Glenmark and did not transfer the right to use technical information (know-how) - the assessee had only parted with the marketing know-how and did not transfer the same - the consideration received on cessation of source of income shall constitute capital receipt - there was no cessation of source of income - Hence the amount of ₹ 20.00 crores received on transfer of technical know-how and marketing know-how was related to sharing of relevant information only and is taxable as revenue receipt in the hands of the assessee – Decided against assessee. Transfer of self generated trade mark named “Sensur” – Held that:- The assessee has not controverted the finding given by the CIT(A) that the assessee has bifurcated the consideration between different intangible assets as mutually agreed between the assessee and buyer and the same is not supported by any credible evidence - the assessee has not given any basis for bifurcation of the consideration between “trade mark” and “good will” - the consideration of ₹ 3.00 crores be divided between the “trade mark” and “good will” in the ratio of 75% and 25% - the 75% portion of ₹ 3.00 crores pertaining to trade mark shall not be taxable during the year - The balance amount pertaining to good will shall be taxable as Capital gains – Decided partly in favour of assessee. Taxability of non-compete fees relating to transfer of three bands – Held that:- The assessee had received non-compete fee for not competing with the purchaser of the marketing know how relating to Nitro Glycering based formulations for a period of five years - there was loss of source of income from marketing of Nitro Glycerine based products for a period of five years, it was a capital receipt - the assessee effectively lost the source of income for a period of three years by entering into “non-compete agreement” - “Right to manufacture” is different from “Agreeing not to manufacture” - the amount received as noncompete fee is not taxable during the year – thus, the order of the CIT(A) is set aside – Decided in favour of assessee. Taxability of transfer of trade mark and marketing right of animal husbandary division – Business receipt or not - Held that:- The consideration can be bifurcated between “trade mark” and “good will” in the ratio of 75% and 25% on the reasoning that the trade name generally carry more weight in trade circles - The consideration received on transfer of trade mark shall not be taxable and the consideration received on transfer of good will is taxable under the head “Capital gains” - The amount received on transfer of marketing know-how is taxable as decided in earlier assessment year - Decided partly in favour of assessee. Disallowance of interest expenditure u/s 14A – Interest paid on borrowed funds – Held that:- CIT(A) rightly noticed that the assessee had invested a sum of ₹ 1.25 crores in the years relevant to the AY 1994-95 and 1995-96 and in those years, the assessee had own funds - These factual findings have not been controverted by the revenue – the order of the CIT(A) is upheld – Decided against revenue. Chargeability of interest u/s 234B – Income computed u/s 115JB – Held that:- The Hon’ble Supreme Court does not enact any law, but it only interprets the law, meaning thereby the interpretation given by the Hon’ble Supreme Court shall be applicable from the date of inception of the relevant provision - the tax authorities are justified in charging interest u/s 234B of the Act for non-payment or under payment of advance tax on MAT tax payable u/s 115JA/115JB of the Act – Decided against assessee.
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