TMI Blog2013 (10) TMI 1133X X X X Extracts X X X X X X X X Extracts X X X X ..... what may be regarded as the source of the assessee's income, the payment made to compensate for cancellation of the agency agreement is normally a capital receipt. In the present case, what the assessee has lost, is the very source of his business and loss of a trading structure. If the right given by the ROFR would have continued, the assessee would have the source of income from the bottling business and this would have constituted its profit making apparatus - Even before the assessee's actual business could start, there was a breach by the other party which ended up the said business itself. Thus, clearly this is a case of loss of source of income itself and hence, the compensation which was received by the assessee is on capital field i.e., capital receipt which cannot be taxed under the income laws – Decided in favor of Assessee. Whether the receipt is casual income - taxability u/s 10(3) -Held that:- the receipt cannot be said to be casual because it has not been incurred by chance or by fortuitous. Here, it is a case of breach of an agreement and the amount has been settled after a dispute among the parties. This receipt cannot be termed as neither casual nor non recu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the learned Sr. Counsel, Mr. S.E. Dastur. The grounds raised by the Revenue in ITA no.5284/Mum./2001, are as under:- 1. "On the facts and in the circumstances of the case, the learned CIT(A) erred in law in directing the Assessing Officer to treat the amount of Rs. 16,05,82,500/- being the compensation received from Coca Cola Co. as long term capital gains whereas the Assessing Officer had treated the same as income from other sources of alternately as short term capital gains for the reasons discussed by him in the asstt. orders." 2. "On the facts and in the circumstances of the case, the learned CTT(A) erred in law in holding that ROFR passed to the assessee company on its inception take over by the Chauhan Group automatically without 'express written consent of The Coca Cola Co. (TCCC)" in terms of last para of Exhibit 'J' to the Master Agreement." 3. "On the facts and in the circumstances of the case, the learned CIT(A) erred in law in allowing the claim of the assessee amounting to Rs. 10,00,000/- being professional fees paid to Mr.R.N. Mungale - the Director of the assessee company which was rightly disallowed by the Assessing Officer u/s.37(1) of the I.T. Act." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e aforesaid assessee's (who are in appeal) are part of Parle Group owned by Mr. Prakash Chauhan and Mr. Ramesh Chauhan. The Parle Group of companies were engaged in the business of manufacturing, bottling and distribution of soft drinks and beverages under several popular brands viz., Thumbs Up, Limca, Gold Spot, Maaza, Citra, etc., and other popular brands. The Parle Group of companies entered into a "master agreement" with The Coca Cola Co. of U.S.A. (for short "TCCC") on September 1993, for transfer of intellectual property rights in the nature of trade marks, knowhow, franchisee rights, etc., in respect of various brands of beverages / soft drinks owned by Parle Group. The parties to the said master agreement were as under:- (i) Limca Flavours and Fragrances Ltd. (for short "LFFL") (ii) Parle Exports Ltd. (iii) Parle International Ltd. (iv) Golden Agro Products Pvt. Ltd. and (v) Aqua Minerals Pvt. Ltd. The aforesaid parties along with Mr. Ramesh Chauhan and Mr. Prakash Chauhan, have been referred to as "seller" in the master agreement and TCCC is the buyer along with Coca Cola South Asia Holding Inc., as a confirming party. After the transfer of trade-mark, etc., as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies in the master agreement itself, that a new company i.e., a Bangalore subsidiary was to be established for carrying out bottling operations in Bangalore. The Article-1 of the master agreement contained the definition of Bangalore subsidiary which, inter-alia, means that the company to be formed for the production, distribution and sale of products of TCCC for the city or nearby territories of the city of Bangalore. For this purpose, Exhibit-L of the master agreement provided the manner and the guideline on which this Bangalore subsidiary was to be established, which would be initially owned by Parle Group entities and the TCCC would later on invest up to 30% in the equity shares of Bangalore subsidiary under the terms of BIC shareholder agreement. The definition of Bangalore investment agreement and BIC shareholder agreement was also mentioned in the definition clause of Article-1. Prior to the agreement with the TCCC, the Bangalore territory was served by an independent third party bottler, M/s. Brindavan Beverages Pvt. Ltd., (for short "BBPL") under franchisee agreement dated 13th November 1988, with Parle Export Ltd., which was to run for a period of 10 years up to the year 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipt not chargeable to income tax. Along with the return of income, the assessee has