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TMI Blog2011 (6) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... iding the ground against reopening under section 147 of the Act. 3. The CIT (A) ought to have appreciated the fact that there is no definite information with the Assessing Officer that there is escapement of income and therefore ought to have held reopening as bad in laws. 4. The CIT (A) erred in holding that what is transferred through MOU is only right to produce aviation software without appreciating the fact that bundle of rights which includes consultancy also and thereby erred in holding that such a transfer attracts capital gains. 5. Any other ground that may be urged at the time of hearing." 3. Ground Nos. 1 and 5 are general in nature and they do not require any adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The CIT (A) found that what the assessee had sold is not the right to carry on any business observing that the assessee company is in the business of consultancy for business management, financial management, software development and project execution with M/s. ELDIS. By referring to MOU with M/s. ELDIS, he pointed out that the assessee entered into an agreement with M/s. ELDIS Sro for making certain specific software for that company as and when required until 31-3-2010 and hence, it is a sale agreement with a specific client. The same MOU was thereafter sold to M/s. Pintells Systems (P.) Limited. He held that the sales contract with regard to certain software for a particular client for a specified period was sold to M/s. Pintells Syst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich it received consideration of Rs. 31,75,000 which the assessee acquired by virtue of earlier agreement entered into with ELDIS Sro Czech free of cost on 1-10-2001. As per the provisions of section 48 of the Act, 1961 dealing with mode of computation of capital gains, clause (II) of the said section stipulates that cost of acquisition of the asset and the cost of improvement thereto shall be deducted from the full value of consideration accruing or resulting as a result of transfer of the capital assets. It is submitted that unless there is cost of acquisition of a capital asset transferred by an assessee the computation provisions as prescribed under section 48 cannot be applied and the receipt would fall outside the net of taxation. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic sales contract with a client, which is routine outsourcing in all businesses and in the present case, only a specific contract has been outsourced. We further find that the expression from section 55(2)(a) of the Act which is applicable in the instant case "right to manufacture, produce or process any article or thing", and in our opinion, the case of the assessee clearly fell within the purview of section 55(2)(a) of the Act and there is no doubt that the amount received on the sale of the MOU was clearly taxable as per specific provision of the Act. The said expression in section 55(2)(a) of the Act was inserted by the Finance Act, 1997 with effect from 1-4-1998 and hence the contention of the learned counsel for the assessee that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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