Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (1) TMI 319 - AT - Income TaxNon-compete fee - nature of receipt - revenue or capital receipt - Held that:- Insertion of the term ‘or profession’ in the statutory provision, viz. Sec. 28(va)(a) makes its abundantly clear beyond any scope of doubt that prior to AY: 2017-18 the applicability of Sec. 28 (va)(a) was restricted only in context of amounts which were received or receivable by way of non compete fees in relation to any business, and was not applicable where such sum was received or receivable under an agreement for not carrying out any activity in relation to a profession. We have given a thoughtful consideration to the issue before us, and are of the considered view that the CIT(A) had rightly observed that the provision of Sec. 28(va)(a) were not applicable to the amount of ₹ 40.50 crore which was received by the assessee by way of non-compete fees from PWC and others, in terms of the agreement dated 25.07.2007 for not practising the profession of a Chartered Accountant for a period of 5 years. The non-compete fee received by the assessee pursuant to the agreement dated 25.07.2007, which therein refrained him from practising the profession as a chartered accountant for a period of 5 years, is a ‘Capital receipt’, which however, in the backdrop of our aforesaid observations would not be exigible to tax under Sec. 28(va) of the ‘Act’. That as we have held that the non-compete fee of ₹ 40.50 crore received by the assessee is a ‘Capital receipt’, therefore, the issue raised before us as to whether the same was rightly held by the CIT(A) as chargeable to tax as LTCG, thus, does not survive. Addition under Section 14A r.w.r. 8D - Held that:- In the present case it can safely be concluded that the A.O had failed to arrive at a satisfaction that having regard to the accounts of the assessee, as placed before him, it was not possible for him generate the requisite satisfaction with regard to the correctness of the claim of the assessee that no expenditure had been incurred by him in respect of the exempt income. We therefore in the backdrop of our aforesaid observations are thus unable to persuade ourselves to uphold the disallowance of ₹ 7,60,656/- made by the A.O under Section 14A r.w.r. 8D, which thereafter had been sustained by the CIT(A). We thus set aside the order of the CIT(A) on the issue under consideration and delete the addition
|