TMI Blog2019 (3) TMI 1246X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Appellant that the sum of ₹ 9,70,59,873, received on transfer of an asset is a capital receipt not chargeable to tax since the asset was a self-generated asset, having no cost of acquisition / improvement and therefore any gains arising on its transfer is not chargeable to tax. 2. The learned CIT(A) erred in fact and in law in computing the cost of acquisition of the capital asset at Rs. Nil by invoking the provisions of section 55 (2)(a) of the Income Tax Act, 1961 ( the Act ). Business Income: 3. The learned CIT(A) erred in fact and in law in treating the sum of ₹ 9,70,59,873, received on transfer of capital asset, as business income and thereby taxing the amount as revenue receipt invoking section 28(va) of the Act. 4. Without prejudice to Ground No. 3, the learned CIT(A) erred in fact and in law in attributing the entire receipt of ₹ 9,70,59,873 towards noncompete fees. Capital Gains - Alternate Grounds of Appeal: Without prejudice to Grounds No. 1 and 2: 5. The learned CIT(A) ought to have directed the AO to tax the receipts of ₹ 9,70,59,873 under the head capital gains u/s. 45 of the Act instead of business income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee entered into with Indusface India and analysed the same in considerable detail. He noted that, as per the said agreement, the assessee has coined the interesting concept for providing round the clock [24X7X365] or daily or on demand malware monitoring of websites in a zero touch and security as a service (SAAS) basis and had expressed the willingness to provide the said concept to the company and to assist the company to develop the same into a business idea on the terms and conditions of the agreement. He further noted that, under the said agreement, Indusface India had represented and assured that it has the necessary expertise and capabilities for exploiting the concept and has intention of developing product and services by utilizing the said concept and is also ready and willing to allocate reasonable funds for developing the product and/ or services and marketing the same . The Assessing Officer then also noted that as per the details furnished by the assessee, the Indusface India had incurred expenses on this project, under the heads (i) salary and other employee benefits, (ii) direct production and service overheads, and (iii) other expenses, aggregating t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxability of receipt not in the nature of revenue receipts and, for that reason not taxable under the head income from other sources , but then in the present case the income is generated on sale of a concept, developed by the employer in the normal course of business of developing software, and is thus materially different. In the light of this detailed analysis, the Assessing Officer concluded that the exemption of ₹ 9,70,59,873 claimed by the assessee is unsustainable in law. He rejected the claim and proceeded to bring the said amount of ₹ 9,70,59,873 to tax in the hands of the assessee as income from other sources. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. While doing so, learned CIT(A) observed as follows: 5.5 I have considered the facts of the case, the appellant's submissions and the AO's observations. The appellant Shri Ashsish R Tandon is working as an Executive Director of the company M/s. Indusface Pvt. Ltd. w.e.f. 16.05.2005. The terms and conditions, mentioned in the appointment letter issued by the company to the appellant are crucial in deciding the issues involved in this appeal. Hence, a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... your roles and responsibilities as Executive Director of the Company. During the course of your appointment hereunder you will truly and faithfully account for and deliver to the Company all money, securities and things of value belonging to the Company that you may from time to, time receive for, from or on account of the Company. You will perform the duties and responsibilities assigned to you in an efficient and competent manner and will devote your skills and best efforts to the business affairs of the Company. 6. Re-imbursement of Expenses, Costs etc.:- I You will be entitled to be paid I reimbursed all costs, charges and expenses as may be incurred by him for the purpose of or on behalf of the Company. 7. Policies and Procedures You will be bound by and will faithfully observe and abide by all the rules, regulations, policies and procedures of the Board of Directors of the Company in force from time to time which are brought to your notice or of which you should reasonably be aware. You will at all times uphold the highest standards conduct and fiscal practices. 8. Termination: Kindly note that this appointment is a contractual appointment which is termin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so mentioned here that Ms. Nandini Tandon is the spouse of the appellant. Thus, during the FY 2008-09, the appellant was in complete control of the company in association with his wife. At the same time, he was also acting as executive director of the company. In his submissions reproduced above, it has been contended on behalf of the appellant that it is a 'contractual appointment' and not an 'employment agreement'. It has been contended that the terms of appointment are not like that of an employee nor has any reference to employment terms and conditions, Besides, it has been claimed that there is no reference to specific scope of work, much less technical contribution or reference to requirement to develop any product like the concept involved in the present appeal.