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2015 (5) TMI 690 - PUNJAB & HARYANA HIGH COURT

2015 (5) TMI 690 - PUNJAB & HARYANA HIGH COURT - [2015] 374 ITR 695 (P&H) - Capital receipt not chargeable to tax - bifurcation of income - Whether ITAT is justified in law in treating a sum of ₹ 100/- per share as capital receipt not chargeable to tax because as per provisions of Section 48, the entire receipts on sale of shares are chargeable to tax? - Whether there being no bifurcation in the agreement as regards the value of the share and the value of the negative covenants, the respon .....

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revent the assessee from doing so. The value to be ascribed to each transaction must obviously depend upon the evidence and the facts in each case. The tax of whatever nature, must be levied on the basis of the true value of the asset of the transaction and not merely on the basis of the value ascribed to it by the assessee. Indeed, the view to the contrary could cause severe prejudice to the revenue itself. To accept the contention would enable assessees to ascribe artificial values to assets e .....

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hout prior consultation and it objected to the registration thereof. Groz Beckert Saboo Ltd. ultimately withdrew its application on the condition that Groz Beckert group would register its trademark in its own name and Groz Beckert Saboo Ltd. would be permitted to continue to use the trade mark in India. Accordingly, lawyers of Groz Beckert Saboo Ltd. withdrew the application for registration and the said R.K.Saboo confirmed the same.There were prolonged negotiations in this regard. There is not .....

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ch matter would know that the agreement is consistent with an exercise for the resolution of such disputes in corporate matters. The negative covenants therein are not at all unusual in such cases. There is nothing to indicate that they were introduced to avoid tax.The submission that there was no consideration for the negative covenants is therefore rejected. - Decided in favour of the respondents/assessees

Whether Tribunal order is perverse - whether tribunal failed to take into con .....

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ntention been raised before the C.I.T. (A) or before the Tribunal, the respondent could conceivably have had several answers to it. If we allow the appellant to raise this contention before us we would be depriving the respondents the opportunity of adducing evidence to deal with the same. - Decided in favour of the respondents/assessees

The Tribunal accepted the value of the shares at ₹ 60.24 per share. The Tribunal, therefore, rightly held that the value of ₹ 100/- appor .....

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aluation report was dishonest or malafide for any reason. Nor is there anything to indicate that it is unsustainable for any reason. It is important to note that there is no ground of appeal before us against the Tribunalís acceptance of the valuation report. The appellants themselves have not valued the shares. In that event even assuming that some valuation is to be attributed to the covenants/negative covenants contained in the Share Purchase Agreement other than Clause 5.5, it would make no .....

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tion 28 (ii) (a) & (b) are inapplicable to the facts of this case. The members of the Saboo group held only 40% of the equity shares in Groz Beckert Saboo Ltd. Their share holding even together did not give them the right to manage the whole or substantially the whole of the affairs of Groz Beckert Saboo Ltd. The terms of the collaboration agreement are important. Under the collaboration agreement, the general administration and management of Groz Beckert Saboo Ltd. was to be in the hands of the .....

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by the company except by the unanimous consent of all the Directors. It cannot be said, therefore, that the Saboo group managed the whole of the affairs of Groz Beckert Saboo Ltd. Thus it is not necessary to consider whether section 28(ii)(a)(b) of the Act applies in view of other certain aspects raised by Ms. Suri. - Decided in favour of the respondents/assessees - ITA No. 557 of 2006, ITA No. 262 , 263, 264 , 351, 352, 353 of 2010 - Dated:- 15-5-2015 - S. J. Vazifdar ACJ And G. S. Sandhawalia, .....

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questions of law are the same in all the appeals. The questions of fact arise on account of the same transaction. The relevant facts are almost identical and are in any event interconnected. We, therefore, dispose of these appeals by this common order and judgment. We will for convenience, however, refer to the facts in ITA No. 557 of 2006. 3. The case in a nut-shell is this. The respondents in the above appeals are members of the Saboo group. Groz Beckert Saboo Ltd. was a joint venture between .....

