TMI Blog2007 (2) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... i Bank and has actually sold its business of credit card to Citi Bank Ltd. As a part of such deal, with Citi Bank required the Diners to get restrictive covenant severally executed between Citi Bank and the four directors of the said company i.e., DBS. As per the contents of such restrictive covenant, company, i.e. , DBS and 4 directors thereof were paid Rs. 90 lakhs together out of which Rs. 45 lakhs was received by DBS and the remaining Rs. 45 lakhs were jointly receivable by the directors. Mrs. P.S. Aggarwal received Rs. 15 lakhs. Shri Vikram S. Agrawal had received Rs. 5 lakhs and Mrs. Vanita Bhandari had received Rs. 10 lakhs and remaining Rs. 15 lakhs was received by Shri S.S. Agarwal. There is no dispute regarding amount of Rs. 45 lakhs received by DBS and Rs. 15 lakhs received by Shri S.S. Agarwal. In the case of Mrs. Vanita Bhandari and Mr. Vikram S. Agarwal, learned CIT(A) has deleted the addition; and hence, revenue is in appeal in these two cases; whereas, in the case of Shri P.S. Aggarwal, learned CIT(A) upheld the addition made by the Assessing Officer; and hence, the assessee is in appeal before the Tribunal. In the case of Shri P.S. Aggarwal, it has been held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deleted the impugned addition of Rs. 10 lakhs on account of compensation received towards restrictive covenant. In the case of Shri Vikram S. Agarwal, learned CIT(A) has followed order of learned CIT(A) in the case of Mrs. Vanita Bhandari and DBS and this issue has been decided by him in favour of the assessee by holding that compensation received by the assessee cannot be brought to charge as income, it being a capital receipt. The revenue is in appeal before us in these two cases; whereas, the assessee is in appeal in the case of Shri P.S. Aggarwal. 3. It is submitted by learned DR of the revenue that the present assessees were only the directors and shareholders of DBS; and it was the company i.e., DBS which was doing the business of credit cards in India and Nepal till 15-6-1990 under franchise agreement with M/s. Diners Club International. It is also submitted that Citi Bank has taken over the business of Diners Club International in India and Nepal i.e., the business of Diners Club India Ltd. vide MOU dated 6-9-1989 for Rs. 675.59 lakhs and said agreement was executed on 26-10-1989 and final deed of transfer was made on 16-2-1990. Present assessees were paid Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n it was held that lump-sum amount paid by a company as compensation to the Managing Director in lieu of his prematured retirement and for parting with the shareholding (majority interest) in the company held by his group is assessable under section 28( ii ). Reliance was also placed by him on the assessment orders in all the three cases and on the order of learned CIT(A) in the case of Mrs. P.S. Aggarwal. 4. As against this, it is submitted by learned AR of the assessee that the issue has become final in the case of company i.e., DBS and one of its directors i.e., Shri S.S. Agarwal. It is further submitted by him that the directorship of all the four directors has continued and the same was not terminated. It is submitted by him that the amount received for non-compete agreement is capital receipt and not chargeable to tax and it is submitted by him that this issue is covered in favour of the assessee by the Tribunal judgment rendered in the case of Addl. CIT v. Duphar Interfran Ltd. as per ITA No. 3385/Mum./03 dated 6-11-2006; copy of which was submitted and kept on record. Our attention was drawn to Para No. 10 of this Tribunal judgment, as per which, this issue has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supports the case of the revenue that these receipts in the hands of these assessees are assessable as salary income . 6. We have considered the rival submissions, perused the materials on record and have gone through the orders of authorities below and also gone through various Judicial pronouncements relied upon by both sides. We find that in the case of Mrs. P.S. Aggarwal, learned CIT(A) has come to the conclusion that payment received by the assessee i.e., Mrs. P.S. Aggarwal is necessarily related to a specific source of income i.e., for carrying on the vocation as a director; and therefore, it is chargeable to tax as income within the meaning of section 2(24)( iv ) read with section 15( b ) of the Income-tax Act. Whereas, in other two cases, learned CIT(A) has come to the conclusion that compensation received by these two assessees cannot be brought to tax as income because the same is a capital receipt. At this stage, we think that the MOU dated 6-9-1989 between DBS and Citi Bank N.A. as appearing on page Nos. 8 to 37 of the paper book should be considered. We find that as per Para No. 17 of this MOU, it has been specified that out of aggregate consideration of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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