TMI Blog2012 (2) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... epresented on behalf of the Revenue. 3. It was submitted by the learned authorised representative that the lateRs. assessee is an individual who is now represented by Shri A. K. Ramkumar, the legal heir. It was the submission that the issue relates to the assessment year 2002-03. It was the submission that the assessee was one of the persons with over 30 years of experience in the marketing division of M/s. Citadel Fine Pharmaceuticals Limited ( CFPL for short). Another company in the name of M/s. Citadel Aurobindo Biotech Limited ( CABL for short) acquired the brands of CFPL. Consequently, CABL entered into an agreement with the assessee on 27- 03-2002 whereby the assessee was to be paid Non-Compete Fee for over a period of 10 years. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital receipt. It was the submission that subsequent to this the learned CIT had issued a notice u/s 263 of the Act on 03-02-2010 asking the assessee to show cause as to why the amount of ₹ 1 crore claimed as Non-Compete Fee received by the assessee from CABL should not be treated as a revenue receipt. The assessee had replied vide letter dated 23-02-2010 submitting all the facts again before the learned CIT. The learned CIT had passed an order u/s 263 of the Act on 31-03-2010 without appreciating the submissions of the assessee and had directed the Assessing Officer to bring to tax the amount of ₹ 1 crore received by the assessee as Non-Compete Fee. It was the submission that the learned CIT had held that the assessment order pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n though admittedly the assessee has given the details before the Assessing Officer, the details were not looked into by proper application of mind, much less an application of mind, and as there was no application of mind by the Assessing Officer on the details produced by the assessee and the Assessing Officer had blindly accepted the contention of the assessee without verification, the learned CIT was right in invoking his powers u/s 263 of the Act. It was the further submission that the learned CIT had only directed the Assessing Officer to reconsider the issue in accordance with law. He relied upon the decision of the Hon'ble Madras High Court in the case of CIT v. Japan Lines Ltd., reported in 260 ITR 656, decision of the Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32 UITR 602, the Non-Compete Fee received by the assessee is not taxable during the assessment year 2002-03 as the amendment to section 28 of the Act was w.e.f. 01-04-2003 and therefore is not applicable for the assessment year 2002-03. 6. We have considered the rival submissions. The learned DR had been directed to file the copy of the order sheet in the case of the assessee in regard to the reassessment proceedings as a consequence of the notice u/s. 148 issued on 20-04- 2006 as also the copy of the reasons recorded. The learned DR has provided us the said copies. A perusal of the order sheet entry in the assessee s case clearly shows that on the basis of the communication received from the Assistant Commissioner of Income-tax, Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Assessing Officer has not been specifically brought out in the assessment order it would not make the assessment one passed by non-application of mind. The genuineness of the agreement between the assessee and CABL is not disputed. That the assessee has received the Non-Compete Fee of ₹ 1 crore only is not disputed. Once it is accepted that the amount received by the assessee is a Non-Compete Fee and the agreement is not put under question, then in view of the decision of the Hon'ble Supreme Court in the case of Guffic Chem. P. Ltd., referred to supra, the assessment year in the present case being the assessment 2002-03, the same cannot be brought to tax and would have to be treated as a capital receipt. The various deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned CIT u/s 263 of the Act cannot invoke his powers just because his opinion on the basis of the evidences is different from that of the Assessing Officer who has examined the same evidences and has come to a conclusion. Even on merits, the learned CIT has not disputed the genuineness of the agreement between the assessee and CABL. The amount of ₹ 1 crore or an amount of ₹ 6 crores, the payment is on account of the Non- Compete agreement and for the purpose of Non-Compete and in view of the decision of the Hon'ble Supreme Court in the case of Guffic Chem. P. Ltd., reported in 332 ITR 602, the same cannot be brought to tax by applying the amended provisions of section 28(va) of the Act. In the circumstances, we are of the vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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