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2018 (8) TMI 375 - AT - Income TaxSum received by the assessee for discontinuing its business of commodity trading is a taxable receipt - capital gain of busniss income - Held that:- Assessing Officer had come to a conclusion that there is no impairment in the loss of commodity trade to the group concern namely ‘Geojit’. Therefore, it was held that the profit making apparatus of the assessee-company / the group company was not impaired by the discontinuance of commodity trade business of the assessee per se. Since there is no sterilization of income / profit earning apparatus from the consolidate perspective of the group concerns, viz., ‘Geojit’, the amount so received by the assessee as compensation cannot be termed as a capital receipt not liable to be taxed under the provisions of the I.T.Act. Therefore, the finding of the Assessing Officer in this context is upheld. The assessee-company in the instant case, had received the compensation for not carrying on any activities in relation to its commodity trading business. The compensation so paid for not carrying any activity in relation to any business (commodity trading business) would be taxable going by the plain meaning of section 28(va)(a). Section 28(va) was introduced w.e.f. 01.04.2003. Though there was no written agreement for payment of compensation, the letters of BNP Paribas dated 23.05.2008 and 27.05.2008 and the Board Resolution of the assessee-company stating that it would discontinue the commodity trading business of the assessee on receipt of compensation of ₹ 40 crore, would come within the ambit of an arrangement / undertaking / action in concert, whether or not, the same was formal or in writing or it was intended to be enforceable by legal proceedings and that would tantamount to an agreement for the purpose of section 28(va). The wordings of section 28(va) of the I.T.Act is unambiguous and clear. The said section does not restrict, the bringing to tax only the non-compete fee but any sum that was received or receivable in cash or kind for not carrying out any activity in relation to any business. The exception for such taxation is only the cash received on account of transfer of right to manufacture, produce or process any article or thing or right to carry on any business, which is chargeable under the head “Capital gains”. - decided against assessee
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