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2018 (12) TMI 209 - AT - Income TaxTreating the sum of License Fees as business income - Held that:- We find merit in the arguments of the Ld. A.R. as is clear from the various agreements that the assessee has allowed M/s. Kuoni Travels India Ltd. to use its business model including brand and logo with the option to buy ultimately if the said it was fully satisfied with the model of the business of the assessee. As per the assessee ₹ 1,00,00,000/- was received as non refundable fee in lieu of assets to be used by the M/s. Kuoni Travels India Ltd. We find reason in the contentions of the assessee that so long as there was no confirmation of purchase of business by the said transferee, the same can not be treated as capital gain. The assessee offered the income on pro-rata basis as business income and once the transferee exercises the option to purchase the business, income falling thereafter was offered as capital gain. In our view, the assessee has rightly offered the income in A.Y. 2002-03, 2003-04 & 2004-05 to the tune of ₹ 13,63,636/-, ₹ 18,18,132/- and ₹ 13,63,636/- respectively as business income which were duly assessed and to this extent we are not in agreement with the CIT(A) that the same should be assessed in one year i.e. 2002-03. So far as the license fee shown as capital gain A.Y. 2004-05 to the tune of ₹ 54,54,546/- is concerned we are in agreement with the CIT(A) that the same should be treated as revenue receipt following the same practice as followed in the earlier years. Accordingly, we modify the order of CIT(A) to this extent that income has to be amortized and therefore this appeal of the assessee is allowed on this issue. Receipt from sale of running business - Capital gains OR business income - allow deduction under section 54E towards investment in bonds of Rural Electrification Corporation Ltd. - Held that:- We find that CIT(A) has passed a very detailed and reasoned order and thus came to conclusion that ₹ 12,79,60,000/- has to be assessed as capital gain in A.Y. 2004-05 which in our opinion is correct. We are, therefore, fully satisfied with the reasoning of the CIT(A) on this issue and in view of the same the appeal of the Revenue is dismissed.
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