annexed the following note:- "During the previous year relevant to A.Y. 1998-99 the company received an amount of Rs. 160582500 as compensation from Coca Col Co. USA. In the accounts for the year ended 31.3.1998, the aforesaid amount received as deducting Rs. 10 lakhs for professional fees paid. In the return of income, the aforesaid amount has been taken to capital reserve after deducting Rs. 10 lakhs for professional fees paid. In the return of income, the aforesaid amount has been treated as capital receipt not liable to tax. Since the said compensation has been received on settlement of dispute relating to bottling rights affecting the profit making business apparatus, inasmuch as the bottling rights by setting up a plant have been lost. Without prejudice to the notes attached to computation, the company has invested Rs. 10,00,17,600 in Units Scheme, 164 under section 54EA of the Act for compensation received from M/s. Coca Cola Co. USA on settlement." 7. In response to the show cause notice, the assessee narrated the entire background and the facts under which such an amount of compensati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. Reliance was placed on the following decisions also:- i) Kettlewell Bullen Co. Ltd., [1964] 53 ITR 261 (SC); ii) Mahindra Mahindra Ltd., [1973] 91 ITR 130 (Bom.); iii) Gillanders Arbuthnot Co. Ltd. [1964] 53 ITR 283 (SC); and iv) Oberoi Hotels Pvt. Ltd. v/s CIT, [1999] 236 ITR 903 (SC). 9. It was further submitted that the amount received is not taxable under section 10(3) as casual and non-recurring receipt because the said receipt cannot be characterised as income. Besides this, it was also pleaded that the receipt in question cannot be taxed as capital gains, because there was no cost of acquisition for the so called rights in question and, therefore, in view of the decision of the Hon'ble Supreme Court in CIT v/s B.C. Srinivasa Setty, [1981] 128 ITR 294 (SC), the same cannot be taxed. 10. The Assessing Officer, first of all, referred to the definition of "Income" as defined in section 2(24) and held that it is an inclusive definition and has a very vide meaning, which would include even those items which may have not been specifically mentioned in the definition but partake the character of income in its natural meaning. In support of this conclusion, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jects were also different. Later on, the name of the company was changed to Parle Soft Drinks (Bangalore) Pvt. Ltd. Thus, he held that the amount received by the assessee company is nothing but a revenue receipt chargeable to tax. Alternate plea of the assessee regarding taxability as capital gain, he concluded that it is a short term capital gain and for arriving to this conclusion, he has given a very detail finding from page-22 to 25 of the assessment order. The sum and substance was that the right, as per the agreement which was available with the assessee was for a period of less than 36 months and, therefore, it has to be taxed only as short term capital gain. 11. The learned Commissioner (Appeals), after discussing the facts stated by the Assessing Officer as well as by the assessee, first of all, clarified to the observations and the conclusion drawn by the Assessing Officer. Finally, regarding the Assessing Officer's allegation that the assessee was never engaged in the business of bottling, he observed that the assessee company has taken over the business of bottling as it had requisite land for the bottling plant; secondly, with regard to the assessee not having any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.11.93 granting ROFR to the subsidiary to be treated by LFFL with an inbuilt stake of 30% in the newly created subsidiary. 2. The assurance of Ramesh Chauhan and Prakash Chauhan to create the subsidiary before 31st March 1994. 3. The taking over of M/s. General Knitwear Exports Pvt. Ltd. changing the name of Parle Soft Drinks and submitting the depreciation of the land to M/s. TCCC for approval in June 1993." 5.2 These factors indicate that the ROFR has been assigned on the date of creating of the subsidiary since the object of such creation of a new company was to develop the right for profit. With coming into existence of the subsidiary company ie., the appellant, the ROFR has passed to the appellant company. The consent of TCCC is evident from the payment being made to the appellant company instead of to LFFL. Considering all these factors, I hold that the transaction attracks long term capital gain. The Assessing Officer is directed to treat the receipt as long term capital gain." 13. Before stating the arguments placed by both the parties, we would like to discuss the treatment of receipt as given by the Assessing Officer and the learned Commissioner (Appeals) in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. The learned Commissioner (Appeals) in this case has taken all together different stand and after discussing the issue in detail held that it is not a capital gain but it is a non-recurring casual income which is to be taxed under section 10(3) of the Act and, therefore, the action of the Assessing Officer in treating the receipt as long term capital gain and taxing it on protective basis, has no basis. Thus, he held that it is to be taxed as casual and non-recurring receipt. 