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an appeal under section 10F of the Companies Act, 1956 before Delhi High Court. The matter was ultimately settled in terms of a Share Purchase Agreement dated 21.01.1993. ₹ 400/- was stated to be the consideration for the sale of all the shares held by the Saboo group to the Groz Beckert group. The agreement also contained restrictive/negative covenants given by the Saboo group. The respondents contended that they were entitled to apportion a sum of ₹ 100/- out of ₹ 400/- as co .....

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preme Court. This is also the view taken by several other High Courts. On facts we have held that the amount of ₹ 100/- out of ₹ 400/- apportioned towards the negative/restrictive covenants was infact on the conservative side. In arriving at these conclusions we have also dealt with certain other issues. 5. The respondent filed a return of income of ₹ 5,55,280/-. The Assessing Officer assessed the respondent s income at ₹ 41,22,020/-. The respondent challenged the order b .....

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per provisions of Section 48, the entire receipts on sale of shares are chargeable to tax?" 7. In 1959, one R.K.Saboo had obtained from the Government of India an industrial licence for the manufacture of hosiery needles. A financial and collaboration agreement was entered into between R.K.Saboo and M/s Theodor Groz & Sohne & Ernst Beckert Nadelfabrik Commandit Gesellschaft, a partnership firm in Germany. By a letter dated 21.11.1959, the Government of India approved the collaborat .....

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rose between the Groz Beckert group and the Saboo group. On 22.01.1992, the Saboo group filed a petition under sections 397 and 398 of the Companies Act, 1956 against the Groz Beckert group for mismanagement and oppression of minority shareholders before the Company Law Board at New Delhi. The Company Law Board by an order dated 22.10.1992 rejected the petition and directed the Saboo group to sell its 40% shares in Groz Beckert Saboo Ltd. to the Groz Beckert group at a value to be determined by .....

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rred to therein as the sellers . Each of the members of Saboo group agreed to sell, transfer, assign and deliver to the purchaser i.e. the Groz Beckert group their shares having a nominal value of ₹ 10/- per share at the price of ₹ 400/- per share aggregating to ₹ 17.60 crores. The sale price of the shares was inclusive of all dividend rights. Clause 1.6 of the agreement provided that it was a fundamental condition and essence of the contract that the sale would be of the entir .....

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tly or indirectly engage anywhere in India in any business similar to or in competition with the business of the Company as now conducted, or have any interest, directly or indirectly, in any such business. 5.6 Employees: For a period of five years after the closing date, neither Sellers nor any of its affiliates or subsidiaries will: a) hire any employee of the company or induce or attempt to induce any employee of the company to leave its employ, or in any way interfere with the relationship b .....

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or subsidiaries will: a) hire any employee of the sellers or of any firms, companies or entities owned or controlled by the Sellers or attempt to induce any employee to leave his employ, or in any way interfere with the relationship with such employees. b) induce or attempt to induce any supplier, licensee, distributor, customer, or other business relation of the Sellers or any firm, companies or any entities owned or controlled by the sellers to cease doing business with it or in any way inter .....

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trade name, logos and trade marks and other intellectual property of the Company or the Purchaser." xx xx xx xx xx xx xx xx 6.4 This agreement will be filed by the parties in the appeal pending in the High Court of Delhi at New Delhi being Appeal No. 23 of 1992 with a request to the Hon ble High Court to take the same on record and to adjourn the appeal to a date after 31st August, 1993, on which date the appeal shall be withdrawn and disposed of upon fulfillment of the terms of this agreem .....

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justify the basis and the quantum of this claim for apportionment, the respondent filed a valuation report of the Chartered Accountants M/s Vaish & Associates which valued the shares at ₹ 93.12 as per break-up value as on 31.03.1993. 11. The appellants accordingly claimed deduction of ₹ 100/- out of the total sum of ₹ 400/- per share. The Assessing Officer, however, disallowed the same. He held that the respondent/assessee was not entitled to split-up the value of the share .....

