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2017 (9) TMI 1576 - ITAT DELHINature of income - Income arising from transfer of petroleum exploration/mining rights by ONGC to certain private companies - assessee received a sum of ₹ 219.76 crores as ‘Signature bonus’ for demitting 60% share in the oil fields and the AO treated the same as Revenue receipt and brought it to tax. - CIT(A) treated the same as taxable as Capital Gains - determination of cost of acquisition, if to be taxed as capital gains. Held that:- Record does not support the observation of the AO that the signature bonus was a payment towards compensation to the assessee for the profit which it loses, as a consequence of production sharing contract. Signature bonus was received by the assessee in lieu of the transfer of 60% of rights in the oil fields, as such, by no stretch of imagination could it be said that the receipts on that account would be to receive the compensation for loss or profit. Under the joint operation agreement ONGC surrendered 60% of the rights to the other companies agreeing to receive signature bonus. We, therefore, hold that the amount of ₹ 219.76 crores received by ONGC is for transfer of 60% of shares in the Revenue yielding oil fields, as such, is capital in nature. Here in this case, the transfer was in the nature of slump sale and as is held by the Hon’ble Apex Court in PNB Finance Ltd. (2008 (11) TMI 7 - SUPREME COURT) referring to the decision in CIT vs. B.C. Sriniwas Shetty (1981 (2) TMI 1 - SUPREME Court) and holding that the ratio of Artex Manufacturing Co. (1997 (7) TMI 7 - SUPREME Court) has no application to the facts of the case and prior to 1.4.2000 there was no computation provision that could be brought to tax as capital gains the consideration received in slump sale. While respectfully following the same, we are of the considered opinion that the amount of ₹ 219.76 crores received by the assessee as signature bonus for demitting 60% shares in the three oil fields cannot be brought to tax. Even otherwise, as is held by the Ld. CIT (A) in this matter the transaction did not result in any capital gain in as much as by demitting 60% of share in three oil fields the book value of which is ₹ 882.86 crores the assessee received only a sum of ₹ 219.76 crores. Viewing from any angle the amount received by the assessee as signature bonus is not liable for tax. We, therefore, dismiss the grounds of appeal of the Revenue.
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