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2009 (7) TMI 899 - HC - Income TaxWhether Tribunal was justified in declining to admit the additional ground regarding charging of interest under section 234B of Income-tax Act, 1961 – Held that:- it is pure question of law - It was a plea, which could be allowed to be raised by the assessee in their appeal before the Tribunal notwithstanding the fact that it was not raised by them before the lower authorities - Tribunal was not justified when it did not allow the assessee to admit the additional ground in their memo of appeal and to urge the same in their appeal regarding charging of interest under section 234B of the Income-tax Act before the Tribunal Whether a receipt is capital or income - payment made by the foreign collaborator to the assessee - foreign collaborator had granted to the assessee non-exclusive right to use the technical know-how - non-exclusive licence was granted to the assessee on payment of Rs. 20 lakhs in three instalments and on payment of recurring royalty on annual basis for three years – Held that:- it was essentially in the nature of compensation paid to the assessee to adjust the relations between the parties, which had become strained on account of committing breaches by the parties as against each other in execution of the agreement. If the original agreements did not create any capital asset or advantage of enduring nature in favour of the assessee due to several restrictions and limitations in the agreement while using the technical know-how then as necessary corollary consequent upon termination of such agreement, the amount received by the assessee from their foreign collaborator too did not create any asset of capital nature nor created advantage of enduring nature in favour of the assessee so as to entitle the assessee to claim exemption from payment of tax on the said sum as capital receipt. Contract was entered into in the ordinary course of business, any compensation received for its termination would be a revenue receipt, irrespective of whether its performance was to consist of a single act or a series of acts spread over a period, and in this respect, it differs from an agency agreement – it is revenue receipt in the hands of the assessee and was liable to be assessed as revenue receipt. Mercantile system of accounting - accrual of income - held that:- since in this case a right to receive accrued to the assessee on November 22, 1991, which also included a right to receive even the second instalment and hence, its taxability in the hands of the assessee could not be postponed till the date of its actual receipt, i.e., up to November 30, 1992. In other words, it had to be taxed in the hands of the assessee as if received on November 22, 1991, i.e., the date on which agreement was executed. Since, this date fell in the assessment year 1992-93 and hence, it was rightly taxed by the Assessing Officer in the assessment year 1992-93.
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