15. Thus, various authorities in the aforesaid cases of the assessees have taken different views on different reasoning which can be summarised in the following manner:- A. Aqua Bisleri Ld. Particulars Treatment As per return of income Capital receipt not taxable As per assessment order Long term capital gain on entire Rs. 32 crores on substantive basis. As per CIT(A)'s order Addition deleted B. Parle Soft Drinks Pvt. Ltd. Particulars Treatment As per return of income Capital receipt not taxable As per assessment order Short term capital gain on Rs. 16 crores on substantive basis an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts to show as to how this company have come into existence and has received the compensation from TCCC, which, for the sake of ready reference, is reproduced below:- Date Particulars 18 October 1991 Incorporated as General Knitwear Exports Pvt. Ltd. 24th June 1993 Limca Flavours and Fragrances Ltd. entered into MOU to acquire General Knitwear Exports Pvt. Ltd. (date wrongly mentioned as 1st July 1993 by AO) through Parle International ltd. and Golden Agro Products Ltd. (Now Bisleri Sales Ltd.) 3 July 1993 100% shares of General Knitwear transferred to Pane International Ltd and Golden Agro Products Ltd (Now Bisleri Sales Ltd.) Shri R.N.Mungale and Shri S.K. Motani appointed as directors of Incorporated as General Knitwear Exports P. Ltd. 18 September 1993 Master Agreement ( MA ) between Parle Group and The Coca Cola Company ( TCCC ) granting Right of First Refusal ( ROFR ) to Limca Flavours and Fragrances Limited 11 November 1993 Execution of Exhibit J i.e. Letter for assignment of ROFR to Limca Flavours and Fragrances Limited May/June 1994 Draft business plan for Bangalo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of income viz. bottling operations in Bangalore territory. In support of his contention, he, first of all, relied upon the judgments of Hon'ble Supreme Court in CIT v/s Vazir Sultan, [1995] 36 ITR 175 (SC) and Oberoi Hotels Pvt. Ltd. v/s CIT, [1999] 236 ITR 903 (SC). 19. Regarding the learned Commissioner (Appeals)'s finding that there was a transfer of a capital asset within the meaning of section 45 and it is a long term capital gain, he submitted that for attracting the provisions of section 45, the very premise of the transfer of capital asset, is lacking completely in the present case. This is a case, where there has been a breach of contract and the amount was received as damages for not carrying out the obligation. It was not for any transfer of capital asset. Thus, here is the case, where there is a breach of contract and any compensation received on such a breach, is a capital receipt and not receipt on account of any transfer of capital asset. He also placed reliance on the decision of the Hon'ble Supreme Court in CIT v/s Shantilal, [1983] 144 ITR 57 (SC) and submitted that this decision of the Hon'ble Supreme Court has been followed by the Bombay High Court also in C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction. 21. For the sake of continuity, we are also referring to the arguments placed by learned Senior Counsel, Mr. Firoze Andhyarujina, who has argued the case of Parle Bottling Pvt. Ltd., wherein the Assessing Officer has treated the receipt to be taxed as long term capital gain on protective basis and the learned Commissioner (Appeals) has treated the same receipt to be taxed as casual and non-recurring taxable income under section 10(3) on substitutive basis. The learned Senior Counsel submitted that in this case also, the assessee has received an amount of Rs. 16,05,60,000, as compensation from The Coca Cola Co. for breach of ROFR agreement with regard to bottling rights of Pune territory. The Assessing Officer solely relied upon the observations and the findings given in the assessment order dated 30th March 2001, in case of Aqua Bisleri Ltd., wherein the entire receipt have been taxed on substantive basis under the head "long term capital gain". 22. Before the learned Commissioner (Appeals), the entire facts were narrated and they are exactly similar to the case of Parle Soft Drinks Pvt. Ltd., except for the fact that in the present case, the assessee was already i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has to be characterised as income, which here in this case is not. He also referred to CBDT circular no.158 dated 27th December 1974, and relied upon the judgment of Hon'ble Supreme Court in Ramanathan Chettiar v/s CIT, [1967] 063 ITR 458 (SC). He further submitted that a casual and non recurring receipt can only be taxed, once there is no claim or right in the recipient to expect its recurrence. Merely because the payment has been made one time that would not lead to inference that the amount received by the assessee was casual or non-recurring. In the present case, there was a violation of ROFR agreement. It was on such a breach that the