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TMI Blog2016 (8) TMI 418X X X X Extracts X X X X X X X X Extracts X X X X ..... action of the Assessing Officer in assuming Rs. 32,50,000/- as Long Term Capital Gain arising out of the transfer of "goodwill". 3) The learned CIT (A) in confirming the action of the Assessing Officer in assuming the receipts of Rs. 3,12,000/- as income under the head "other sources". 2. Briefly the facts of the case are that the Assessee is a HUF and notice u/s 148 of the Act was issued on 04/03/2011. In response, assessee filed return of income for the AY 2009-10 on 02/04/2011 admitting total rental income of Rs. 1,18,760/-. The AO completed the assessment on 21/12/2011 u/s 143(3) r.w.s. 147 of the Act and determined total income at Rs. 35,71,955/- by making the following additions: i) Addition towards 'goodwill' Rs. 32,50,000 ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irmed the addition to the extent of Rs. 27,50,000/-, the amount of which was received during the current year, by observing as under: 5.12 Applying all the aforementioned legal cannons and decisions to the case of the assessee, I find that there is no doubt about the fact that the transfer of property took place. The assessee has recognised that the transfer took place. The only bone of contention is whether the amount of Goodwill received by the assessee was in the nature of advance or it was a part and parcel of the consideration for transfer. As discussed above, there is absolutely no indication in any of the MOUs that the goodwill is being received for a future performance of a duty or the service or for a future supply of goods. Inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 496, 505, 506 and 515 at Attapur, Rajendra Nagar Mandal, R.R. District, Hyderabad. Further, he submitted that they have entered into development agreement with Shri S. Pandu Ranga Reddy and Shri K. Krishna Reddy for the purpose of constructing multiplex cinema theatre and as per the terms of the agreement development ratios are fixed at 50:50 between the first party and second party. Assessee also agreed to receive development goodwill ( non-refundable amount of Rs. 1.20 crores) with the payment schedule of Rs. 10 lakhs to be paid at the time of signing MoU i.e. on 09/01/2008 and balance shall be paid at the time of commencement of the work. He, however, emphasized that the above agreement is unregistered. 6.1 The ld. AR further submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kondakalla Krishna Reddy, S/o Sri Agi Reddy 2. Sri Kondakalla Vikram Reddy, S/o Sri K. Krishna Reddy 3. Sri Kondakalla Chakradhar Reddy, S/o Sri K. Krishna Reddy 6.2 The ld. AR submitted that in the earlier two unregistered agreements the developers were Shri S. Pandu Ranga Reddy and Shri K. Krishna Reddy, whereas, in the registered document/agreement, developers were different i.e. M/s K. Krishna Reddy Contractors. Moreover, the agreed goodwill also reduced to Rs. 65 lakhs. As per the registered agreement, contractors has paid cash on 09/01/08 Rs. 10 lakhs and the balance of Rs. 55 lakhs paid during the year 2008-09. He vehemently argued that goodwill is part and parcel of purchase consideration and not a separate asset as stand alone, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , (not refundable). Whether mere receipts of Rs. 65 lakhs as goodwill amounts to transfer as separate assessable asset is the main query. In our considered view, the goodwill is generated only because the assessee had entered into the development agreement not otherwise. Hence, the assets under consideration are composite assets linked to development of land. Hence, it cannot be separated. In this case, assessee had received the goodwill and handed over the land for development. The payment of goodwill is prior condition for handing over of land for development. This being the case, the expression goodwill is nothing but part performance towards development of land. It has to be part and parcel of the purchase consideration accepted for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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