TMI Blog2011 (7) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee by the Assessing Officer, such question even cannot be lawfully raised for the first time before the Tribunal, the second appellate forum and that too, without giving opportunity to the assessee to prove the genuineness of the transaction - Find that the Tribunal below committed a substantial error of law in disbelieving the transaction as a sham transaction which is totally a new case not even borne out by the records. - I.T.A. No.49 of 2003 - - - Dated:- 15-7-2011 - Mr. Justice Bhaskar Bhattacharya, Mr. Justice Sambuddha Chakrabarti, JJ. For the Appellant: Mr. J.P. Khaitan, Mr. Anirban Ghosh, Mr. C. S. Das. For the Respondent: Mr. Dipak Kumar Shome. Bhaskar Bhattacharya, J.: This appeal under Section 260 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n agreement so as to prevent the assessee from competing with the sugar business of the company directly or indirectly for a period of five years and in consideration of the respective covenant, the company agreed to pay to the assessee a sum of Rs.25 lakh. c) On receipt of the said sum of Rs.25 lakh, the assessee resigned from the office of the Director of Ganges Sugar Mills Pvt. Ltd. and upon resigning from the said office of Director, the Ganges Sugar Mills Pvt. Ltd. decided not to go ahead with the setting up of the new sugar factory. d) In the assessment proceeding for the Assessment Year 1997-98, the assessee claimed that the said amount of Rs.25 lakh received for non-competition with the said company was a capital receipt n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal. A Division Bench of this Court formulated the following question of law for disposal: 1) Whether the sum of Rs.25.00 lacs received by the appellant in terms of the Agreement dated December 27, 1996 with Ghaghra Sugar Ltd. by way of non-competition fee was a capital a receipt not liable to tax under the provisions of Income Tax Act, 1961? 2) Whether the Tribunal was justified in law in entering into the question of genuineness of the transaction relating to receipt of noncompetition fee of Rs.25-00 lacs raised before it for the first time by the Department representative when none of the authorities below had deputed the factual position that the receipt by the appellant represented non-competition fee? 3) Whether th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, contended that the learned Tribunal below committed substantial error of law in entering into the question of genuineness of the transaction and that too, without giving any opportunity to the assessee to prove that the said transaction was a genuine transaction. Mr. Shome, the learned counsel for the parties appearing on behalf of the Revenue, has, on the other hand, supported the order passed by the Tribunal below. Therefore, two questions arise for determination before this appeal; first, whether the non-competition fee can be taxed as a revenue receipt and secondly, whether the Tribunal was justified in entering into the question as to whether the transaction of acceptance of Rs.25 lakh as non-competition fee was a gen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sentially a question of fact and no such allegation about the genuineness having been levelled against the assessee by the Assessing Officer, such question even cannot be lawfully raised for the first time before the Tribunal, the second appellate forum and that too, without giving opportunity to the assessee to prove the genuineness of the transaction. We, therefore, find that the Tribunal below committed a substantial error of law in disbelieving the transaction as a sham transaction which is totally a new case not even borne out by the records. We, consequently, set aside the order of the Tribunal below and affirm the order of the C.I.T. (Appeals) and thus, allow this appeal by answering the first point formulated by the Division ..... X X X X Extracts X X X X X X X X Extracts X X X X
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