TMI Blog2010 (7) TMI 1091X X X X Extracts X X X X X X X X Extracts X X X X ..... g total income of ₹ 23.46 crores which was revised to ₹ 23.08 crores by revised return. In the return the assessee claimed that the receipt of ₹ 12,26,80,000/- from Hewlett Packard (HP) was a capital receipt and hence not taxable. It was the case of the assessee that the amount was received for termination of the joint venture agreement entered into with HP and since the source of income had been extinguished, the receipt was a capital receipt. The assessee s claim was not accepted by the Assessing Officer, according to whom the receipt was revenue in nature. He accordingly brought the same to tax as business profits. The assessee appealed to the CIT(A), who held that the amount was a capital receipt no doubt, but accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the aforesaid order of the Tribunal was filed by the assessee before the Hon ble Bombay High Court in Income Tax Appeal No: 799 of 2007 and the same was admitted with the following two substantial questions of law: - (a) Whether on the facts and circumstances of the case and in law, the amount of ₹ 12,26,80,000/- received by the Appellant on surrendering / giving up / extinguishment of its rights in the Joint Venture Agreement is a capital receipt not liable to tax at all? (b) Whether on the facts and circumstances of the case and in law, the Tribunal was right in coming to the conclusion that the compensation received by the Appellant is liable to be taxed as long term capital gains? The aforesaid order was passed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee credited the amount received from HP to its Profit and Loss Account but reduced the same in the computation of income. A Note was given along with the return of income to highlight the reason why it was reduced from the computation of income. (b) According to the Note, no capital gains arose because there was no cost of acquisition and reference was made to the judgment of the Supreme Court in the case of CIT vs. B C Srinivasa Setty (1981) 128 ITR 294 (SC). The assessee also relied upon the opinion of an expert. (c) The Tribunal has accepted the assessee s contention that the receipt is a capital receipt but has disapproved the assessee s plea that there was no cost of acquisition. According to the Tribunal, the share applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planation 1 below section 271(1)(c) can be invoked. The assessee has placed all the details, papers and agreements relating to the receipt of compensation from HP before the AO. Even though the compensation was included in the Profit and Loss Account but excluded in the computation of income, the assessee has substantiated the claim with reference to the judgment of the Supreme Court cited supra and an expert opinion. A Note was appended to the computation of income drawing the attention of the AO to the claim. The AO has no case that the assessee withheld any material facts or aspect relating to the claim which he was able to unearth in the course of the assessment proceedings. When the assessee has disclosed all the material particulars r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s difficult to see how the assessee could be said to have filed false returns, when what the assessee did, namely, not including the amount of freight in the taxable turnover, was under a bona fide belief that the amount of freight did not form part of the sale price and was not includible in the taxable turnover. The contention of the assessee throughout was that on a proper construction of the definition of sale price in section 2(o) of the Madhya Pradesh General Sales Tax Act, 1958, and section 2(h) of the Central Sales Tax Act, 1956, the amount of freight did not fall within the definition and was not liable to be included in the taxable turnover. This was the reason why the assessee did not include the amount of freight in the taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court and expert opinion. The claim cannot therefore be said to be false. 7. There are a few other judgments in which it has been held that if the assessee has disclosed all the facts relating to the claim before the AO but contends for a particular position and the AO, on the very same facts and without unearthing any other fact, takes a different position regarding the claim, and there are no materials to hold that the claim was not made bona fide, merely because the AO has taken a different view of the assessee s claim it cannot be said that the assessee concealed his income or furnished inaccurate particulars thereof: - (1) Additional CIT vs. Delhi Cloth General Mills Co. Ltd. (1984) 157 ITR 822 (Del) (2) CIT vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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