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2018 (6) TMI 1548 - HC - Income TaxNature of receipt - Payment received by the assessee for exercising its voting rights in a company - capital receipt or revenue receipt - whether income had to be treated as a capital receipt since it was one-time in nature and not a recurring source of income? - Held that:- The assessee, a non-banking financial company, holds 50% of the paid up capital in RPG Raychem Limited, Upon the relaxation of rules for foreign entities conducting business in India, Tyco, USA licensed the right to manufacture and sell the relevant industrial products in India to two its subsidiaries. These subsidiaries sought the assistance of the assessee in this case to ensure that RPG Raychem Limited did not continue rival business in the same industrial products in India. Accordingly, an agreement was entered into by the relevant subsidiaries of Tyco, USA under which the assessee was to vote in a particular manner at a general meeting of RPG Raychem Limited such that Tyco's specialised business was no longer carried on in India by RPG Raychem Limited. In consideration for voting in the manner agreed, Tyco, Dubai paid certain sums to the assessee and the treatment of such sums fell for consideration before the Assessing Officer and, subsequently, before the Commissioner (Appeals). Though the Commissioner (Appeals) did not accept the assessee's contention that this was a one-off payment, it could not be said that the assessee was in the business of voting in a particular manner at shareholders' meetings for this to be treated as Income from other sources. The Tribunal noticed the Bombay High Court judgment in the Old Spice case and found it to be applicable in the facts and circumstances of the assessee's matter. The income obtained by the assessee from exercising its voting rights in a particular manner was a consequence of the investment of the assessee in RPG Raychem Limited. Even by such logic, the income could have been regarded as a capital receipt, Appellate Tribunal's treatment of the matter, particularly, in the light of the judgment of the Bombay High Court, does not call for any reconsideration. Tribunal appropriately held that since the income was one-off in nature and arose in the context of the appellant, through a company in which the appellant had substantial control, relinquishing a right, it ought to be treated as a capital receipt and not a revenue receipt. - Decided in favour of the assessee
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