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2021 (10) TMI 1157 - KARNATAKA HIGH COURTNature of gain - sale of technical know-how - slump sale - capital or revenue gain - goodwill liable to be taxed u/s 45 of the Act as capital receipt at the value given by the purchaser in its financials - HELD THAT:- It cannot be gainsaid that the assets were self-generated and the cost of acquisition of the said assets was indeterminable. The whole exercise was done by the Revenue merely for the reason that the purchaser in his books of accounts has shown the same as the technical know-how. If such technical know-how could not attract capital gains, in view of B.C.Srinivasa Setty [1981 (2) TMI 1 - SUPREME COURT] the Revenue has made an attempt to treat the technical know-how as goodwill in the second round. This reasoning of the Tribunal cannot be faulted with, in the light of the judgment of the Hon'ble Apex Court in B.C.Srinivasa Setty supra. The gain from transfer of business by implication was not a Revenue receipt chargeable to tax either under Section 28 or under Section 56 or Section 10[3] of the Act. Moreover, the order passed by the Tribunal at the first instance has reached finality. Hence, this substantial question of law has to be answered in favour of the Revenue and against the assessee. Non-competence fee receipt - Since we have held that the technical knowhow is not a goodwill, the arguments of the Revenue for remand would not inspire any confidence. The non-competence receipt was received by the assessee in cash. See case of Mahindra & Mahindra Ltd [2003 (1) TMI 71 - BOMBAY HIGH COURT]wherein it is held that Section 28[iv] does not apply to benefits in cash or money, referring to the judgment of the Hon’ble High Court of Gujarat in CIT V/s. Alchemic Pvt. Ltd. [1980 (8) TMI 42 - GUJARAT HIGH COURT] The non-competence fee was in fact a payment for sharing customer database and sharing of trained employees. The receipt towards the said transfer is not attributable to transfer of any assets or right and the mere fact that the receipt is not attributable to noncompete covenant, it cannot be automatically concluded that the receipt was either from business or income of an activity recurring in nature. - Decided in favour of assessee. Interest under Section 244A - HELD THAT:- If the orders under which such refund was made, subsequently if gets reversed, the interest paid to the assessee under Section 244A if to be withdrawn, no fault can be fixed on the assessee for the delay caused in the entire process, thereby seeking for compensatory interest. Claiming interest on the interest paid under Section 244A of the Act not being provided under the Statute, the Tribunal rightly held that the Assessing Officer shall recompute the interest chargeable under Section 220[2] of the Act by reducing only the principal amount of tax from the refund granted earlier and not to charge interest on the interest granted earlier under Section 244A of the Act, the same cannot be held to be unjustifiable. Thus, we find no perversity or illegality in the order of the Tribunal impugned.
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