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on for its transfer and refraining from competition was treated as capital receipt. Curiously, however, he held that the special provisions of the Income Tax Act, namely sections 17 and 28(ii) supersede the principles. He, therefore, refused to follow the judgments. We will deal with section 28(ii) of the Act later. Referring to the above provision of the Share Purchase Agreement, he held that the Groz Beckert group after paying ₹ 400/- per share would have been foolish not to take the ass .....

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followed upon the Groz Beckert group taking over the management. He observed that if there were to be apportionment of the sale consideration, the Directors who relinquished office would get a higher amount than the other members of the Saboo group. It was contended before us that infact there was no apportionment. 12. The C.I.T. (A) held that the respondent in ITA No. 557 of 2006 was neither a Director nor an employee of the company; that she was not a technical expert; that the sale of the sh .....

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0/- per share was received against the sale of the share and the Assessing Officer had rightly treated the entire amount as a part of the capital receipt liable for capital gains. 13. It is not necessary at this stage to refer to the order of the Tribunal which we have upheld. We will refer to the same later. 14. Ms. Dhugga, learned counsel appearing on behalf of the appellant submitted as follows:- I) There being no bifurcation in the agreement between the value of the share and the value of th .....

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ve covenants, the respondent/assessee was not entitled to apportionment thereof for the purposes of assessment under the Income Tax Act. 15. Ms. Dhugga s, absolute proposition that the assessee is not entitled to seek bifurcation of the consideration stipulated in the Share Purchase Agreement merely because the agreement does not provide for the same is not well founded. In our view, an assessee is entitled to seek bifurcation of the consideration mentioned in the agreement. Whether a part of th .....

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reement dated 18th January, 1938 the said firm assigned the managing agency and 4,736 shares of the company to Sheth Peeramal Chaturbhuj for ₹ 7,51,000/-. By an agreement dated 07.09.1946, Peeramal Girdharlal & Co. agreed to relinquish their managing agency rights and to get M/s Chaturam & Sons appointed the Managing Agents and to sell 65,012 shares of the company at the price of ₹ 65/-per share. The assessee was a partner in Peeramal Girdharlal & Co. and the Taxing Depar .....

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nce before the Division Bench. Chief Justice Chagla speaking for the Court held:- "Now, the Tribunal has found as a fact, and there can be no dispute about it, that the main object or rather the only object of the agreement of the 7th September, 1946, was to get the purchasers of these shares appointed the managing agents of the company. The Tribunal also points out in its order that this was not an ordinary agreement of purchase and sale of shares of the company entered into in the ordinar .....

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d by the assessee and in respect of which he made a capital gain? It is erroneous to suggest that the full value is necessarily the value which the parties place upon a capital asset. The full value must be the true value, not any artificial value, which parties for any purpose may assign to a particular capital asset. Here we have evidence that these shares were marketable and they had a market price which was ₹ 46 per share. The agreement also makes it clear that it was a composite agree .....

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7; 65 per share. The full value was the market value of ₹ 46 per share and an additional amount was paid by the purchasers because they obtained not only the shares but also the important right to manage the Gujarat Mills Co. Ltd. It is difficult to understand how the mere fact that the parties have not apportioned the consideration between the two assets which were being dealt with by this agreement can make any difference to the rights of the parties. The position might have been differe .....

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d in respect of which capital gain was made was not merely the shares but also the managing agency agreement, and therefore if ₹ 65 were obtained by the purchasers they obtained it in respect of the capital asset and the whole of the capital gain must be brought to tax. Now, it is not the case of the Taxing Department and it has never been their case that the capital asset in respect of which capital gain was made by the assessee and which is sought to be taxed was the shares and the manag .....

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the consideration, would the Department have accepted the artificial value put by the parties upon the shares if that value was far below the market value? The position is the same here. The parties have put upon the shares a value which is much higher than the market value. Admittedly, it is an artificial value and it is artificial because the value put upon the shares is not the value of the shares alone but it is the composite consideration paid by the purchasers for obtaining the shares and .....