assessee had a right to be compensated by the violating party. Thus, definitely, it cannot be held as casual or non- recurring receipt. In support of his argument, he has also relied upon the judgment of Jurisdictional High Court in Mehboob Productions Pvt. Ltd. v/s CIT, [1977) 106 ITR 758 (Bom.). He has also rebutted each and every finding of the learned Commissioner (Appeals) given in this regard before us. 25. Per contra, the learned Special Counsel, Dr. P. Daniel, on behalf of the Revenue, submitted that all the terms and agreement in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... companies; 26. He further submitted that the learned Commissioner (Appeals), in case of Parle Soft Drinks Pvt. Ltd. has gone by the fact that the Assessing Officer has not proved the negative and, therefore, the Assessing Officer's finding is not correct is a wrong conclusion; 27. Lastly, he concluded that the amount received has to be taxed as revenue receipt in the hands of the LFFL or alternatively in the hands of other assessee if it is held that there was no right to LFFL by the ROFR agreement. 28. In the rejoinder, the learned Senior Counsel, Mr. Dastur, submitted that first off all, the Revenue has to take a clear stand as to in which hands, these receipts are to be taxed and under which head. If the argument of the learned Special Counsel is accepted, then the additions made in the hands of Parle Soft Drinks Pvt. Ltd. and Parle Bottling Pvt. Ltd. should be deleted. In case of LFFL, the amount has already been taxed as capital gain on substantive basis, therefore, all these pleas, whether such an amount can be taxed as capital gain or not can be discussed in that case only i.e., Aqua Bisleri Ltd. (LFFL) and not in these cases. 29. Regarding the main arguments taken b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ROFR agreement, is a capital receipt not chargeable to tax or to be treated as revenue receipt or casual income or long term capital gain or short term capital gain and further in whose hands it should be taxed. As already discussed above, various authorities have discussed and decided this issue in different manner and on different interpretation of the same facts placed before them. Insofar as the facts which have been narrated above, there is no dispute. The dispute is only with regard to the interpretation and the taxability of the receipt and under which head. In the main agreement which has been referred as master agreement entered by the various sellers who are Parle Group of companies with The Coca Cola Co., there was a stipulation for assignment of bottling rights for the Bangalore territory and Pune territory. In order to give priority to the Parle Group of companies for the bottling rights, ROFR agreement was entered, which flows from Exhibit-J of the master agreement. The ROFR i.e., Right Of First Refusal, is a contractual right that gives its holder an option to enter into a business transaction with the owner of something, before the owner is entitled to enter into a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the manner and sequence in which this company was formed has already been discussed by us in the forgoing paragraphs. Thus, the assessee company was formed only for carrying out bottling activities in the territory of Bangalore. Hence, there can be no dispute or a question, that the assessee was entitled for receiving the compensation amount on the breach of ROFR from The Coca Cola Co. Thus, even though ROFR agreement was with LFFL but it was always agreed upon by the parties to the agreement that the same should be for a newly formed entity as Bangalore subsidiary company which is the assessee company only. The agreement as well as the ROFR provided that the rights were given to the assessee for carrying out the bottling activities for The Coca Cola Co. for the Bangalore territory. It is for the purpose of this intended business that the assessee company was formed in terms of ROFR as given in Exhibit-J and L. It was not necessary that the assessee should have instaled the entire plant and machinery for carrying out such business. Thus, the ROFR itself constituted a substantial right and foundation on which the assessee could have built its bottling business. If such right wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich had resulted into loss of source of assessee's income the receipt in the hands of the assessee is a capital receipt. 34. If we apply the said ratio and the law laid down by the Hon'ble Supreme Court in the present case, then, what the assessee has lost, is the very source of his business and loss of a trading structure. If the right given by the ROFR would have continued, the assessee would have the source of income from the bottling business and this would have constituted its profit making apparatus. It is not a case that there was some breach of agreement during the course of carrying on the business or trading activity for which the assessee has received any kind of compensation. Here, even before the assessee's actual business could start, there was a breach by the other party which ended up the said business itself. Thus, clearly this is a case of loss of source of income itself and hence, the compensation which was received by the assessee is on capital field i.e., capital receipt which cannot be taxed under the income laws. This conclusion of ours concludes the entire controversy on this score. 