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2022 (12) TMI 1076 - AT - Income TaxNature of receipt - amount received by the assessee firm as a compensation for pre-closure of its BOT projects - Revenue or capital receipt - whether taxable as a revenue receipt in the hands of the assessee firm since it represented the net present value of the future cash flows to be received by the assessee? - HELD THAT:- Revenue’s vehement arguments supporting the learned lower authorities’ action treating the impugned compensation as a revenue receipt fail to evoke our acceptance. This is for the reason that the Government of Maharashtra herein had acquired the assessee’s BOT project(s); lock, stock and barrel by way of gazette notification(s) dated 27.06.2014 thereby rescinding it’s earlier notification dated 08.04.2000 introducing the toll scheme in issue. We conclude in the light of these clinching facts and settled legal proposition that the hon’ble Calcutta high court’s view [1989 (12) TMI 362 - CALCUTTA HIGH COURT] would squarely apply since not only the assessee’s business stood closed but also it’s intangible asset(s) by way of right to collect the toll u/s.32(i)(ii) and building, plant and machinery, as the case may be, vested with the government. Legislature has also inserted clause (e) in section 28(ii) of the Act by the Finance Act 2018 w.e.f. 01.04.2019 wherein any compensation or such payment received “at or in connection with termination or the modification of the terms and conditions, if any, contract relating to his business” is assessed has seem held taxable as profits and gains of business or profession. This latter amendment is applicable w.e.f. 01.04.2019 whereas we are in AY 2015-16 only. We also take note of the explanatory memo thereof that this latter amendment proposes to invoke section 28 of the Act qua any compensation; including both revenue as well as capital u/s.28 of the Act. We thus conclude that both the learned authorities have erred in law and on facts in invoking section 28(ii)(d) qua assessee’s impugned compensation thereby holding it as a revenue receipt. The assessee succeeds.
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