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pect of each of them. 17. We see no reason in principle to prevent the assessee from doing so. The value to be ascribed to each transaction must obviously depend upon the evidence and the facts in each case. The tax of whatever nature, must be levied on the basis of the true value of the asset of the transaction and not merely on the basis of the value ascribed to it by the assessee. Indeed, the view to the contrary could cause severe prejudice to the revenue itself. To accept the contention wou .....

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not flow out of the agreement to sell the shares. Each of these agreements could have been arrived at independent of the others. Each of the agreements could have been arrived at without and even in the absence of the other. The negative covenant could have been agreed to by the members of the Saboo group without having sold their shares and the members of the Saboo group could have sold their shares without agreeing to the negative covenants. It was therefore not only permissible but necessary .....

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lip;.We, therefore, hold that the compensation agreed to be paid was not only in lieu of the giving up of the agency but also for the assessee accepting a restrictive covenant for a specific period. In the present case, the covenant was an independent obligation undertaken by the assessee not to compete with the new agents in the same field for a specified period. It came into operation only after the agency was terminated. It was wholly un-connected with the assessee's agency terminated. We .....

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be a ground for rejecting the claim either of the revenue or of the assessee. Such an apportionment was sanctioned by courts in Wales (H.M. Inspector of, Taxes v. Tilley, Carter v. Wadman (H.M. Inspector of Taxes and T. Sadasivam v. Commissioner of Income-tax, Madras. In the present case apportionment of the compensation has to be made on a reasonable basis between the loss of the agency in the usual course of business and the restrictive covenant. The manner of such apportionment has perforce t .....

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ssee as its selling agent in case of diverse products. The agreements were renewed. The parties, however, entered into an agreement for pre-mature termination of the selling agency/distribution arrangement. The HMM Ltd. agreed to pay certain amounts in installments in consideration of the assessee s accepting the pre-mature termination of the agreement. In consideration thereof, the assessee inter-alia agreed not to accept or engage itself in any selling/distribution arrangements of any products .....

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amount be taken as a capital receipt and not liable to tax as income under section 28(ii)(c) of the Act and deleted the addition to that extent. The question in the assessee s appeal to the High Court was whether the compensation would restrict the capital receipt or the revenue receipt. The High Court held that the compensation was in consideration of the pre-mature termination of the selling agency/distributorship agreement and also in respect of the restrictive covenants. Relying upon the jud .....

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and price of the restrictive covenants merely because the Share Purchase Agreement itself did not bifurcate the same, is rejected. Where the agreement between the parties indicates that the lump-sum consideration was in respect of two or more promises, it is liable to be bifurcated and apportioned between each of the assets. At times bifurcation operates in favour of the assessee and at times in favour of the revenue. In whose favour it operates is irrelevant. In such cases, the consideration mu .....

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at part of the consideration does not represent the value of the shares sold but constitutes the consideration for the sale of right to control the company with the aid of the shares sold in two companies-Anglo French Textiles Ltd. and Best & Co. (Pondicherry) Pvt. Ltd. The shares were held by all the assessees who belonged to the same family. The shares were sold in two companies at the rate of ₹ 601/- per share and ₹ 935/- per share, although the prevailing market value of thos .....

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the consideration for the transfer of the controlling interest of those companies to the vendees which was evidenced by the fact that the assessees who were Directors would resign from the boards of two companies and induced the vendees companies. Ms. Dhugga relied upon the following observations of the Division Bench:- "The argument for the assessees that the controlling interest in the company is capable of being transferred separately, apart from the transfer of shares is wholly untenab .....

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is but an incidence of the shareholding and has no independent existence. Similar view was taken by the Madhya Pradesh High Court in the case of Smt. Maharani Ushadevi v. CIT [1981] 131 ITR 445, wherein also it was pointed out that the controlling interest in a company is an incident arising from holding of a particular number of shares in the company and that such controlling interest cannot be transferred without transferring shares." The judgment does not support Ms. Dhugga s contention .....

