TMI Blog2011 (4) TMI 503X X X X Extracts X X X X X X X X Extracts X X X X ..... ournals & Communications business is also taxable as long term capital gain by virtue of section 55(2)(a) read with clause (i) of the proviso to section 28(va) - The Revenue has also relied on the provisions of section 45(1) read with sections 2(14), 2(11)(9b), 48 and section 55(2)(ii) of the Act - The combined reading of the above provisions and of section 28(va) leaves no ambiguity that law makers specifically excluded the income from the purview of main section 28(va) - Hence, appeal is dismissed accordingly. - IT APPEAL NO. 549 OF 2011 - - - Dated:- 5-4-2011 - A.K. SIKRI AND M.L. MEHTA, JJ N.P. Sahni for the Appellant. C.S. Aggarwal and Prakash Kumar for the Respondent. JUDGMENT A.K. Sikri, J. Present appeal is filed under section 260(A)(1) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), against the impugned order dated 2-7-2010 passed by the ITAT. The following substantial questions of law are being raised for our consideration : "(a) Whether ITAT was correct in law and on facts in deleting the additions/disallowance made by the Assessing Officer amounting to Rs. 3,80,02,500 in respect of the amount received by the assessee com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he return of income for the assessment year 2006-07 on 19-11-2006 declaring its income of Rs. 11,69,453. During the course of assessment proceedings, it was noticed by Assessing Officer that the assessee had shown the income from Long Term Capital Gains @ 3,80,02,500. Moreover, Assessing Officer observed that this income should be made taxable under the head 'Business and Professions' vis-a-vis 'Capital Gain' as taken by the assessee. Thereafter, Assessing Officer had taxed the same under section 28(va) of the Income-tax Act, 1961 treating the same as business income and recomputed the taxable income of the assessee company. 3. We may record that before taking the aforesaid view the Assessing Officer asked the assessee company as to why sale shown as long term capital gain be not treated as business income for the year in question in the reply submitted by it, the assessee explained that it was publishing the journals since 1995 onwards, but in all the journals published, the period of starting the journals was more than three years from the date of transfer of these assets. Further, all the journals were initiated by the company itself and were not in existence earlier. These jo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s income as per the provisions of section 28(va) of the Act and passed the assessment order accordingly. The assessee preferred appeal against this action on the part of the Assessing Officer. The CIT(A) accepted the contention of the assessee and held that the receipt in question was not business income but long term capital gain on transfer of the assets. This decision of the CIT(A) has been upheld by the ITAT also dismissing the appeal of the revenue vide impugned order dated 19-12-2009. The ITAT downrightly observed that assessee seems to be the elite owner of the Trademark Copyright of these publications. Also publications i.e., journals were undeniably capital assets of the assessee's business duly registered with the Trademark Authorities. It was also established by the ITAT that assessee has sold all its intangible assets like trademarks, brands, copyrights goodwill. By doing this exercise, the assessee company has deprived itself of any earnings in the subsequent years. It was also revealed by ITAT the assessee company has wholly given up its right to carry on Healthcare Journals and Communications business for a specified period. The ITAT was of the clear view that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether or not containing any precious or semi-precious stone, and whether or not worked or sewn into any wearing apparel; (b) Precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel; (iii) Agricultural land in India, not being land situate - (a) In any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the 1st day of the previous year; or (b) In any area within such distance, not being more than eight kilometres from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify 20 in this behalf by notification in the Official Gazette; (iv) 6 1/2 per cent Gold Bonds, 1977, issued by the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unication business. (c) That the consideration of Rs. 3,80,02,500 was not received only for giving up the right to carry on the healthcare Journals Communications business but was mainly for the transfer of all intangible assets being trademarks, brands, copyrights and the associated goodwill of the Healthcare journals communications business. (d) That the consideration for the transfer of intangible assets being trademarks, brands, copyrights and the associated goodwill of Healthcare journals communications business was taxable as long term capital gain. (e) That for the purposes of journals etc., published by the appellant company it had to go through the following procedures which proves the authenticity of the appellant's claim of the assets being in the nature of intangible capital assets of business : (i) Statutory Title Clearance for all publications was obtained prior to the commencement of publication from the office of the Registrar of Newspapers for India. (ii) All these publications were registered with the RNI. (iii) The appellant had also filed "form-B" declaration before the DCP (Licensing), Delhi. (iv) All publications were indexed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) leaves no ambiguity that law makers specifically excluded the income from the purview of main section 28(va)." 12. It would also be worthwhile to mention that the parties had entered into agreement dated 10-3-2006 which was captioned as "Specified Asset Transfer Agreement". This agreement defines "Business" to mean the business of publishing, distributing and selling the periodical and products as carried on by the seller (assessee). It also termed all these publications as "Business Intellectual Property Rights" which were treated as "Specified assets". As per clause (2) of the agreement, all these specified assets were transferred in the following manner : "2. Transfer of specified assets 2.1 The Seller shall sell or procure the sale with full right, title, interest and guarantee and CMP Medica shall purchase the following assets and with a view to CMP Medica carrying on the business pertaining to the Specified Assets as going concern from the seller with effect from the closing date: (a) the Periodicals; (b) the Products; (c) the Business Intellectual Property Rights alongwith the Goodwill and all interests and benefits attached and appurtenant to the Busine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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