\ 5.5.2.1. In this respect, from the perusal of the submission made by M/s. Indusface Pvt. Ltd. in Appeal No. CIT(A)-1/10005/16-17 before this office, it is seen that the company is engaged in the business of providing consultancy in mapping information security strategies and process of information related Government Regulatory and Industry standards such as ISO 27001, RBI, SEBI, SOX etc. It is als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the appellant was directly related to such field. Besides, the appellant was also required to devote all his working time, attention to the business and affairs of the company in his capacity as executive director. It was his working in this capacity that led to the development of this new concept utilizing which the company was able to develop the new product namely, 'Indus Guard'. Though the appellant claims that this concept was developed independently, but there is no evidence submitted in this regard. The development of the concept was on account of the fact that the appellant, as an executive director of the company, was engaged in the development and operation of computer software in relation to internet security on day to day basis and was also over all in charge for technology development to be made by the company. Thus, the entire development of this new concept is on account of the working of the appellant as an employee of the company. 5.5.4. It is a fact that the company has nowhere claimed that the concept developed by the appellant belong to the company. But, this Is on account of the fact that the company was controlled by the appellant himself alon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the security services it also sells some software products for providing web-site security in the form of SSL Certificates. 3) AT has over the period of years developed an in-depth knowledge of the needs of the industry in Information Security. 4) IFC is exploring the possibilities of venturing into new areas, more importantly developing some new product which meets with the future needs of the IT Industry related to the Information Security. 5) AI has coined an interesting concept for providing round-the-clock [24 X 7 X 365] or daily or on-demand Ma/ware Monitoring of websites in a zero touch and Security as a Service (SAAS) basis essentially to safeguard websites from getting infected with malware [ the Concept ] and is willing to provide the said concept to the Company and also assist the Company to develop the same into a business idea, on the terms and conditions contained herein. 6) The Company is of the view that significant business opportunity can be created if an appropriate product and / or service can be developed around the Concept and is therefore interested in getting access to the Concept, exclusive right to use the Concept and also necessary as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld: (ii) recruit, solicit or induce, or attempt to induce, directly or indirectly, any of the Business Employees or the Business Contractors to terminate their employment or engagement with, or otherwise cease their relationship with Purchaser; or (iii) solicit, divert or take away, or attempt to divert or take away, the business or patronage of any of the 'Business clients, customers or accounts, or prospective clients, customers or accounts, of Purchaser as at the Closing Date (collectively, the activities described in this Section 9.1(a)(i), (ii) and (iii) being the Restricted Business ). (b) Nothing contained in Section 9.1 (a) shall prohibit Indusface India from acting as an authorized reseller of Purchaser's products in accordance with the Purchased Software License Agreement and the Trend Micro Strategic Channel Partner agreement. (c) If any restriction set forth in this covenant not to compete is found by any court of competent Jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend only to the maximum period of time, ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer of the Indusface Pvt. Ltd. and hence, was having in depth knowledge of the process to be followed for the production / development to be made utilizing such product. Due to this fact only, the appellant had to enter into the non competition Agreement with the purchaser of Indus Guard, 5.6.3. It may also be mentioned here that in Clause d' of Section 9.1, the sellers have expressly acknowledged the value of the consideration received in connection with this covenant not to compete. This is the only place in the entire agreement where the express recital of the purpose for which the payment has been made to the appellant has been narrated. As has been already stated above, the appellant was working as an employee of M/s. Indusface Pvt. Ltd. and in that capacity only had developed the product Indus Guard including the concept of the same. Under identical circumstances, the Hon'ble High Court of Bombay, in its decision in the case of Arun Toshniwal Mumbai (2015) 50 taxmann.com 274 (Bombay) has held that where pursuant to sale of one division of its business by the company to another person, the director of the seller company received certain amount by entering into the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne, 2008 that is well after 1st April, 2003 and would be covered by the provisions of Section 28(va) of the Act. We are accordingly of the view that no relief can be granted to the appellants. The appeals do not raise any substantial questions of law and the same are dismissed. No order as to costs. 