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tinct right independent of the right of ownership of the shares. The case is, therefore, clearly distinguishable from the one before us. 24. The Division Bench then referred the judgment of the Patna High Court in Raghubar Narain Singh v. Commissioner of Income Tax 1984 Income Tax Reports 447 wherein it was held that the price received by the vendor who happened to be the Managing Director and who had agreed under the agreement to delegate his power to the vendee was not the consideration for th .....

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are not concerned with such a case at all and therefore, do not express any opinion regarding the same. Suffice it to note, however, that the Division Bench of the Madras High Court did not hold that the consideration cannot be apportioned even if the Court comes to the conclusion that two distinct assets are sold. The Division Bench of the Patna High Court endorsed the principle of bifurcation and apportionment. 25. Ms. Dhugga then relied upon the following observations of the Madhya Pradesh H .....

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o pay Rs, 100 per share, then so far as the assessee was concerned, the cost of acquisition of each share was ₹ 100. The Tribunal, however, held that the sum of ₹ 100 did not represent the cost of acquisition of shares to the assessee because, the assessee acquired, in addition to the shares, a controlling interest in the company and, therefore, the excess amount paid by the assessee over the market price of the share represented the price of controlling interest. This view of the Tr .....

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price of a share and if the transaction is genuine, as has been found in the present case, then, really speaking, the cost of acquisition of the block of shares purchased by the assessee is that which she has in fact paid for holding that block." "The other decision relied upon by the Tribunal is Baijnath Chaturbhuj v. CIT [1957] 31 ITR 643 (Bom). In that case, it was found that the consideration received by the assessee was really a composite consideration for the transfer of shares .....

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r each share then ₹ 100 would, in our opinion, be the cost of acquisition of the share so far as the assessee is concerned. For these reasons, our answer to the question refrained by us in M.C.C. No. 411 of 1976 is in the negative and against the department." 26. These observations do not support Ms. Dhugga s submission. The Division Bench only held that the controlling interest is an incidence arising from holding a particular number of shares in the company and cannot be separately .....

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as really a composite consideration for the transfer of shares and the assignment of managing agency. No doubt, there can be a case of composite consideration but in that case there should be two distinct assets, each capable of being acquired or transferred separately. In our opinion, "controlling interest" by itself cannot be acquired or transferred. It is an incidence arising out of holding a particular number of shares and if for holding that number the assessee was required to pur .....

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pable of being acquired or transferred separately are sold or purchased. 27. Lastly, Ms. Dhugga relied upon the following observations of the Supreme Court in Vodafone International Holdings BV vs. Union of India (2012) 6 SCC 613 :- "167. As stated, CGP was treated in the Hutchison structure as an investment vehicle. As a general rule, in a case where a transaction involves transfer of shares lock, stock and barrel, such a transaction cannot be broken up into separate individual components, .....

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, control premium, call and put options, consultancy support, customer base, brand licences, etc. 168. On facts, we are of the view that the High Court, in the present case, ought to have examined the entire transaction holistically. VIH has rightly contended that the transaction in question should be looked at as an entire package. The items mentioned hereinabove, like, control premium, non-compete agreement, consultancy support, customer base, brand licences, operating licences, etc. were all .....

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. The parties to the transaction have not agreed upon a separate price for the CGP share and for what the High Court calls as "other rights and entitlements" (including options, right to non-compete, control premium, customer base, etc.). Thus, it was not open to the Revenue to split the payment and consider a part of such payments for each of the above items. The essential character of the transaction as an alienation cannot be altered by the form of the consideration, the payment of .....

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t mean that the parties had agreed for the price payable for each of the above items. The transaction remained a contract of outright sale of the entire investment for a lump sum consideration [see Commentary on Model Tax Convention on Income and on Capital (OECD, 28-1- 2003) as also the judgment of this Court in CIT v. Mugneeram Bangur and Co. [AIR 1966 SC 50 : (1965) 57 ITR 299] ]. Thus, we need to "look at" the entire ownership structure set up by Hutchison as a single consolidated .....

