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2019 (3) TMI 1246 - ITAT AHMEDABADNature of receipt - Capital Receipt not chargeable to tax or business income as revenue receipt - sum received on transfer of an asset - sale of business - true consideration for the payment of US dollars to company - scope of “coining of the concept” - arrangement of non compete Agreement - “non-complete” by the assessee clause in the business purchase agreement with Trend Micro - as per assessee transfer of an asset is a capital receipt not chargeable to tax since the asset was a self-generated asset - whether amount received by the assessee from Trend Micro USA is towards the sale consideration of a self generated asset by way of a new concept? - HELD THAT:- If “coining of the concept”, as assessee puts it, was indeed so valuable that it would, on standalone basis, fetch the assessee ₹ 10 crores, there could not have been any logic in allowing a company to commercially exploit or develop the same for 7 years, without any royalty, consideration and arrangement for sharing the results of its commercial exploitation. The terms of the provisions of the agreement do not make commercial sense at all. What is being shown in this agreement, in our considered view, not real. Apart from the fact that, as noted earlier, on the face of it, it is an agreement without consideration, it does not appear to be a legally enforceable contract anyway, it is completely at variance with the ground realities of the commercial world. All these facts taken together raise serious doubts about the claim of the assessee with respect to the true consideration for the payment of US $ 15,75,000. We donot have sufficient material on record to come to the conclusion that this payment was indeed “coining of an idea”, reproduced earlier, and, in any event, if at all, the assessee had one important and significant right that the assessee gave away in this consideration was his non compete right. As learned CIT(A) has rightly observed, “non-complete” by the assessee clause in the business purchase agreement with Trend Micro was clear thrust and a significant obligation by the assessee for which impugned payment was made to the assessee. As clause 6.6 of the business purchase agreement clearly states, “an original counterpart of the noncompetition agreement duly executed and delivered by Tandon (i.e. the assessee)” is a was delivered, contemporaneously with or prior to the execution of business purchase agreement. Clause 9.1 (a) of this agreement further provides unambiguous thrust on non competition agreement by the assessee. It is for the assessee to decide as to what is appropriate for justifying his case, and when he does not file a document, with specific prayer for admission of such additional evidence, he cannot have a grievance about not been given an opportunity to furnish that evidence. In any case, whatever documents have been placed before us donot help us conclude that the amount received by the assessee from Trend Micro USA is towards the sale consideration of a self generated asset by way of a new concept. It is only elementary that the onus is on the assessee to demonstrate that an income is exempt from tax, and that onus is clearly not discharged by the assessee. There is no escape from the taxation of these receipts in the hands of the assessee. The erudite arguments of the learned counsel, therefore, donot come to the rescue of the appellant. We are unable to accept the plea of the assessee that the impugned receipt is in the nature of an exempt income. We are, therefore, in considered agreement with the conclusions arrived at by the learned CIT(A). In view of these discussions, as also bearing in mind entirety of the case, we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. - Decided against assessee.
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