35. Now we shall briefly deal, whether such a receipt could be taxed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cola Co. is decided in favour of the assessee that it is not taxable. 37. In ground no.2, the assessee has challenged disallowance of higher depreciation of 40% in respect of vehicle used in the business of hire. 38. The Assessing Officer noted that the assessee has disclosed hire charges of Rs. 6,18,900. These receipts have been received from the trucks / three wheelers which were leased out by the assessee. These vehicles were purchased during the year and depreciation of 40% was claimed. In response to the show cause notice issued by the Assessing Officer, it was submitted that the assessee was owner of these vehicles and were used for the purpose of its business i.e., for hiring and, therefore, depreciation has to be claimed @ 40%, as prescribed. The Assessing Officer held that the vehicle should be used by the assessee for running them on hire by different persons and it shall necessarily bear the expenditure on running and maintenance, etc. Thus, higher rate on depreciation is not admissible as it is leased out. Hence, he allowed only 20% of the depreciation and admissible depreciation was allowed to the extent of Rs. 5,75,645, in stead of Rs. 11,51,291. 39. Before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer held that the communication was between The Coca Cola Co. and the assessee and moreover Mr. Mungale, is one of the employees of Parle associated group and, therefore, does not justify the payment of professional charges to him. 44. Before us, the assessee submitted a copy of Board resolution approving a payment of Rs. 10 lakhs to Mr. Mungale for the services rendered during the negotiating transactions with The Coca Cola Co. which has resulted in settling the dispute. He is neither related to the assessee nor a shareholder in the Parle group of companies. The learned Commissioner (Appeals) held that on these facts, the provisions of section 40A(2) does not attract and moreover payment of such professional charges has yielded Rs. 16.05 crores to the assessee for carrying out negotiate with The Coca Cola Co. Accordingly, he allowed the same in favour of the assessee. 45. Before us, both the parties relied upon the respective orders. 46. After carefully considering the submissions made by the parties and also the relevant findings given by the Assessing Officer as well as the learned Commissioner (Appeals), it is seen that the Assessing Officer has not given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserving that substantive addition has been made in case of Aqua Bisleri Ltd. i.e., LFFL as the same is chargeable to tax as long term capital gain. Since the facts and issue are similar which issue has been discussed by us already in the forgoing paragraphs, the same will apply mutatis mutandis in the present case also, therefore, these grounds are treated as allowed as we have already held that the amount received by the assessee is a capital receipt which is not taxable. 56. In ground no.9 and 10, the assessee has challenged that both the authorities have not considered the assessee's claim for deduction in respect of deposit on bottles and crates refunded during the year amounting to Rs. 8,30,307. 57. The relevant facts, apropos the aforesaid issue are that, the assessee in the accounts for the year ending 31st March 1988, had shown an amount of Rs. 3,42,84,765, being deposits received in respect of bottles and crates as trade deposits under the head current liabilities. Before the Assessing Officer, the assessee submitted the details of deposits received on bottles and crates along with confirmation received from local retailers / stockiest. It was also submitted that in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er has not allowed the said claim under section 143(3) and, therefore, it should be allowed in this year. 62. The Learned Commissioner (Appeals) has disallowed the assessee's claim on the ground that the same has not been claimed in the return of income for the assessment year 1998-99. and therefore, there should be no grievance. Moreover, this expenditure relates to the assessment year 1997-98 which should have been claimed and allowed in the assessment year 1997-98 only. Accordingly, he disallowed this claim. 63. Before us, the learned Counsel submitted that this claim has been crystallized during the year and, therefore, the same should be allowed in this year because the Assessing Officer has disallowed in assessment year 1997-98 on this ground alone. 64. Under the aforesaid facts, we set aside this issue to the file of the Assessing Officer to examine whether these expenses have been crystallized during the year or not and if that is so the same should be allowed. Thus, ground no.11 and 12 are treated as allowed for statistical purposes. 