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s and/or the assessees are precluded from doing so. Indeed, the issue, as it arises before us, was not considered by the Supreme Court. The Supreme Court considered the aspect in an entirely different context. To understand these observations, it would be necessary to read the judgment in Vodafone International Holdings BV vs. Union of India (supra) as a whole. The dispute related to the acquisition by Vodafone International Holdings (VIH) of the entire share capital of CGP Investments (Holdings .....

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the Chief Justice repeatedly noted and held that in that case the Court was concerned with the sale of shares and not with the sale of assets item-wise. The Court dealt with each of the items that the revenue contended had been acquired by VIH. It was held that the rights did not flow from the share-purchase agreement; that some of the rights, such as, rights of influence/persuasion cannot be construed as a right in the legal sense. For instance, although the holding company would, by virtue of .....

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rough the execution of the share-purchase agreement. After having analyzed each of the ingredients, which were alleged to have been separately transferred, the Supreme Court held: "127. For the above reasons, we hold that under the HTIL structure, as it existed in 1994, HTIL occupied only a persuasive position/influence over the downstream companies qua manner of voting, nomination of Directors and management rights. That, the minority shareholders/ investors had participative and protectiv .....

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hts. 29. In the judgment under appeal, the Bombay High Court had come to the conclusion that the transfer of the CGP share was not adequate in itself to achieve the object of consummating the transaction between HTIL and VIH and that intrinsic to the transaction was a transfer of other "rights and entitlements" which rights and entitlements constituted in themselves "capital assets" within the meaning of Section 2(14) of the Act. The High Court held that VIH acquired the CGP .....

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come to the conclusion that the case concerns sale of share and other assets, there could be no bifurcation and apportionment of the consideration stipulated merely because the Share Purchase Agreement did not itself bifurcate the consideration qua the independent components. 30. Our view is, therefore, not inconsistent with the judgment in Vodafone s case (supra). As we noted earlier, this is the view of a Bench of three learned Judges of the Supreme Court in CIT v. Best and Co. P. Ltd. (supra) .....

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e present case there was infact no consideration payable for any of the covenants stipulated in clause-5 including for the negative covenants contained in clause 5.5. Clause 5.5 prohibited the sellers i.e. members of the Saboo group and the firms, companies and other entities owned and controlled by them from directly or indirectly engaging anywhere in India in any business similar to or in competition with the business of the company i.e. Groz Beckert Saboo Ltd. or from having any interest, dir .....

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indigenization of raw material supply and transfer of technology to the company, the proposal of the Saboo group that more manufacturers of raw material should be contacted was defeated. This according to her indicates an admission on behalf of the Saboo group that it was the Groz Beckert group that was in possession of the technology and that the Saboo group did not have the technology necessary to conduct such business. Further, this submission according to her, established that the Saboo grou .....

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of the Reserve Bank of India to carry on business in India. In 1973-74, the Government required the Groz Beckert group to reduce its equity ownership in the company but considering the nature of the technology, the Reserve Bank of India permitted the Groz Beckert group to retain 60% of the equity and the Saboo group supported the same. This according to Ms. Dhugga indicated that the technology was of a high level and valuable and that it is the Groz Beckert group that was in possession of the sa .....

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ly dependent on imported supplies. 34. We will assume that the members of the Saboo group did not possess the technical expertise to run a similar business themselves. That does not render clause 5.5 meaningless. It is of vital importance to note that clause 5.5 prevented the members of the Saboo group from directly or indirectly engaging in a similar business or in competition with the business of Groz Beckert Saboo Ltd. The possession of technical expertise required to manufacture a product is .....

