TMI Blog2016 (2) TMI 413X X X X Extracts X X X X X X X X Extracts X X X X ..... May, 2006 of the Income Tax Appellate Tribunal (Tribunal). This appeal relates to Assessment Year 200203. 2 This appeal was admitted on 22nd August, 2008 on the following substantial question of law: Whether on the facts and in the circumstances of the case, the finding of the Tribunal that the amount received by the Appellant was not in the nature of noncompete fees is perverse and/or contrary to the material on record and is given ignoring the documents in the Paper Book and overlooking the written submissions made by the Appellant? . 3 Briefly, the facts leading to the present appeal are as under:( a) On 31st March, 2002, the Appellant at the age of 81 years, retired from employment with M/s. Grasim Limited (Grasim). This was after having worked for over 33 years with Grasim; (b) At the time of retirement, the Appellant received retirement benefits of more than ₹ 95 lakhs from Grasim. A monthly pension of ₹ 3 lakhs per month for life, reimbursement of medical expenses for life etc. Besides, the above, in addition, the Appellant received an amount of ₹ 3,80,48,100/which the Appellant claimed was noncompete fees and in support, relied upon an Ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A) found that the amount aggregating to ₹ 3,80,48,100/was received in installment of ₹ 2.00 Crore on 30th October, 2001, ₹ 30 lakhs on 20th February, 2002 and ₹ 1,50,48,100/on 27th March, 2002. All these amounts were received prior to date of Agreement dated 31st March, 2002. It further records that the payment of ₹ 2.00 Crorewas made on 30th October, 2001 was in fact an advance against noncompete fees/ exgratia, fees etc. Thus, he concluded that theagreement dated 31st March, 2002 indicating noncompete fees is the document which has been entered into so as to only hide the real nature of transaction. All this with a view to not pay legitimate tax on it. It was further held that the Appellant had retired from Grasim at the age of 81, having got benefit of more than ₹ 95 lakhs from his employer with monthly pension of ₹ 3 lakhs for life, along with reimbursement of medical expenses. In these circumstances, the order of the CIT(A) held that it is highly unlikely that the person having put in such a long service with Grasim and granted generous postretirement benefit would do anything to compete with the business of his former employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dharan, learned Counsel appearing for the Appellant in support of the appeal submits as under:( a) The payment received as noncompete fees is not taxable in the subject Assessment Year as settled by the order of the Supreme Court in Guffic Chem P. Ltd. V/s. CIT 332 ITR 602; (b) The impugned order of the Tribunal relies upon six circumstances as set out herein above to conclude that the amount of ₹ 3,80,48,100/received by the Appellant is not noncompete fees. All the six circumstances either individually or collectively, would not result in the amount of ₹ 3,80,48,100/being classified anything as other then noncompete fees; (c) The amount of ₹ 3,80,48,100/if held to be not claimable as noncompete fees, then the authorities must hold under which head is the same classifiable. This not being done, the amount of ₹ 3,80,48,100/is classifiable as noncompete fees as claimed; and (d) The classification of the amount of ₹ 3,80,48,100/under the head 'profit in lieu of salary' under Section 17 of the Act must fail as the obligation under the Agreement dated 31st March, 2002 is to return the same if there is a breach of the Agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an odd figure of ₹ 3,80,48,100/even when it is the case of the Appellant that it was a negotiated fees. The Appellant at no stage thereafter either before the authorities under the Act or even before us at the hearing of the appeal made any attempt to explain the circumstances in which the noncompete fees was negotiated at an odd figure of ₹ 3,80,48,100/. The submission of the Appellant that the figure of the compensation being odd or round, cannot by itself determine the character of the Appellant cannot be disputed. However, it is only one of the factors which the authorities have been relied upon to determine whether or not the amount of ₹ 3,80,48,100/is in fact a noncompete fee. In fact, the Appellant had claimed that an amount of ₹ 3,80,48,100/was arrived at after negotiations. Thus, if it was so, the Appellant ought to have made available the breakup of the constituents of the odd figure of ₹ 3,80,48,100/as noncompete fees. This is particularly so, when it was specifically sought for by the Assessing Officer. Further, even before the Appellate Authorities, the same was not made available. This is one of the features which suggests that the pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or noncompete fees as claimed by the Appellant. 11 Mr. Murlidharan, learned Counsel appearing for the Appellant next submits that the impugned order has incorrectly relied upon the fact that Grasim had deducted the TDS on the payment of noncompete fees of ₹ 3,80,48,100/made to the Appellant. The Appellant accepted the TDS without any protest. This itself evidences the fact that the Appellant accepts the fact that payment is not for noncompete fees. However, the Appellant submits that there can be no estoppel against statute. Therefore, even if Appellant itself agrees to the deduction of TDS by Grasim, yet it would not prevent the Appellant from urging that in law, the noncompete fees cannot be subjected to tax. There can be no quarrel with the above submission of the Appellant. However, when this fact of nondeduction of TDS and no protest by the Appellant is taken along with other facts, the view taken by the authorities that the payment is made not on account of noncompete fees, is a reasonable and possible view. This view cannot be considered to be perverse in any way. 12 Mr. Murlidharan, learned Counsel appearing for the Appellant next points out that the impug ..... X X X X Extracts X X X X X X X X Extracts X X X X
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