65. In ground no.13 and 14, the assessee has challenged the disallowance of net expenses amounting to Rs. 19,741, which comprise of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case and in law, the Ld. CIT(A) has erred in directing the AO to treat the sale consideration of bottles and crates as part of the block of assets; (vii) On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact in earlier years the assessee claimed purchase of bottles and crates as revenue expenditure in the P L A/c; (viii) On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that the bottles purchased during A.Ys. 1993-94, 1994-95 and 1995-96 cannot form part of block of assets since on these bottles, 100% depreciation was claimed by the assessee and the value of such assets was zero. The Ld.CIT(A) failed to observe that the assessee did not discharge his onus of maintaining proper register of stock of bottles and crates purchased in different years and no evidence with regard to the fact that the bottles sold were of current year, was produced before the AO; (ix) On the Facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition despite the fact that the assessee admitted before the AO that bottles which were worn out o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng bottles on which depreciation @ 50% is admissible. He also noted that up to the assessment year 1995-96, the assessee has claimed depreciation @ 100% on bottles and crates as the cost was less than Rs. 5,000. He required the assessee to furnish details of these bottles on which 100% depreciation has been claimed in the previous year. The assessee replied that no separate registers have been maintained for the bottles and also accepted that bottles on which 100% depreciation has been claimed cannot be distinguished from the bottles on which 50% depreciation is being claimed in the year. In response to the show cause notice, the assessee, vide letter dated 17th March 2001, has given a detail submission which has been incorporated by the Assessing Officer at Page-5 of the assessment order. The Assessing Officer rejected the assessee's submissions on the ground that up to the assessment year 1995-96, the assessee has claimed the expenditure on the purchase of bottles and crates as revenue expenditure being the value less than Rs. 5,000 and in this year, the assessee has failed to prove for such bottles and crates sold this year were purchased after 31st March 1995. Accordingly, he a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned Commissioner (Appeals) has deleted the additions after observing and holding as under:- 25. Since the bottles and crates on account of sale on which Rs.84,67,666/- is received could not be segregated between those purchases prior to 1.4.95 and w.e.f. 1.4.95 the entire receipt is reduced from block of assets from the bottles and crates as per submission of the appellant. It is submitted by the appellant that: (a) The action of the A.O in treating the same as revenue receipt is wrong because they are sale purchases of capital receipts in form of bottles and crates. It is further submitted that there is no loss to revenue because if assessee's view point is accepted sale proceeds will get taxed over a period of two years because the claim of depreciation will go down by the corresponding amount. (b) If the A.O's approach is taken to logical conclusion, then what can be taxed is only income under the head 'capital gain' where cost of acquisition is to be reduced from sale proceeds and this course of action shall be detrimental to the interest of revenue because capital gain shall be computed by deducting the cost of acquisition of assets which shall be more than in cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd secondly, the present assessee was not entitled for any kind of compensation for the breach of ROFR. Accordingly, the findings of the learned Commissioner (Appeals) in this case are affirmed and the ground no.1, raised by the Revenue is treated as dismissed. 87. Ground no.2, the Revenue has challenged the deletion of addition of Rs. 3,94,863 on account of MODVAT credit on the ground that the decision of Bombay High Court in Nippon Chemicals Co. Pvt. Ltd. (supra), has not been accepted by the Revenue. 88. As admitted by both the parties, this issue now stands decided by the Hon'ble Supreme Court in the same case which is now reported as 261 ITR 75 (SC). Thus, there is no merit in the ground raised by the Revenue. Accordingly, ground no.2, raised by the Revenue is treated dismissed. 89. In the result, Revenue's appeal in ITA no.744/Mum./2002, is treated as dismissed. We now take up assessee's cross objection (C.O. no.35/Mum./2003), vide which, the assessee has taken an alternative claim with regard to the receipt of Rs. 32.11 crores. 90. Since we have already given a detail findings on this score holding that the amount aggregating to Rs. 32.11 crores is a capital receip ..... X X X X Extracts X X X X X X X X Extracts X X X X
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