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PR. COMMISSIONER OF INCOME TAX-3, AHMEDABAD Versus PIRUZ AREEZ KHAMBATTA

2016 (6) TMI 963 - GUJARAT HIGH COURT

Penalty levied u/s. 271(1)(c) - addition on account of non-compete fee - Held that:- This is not a case of non disclosure of the income. The claim made by the assessee was found untenable. The Tribunal therefore, referred to various decisions including that of the Supreme Court in case of CIT v. Reliance Petroproducts Pvt. Ltd., reported in [2010 (3) TMI 80 - SUPREME COURT ] in delting the penalty - Decided in favour of assessee. - TAX APPEAL NO. 180 of 2016 - Dated:- 15-6-2016 - MR. AKIL KURESH .....

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s erred in law and on facts by relying upon the decision of Hon'ble Apex Court in the case of Reliance Petroproducts Pvt. Ltd. though the facts in the present case were altogether different. 2. The issue pertains to penalty under section 271(1)(c) of the Income Tax Act, 1961 ('the Act' for short). The Assessing Officer after denying the claim of the assessee that a certain receipt under non-compete agreement was not taxable, proceeded to impose penalty. Commissioner of Income Tax (Ap .....

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bove facts, I have no hesitation to hold that the claim of the assessee that the receipt from the non-compete agreement was bona fide. The genuineness of the agreement between the assessee and RPL is not in dispute. It is also not in dispute that the sum of ₹ 5.25 crores was received by the assessee as per this agreement. The receipt of the money is credited to the capital account with the narration non-compete territory rights . Any of the details furnished by the assessee either in the r .....

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e. Considering the totality of the facts, as discussed by me earlier, the claim of the assessee that the receipt was in the nature of capital receipt was a bona fide claim. Whether the claim is accepted or not, it is a matter of opinion and the issue of taxability of ₹ 5.25 crores is still sub judice before the Hon'ble High court. In view of the above, I am of the opinion that, on these facts, the decision of Hon'ble Apex Court in the case of Reliance Petroproducts Pvt. Ltd. (supra .....

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