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TMI Blog2016 (5) TMI 855X X X X Extracts X X X X X X X X Extracts X X X X ..... Petition No.1894 of 2010 in the Hon'ble High Court. The appeal and the writ petition filed by the assessee were disposed of by the Hon'ble High Court by a common order dated 20th September, 2010 with the following observations:- "2. Having heard both the above matters for some time, Mr. Sahadevan the Learned Counsel for the Revenue stated that the impugned orders in the appeal as well as Writ petition may be set aside without examining the merits and demerits of the impugned order and action and dispensing with the reasons in support of this order. The joint submission is that appeal as well as Writ petition be allowed and the matters may be remitted back to the Tribunal for afresh consideration leaving all contentions open. 3. In view of the joint prayer made, the impugned orders in the Appeal as well as Writ petition are set aside by consent of parties dispensing with reasons in support of our order. The proceedings are remitted back to the Tribunal for consideration afresh with expeditious dispatch. No order as to costs. All contentions kept open." 3. Two appeals filed by the revenue have been numbered as Income tax Appeal No.1449 of 2010 and Income tax Appeal No.1454 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is a Non-banking financial company. It has since been amalgamated with M/s Aditya Birla Nuvo Ltd. w.e.f. 30-06-2006. Since the appellate orders have been passed in the name of Birla Global Finance Ltd and the assessee is also prosecuting the appeals in the old name only. Since the Birla Global Finance Ltd has been merged with the above said company, the present orders are being passed in the name of the present company. The first issue urged in the appeal of both the parties relates to the taxability of Rs. 12.92 crores received by the assessee from M/s Sunlife Assurance company of Canada. 6. The assessee treated the above said amount as a receipt towards "Good Will" and accordingly offered the same for taxation under the head Long term capital gain. However, the AO considered the same as a business receipt and accordingly assessed the same under the head "Income from business". The Ld CIT(A), however, agreed with the contentions of the assessee and accordingly directed the AO to assess the same as Long term capital gains. The revenue is challenging the said decision of Ld CIT(A). Before the Tribunal, the assessee has taken a new stand and now it contends that the said rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a sum of Rs. 12.92 crores as premium towards Strategic relationship entered by way of Joint venture agreement. The assessee offered the same as Long term capital gain, but the AO assessed the same as business receipts. The Ld CIT(A) accepted the contention of the assessee and accordingly held that the same is assessable as Long term capital gain. The revenue challenges the said order of Ld CIT(A). The assessee has taken a new stand that the same is not taxable as Long term Capital gain also, as there is no transfer of any capital asset, which is a primary condition for bringing a receipt under the head "Capital gains". Accordingly, it is being contended that the amount of Rs. 12.92 crores is just a capital receipt and it is not taxable at all. 10. The Ld D.R drew our attention to the order passed by the Tribunal in AY 2000-01 against the revision order passed by Ld CIT(A), wherein the ITAT has held that the identical payments received by the assessee as Good Will exigible to tax as Long term Capital gains. He submitted that the order passed by the ITAT was in the context of revision proceedings u/s 263 of the Act and hence the same cannot be considered to be binding decision. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments made towards acquisition of shares and good will and hence, the amount paid in excess, if any, shall be adjusted against the premium stated above. The dispute is with regard to the nature or character of this premium amount. 13. The revenue's view is that the same is a business receipt chargeable under the head Income from business. The assessee's contention is that it is a capital receipt not taxable at all, even though it initially offered the same as goodwill chargeable under the head Capital Gains. 14. We notice from the order passed by the Tribunal in AY 2000-01 against the revision order passed by Ld CIT that the parties have obtained approval of Competent Authority for establishing Strategic relationship. The Competent authority has also accorded its approval for payment of Rs. 63.25 crores to the Birla Group by M/s Sunlife Canada as "goodwill", subject to the condition that this amount will not be repatriated. However, it is not clear as to whether the impugned receipt of Rs. 12.92 crores is part of Rs. 63.25 crores or not. 15. Be that as it may, a perusal of the Joint Venture Agreement shows that the agreement provides for Respective Roles and Responsibilities, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayer with interests in various types of financial markets and other field. Further, it has got branches all over the India and hence it is specifically provided in the joint venture agreement that the business expertise in all the fields shall be contributed by the Birla group to the Joint venture. Hence, the Birla group was considered to have an edge over M/s Sunlife, Canada. The business expertise, experience or edge, in our view, is considered as good will. Accordingly, we are of the view that the impugned payment of Rs. 12.92 crores received by the assessee is in the nature of goodwill only and hence we uphold the decision rendered by Ld CIT(A) on this issue. 17. The next issue contested by both the parties relates to the disallowance of bad debts claimed by the assessee. The following amounts claimed as bad debts by the assessee were disallowed by the AO:- Investment in Govt. securities 22,43,625 Investment in Shares 15,88,988 TDS receivable 25,00,000 The Ld CIT(A) allowed the claim of Rs. 22,43,625/- and confirmed the disallowance of the claim of Rs. 15,88,988/- referred above. In respect of claim of Rs. 25.00 lakhs, the Ld CIT(A) held that the remedy lies before Ld C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the disallowance of claim relating to TDS certificates. The AO disallowed this claim and the Ld CIT(A) took the view that the assessee should seek remedy u/s 264 of the Act. The Ld A.R submitted that the tax has been deducted by the clients from out of business receipts and due to mismatch or other unavoidable reasons, the claim of TDS to the extent of Rs. 25.00 lakhs was not allowed. Since the assessee could not claim its right for credit of TDS amount for the reasons beyond its control, it chose to write off the same as unrecoverable. The Ld A.R submitted that identical issue was considered in the following cases and the same was allowed in favour of the assessee:- a. ACIT Vs. Kelly Services India P Ltd (ITA No.5435/Del/2011 dt. 31.10.12)(Delhi Trib.) b. CIT Vs. M/s Shreyans Industries Ltd (ITA No.277 of 2004 dated 15.11.2013)(P & H) In both the cases, it has been held that the non-allowance of TDS credit for want of TDS certificates can be claimed as normal business loss. Consistent with the view taken therein, we set aside the order of Ld CIT(A) on this issue and direct the AO to allow this claim also. 22. The assessee is also contesting the decision of Ld CIT(A) in confi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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