5.6.4. It may be mentioned here that as per the agreement in this case, the entire business related to the product Indus Guard has been sold by the sellers, including the appellant and his employer company, to M/s. Trend Micro. All such items sold have been listed in the agreement viz., Asset Purchase Agreement. As can be seen from enumeration given in Section 6 of this Agreement, even the key employees and some other employees had been transferred to the purchaser. A separate list of assets transferred had been prepared; vide which following assets had been transferred: Schedule 1.1(m) Customer Contracts Schedule 1.1 (q) Excluded Intellectual Property Schedule 2.2(b) Inventory Schedule 2.2(f) Prepaid Expenses Schedule 2.3 Seller Identified Excluded Assets Schedule 4.6(e) Business Products Schedule 4.6(f) Registered Intellectual Property Schedule 4.6(v) Open ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... competing business; It has to be clarified that the case laws in which the transferee claims the consideration paid as above as revenue expenditure have no bearing whatsoever when we deal with the case of the tax treatment in the hands of the transferee. There are different considerations for determining whether the cost paid by the transferor is to be regarded as capital expenditure or revenue expenditure. 38. As far as category (a) is concerned the receipt would fall for consideration under the head capital gains as there is a transfer of capital asset in respect of which the machinery provisions of computation of capital gain can be applied. As far as category (b) is concerned the consideration received would fall for consideration under the head capital gain but depending upon the law that prevailed at the time of transfer. Self generated assets like, goodwill of a business or a trade mark or brand name associated with a business, a right to manufacture, produce or process any article or thing or right to carry on any business, tenancy rights, stage carriage permits or loom hours by their very nature could not have cost of acquisition and therefore, machinery provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egarded as capital gain, being transfer of a capital asset viz., right to carry on business. Thus for the provisions of Sec.55(2)(a) of the Act to apply the transferor must be carrying on a business which he agrees not to carry on. If the transferor is not already carrying on business then he receives consideration only for not carrying out any activity in relation to any business . In that case the provisions of Sec. 28(va)(a) of the Act would apply and not the proviso thereto. 41. Now in the case before the special bench we are concerned with consideration paid to persons associated with the transferor. Late B.V. Raju was not carrying on business of manufacture of cement. He was associated with two cement manufacturing companies RCL and SVCL in various capacities. With this background, we will examine the meaning of the expression a Right to Manufacture, produce or process any article or thing and Right to carry on any business used in Sec.55(2)(a) of the Act, 48. Keeping in mind the discussion in para 37 to 41 of this order, let us see what was transferred by Mr. B.V. Raju under the agreement dt. 27.10.1999 for which he was paid a sum of ₹ 11l crores by ICL. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for not carrying out any activity in relation to the business in respect of Indus Guard which stood transferred to M/s Trend Micro and which was being carried on by M/s. Indusface India Ltd. and not by the appellant. The appellant was associated with this business in the capacity of an employee, but was having indepth knowledge of the production developments to be made utilizing this product. Under such circumstances, the amount received by the appellant is chargeable u/s 28(va)(a) as business income, as has been held by the special Bench and the Hon'ble Bombay High Court. Accordingly, the action of the AO of treating this receipt as revenue receipt in the hands of the appellant is upheld. But he is directed to tax this amount as income from business and not under the head income from other sources. 5.7. Without prejudice to the above, even if the appellant's contention that vide the Asset Purchase Agreement, he had transferred his right on the concept developed by him is accepted, then it requires examination as to what was the nature of asset transferred by the appellant. A perusal of the agreement dated 26.03.2009 entered into by the appellant with M/s. Indusface Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produce or process any article or thing shall be taken as nil, if there is no cost of acquisition to the transferor. This is the situation in the present case. 5.7.2. This transfer of the right to utilize the concept for developing products and/or services, has been made by the appellant in consideration of the terms and conditions agreed upon between the appellant and the company. In the Agreement, no monetary consideration has been paid to the appellant and the agreement clearly says that the transfer is free of any royalty. Thus, this right has been transferred to the company on 26.03.2009 without any consideration except for the reversionary rights. In pursuance of such agreement, the only right for a limited period which remained with the appellant has been narrated in clause 5' of this agreement as follows: 05. IFC farther agrees and confirms that in case any of the following situations arise before expiry of 7 (seven) years from the date of this Agreement, then the right granted by AT shall revert to AT and thereupon, IFC shall not have any right, title or interest either in developing any product and / or services in relation to the Concept or shall have any rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the signing of this agreement, the only right remaining with the appellant was the revisionary right as narrated in Clause '5' of the agreement. Now, as per clause '7', the appellant had agreed that in case of any transaction involved in selling of business, the change of control or sale of substantial or substantially the whole of the business of the company, he will forgo his reversionary right for the consideration to be negotiated. Moreover, a perusal of Clause '5' shows that upon happening of the circumstances mentioned in this, only the right granted by AT to the company shall be returned back to him. Thus, the right which was bound to be reverted back to the appellant was only the right to utilize the concept for developing products and/or services around it. Accordingly the reversionary right was also in the nature of 'Right to manufacture, produce or process any article or thing'. Hence in the absence of any cost to the appellant for acquiring such right, its cost of acquisition is to be deemed as 'Nil'. 