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ers of the Saboo group had the technical expertise themselves to manufacture the goods is entirely irrelevant. Their ability to engage in such a business is not dependent on their possessing the technical expertise required for running such a business. 35. Clause 5.5 did not prevent the members of the Saboo group merely from using their technical expertise for the purpose of engaging anywhere in India in any business similar to or in competition with the business of Groz Beckert Saboo Ltd. It pr .....

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enalty for breach thereof. 37. This is entirely irrelevant. It does not indicate that clause 5.5 is meaningless or without any value. If there was a breach of clause 5.5, the Groz Beckert group or the company i.e. Groz Beckert Saboo Ltd. could have filed an action to prevent them from doing so by enforcing the negative covenants. They could also have sought damages for the breach of the covenants. The contention that clause 5.5 is meaningless and of no value is, therefore, rejected. 38. Ms. Dhug .....

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ant was sham and was not intended to be acted upon. They may have refrained from doing so for a variety of valid reasons. 40. The contention that the covenants/negative covenants were sham, bogus and were never meant to be acted upon, is belied by at least one fact. As noted in the order of the Company Law Board, several disputes had arisen between the parties including as regards the expansion programme, transfer of technology, failure of the Groz Beckert group to give a commitment to buy back .....

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other G.B. trademarks/tradenames for exports and domestic sales. The Saboo group allegedly with the knowledge and consent of the Groz-Beckert group, registered its own trademark "GROZ-Beckert SABOO LIMITED (Label)" in respect of needles falling in class 26 and that trademark was mainly used in domestic sales. According to the Groz Beckert group, the application for registration of that trade mark was made without prior consultation and it objected to the registration thereof. Groz Bec .....

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were several disputes. This is clear from the fact that the dispute is reflected in the petition filed before the Company Law Board whereas the Share Purchase Agreement was entered into much later namely after the appeal under Section 10-F before the Delhi High Court. It is obviously in view of these various disputes that various clauses were introduced by the parties in the Share Purchase Agreement. Anyone familiar with such matter would know that the agreement is consistent with an exercise f .....

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e considered to be the consideration for the negative covenants contained in the Share Purchase Agreement, there was no further bifurcation and apportionment of the consideration towards each of the covenants/negative covenants contained in the various clauses of the Share Purchase Agreement. She submitted that a value must then be attributed to all the covenants/negative covenants such as in Clauses 5.6, 5.7 and 5.8 set out earlier. 44. This submission must be rejected for at least two reasons, .....

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ant to raise this point for the first time in the appeal before us. Had the contention been raised before the C.I.T. (A) or before the Tribunal, the respondent could conceivably have had several answers to it. If we allow the appellant to raise this contention before us we would be depriving the respondents the opportunity of adducing evidence to deal with the same. This would be unfair to the respondents. 46. Secondly, and more important, in the facts of this case, it would make no difference e .....

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₹ 100/- apportioned towards the negative covenants was not such as to warrant interference. We agree. The Chartered Accountant valued the shares in three different ways. The valuation at ₹ 106.90 per share was arrived at on the basis of Rule 14 of Schedule-III of the Wealth Tax Act, 1957; of the business as a whole, at ₹ 118.90 per share on the yield basis and at ₹ 93.12 on the basis of Rule 11 of Schedule III of the Wealth Tax Act i.e. breakup value. There is nothing to .....

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e 5.5, it would make no difference. The apportionment of sum of ₹ 100/- out of ₹ 400/- towards clause 5.5 would in any event be reasonable. We agree with the findings of the Tribunal that in view of the above facts the apportionment of 25% of the value of shares towards the negative covenants was on conservative basis. 48. In the circumstances, we do not consider it appropriate to interfere with the decision of the Tribunal on this ground. Nor do we think it necessary to remit the ma .....

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e during the previous year. ii) any compensation or other payment due to or received by, (a) any person, by whatever name called, managing the whole or substantially the whole of the affairs of an Indian company, at or in connection with the termination of his management or the modification of the terms and conditions relating thereto; (b) any person, by whatever name called, managing the whole or substantially the whole of the affairs in India of any other company, at or in connection with the .....

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