TMI Blog2008 (3) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... vity were furnished in the regular assessment u/s 143(3) and the re-opening amounted to change of opinion the learned Commissioner of Income Tax (Appeals) noted that this transaction was duly reflected in the Profit and Loss Account as an extraordinary item. The learned Commissioner of Income Tax (Appeals) held that this was a mere change of opinion of the Assessing Officer and since as per the learned Commissioner of Income Tax (Appeals) assessee had disclosed all the materials, re-opening of the assessment beyond a period of four years cannot be upheld. For this, he placed reliance upon Hon'ble Madras High Court decision in the case of CIT vs. Annamalai Finance Ltd. 275 ITR 451 and Hon'ble Apex Court decision in the case of CIT and Another vs. Foramer France 264 ITR 566 (SC). Against: this order, Revenue is in appeal before us. 4. The Revenue's contention is that the Commissioner of Income Tax (Appeals) erred in holding that proceedings u/s 148 was invalid as the issue of taxation of this amount under normal computation was never considered by the Assessing Officer and the query in the original assessment was for the limited purpose of computation u/s 115JA. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ginal assessment stage. If initially no opinion was formed, the question of change therein could not be said to take place. We also find that Hon'ble Bombay High Court in the case of Dr. Arnin's Pathology Laboratory vs. JCIT 252 ITR 673 has held that, mere reflection of an amount in the Profit and Loss Account would not tantamount to full and true disclosure of all material facts necessary for assessment. 9. Following further case laws also support the case of the Revenue:- Hon'ble Apex court in the case of Sri Krishna (P.) Ltd. vs. ITO (1996) 87 Taxman 315 / 221 ITR 538 (SC) has held that, Every disclosure is not and cannot be treated to be a true and full disclosure. A disclosure may be a false one or true one. It may be a full disclosure or it may not be. A partial disclosure may very often be a misleading one. What is required is a full and true disclosure of all material facts necessary for making assessment for that year. Hon'ble Apex Court in the case of Calcutta Discount Co. Ltd. vs. ITO (1961) 41 ITR 191 (SC) has held that, The words 'omission or failure to disclose fully and truly all material facts necessary for his assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied. 11. As regards the merits of the case, it is the assessee's claim- that a sum of ₹ 542 lakhs was paid to the assessee company as non-compete fee for not engaging in forex business. The assessee was carrying on the business of non-banking finance and also engaged in forex business. It had obtained RBI licence for doing the same. The company wanted to change over to I.T. sector. Hence, it had exited its forex business in March, 1997. Subsequently, it also stopped other financing activities, changed its object and came out with a maiden public issue. By an agreement executed on 15.3.1997, the assessee transferred the clients who had agreed for the same to another company M/s Premier Fertilisers Ltd. The assessee agreed that it shall not carry on forex business from the date of agreement for the next 14 years for a consideration of ₹ 542 lakhs. The Assessing Officer, in his assessment order, had noted that no agreement in this regard was produced before the Assessing Officer. 12. The Assessing Officer further noted that, In the absence of specific agreement for not engaging is forex business, the consideration received for the transfer cannot be conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngalore Bench of the Tribunal in IBM India Ltd. vs. CIT 105 ITD 1 (Bang.). The learned Departmental Representative further contended that as noted by the Assessing Officer, the assessee was maintaining cash balance in forex as on 31.3.1997 and also as on 31.3.1998. Hence, it cannot be said that assessee is not engaged in forex business subsequent to the agreement. Hence, the amount received cannot be a capital receipt as held by the Hon'ble Delhi High Court in the case of CIT vs. All India Films Corporation (2008) 297 ITR 358 (Del). 15. The learned counsel of the assessee, on the other hand, submitted that there was a real threat to the other party and that is why non-compete fee agreement was entered into. He further submitted that assessee had certain clients, which, because of the stoppage of forex business, went to the other party. He further submitted that when a business is closed, automatically manpower seeks alternative employment. He further submitted that, for entering into a non-compete fee agreement there need not be any unique product. 16. Upon a careful consideration of the above, we note that the said transaction was between two sister concerns where both t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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