9911796707
TMI Blog2011 (7) TMI 523X X X X Extracts X X X X X X X X Extracts X X X X ..... with his two brothers was the promoter/director/shareholder of various companies which were manufacturing and trading in carbon dioxide gas. The said businesses were sold vide the agreement dated 9.2.1998 to M/s.Praxair Carbon Dioxide Private Limited, Bangalore. By a separate agreement of even date, Dr. Bhaskar Kim and his brothers entered into non-competition agreement with M/s.Praxair Carbon Dioxide Private Limited. The consideration paid under the said agreement was Rs. 3 Crores. In terms of the said agreement they agreed not to engage in similar business in any capacity for a period of 10 years. Rs.75 Lakhs was the consideration of Dr.Bhaskar Kini. In the return filed by him the said amount was disclosed and exemption was claimed as ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 55 (2)(b), it cannot be said that both the provisions do apply to she amounts received by way of non-competition fee. According to the Tribunal prior to 1.4.2003 such amount was not taxable. Aggrieved by the said order the revenue has preferred this appeal. 4. The learned senior counsel appearing for the revenue contended that it is no doubt true that such an amount received by way of non-competition fee is treated as a business income under Section 28(va) with effect from 1.4.2003. But, prior to thai period it was liable to tax under Section 45 read with Section 55. Though under an agreement the assessee has agreed not to use the technical know-how to manufacture the very same products which are the subject matter of transfer, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal was right in holding that the sum of Rs.75 lakhs cannot be brought to tax as the same is received as non-competitive fee which can be brought to Tax as per section (VA) of Section 28 with effect from 2002? 3. Whether on the facts and circumstances of the case the Tribunal was right in holding that no interest under Section 234B of the Act can be leviable on the assessee in order of assessment passed under Section 143(3) read with Section 147 of the Act as on intimation had been issued under Section 143(1) of the Act? 7. Under the agreement dated 9.2.1998 executed by the three promoters of Chemicon Private Limited. iM.aha.isa Gases and Chemicals Private Limited and Coastal Gases and Chemicals Private Limited and M/s Chemical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not sharing any know-how, patent copyright. trade-mark, licence. franchise or any other business or commercial right of similar nature or information or technique likely to assist in the manufacture or processing of goods or provision for services: xxx xxx xxx A reading of the aforesaid provision makes It very clear any sum, whether received or receivable, in cash or kind, under an agreement, for not carrying out any activity in relation to any business; or not sharing any know-how or technique likely to assist in the manufacture or processing of goods or provision for services is chargeable to income tax under the heading profits and gains of business or profession. Prior to this amendment which came into effect from 1.4.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve mandate vide section 28(va) and. that too with effect from April 1, 2003. Hence, the said section 28(va) is amendatory and not clarificatory" 9. Therefore, when the said provision is held to be not clarificatory, but amendatory, it follows earlier to the said provision the said amount was not taxable. The said provision was not. inserted to by way of a clarification. It was introduced only by way of amendatory. Prior to the insertion of that provision there was no provision in the Act for providing for charging tax on such income. However, from 1.4.2003 it is treated as an income chargeable to tax under the heading of profits and gains. Though prior to that. Act. it. was treated as a capital asset it was not taxable under the hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred any right to produce or manufacture any article. The consideration paid to him is not to compete. Therefore, the case would not fall under Section 55(2) of the. Act. It is because it was not falling under Section 55(2) and was not falling under any other provisions of the Act. the Parliament thought it fit to insert the aforesaid new provision by way of an amendment. Therefore, only from 1.4.2003 the consideration received under a non-competition agreement is chargeable to tax under the heading of profits and gains of business. Therefore, the order passed by the Tribunal setting aside the order passed by the Appellate Authority is legal and valid and cannot be found fault with. Accordingly the substantial questions 1 and 2 framed are ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