5.7.4. Thus, vide the Asset Purchase Agreement entered into with M/s. Trend Micro by IFC and others, the appellant has foregone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trend Micro from the sellers. Under such circumstances, the decision in the case of Arun Toshniwal Mumbai (supra) Dr. B.V. Raju (supra) are fully applicable to the facts of the present case. Hence, it is held that the amount received by the appellant is revenue receipt in his hands and is taxable as business income u/s 28(va) of the Act. Thus, there will be no difference on the tax to be charged from the appellant as the entire amount becomes taxable in his hands as revenue receipt. Accordingly, Ground Nos. 1, 2 3 are dismissed. 4. The assessee is not satisfied and is in further appeal before us. 5. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of applicable legal position. 6. It is important, before we take up legal arguments canvassed by the assessee, to analyse the basic facts of this case. Indusface India, at the point of time when it entered into agreement dated 26th March 2009, was a private limited company with only two shareholders holding 5,000 shares each- the assessee and his wife Nandini Tandon. The agreement that the assessee entered into with Indusface India was thus clearly a trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crores. Let us, at this stage, take a closer look at the description of this concept in annexure to the agreement dated 26th March 2009: Annexure A Injecting malware on a web portal is one of the attacks that has been turning out to be most effective attack vector. Organization that is on World Wide Web is responsible for ensuring that their website is secure from malware to its visitors. The number of vulnerabilities in the browser continue to rise, fuelling zero hour exploits which can infect any system before patches or signatures are available. This is the right time to develop a website malware monitoring product and/ or service which is a zero touch, 24/7 or Daily, or On- demand/ Security as a Service (SAAS). Possible Solution Architecture Components which should be used for anti malware services would include: ˃˃ Crawler ˃˃ Sandbox System ˃˃ Honeypot ˃˃ Smortinline Possible Detailed Architecture As shown in the above diagram, client s website can be crawled 24X7. The crawler simulates visitor accessing the website. Crawler engine is integrated with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e portion of the agreement which deals with what is given by the assessee and what does the assessee get in return: 01 AT has developed a Concept, more particularly described in Annexure A to this Agreement related to providing malware monitoring of websites and is desirous of permitting the Company to develop one or more products and / or service lines around the said Concept and the Company is desirous of exploiting the concept and make investment in developing one or more products and / or service lines around the said Concept. 02. In consideration of the terms and conditions agreed upon by the Company, including the reversionary rights contained in Clause [5] below, AT hereby grants permission and approval to IFC to utilize freely the Concept, incur expenditure and develop products and / or services around the Concept. 03. Subject to the provisions of this Agreement, the grant of permission and approval under Clause 02 above, shall be royalty free for IFC, but IFC shall not have a right to assign this right to any other person, body or entity without seeking prior written permission of AT. 04. AT undertakes and agrees not to share the concept with any other person o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod of 7 (seven) years from the date of this Agreement, then AT shall not have any reversionary right provided for in Clause 05 above and such right.then shall terminate on expiry of the 7 (seven) years. 07: AT assures that in case of any transaction involving sale of business, change of control or sale of substantial or substantially the whole of the business of the Company, AT shall, for consideration to be negotiated, agree to either forego his reversionary right contained herein or assign such reversionary right in favour .of the acquirer of the business, shares or part of the business. 9. There is no mention in the agreement as to how the fruits of commercial exploitation will be shared between the parties, and that is precisely what the assessee had offered, under the above agreement, for seven years to his employer. In that sense, this agreements seems to be devoid of a consideration for the assessee and, as is only elementary, an agreement without consideration is not a legally enforceable contract. Section 10 of the Indian Contract Act, 1872, specifically states only such agreements are contracts as are, inter alia, entered into for a lawful consideration . 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssa Corporation Pvt Ltd [(1986) 159 ITR 78 (SC)], Dhakeshwari Cotton Mills Ltd Vs CIT [(1954) 26 ITR 775 (SC)]. Learned counsel then pointed out that the genuineness of the above agreement is also accepted, by implication, by Dhanya Thakkar who invested in 30% shareholdings after this agreement, by Venkatesh Sunder, an employee whjo was given ESOP, and the value of his benefit would have been lowered by the outgo to the assessee, by Trend Micro who agrees to compensate the assessee for the loss of reversionary rights, by the Assessing Officer who did not dispute the genuineness and by the CIT(A) who did not doubt the bonafides of the agreement at any stage and discussed it extensively. Learned counsel then added that the concept was a valuable concept and its valuation was done by SSPA Co, Chartered Accountants, one of the most reputed firms specializing only in valuations but since the issue of valuation of concept never came up, the valuation was not fined. We are thus urged to accept the agreement as it is, accept all the corollaries thereto and not to entertain any doubts about the same and allow its logical consequences to be followed. 