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2015 (10) TMI 2236 - AT - Income TaxRevised return filed beyond the permissible date - Set off of brought forward business loss and unabsorbed depreciation of amalgamating company - Held that:- We find that the revised return reflecting the consolidated results of the amalgamated entity was filed beyond the permissible time limit u/s 139(5) of the Act. This is due to the fact of delayed passing of the order of the High Court approving the scheme of merger with effective date as 1.4.2000. This delay is definitely not attributable to the assessee and it is not within the control of the assessee. We also find the revised return has been filed herein before the completion of assessment proceedings. The decision of Goetze India reported in [2006 (3) TMI 75 - SUPREME Court] is not applicable to appellate authorities. In view of the aforesaid facts and circumstances, we direct the Learned AO to kindly frame the assessment by considering the loss returned by Aqua Chemicals & Systems (Mfg) Ltd i.e by considering the consolidated results reflected in the revised return. Compensation received by the assessee for restraint of trade - capital receipt or revenue receipt - Held that:- We find that the assessee had received the compensation from its US parent company amounting to USD 326374 has been received for entering into restrictive covenants of not entering into competitive business. We also find that the provisions of section 28(va) of the Act had been introduced in the statute book by Finance Act 2002 with effect from 1.4.2003 (relevant to Asst Year 2003-04) only and not earlier. Accordingly, the non-compete fees would become taxable only from Asst Year 2003- 04 and not earlier. The year under appeal before us is Asst Year 2001-02 , during which year, the provisions of section 28(va) of the Act were not in the statute.We also hold that the payments received for impairment of income earning apparatus, sterlisation of source of income or transfer of a capital asset would generally fall in the category of capital receipts. Further the correspondences dated 20.4.1999; 4.1.2000 ; 10.4.2000 & 20.11.2000 as reproduced supra, clearly goes to prove that the compensation received for undertaking restrictive covenants of not competing with the business of the assessee and fall in the nature of capital receipt. - Decided in favour of assessee. Treatment of exchange fluctuation loss arising out of restatement of Exchange Commercial Borrowings (ECB) from holding company of the assessee utilized for general corporate objectives - Held that:- It is observed from the finding given in the assessment order that the ECB Loan of USD 50,00,000 was utilized for general corporate objectives and not for acquisition of any fixed assets by the assessee, though contradictory finding is taken by the Learned AO in his order. Hence we hold that the borrowings were utilized on revenue account. Based on this, it could logically be concluded that any exchange fluctuation arising out of restatement of the said loan at the end of the year, be it gain or loss, would also fall on revenue account and hence automatically comes under the ambit of taxation if it is a gain and allowable as an expenditure if it is a loss. This issue is squarely covered by the decision of the Supreme Court in the case of CIT vs Woodward Governor India P Ltd reported in (2009 (4) TMI 4 - SUPREME COURT) to hold that the "loss" suffered by the assessee on account of the exchange difference as on the date of the balance sheet is an item of expenditure under Section 37(1) of the 1961 Act - Decided in favour of assessee.
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