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Pr Commissioner of Income Tax Versus M/s Satyam Food Specialities Pvt. Ltd. (Now Known As Karmic Budiness Specialities Pvt. Ltd.)

2017 (12) TMI 410 - RAJASTHAN HIGH COURT

Addition on account of amount received by the assessee towards settlement compensation - revenue or capital receipt - Held that:- Compensation in question was meant, intended and paid for withdrawal of aforesaid litigation instituted by assessee which could have resulted in many adverse consequences for the reputation of Coca Cola/Atlantic besides entailing huge cost and efforts of litigation. Relinquishment of right to sue is neither a capital asset nor taxable u/s 28 which provides specific ty .....

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and we are in complete agreement with the view taken by the Tribunal. Decided in favour of assessee and against the Department. - D. B. Income Tax Appeal No. 118 / 2015, D.B. Income Tax Appeal No. 191 / 2016 - Dated:- 6-11-2017 - K. S. Jhaveri And Vijay Kumar Vyas, JJ. For the Appellant : Mr. Sameer Sharma & Mr. Gaurav Gaur for Mr. Anil Mehta For the Respondent : Mr. N.L. Agarwal JUDGMENT 1. In both these appeals, common questions of law and facts are involved, hence they are decided by this .....

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77; 8,16,22,040/- made by the Assessing Officer on account of amount received by the assessee towards settlement compensation" 3.2 Appeal No. 191/2016 admitted on 14.2.2017 "Whether onthe facts and in the circumstances of the case and in law, the ITAT was right in deleting the penalty levied u/s 271(1)(c) of the I.T. Act holding that the quantum additions on the basis of which penalty was levied has been deleted, therefore, the consequent levy of penalty does not survive, ignoring the .....

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mpensation. Ld. CIT(A) while deciding the appeal has held the impugned amount to be specifically taxable u/s 28(va) of the IT Act, same has been reproduced above. Revenue has accepted this order. Consequently on merits, the issue before us is narrow - Whether the amount in question can be held to be falling within the scope of sec. 28(va). Search in the premises of Cabana group was conducted on 31-7-09 whereas the settlement agreement in question and other agreements were executed much earlier o .....

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ent was to resolve the disputes and amicably settle all demands fully and finally. c. That in consideration of the mount received from Atlantic Industries, the Assessee-company would irrevocably and unconditionally release, acquit, waive, relinquish, withdraw all claims and complaints against Atlantic and its affiliates. d. That Satyam would not initiate and proceed with or prosecute any of the claims or the complaints and forever discharge Atlantic and/or its affiliates. e. That Satyam receives .....

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ights, debts, liabilities, promises, agreements, demand, damages, accountings and costs and expenses of any kind whatsoever. g. That the intent of the agreement is to completely release all claims against Atlantic. i. That on receipt of settlement amount, Satyam will be left with no other outstanding claims, demands, differences, disputes or liabilities against Atlantic. In our considered view, all the clauses of the agreement read together reflect that the real intent, objective and purpose of .....

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rities in various paras of their orders have referred to the following facts and observations in respect of these agreements: a). That certain disputes arose between the assessee company and Atlantic Industries/ Coco Cola India Pvt. Ltd. b) That the intention of the Settlement Agreement was to resolve the disputes and amicably settle all demands fully and finally. c) That in consideration of the mount received from Atlantic Industries, the assessee company would irrevocably and unconditionally r .....

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l stand fully and finally settled. g) That Satyam fully, completely, irrevocably, finally and forever releases, acquits and discharges Atlantic and/or its affiliates. h) That the amount received by Satyam would take care of any and all or present and future claims, causes of action, rights, debts, liabilities, promises, agreements, demand, damages, accountings and costs and expenses of any kind whatsoever. i) That the intent of the agreement is to completely release all claims against Atlantic. .....

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