12. As we examine the agreement be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of the recitals made in those documents . As a final fact finding authority, this Tribunal cannot be superficial in its assessment of genuineness of a transaction, and this call is to be taken not only in the light of the face value of the documents sighted before the Tribunal but also in the light of all the surrounding circumstances, preponderance of human probabilities and ground realties. 13. In our considered view, 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 worl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness Contractors to terminate their employment or engagement with, or otherwise cease their relationship with Purchaser; or (iii) solicit, divert or take away, or attempt to divert or take away, the business or patronage of any of the 'Business clients, customers or accounts, or prospective clients, customers or accounts, of Purchaser as at the Closing Date (collectively, the activities described in this Section 9.1(a)(i), (ii) and (iii) being the Restricted Business ). (b) Nothing contained in Section 9.1 (a) shall prohibit Indusface India from acting as an authorized reseller of Purchaser's products in accordance with the Purchased Software License Agreement and the Trend Micro Strategic Channel Partner agreement. (c) If any restriction set forth in this covenant not to compete is found by any court of competent Jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend only to the maximum period of time, range of activities or geographic area as to which it may be enforceable. (d) Sellers acknowledge and agree that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luable asset that it could fetch ₹ 10 crores of consideration on a standalone basis, and, if that was so, it is simply beyond the human probabilities that such a valuable right could be given to someone for 7 years for commercial exploitation and development, with no strings attached, and without even finalizing as to how the fruits of such commercial exploitation will be shared by that person with the owner of this concept. Even otherwise, whatever little we can make out of the concept coined by the assessee , attached as Annexure A to the agreement dated 26th March 2009, it is not a scientific invention or a implementable eureka idea but rather a broad, though technically well informed, idea about a product and its need as generally felt by the industry. The agreement dated 26th March 2009, for the detailed reasons discussed above, is neither a legally enforceable document so far as value of or sharing of the fruits of its commercial exploitation is concerned, though, with an unusual vision about the way things were to unfold in future, it has finest details about what is to happen in case the business of the employer is to be sold, nor, for that purpose , it inspires much ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to his employment, and business of the employer was the same. The concept developed by the assessee, during the course of his employment, was sold to a third party, and, going by the claim of the assessee, the amount of US $ 15,75,000 was received on account of sale of this concept. That is the logical conclusion that must follow in the event of our accepting bonafides of the agreements filed by the assessee. Viewed thus, what the assessee has got as a result of the impugned sale of business by his employer to Trend Micro is a result of fruit of his employment, but, as it has not been received from the employer, it is taxable under the head income from other sources . As we observe so, we find support from Hon ble Supreme Court s decision in the case of Emil Webber Vs CIT [(1993) 200 ITR 483 (SC)] wherein Their Lordships have, inter alia, observed as follows: The question then arises under which head of income should the said income be placed. Inasmuch as the assessee is not an employee of Ballarpur, which made the payment, it cannot be brought within the purview of section 17 of the Act. It must necessarily be placed under sub section (1) of section 56, 'Income from other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are in considered agreement with the learned CIT(A) that a perusal of the Asset Purchase Agreement clearly shows that the dominant intention of the purchaser for making payment to the appellant was to prevent him from engaging in any business which could have competed with the business purchased by M/s. Trend Micro from the sellers. Under such circumstances, the decision in the case of Arun Toshniwal Mumbai (supra) Dr. B.V. Raju (supra) are fully applicable to the facts of the present case. Hence, it is held that the amount received by the appellant is revenue receipt in his hands and is taxable as business income u/s 28(va) of the Act . We are in considered agreement with the findings of the CIT(A) and we approve the same. In any case, cost of acquisition, in the case of non compete rights, under section 55(2)(a) is to be taken as NIL, and, as a corollary thereto, the entire receipts is to be taxed in the hands of the assessee. 20. Even if one proceeds on the basis that it is a capital gain, as learned CIT(A) rightly observes, if the consideration received by the assessee could be said to be on account of transfer of a capital asset, that asset is the reversionary right tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
